VIx, Germany, NyAD and Gold 8-17-2012

VIX went to an oversold state, reaching almost equal to March 2012’s low at 13.66. MACD and RSI hit oversold, and VIX went to our 12-16 range for “TOO Bullish” sentiment by the public.

QoQ GDP Growth for Q2 2012:

Germany – 0.3%

France – 0.0%

Italy -  -0.9%

UK -  -0.7%

VIX showing Public is still Too Bullish even though European GDP Numbers are flat growth and even contracting economy (3 quarters in a row). Although European GDPs beat estimates, they aren’t good enough to be said Bullish. Something really weird could happen soon.

NYAD on the other hand hits fresh new highs, but MACD and RSI showing negative divergence on the daily charts. Showing signs that anything could turnaround also soon.

Germany’s GDP expanded 0.3% , beat the 0.2% estimates, continued to get near 7000 level. We have been monitoring this level for the past 1 month or so. And still recommending to “lighten” and even “sell” when Germany approaches 7000 level, its 2 yr downtrend resistance. Next resistance is 7400 level, 4yr downtrend resistance since 2008, and I’m not expecting we could reach that level if economy is still stagnant. Currently, the RSI hit overbought levels, but MACD showing negative divergence, sign of anything could also turnaround soon.

Overall, things are really just weird, no clear good developments, but markets continue to rally and our indicators all giving a hint on the negative divergence forming. It might be safe to stay in the sidelines, and wait for good correction or better economic numbers before getting back into the market. The only good thing happening is that, US Bonds are selling off from the fresh new peaks- what’s the implication of this? 1. Public is going to risky assets. 2. Bond selloff is just a correction, and will resume soon. Let’s see in the coming weeks.

Gold is currently in a trade the range pattern. Current trade seen is from 1575 to 1625

The Larger trend shows trade the range pattern also from 1550 to 1775. Overall Pattern for gold is sideways. No clear indication yet where to go.

Germany paused near 7000 level, may have peaked short-medium term 8-12-2012

We are still anticipating a possible peak short term, bellwether for current Global Market is Germany.

We issued a 2 yr resistance at 7000 since 2 weeks ago, and we may have reached that level. Triggering a "warning" signal. RSI was also negative divergence, MACD didnt.

August 14 will tell wether it will edge higher into 4 yr resistance at 7400, or resume its downtrend.

 

SPX on the other hand gets a little bit choppy, waiting for more news, I still believe this could be possibly a trap.

We are expecting a positive GDP for Germany, but who knows if it releases a surprising negative GDP that will trigger selloff, or a small chance to release more than 1% QoQ GDP Growth that may trigger a rally.

Current Holdings:
DOLLAR:
I have completed my selling on Equity positions, especially in Hong Kong and AU last  August 9, 2012. I may be wrong or right in this decision, but cash is king right now.

70% - cash
30% - high yield bonds

PESO:
80% - cash
20% - Philippine Stocks

Germany slightly toppish, others may follow, waiting for Aug 14 Germany GDP 8-7-2012

Last week's post, we are anticipating a strong rally this week, and approximate to hit near 7000 or 7000 for the Germany. It may have already hit our targets at 6944, or may hit higher into near 7000 level anytime this week to next week.

Few things alarming me that we may see strong resistances/pullback anytime.

1. RSI of Germany index (DAX) is in negative divergence

2. 6944 is very near the 7000 (2 year resistance level).

3. Deepening Recession in London,Italy, Spain and UK.

4. Elliot Wave count seems like a 5 valid upward count. Or seems to be a valid A-B-C pattern, which means correction is likely high to happen anytime.

5. Italy GDP Forecast at -0.9%, deepening. Due this week(need to confirm).

 Short Term: Weak RSI, near the 7000 resistance
Medium Term: Downtrend 2yr channel
Long Term: Sideways

 

Our SPX projections is taking into shape as well, although SPX is hard to label based on Elliot Wave Patterns, I tentatively indicated that  Minute wave iii could be underway or could have ended at 1400. 

There could be 2 possible uptrend channel forming, 1st one with a resistance of 1400 in red. and 2nd one at 1420 in blue and it coincide with this Bull Cycle highs at 1422.

Short Term: Uptrend channel intact, but looking into upper trading channels. Slightly overbought and Germany slightly peakish short term

Medium Term: Sideways to Uptrend

Long Term: Uptrend at 1280 SPX.

Hong Kong is sluggish but with a good tradable range, 20,000 target achieved and can now be shorter temporarily.

Short Term: Uptrend channel reached. and 20,000 resistance reached.
Medium Term: 2-year downtrend resistance at 20,500 coming.
Long Term: 4yr Bull Market Uptrend line intact, but increasing at 18,500.

THE BAD and WEAK SIDE. China.

All throughout this Ball Game, im not sure why China is so sluggish, and if their market really proves 7.6% GDP is still strong, or possibly China Economy reflects on Hang Seng index?

Anyway,lets discuss the possibilities and its current status.

