EME HEADER

PERU LIMA IGRA SE INDEX

PERU LIMA IGRA INDEX

Peru LIMA IGRA index has one of the weakest chart set-ups in the emerging market equities. Multi-year head and shoulder top has a neckline standing at 14,150 levels. Index is trading at 13,493 levels – below the multi-year support. Decisive “weekly” close below 13,360 levels (minor low in January) will confirm the downtrend towards 10,000 levels. Strong medium/long-term resistance area remains between 14,150 and 15,000. Technical outlook is negative for Peru equities.

EMC HEADER

USD/CNH (CHINESE YUAN OFFSHORE)

Here is a detailed article that explains the difference between on shore and off shore Chinese Yuan.

http://www.businessinsider.com/onshore-and-offshore-renminbi-2014-2

I am analyzing the long-term base formation on the USD/CNH (Chinese Yuan Off Shore) in this update. I think this chart is important as we start reading more about currency wars. Cup & handle is a reversal pattern. In this case it is a bullish development and suggests higher levels for USD/CNH. In other words depreciation for the Chinese Yuan. Breakout above 6.27-6.30 area will confirm the 2 year-long base formation. Until the beginning of 2015, USD/CNH had lower lows and lower highs. In the last quarter of 2014, the low formed at a higher level. This could be the beginning of a change in trend.

USDCNH

COMMODITIES HEADER

PLATINUM

PLATINUM

Commodities markets have performed poorly compared with stocks over the past 3 years. From industrial metals to agricultural commodities deflationary pressures are being felt worldwide.

Platinum prices which is almost 50% lower than 2008 historical high levels, is now testing a 15 year-long trend support. Usually prices should rebound sharply from such historical level. However, over the past four months the performance has been lackluster. Breakdown below 1,170 levels will have long-term implications and will be negative for Platinum prices. It is important to note that the next major long-term support is around 735 levels. Next few months will be extremely important for the medium/long-term trend.

DME HEADER

CBOE VIX (VOLATILITY INDEX)

During the sharp correction in October 2014, S&P 500 index reached 1,800 levels and CBOE VIX jumped to 31 levels. VIX is often called the “fear index”. Higher levels of VIX can coincide with market corrections. Over the past 2 months CBOE VIX has been consolidating in a tight range. Consolidation can be a symmetrical triangle. Breakout from this consolidation will result in high volatility for U.S. equities. Breakout above 22.80 levels can send the VIX to 35-40 area. Breakdown below 15.52 levels will be positive for equities. I have posted the S&P 500 index futures on an inverted scale to see the price movements in sync with the VIX. Symmetrical triangle chart pattern (if it is a valid one) should resolve in the next few days/week.

CBOE VIX

S&P 500 INDEX

S&P 500 INDEX (MAR 2015) FUTURES PRICE

DME HEADER

AUSTRIA VIENNA ATX INDEX

Austria Vienna ATX Index formed similar chart patterns in different time frames. Since 2009 the index has been consolidating in a wide range. Long-term chart pattern is a symmetrical triangle. Over the past six months, ATX index formed a short/medium-term consolidation; another symmetrical triangle. Direction of the breakout from the short-term consolidation range will be important. Breakout above 2,280 levels will push the index towards 2,500. Breakdown below 2,000-2,100 range can be very negative in the long-term.

AUSTRIA VIENNA ATX INDEX

DME HEADER

CBOE VIX (VOLATILITY INDEX)

Volatility can move higher in the following months if we see a decisive weekly close above 22 levels. In the last two years CBOE VIX consolidated in a range between 11 and 22. Six year-long downward trend line and the upper boundary of the horizontal consolidation range meet at 22 levels. A decisive break above 22 levels can result in a sharp upward move towards 40-45 area. Such price action will be bearish for global equity markets. It is important to keep a close eye on this chart development in the next few months.

CBOE VIX

Chart is plotted on a weekly scale and closing prices are taken into consideration.

EME HEADER

MSCI EMERGING MARKETS INDEX

Strong trends usually emerge from low volatility periods. Low volatility reading on long-term charts is more significant. MSCI Emerging Markets index is getting closer to a strong directional movement after the band width reached multi-decade low level. Index is now in a tight range between 910 and 1,100 levels. Breakout in either direction will result in a strong move. Last two year’s choppy sideways trading is a sign of weakness. Though, I would wait for a decisive close above or below the mentioned levels.

MSCI EMERGING MARKETS INDEX

COMMODITIES HEADER

FEEDER CATTLE

FEEDER CATTLE had a strong bull market since its long-term breakout in 2010. Though, this uptrend might be over. Feeder Cattle which had a strong rally after breaking out of its 2005-2010 consolidation period, formed a head & shoulder top chart pattern. Both the neckline and the 200-day moving average were between 208-215 area. Price broke down the neckline and the 200-day moving average. Possible H&S price target remains at 180 levels. Unless we see Feeder Cattle price climbing back above 208-215 area in the following days/weeks, expectation will be lower prices towards 180 levels.

Note: Analyzed chart is the March 2015 Feeder Cattle futures contract that trades on the CME. For more information you can follow this –> More info on FEEDER CATTLE

FEEDER CATTLE I

FEEDER CATTLE II

COMMODITIES HEADER

COPPER vs. GOLD

Over the past two decades Copper underperformed Gold during turbulent times in the financial markets. Ratio between Copper and Gold declined sharply during 2000-2003 and 2007-2009 periods. Latest breakdown from the consolidation range can result in further underperformance for Copper. This is a powerful long-term chart with a strong message.

COPPER vs GOLD

DME HEADER

NIKKEI 225 & EURO STOXX 50

When Japan’s Central Bank announced its QE program in April 2013 it was a big surprise for the public at least according to the way some of the mainstream media announced it. The Independent wrote “Japan tries shock and awe to jump-start stalled economy”. At the time Japan had already elected a new government which signaled monetary easing.

I reviewed the top 5 names in the widely followed Japanese equity benchmark – Nikkei 225. Most of the names anticipated the monetary easing and broke out of their multi-year base formations. When the QE was announced it was a confirmation for the market rather than a surprise. Below are the top 5 names from the Nikkei 225. Markets are discounting mechanisms.

TOYOTA MOTORS

MITSUBISHI

SOFTBANK

NTT DOCOMO

NTT

When a trade is assigned %100 probability of success, I start getting uncomfortable. I look around and see almost certainty for an event to occur… this becomes a case study for me. European Central Bank’s Quantitative easing is now being announced by the mainstream media as almost a certain event. I reviewed the top names in the Euro Stoxx 50 index to see if the market is anticipating this almost sure event. What I find is a bit different from the Japanese QE announcement. None of the names except UNILEVER is preparing for a breakout. Some of the names are overbought and some are showing significant weakness.

Take this update as a case study and not as a forecast. My conclusion for the top European stocks is that there is no clear anticipation of QE that would spill over to result in further equity gains. Below are the largest market cap stocks in the Euro Stoxx 50 index. I welcome any thoughts on this.

NOVARTIS

ROCHE HOLDING

NESTLE

ROYAL DUTCH

AB INBEV

SANOFI

HSBC HOLDINGS

UNILEVER