SP500 -0.11%, Dow Industrials -0.00%, Nasdaq100 -0.78%, Transports -0.16%, German DAX +o.o6%. I’ve added DAX as the Australian market in recent times has been more like the Europeans than America.
SP500, Dow 30 and Transports were relatively narrow range days. NDX and R2K, however, had bearish three day candle formations. On the DAX, we have a small hypodermic needle, often seen at the end of trends. That doji candle has been preceded by two other narrow range dojis. So, after two days of indecision, DAX tried to rally today, but failed. That’s not a good sign. The imbalance in the American indices is also a bearish indication.
Here’s a closer look at SP500:
Today's candle was a "hang man". Seen at the lower end of a trend it's often a bullish sign. At the top of a trend it is less reliable. Often, it means that last gasp bulls have bought the dip expecting the index to go higher - but are often disappointed. CCI has rolled over - it is often a leading indicator. The Index hasn't reached extreme overbought conditions, so there could be more in this. The potential negative divergences on MACD and Money Flow are a concern if they play out. Tomorrow is NFP Jobs Report - it is recently bullish for the market. If, however, we get a poor result - it could be the catalyst for a pull-back. Tomorrow could be a key day.
Below is another "fear/complacency" index. This is the CPC (inverted) - the Total Call/Put Ratio. It charts the ratio of total options in both Equities and Indices. I've inverted the chart so that highs on the chart can be correlated with highs on the SP500. High (low on the original chart) means that Option players are preferring many poor calls to puts. That's a sign of complacency - which often comes before a turn in the market. Currently complacency is at a level round about seen at three previous times in the past year. Interestingly, these levels didn't mark the high in the SP500 - but came a few days before the high. So, it tends to be an early warning sign that trouble is about to come. It's usually considered that Options players are "dumb" money. Well - it's sort of true. But clearly there are some savvy players in the Options market as it tends to turn before the Index turns.
It should be noted, however, that the two times extreme fear was indicated on the CPC (low readings on this chart) they were coincident with extreme lows in the SPX in late June and early October.
Commodities:
CRB Index down a little -0.19%. Energy had a strong bounce off horizontal support +1.09%. Industrial Metals barely moved -0.04%. It is struggling at the 50-Day Moving Average. Precious Metals -0.57%. The action in the PMs now looks more like a consolidation at the lows (bearish) rather than the start of a counter-trend rally, but Indices often stutter at the start of a trend, so the jury is still out on that one.
Australian interests on the NYSE:
The main take-away here is the bearish action in Westpac -1.18%. I mentioned yesterday that Wespac on the American market had been up nine days in a row. That run ended last night. Discounting the currency effect (Oz Dollar down -0.21%), Westpac in America was still down heavily. Yesterday in Australia, Westpac was down -043%. The bigger fall in America could be a leading indicator for action in Australia. If it is, Financials x-P is likely to be down heavily - and our market is unlikely to withstand such pressure from its biggest sector. We'll have to wait to see how the opening goes. Other OZ Charts on the NYSE aren't indicating any degree of fear - so we might see a repeat of yesterday's narrow range day. That would make sense ahead of NFP Jobs Report.
To sum up, the American/German indices appear to be setting up for a pull-back - but perhaps not just yet, if we believe the action in the Options market. Australia today looks likely to be a little weaker, with a cautionary note coming from America about Westpac. Gold Miners are unlikely to get any love today. We may have to wait for the Jobs Report to see any definitive action in the broad market. It is usually positive on those results.
(20min delay)