As has been discussed previously in China Weakness: A House of Cards the Chinese markets have been red hot with speculative mania. However looking at the Shanghai Composite Index recently, it appears that things are beginning to cool off. The Chart is flashing a technical sell signal.
Has the Chinese Market Peaked?
The massive August 2014 breakout in the Dollar and subsequent rally could be the beginning stages of a Bullish Supertrend. This chart illustrates the strong dollars effect on commodity prices. The uptrend is currently stalling at pivot resistance. If the uptrend continues expect commodities to continue to experience downward pressure.
There is alot of momentum behind this rally. The Trend is your Friend! ;)
I was doing some research this morning into bond prices and ended up stumbling into an amazing correlation between the USDollar and the S&P 500.
The correlation between tops and bottoms in this ratio and the S&P 500 is amazing! Recently the S&P 500 has began to under-perform relative to the USD. Could this be a warning sign that markets are about to drop in the near future?
I am of the opinion that home prices will drop at some point in the near future. Big earnings misses recently from KBH and LEN
I see the XHB at a potential inflection point if sellers present themselves here and solidify the January false breakout as a Bull Trap.
Today I started a short position in Lumber Liquidators LL, Which checked back to its 200day MA in a bigger downtrend after a big downside earnings gap last July.
I also started a short position in Sherwin Williams, a derivative of housing so to speak. SHW has been an absolute monster but on a longer term time frame look how ridiculously overextended it is. Playing for the abnormally steep uptrend to snap off.
NFLX has some of the wildest moves on earnings over any other stock in the market. It's a battleground cult stock like GPRO people are very divided in the stock price. Either you love the company so much you feel like the price must always go higher despite any fundamental metric or you think the multiples people are paying are ludicrous and they are brilliant shorts.
Anyways NFLX had another huge earnings move and resultant short squeeze. It is now back at an area if defended by bears could be forming the right shoulder of a massive H&S.
Wouldn't that be funny if the whole sort of financially engineered QE market tops out with NFLX putting in a gigantic H&S...
I can't help but think that NFLX will be the grand finale of the current bull market and with a bit more patience could be setting up to be the short of the decade.
I've been watching KING since this post I was shorting it back then and took a small profit but look how this stock is playing out. It made a brilliant H&S pattern, then bear flagged sideways for a bit. Today it broke down out of it's bearflag and I bought some puts on it expecting further downside continuation.
Greece is blowing up: Back in crises mode again after failing to elect a president.
The chart of Greece etf, GREK looks similar to many other emerging markets.
With SPY closing today at ATH, this helps add weight to my thesis: Emerging Markets Exodus is Americas Gain
Oil Continues to drop. This is shaping up to be a perfect storm for Emerging Markets. This could eventually spread to America. Keep an eye on what happens to places like Venezuela: Reversal/Venezuela/Energy
Once you create it out of thin air, that money never goes away. It has to go somewhere, the only thing that changes is it's perceived value.