ACE: Market under pressure! Watch Oil, $TED and DB charts for clues (6/12/16)

Mike Carlton Has Had Over 50 Followers Rank: 19 Followers: 98 Votes: 50 Years Member: 8 Last Update: 26 June 2016, 19:21 Categories: Momentum Stocks
Trend Analysis
Ratio Analysis

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Three (3) new features of my Chart List are my favorite hand-picked IBD 50 Stocks, the Spyder Sector ETFs and the 13 Wonders known as the Internet of Things stocks!

The first two pages contain charts that measure perceptions of the overall markets. The main equity indexes (S&P500/ Dow Industrials/ Nasdaq) and key measures of bond markets, the TED Spread, Gold, Currencies, and special ratio charts in the special 'Ace way' that makes things clear and simple to see.

The 10 major Sector SPDR ETFs are tracked with Ace's favorite trend indicators and oscilators! If one understands the trends and cycles of these charts, then they will have a very good grasp of the major rotations of the smart money traders. These charts show up on Page 19 of my Chart List and their symbols begin with the letter 'X'.

The second new feature is a hand-picked selection of the IBD 50 stocks. I use many of my favored indicators on these DAILY charts, including the dynamic 13. 50, 100 and 200 MA lines. (IBD usually shows WEEKLY charts-- you can see DAILY here!) I show the proper bases on these charts as base theory is critical in the IBD 50 stock selection and CANSLIM systems. Of course, IBD 50 and CANSLIM are successful trading systems developed by Investor's Business Daily. These charts start on Page 10. I am not associated or affiliated with the IBD in any way and my charts are interpretations based on IBD theory, Please visit their website to learn more at www.investors.com .

Finally, I have added a section known as 'the Internet of Things.' These are the 13 wonders identified by many investors as the key stocks leading the internet revolution as we enter the middle years of the 21st century. The Internet of Things is expected to be the most profound tech revolution in the next several years.Now, track these stocks with me beginning on Page 12.

Finally, I thank you for YOUR VOTES!

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-0.1 a - Deutsche Bank AG (DB)

In trying to find the center of the looming storm (the new financial crisis), it seems to me that Deutsche Bank may be one of the triggers for that storm. The chart shows the bank stock to be in continual decline. This is the 11th largest bank by assets in the world, and considered by many to be 'too big to fail.' One prominent market observer has commented that the derivatives book of DB is large and that recent selling in the stock could be the proverbial 'canary in the coal mine.' In other words, another Lehman moment may be approaching, and DB could be at the center of that storm? Of course, Germany and the EU will 'do whatever it takes' to rescue this bank, but nonetheless, it could trigger problems in the international swap system and possibly trigger a crisis? Another European bank also swirling in bearish sentiment is Credit Suisse. If you scroll down a little on this page, you will find the CS chart. (June 16, 2016)

-0.1 a -Credit Suisse Group (CS)

The CS chart shows the Swiss bank stock to be in continual decline. Between the Brexit vote and negative interest rates, European banks are under considerable stress. In other words, another Lehman moment may be approaching, and CS could be one of the banks at the center of the storm? See my Deutsche Bank (DB) chart for further comment and insight. (June 16, 2016)

-0.1 a Treasury - EuroDollar Spread ($TED)-daily

UPDATE 6/11/16: The TED SPREAD has gone back above 0.4 once again. This warns us that there is a financial imbalance growing between Europe and the US. With the Brexit vote less than 2 weeks away and the Frankfurt and Paris exchanges under great pressure, this is an index to be watched closely in the coming days.

UPDATE 9/20/15: The TEDDY has spiked to 0.34. This is a significant warning area. Keep an eye on the EU countries in the wake of the FED 'no rate hike' decision. A weaker US $ puts pressure on the EU's easy money strategies.

The TED SPREAD ($TED) -- sometimes affectionately called 'the TEDDIE'-- tracks the yield spread between the historically 'safe' 3 month US Treasury Note interest rate and the 3 month LIBOR Rate, which is the European base lending rate for banks around the world. Generally, when the spread is low, stock markets tend to perform well. In 2008, the Teddie rose dramatically which foretold of a significant and damaging credit event which eventually came to pass and led to a generational low in stocks in early 2009.

In mid-2012, we saw here that the TEDDY was falling dramatically, which led to the general call to get bullish in stocks. Since then, we have seen the US stocks (and other global stock markets) rally considerably in that time, even as many investors remained on the sidelines cubby-holed into US treasuries and other debt instruments.

-0.1 aa $SPX - The Big Picture Chart

UPDATE; May 24, 2016. Once again, totally unnoticed by the popular pundits is that the 400 day line was tested and held once more. On the SPX chart, the 400 day line has been drifting near the 2040 mark. Each time, the 2040 line has proved to be supportive to the SPX when tested in 2016. The Bull Market remains alive for now. However, do note that the 400 day line has flattened out and is no longer rising. That is a sign of a tired bull market, imho.