China is now at 21xx, a very low level, compared to 1600 last 2008 recession bottom.

What concerns me is that, Germany is peakish, but China is bottomish, which market to follow?????

The red uptrend channel may also broke down. Its the 4yr uptrend line since 2008. The last line defence of the bulls, but it seems the sell-off was triggered when it went below that line.

I am still trying to figure out China index' role in this Global Economy. If its a Catalyst, or a trap or maybe a Bullish sign of this market.

Germany to announce GDP Aug 14, SPX and Hang Seng 7-29-2012

Global Markets almost went off its short term uptrend lines when DAX almost lost its important 6400 support and 1337 for SPX.

The sell-off attempt was reversed by a 2 day 3% rally to calm the markets. Germany is alive again short term, and we are still anticipating for Germany to reach  7000 before any huge selloff resume, or breakdown this short term uptrend line.

Germany GDP is expected to be released by Aug 14,2012. And I am hoping, this run could spark more short term rally in 2 weeks time, and hoping it could really reach 7000 level. A rally to 7000 level could help send DOW and SPX back to their 2012 highs. A chance to SELL when we met that levels!!

Short Term: Uptrend line almost broke off, but 2 day rally resumed and confirmed that short term UPTREND still underway. MACD is Weak.

Medium Term: near the 7000 3yr Downtrend resistance levels.

Long Term: Q2 2012 GDP will make global markets make or break. A contracting Germany Economy will spark selloffs for sure. As I've never seen a deteriorating Economy in terms of GDP, rally to new highs. - remember last week, London just contracted another 0.8% QoQ, 3 time in a row in Negative Territory and their markets made new short term highs. So long term status- Possibly Down.

Our U.S. markets still going strong, expanding 1.5% GDP QoQ. Slightly above from expected 1.2% Growth. Current rally was due to the help of Draghi's comment to make everything possible for Euro.. Still I couldnt believe him, he cant do anything to reverse the Deteriorating GDP of EuroZone in very short period of time. It would take years, plus Eur-Usd almost high 2011 lows of 1.19xx. Weakening their value as EuroZone.

SPX almost fall from short term cliff, hanging by 1337 important support last Tuesday. SPX lost some points below that level, but technical traders made the market afloat from its support. We continue to monitor Germany and Eurozone markets, which seems to be indicator where market will go, we expect Germany to gain some more before any good/bad news come out. So trade the range pattern into possible 2012 highs.

Short Term: Uptrend intact but weak MACD. Next targets 1390,1400 then 1407. Support raised to 1335-1340.

Medium Term: Sideways to Up. Possible to reach 2012 high - 1419.

Long Term: Uptrend line since 2009 still intact.

 

Hong Kong and China markets are the worst performers in Asia. HK is dragged down by China's -20% YoY Index Price.

Hang Seng is near to its Long Term uptrend line, and they must act out fast to Defend these multi-year long term uptrend support.

 In very short term, we are seeing 19500 downtrend resistance in GREY Line, followed by Short-Medium Term uptrend to 20,000 level. A trade the range pattern same with SPX and Germany.

Short Term: must move above 19500 to reach 20000 uptrend resistance

Medium Term: Downtrend multiyear resistance at 20500.

Long Term: Sideways

CURRENT POSITIONS (dollar):

18% - Equity

55% - High Yield Bonds (mix of Corporate,Govt Bonds)

27% - Cash

 CURRENT POSITIONS (Philippine Peso):

12% - Equity

88% - Cash/High Yield preffered stock

Germany in focus, Dow, SPX 7-24-2012

 

Germany I think is the current bellwether of Global Equity direction. The recent rally near 6800 was a clear upper resistance of its short term uptrend channel, and an overbought Daily RSI, we expected a small 2-3% correction, but it made a huge 2daysell off amounting to 4.5% decline, its initial support is at 6400, and should NOT break below its uptrend line. An important support in 1-2weeks time.

Short Term: Uptrend but selloff trying its chance to sell below 6400 support.

Medium Term/Long Term: Sideways to downtrend, 3yr resistance pegs at 7000.

 

DOW Jones and SPX followed Europe’s decline, all three actually have the same chart and support in terms of %.

Upcoming announcement will make or break this global market:

1.       7/27/2012 – Q2 2012 US GDP

2.       Next week to Mid August 2012 are Europe-area GDP:

August 14,2012 - Germany GDP

August 7, 2012 - England GDP(tentative)

If numbers are frustrating, breakdown of this market is likely to happen. Else if numbers are good, we continue to climb back up to 7000 for Germany before critical things happen again.

DOW:

Short Term: Uptrend support at 12500-12600

Medium Term: Sideways
Long Term: Uptrend but weakening

SPX:

 Short Term: Uptrend support at 1348 then max support 1336

Medium Term: Sideways
Long Term: Uptrend but weakening

Both DOW and SPX must NOT break below its Short Term count. Else, Elliot Wave analysis and technical analyst/traders could trigger downward selling.