Today's Stock Market Technical Analysis 20150601

 

 

Good morning, everyone.  Steven Whiteside here with a look at the North American stock markets for Monday morning.  On Monday mornings we usually expect buyers to come into the market, and that's what we're seeing right now.  Things were fairly quiet until 7:30 this morning; then we got some news and we ran straight up, traded above the recent high, and then quickly reserved, and the S&P 500 futures are currently up 5.5 points at the time of this video.

Now, 2015 has been an extremely frustrating time for short-term traders and investors, and so if you feel like you've been chopped around and slopped around so far in 2015, you are not alone.  It is not you.  When we look back at a chart for 2015, we can see exactly what's happened.  We had a nice move-off the start of the year, we ran up, we had a nice pullback, and then ever since that pullback, things have been very choppy.  In fact, and this chart is up until the end of May and it is off the TV screen, the range from the low of 2015 to the high of 2015 was only 6.15 percent.  That is the smallest range in the last 100 years for the Dow.  Of course, the S&P 500 and the NASDAQ were not trading 100 years ago, so we can only look at the Dow, but it has been the quietest opening for a year in the last 100 years.  So it's not you, it's the market.  When we add June's trading to it, we were up ever so slightly in June, and so the historical significance of the tightness of the trading range is still in play; that hasn't changed yet.  So what often happens is small range or small bar trading activity is often followed by wide bar or increased volatility, volatility expansion; that's what's going to happen next, and the fact that we haven't had a major pullback and we're coming into June, and June for the last ten years has been the worst performing month for the U.S. stock markets, I think the volatility expansion is probably going to be to the downside.  Looking at a monthly chart for the S&P 500 cash index, we were only up a little over one percent on the month.  Everything is still blue.  We're still trading above the upper channel line, so the long-term trend, of course, is still in play, no question there.  But for the year so far, we're only up 2.4 percent.  For the last year, we were up a much more significant 9.8 percent, but only up 2.4 percent for the year, and that's really what's killing everybody so far.

Now, there's absolutely no way to predict or anticipate the lack of volatility; it's just something that happens every once in a while, and it's just something you have to play through.  Looking at the NASDAQ from the month of May, it was an inside month, so a month of indecision, so we'll be looking to see if we take out April's high or April's low.  For the month we are up 2.3 percent, for the year 6.4 percent, and 20 percent for the 52-week change, and of course that has a lot to do with biotechs and semiconductors.  The TSX also had an inside month, so again we're looking for a breakout of April's high or April's low.  Year-to-date, again only 2.6 percent, and for the 52-week change, only 2.9 percent, so just under 3 percent.  So given the fact that the TSX has such a large commodity component to it, you'd think the swings would be wider, but the commodities, of course, are being outweighed by the industrials and the financial services stocks, and so they're keeping things in balance, but really no real direction to the Canadian stock market so far.

Moving over, looking at the weekly charts, this coming Friday we're looking for a close below 2,090.18 for the S&P 500 Cash Index, 4,408.25 for the NASDAQ 100, and for the TSX, we're on our weekly sell signal as of Friday's close, so we're looking for a close above 15,299 to give us a buy signal this coming Friday,

Drilling down, looking at the daily charts, we have an early warning signal up there for the S&P 500 Cash Index.  We've been on a sell signal since Tuesday, so that hasn't changed, so we're looking to see if we take out last week's low.  Otherwise, looking up at resistors, they're at 2,125.83; a close above that on Monday would give us a buy signal.  Pros are giving up control for the S&P 500 and really have not had a major move away from line in a while now, and, of course, that is a concern.  Looking at the NASDAQ 100, we have an early warning signal up there traded into the channel on Friday, but still on a buy signal that would change on Monday with a close below 4,482.64.  Pros in the public intertwined here no real commitment to the long side or to the short side right now, and there we have the TSX; we had an early warning signal go off in early April, so we still haven't taken out that high.  Looking for lower prices here we're on a sell signal since Tuesday, and that hasn't changed.  We traded below Tuesday's low on Friday, and so looking to see if the May lows hold here.  Looking up, all we need is a close on Monday of about 15,173, and looking at the pros and the public there, you can see the pros have been out of control since late April and have looked liked they have no interest in taking control at this time.

Now, one of the biggest problems for the U.S. Stock Market, of course, has been the transports, and, you know, if the transports were still hugging the flypaper channel, we could remain somewhat bullish here, but the fact that we've taken out this support and the only other support that we see is way down here at the August and October lows from last year, they could be potential targets to the downside.

Now what's still working, of course, semi-conductors had a big week last week, and it looks like we're getting another takeover this morning, so that market as up nicely, over 3 percent last week.  Now biotech stocks had a little pullback last week, but are still on a buy signal and still trading near the all-time highs. What's not working?  The XAU is back on a sell signal as of Friday's close; the TSX Gold Index had a pullback last week and closed in the channel.  A close below last week's low would give us the sell signal below 16,226.  Energy stocks continued to move lower last week, and both the Canadian and U.S. Energy stocks down the same percentage, 2.23 percent.

Now looking at our Commodity Charts, we had a nice pop on Friday for the Commodity Tracking ETF, and that all has to do with the price of oil.  There's the price of crude oil, giving us a buy signal.  We're seeing a pullback in the pre-market this morning, but as long as we don't close below 1977, we make take a run at the recent high.  There is gasoline moving up sharply on Friday back on a buy signal and natural gas continuing to move lower, so no change there.  No change in the direction for copper, gold moved up slightly on Friday, but no change in trend there–we have that open gap to deal with.  Platinum was down 35 cents on Friday and the silver ETF traded up, still trading below the lower channel line.

Last up this morning, a quick look at a couple of 60-minute charts.  For the S&P Cash Index, we're looking for a close above, a narrowly close above 2,116.87.  That would give us a buy signal on Friday, so up over nine points.  Not seeing that in the pre-market so far.  For the TSX, we're looking for an hourly close above $15,061; for the NASDAQ 100, it's 4530.44, for the stocks index, we're looking at an hourly close below 743.20.  Not expecting to see that given the activity in the pre-market.  And last up for the XAU, an hourly close below 6,947 would give us a new intraday sell signal on Monday.

OK, folks, that is all for this morning's presentation.  S&P 500 futures are still up 6 points and change, so we are expecting to see some buying at the opening on Monday morning.  We're not expecting to see a lot of follow-through to the upside during the week.

Have a great day and we'll talk to you again on Tuesday morning.