I thank you for your votes and support. On this board, WE are here to make profits in the stock market--pure and simple! By the way, I am an Associate Member of the Market Technicians Association (MTA). -Mike

-0.1 aa US Dollar Index - Cash Settle (EOD) ($USD)

Update: Major dollar reversal on Friday, June 4th following a very weak US Jobs Report. Notice that the chart predicted a possible pullback as the index reached the late January down-trend line, a key resistance point on the chart.

Update on May 24, 2016: The dollar rally has been strong the last few weeks. Notice it broke free of the deep downtrend channel in mid-May and then pushed through the influential 50 day line. It appears to have more room to run, but should encounter strong resistance at the long term dominant down-trend line (yellow-dashed) at about the 96 level. Keep in mind that as the $ rises, it also pulls the Chinese Yuan up with it since the Yuan is pegged to the $. This could create tremendous pressure on the CNY in the coming weeks. Watch for a possible, sudden devaluation in the Yuan by mid- to late summer--especially if the FED raises rates in June or July-- and that could play havoc with global stock markets. Look back at the reaction of global stocks on August 24th, the last time the Chinese did a meaningful devaluation of the CNY currency.

Update on April 30, 2016: US $ is in free-fall, as noted in the previous two weeks, the 13 EMA line was guiding down in advance of this move.

Update on February 5, 2016: The US dollar index has collapsed in the past week, breaking down through the 50 and 200 day lines very quickly! When one sees this type of breakdown occur swiftly, it is a bad sign for the US $. The market is telling the FED not to raise interest rates again. At the same time, gold is now flying higher. The gold market has suddenly entered a new bull market, and of course, ACE saw this coming too. It is not that he has a crystal ball, but because the charts told him this was coming. It's all rather scientific, if one understands what to watch for on www.StockCharts.com. Stay tuned.

-0.1 aaa - Crude Oil - Spot Price (EOD) ($WTIC) Daily

Daily chart for West Texas Intermediate Oil

UPDATE on 6/6/16: The WTI Oil Index continues to rally after coming out of the bull flag, as I predicted last month.

UPDATE on 4/10/16: Sharp reversal occurred this past week, and now the pattern becomes more clear as a Bullish Flag reversal. Breakout of the flag occurred on Friday, thus confirming the wedge line breakout of about two weeks ago. Next target is the firm resistance at the 200 day line ($41).

UPDATE on 3/28/16: This chart shows that WTI is caught in a pocket between a rising 13 EMA line which is supporting price, and trapped by a descending 200 SMA line which has shown resistance. Also, price is re-testing a wedge line that it broke free of a few weeks ago. Bulls would view this pocket as a Bull Flag.

Bears would point to the Descending 200 day which has acted as resistance and also, they would point to the longer term weekly chart which shows WTI being held down by a longer term down-sloping wedge line.

-0.1 aaa - Light Crude Oil - Spot Price (EOD) ($WTIC)

Weekly chart for West Texas Intermediate Oil

UPDATE: on 4/12/16 Break-through of down-trend wedge line is bullish for both oil and stocks. See daily chart for more precise positions, resistance and support lines.

UPDATE on 3/28/2016: The Weekly Chart shows WTI trying to break up through a steep down-trend line (blue-dashed), but so far, the strong resistance of that down-trend line is holding. OIL is at a crossroads--depending on how it breaks, will likely determine the direction of equities and commodities in the next few weeks. One can see that if WTI should break higher, that the next key resistance area would be $48. See the daily chart for more precise day-to-day projections.

-0.1 aaa db X-Trackers Harvest CSI 300 China A-Shares Fund (ASHR)

Update on 6/6/16: The A-shares ETF has broke free of the down-trend wedge line recently, Things are looking up for the Shanghai shares, at least in the near term.

This popular China A-shares ETF shows a bearish descending triangle on the daily chart. Though there may be strong rallies at times, the longer term projection is calling for a potential crash of the Shanghai stock market.See my comments on the US dollar chart for further insight.

-0.1 aaa iShares Barclays 20+ Year Treasury Bond Fund (TLT)

Update 6/6/16: Thanks to a weak Jobs Report, the TLT ETF has found renewed vigor.

Update Sept. 13, 2015: Is TLT trapped in a bearish down-trend? or is it in a Bull Flag pattern? It could be either as the world awaits the FED's decision on Sept. 17th. All eyes will be focused on the reaction in US Treasuries. Also, keep an eye on gold for any reaction there, especially if TLT should RAPIDLY collapse in price. (A slow drop in price would not be favorable to gold, but a rapid disintegration would be positive for gold.)

-0.1 aaa ProShares Ultra Oil And Gas (DIG)

DIG is an ETF that tracks oil and gas stocks at a 2x daily leverage.

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