Market Cycle Aggregate

Having vigorously studied technical analysis, I have spent too many hours to count pouring over books, methodologies and techniques the the science/art.

After viewing Raoul Pal’s video on predicting the global economy on RealVision TV, I’ve decided to return to cycle analysis to combine my technical analysis skills with his economic framework.

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S&P500 Makes A Mockey Of Its Seasonal Tendency

Santa’s rally took another slap to the face yesterday with the SP&500 closing firmly beneath the 2018 low. Currently trading -9.2% lower amid its worst month since February, the odds of a turnaround look bleak to say the least.

We’ve been tracking the top of the S&P500 for a while and, whilst it currently lags the ferocity of the 1987 top, it is giving the 2007 and 2000 bears a ‘run for their money’. If this does turn out to be a mere correction, it’s certainly an unpleasant one, especially given the time of year.

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USD/JPY Deja Vu?

We see a potential topping pattern on USD/JPY which is eerily similar to one last December which resulted in a 700-pip decline. So, with a highly anticipated FOMC meeting just hours away, it’s worth keeping an eye on which way this one breaks.
The weekly chart shows that USD/JPY bulls are struggling to overcome the June 2015 trendline, which could be part of a multi-year pattern. We highlighted in a recent video that volatility is brewing within larger coiling formations and continue to think this is the case. If USD/PY is within the process of topping out, the larger triangle leaves potential for a 4% decline without breaking out of it. And, whilst this may be too large a timeframe to trade for most, it provides a starting point before drilling down to the lower timeframes.

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Nasdaq To Extend Its Bounce?

Among the large US indices, the Nasdaq 100 has fallen the furthest from its highs. However, we’re starting to see signs that the tech benchmark could be oversold.
We can see on the weekly chart that, having fallen over 15% from its highs, the Nasdaq is now within its second worst drawdown since the Nasdaq bubble burst. Interestingly, the prior two times it has fallen 15% or more post-bubble, the index has posted a solid recovery. Whilst this may not provide a solid buy signal within its own right, it does provide food for thought and send a warning to bears, especially given the clues on the daily chart.

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Getting On Top of the S&P500

It wouldn’t be a market correction without comparisons to prior market tops. So, today we compare the S&P500 price action to its three previous bear markets.
The following chart rebases the S&P500 from previous market tops, which enables us to compare these historic periods to see if current price action tracks it in real-time. So far the decline from the 2018 highs is eerily similar to the 1987 and 2007 tops, and may be fast approaching a stage where it needs to carve out its own route.

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S&P500: Do Large Losses Lead to Further Losses?

As of yesterdays close, the S&P500 has shed -9.36% for the month of October. This puts it on track for its tenth most bearish month using data since 1960. Of course, with two trading days left in the month it could still make a comeback, but we don’t see the harm in getting ahead of the game and checking how things panned out for the other nine months.

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European Economic Situation Report – Sep 2016

  • Strong rebound from UK construction (19.2pts MoM)
  • Momentum for Euro Area ESI dips negative (YoY%) and composite suggests topping out
  • But ESI remains above near-term trend (post 2010) and trend is rising. Also a solid recovery post-Brexit considering negative sentiment just after  it.
  • German construction at highest level on record at a mere 3pts (having spent 99.9% of its time in contraction)
  • Finland ESI composite crosses above 100 and posts solid monthly gains on industrial and consumer confidence sub indices


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ISM industry breakdown – August 2016

Charts of interest from July’s ISM purchase managers survey’s for manufacturing and non-manufacturing sectors. Above clearly demonstrates as to why I am bullish on the US stock market for the months ahead.

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European ZEW to drag broad Euro sentiment lower

The European Economic Sentiment Indicator is a broad measure for sentiment across the Euro Area and Union. It also includes sub-indices of confidence for industrial, services, consumer, retail trade and construction for Europe and each constituent member. I will be analysing it each month too assess the business cycles within Europe, with the goal of building a stock portfolio around it. Similarly, I’ll be using the ISM PMI reads for US to form my views on the US stock market and economy.
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AmiBroker exploration

Having recently discovered and purchased AmiBroker software I am keen to learn how to code my own indicators, trading systems and filters. Part of my own personal development will benefit by logging and sharing my various experiments and code, with today’s post showcasing my first ever trade exploration.

My first exploration intends as a quick method of comparing performance and volatility of chosen markets, whilst also serving to suggest the trend as bullish or bearish, reflecting the direction as red or green on the exploration.

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