Market Recap: Friday, April 22, 2016 - SPY QQQ NYA TLT AGG UUP EURJPY MUB GLD GDX USO UNG

Signs of selling appeared on Wednesday and continued into Friday. SPY gained about ½ of percent to end the week at 208.97. This rally that started in February has probably overstayed its welcome and profit taking is likely to commence. Profit taking implies some sort of a corrective action. Whether or not this coming correction is going to turn into a rout remains to be seen.
CHART OF SPY
​

Last week I mentioned that there are many bearish divergences appearing on the various stock index charts. For example the ITBM (Intermediate Term Breadth Momentum) oscillators have trended lower for the past few weeks, while the indices did the opposite. This is indicative of fewer and fewer stocks carrying the index higher.
Similar divergences are appearing on the charts of NASDAQ 100 and the New York Stock Exchange Composite ($NYA).
CHART OF $SPX
CHART OF QQQ
CHART OF QQQ with breadth        
CHART OF $NYA
​

If the rally stops right now, where could $SPX pull back to? Looking at the weekly chart of $SPX I can see several retracement areas. The high-volume support and the 50% retracement is around 1975 on $SPX. So if the pullback materializes, some sort of a bounce around that area should be expected. A close-only chart shows support slightly higher at around 2000.
CHART OF $SPX with Fibonacci retracements
CLOSE ONLY CHART OF $SPX with Fibonacci retracements
​

​Market breadth has indeed improved. The only major concern remains the lack of volume on this move higher. My long-term stock market model (MBI) has flipped into the bear mode as early as September of last year and is yet to even begin improving. By extension I still have a bearish outlook. This could change at any time and I am keeping an open mind about a possible bullish outcome.

Finally, we are entering the seasonally weak period for stocks. May through September period is associated with smaller stock market returns. In fact returns during the summer month often translated into losses according to the seasonality chart of $SPX.             

The long-dated Treasuries fund (TLT) extended its pullback and gapped below the 50-day moving average on Thursday. It appears TLT wants to again retest the early February breakout levels of around $127. If it holds there, it could provide for a low risk entry on the long side.
         AGG is looking even more bullish as it consolidates near all-time highs. AGG is generally much less volatile then TLT
CHART OF AGG.
LONG-TERM CHART OF AGG
CHART OF TLT
LONG-TERM TLT CHART
​

​US Dollar is struggling at the 94 area. This week, however, we saw $USD come down to test that area again and the test was a success for now. This makes it the second attempt in as many weeks for the dollar bears to fail.
CHART OF $USD
LONG-TERM CHART OF $USD   

Especially interesting was Friday’s action as the USD gained strongly against the basket of currencies, but against Yen in particular. Chart of USDJPY possibly has a bear trap being  traced out on it. A bear trap happens when price of security drops below support only to immediately rebound and rally back above it.
CHART OF USDJPY

Strength in the dollar is bad for the precious metals which are priced in that same currency. Gold ended the week below the 50-day moving average for the second time in as many weeks...  
…No major changes in the long-term gold posture, so I am quoting:
“Few weeks ago I mentioned that my long-term gold model (GBI) has flipped into a bull market and I am now looking to buy gold and to trade it on the upside. However gold needs to correct quite a bit more for me to become interested opening a long. A retest of gold’s recent breakout could be upon us soon. $1191 is the level to watch.”
GOLD CHART
​

As with gold, GDX is overextended to the upside, so a pullback may provide for an opportunity to partake in this new bull market. GDX has a confirmed Outside reversal on its chart. An outside reversal happens when yesterday candlestick is completely inside the range of today’s candlestick. In the case of GDX, Tuesday’s action is completely inside Wednesday’s action. Friday we had a close below the entire pattern, thus confirming this bearish reversal.
CHART OF GDX
​

On the weekly chart of oil, we see that it is trading around $45. This is an important level for oil because it has failed there twice in the past and also because oil touched that level on several occasions. There are also several bullish divergences present, which make me think that oil could consolidate sideways, or maybe even push somewhat higher before another leg down unfolds.
LONG-TERM CHART OF $WTIC
CHART OF $WTIC
​

NATGAS punched through resistance at 2.17 to end this week almost touching the 200-day moving average around 2.30. There is also resistance slightly higher at 2.315 from the previous peak. This would be a great place for NATGAS to fail. If the failure doesn’t happen, then there is an even stronger resistance at 2.50. That area is of particular importance to NATGAS, because if it manages to close above it and consolidate there, most likely a new bull market in NATGAS would be upon us.
CHART OF NATGAS
LONG-TERM CHART OF NATGAS
​

​Trade Alerts Service is now live – please sign-up here!
 
That’s it for this week’s market recap,
Best Regards and have another great trading week!
 
Alexander Berger (www.MasterChartsTrading.com)