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In the last workshop and market outlook seminar, we had a chance to briefly touch on the US markets, and within seconds I was able to decipher the direction based on price behavior.

This was also partly the reason why I took my profits on the EUR/USD and Gold shorts as mentioned a few posts back; true enough there was a sudden plunge in the USD, affecting all the majors, and causing the EUR/USD and Gold to spike up.

This looks poised to carry on pushing up to test the prior swing high, with a one-bar flag in the middle of the equilibrium range. I will be following up on this during the next market outlook seminar.

^dji 181013

Where will the US markets head next? And how will this affect the local markets?
I will be sharing my latest analysis here: https://www.eventbrite.sg/event/8521073761

I have chosen 5 weekly charts to provide an overview of the global markets, and to see where we are likely to be heading next. The black horizontal line denotes the 2007 highs, to provide a reference point for comparison. The blue boxes indicate key behavioral clues for us to read and time the markets.

First off, we can see that the US markets are the strongest, surpassing the 2007 highs, and looking poised to push even further.

^dji 020813

^gspc 020813

Next, we move on to the European markets, which have not recovered much. The decline has been plugged, but instead of recovery, all we see is a slow chugging movement elucidated by a prolonged sideways market.

^stoxx 020813

Nearer to home, the China markets have been extremely weak, continuing an aimless drift downwards. It does not look like it would be recovering any time soon.

^sse 020813

Lastly, this is the chart of the STI, straddling the middle ground between the strong US markets and the weak China/Europe markets. Since we have already recovered by more than 50%, I believe there is a good chance we will make a push to test the 2007 highs.

^sti 020813

Currently, I am still holding on to my long positions, which are already deep in the money, and recently initiated some short positions. Here are the previous documented posts:
https://synapsetrading.com/2013/08/sti-banks-signs-of-cracking/
https://synapsetrading.com/2013/07/sembmar-a-surreptitious-change-of-hands/

On Tuesday, I will be sharing more at my live event, and you can drop by if you have any questions about the market. Actually, the event is already sold out, but if you don’t mind standing, or taking the chance that some people might not turn up, you can still drop by to avoid missing out on this event.
http://www.eventbrite.sg/event/7582887621?ref=ecal

To get priority updates on our future events, you can sign up for our mailing list,
and also “like” us on facebook.
https://www.facebook.com/synapsetrading
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2013Feb-Dow Jones Industrial-800x600 

2013Feb-S&P 500-800x600

 

For the past few weeks, I have been rather bearish on the US indices, expecting them to stop the ascend at their respective key resistance levels. However, a major news catalyst (QE3) has changed all that. With the new tweak in money supply, and the added confidence (real or perceived is debatable), we could continue to see the market drift upwards till the elections in November. There is also likely to be “words of encouragement” by the leaders to prod the market in the right direction.

Hence, the reversal could instead occur at the next resistance levels, which would more likely coincide with the end of the elections. This is not a forecast, merely a guess. At this point, I would look to buy on a weak pullback, or be ready to short if I see a sudden strong breakdown of the bulls.

Looking at the 2 key US indices, they have remained largely unchanged since 2 weeks ago when I last looked at them. Interestingly, the S&P 500 has broke slightly above its previous swing high, but the Dow Jones is still unable to break up. Overall, I am still bearish, and I am looking for a setup to go short. Aggressive players would have already started accumulating shorts, since the R/R is very favourable.

Markets are likely to remain flat till the next major news catalyst, which is likely to be the next FOMC meeting later this month. (http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm). Since the US elections are going to be held in November this year, it is likely that the govt will find ways to prop up the market till then, either through promises of QE3, or by playing up positive economic data.