U.S. Markets Emerging From Chaos
Candy Matheson | May 18, 2020 12:52AM ET
The following daily, weekly and monthly charts of the four U.S. E-mini Futures Indices show that they are at the emerging edge of chaos [which is defined by three future-offset moving averages (green 5MA, -3), (red 8MA, -5), and (blue 13MA, -8)].
In all of these three timeframes, the NQ is the strongest and is the most favoured to continue its rally, while the ES is next, followed by the YM and RTY.
In the short term, watch for all three of the moving averages to curl upwards on the daily timeframe (with the green above the red above the blue), and for price to break and hold above all of them, to confirm that a sustainable rally is supported.
In the medium term, watch for all three of the moving averages to curl upwards on the weekly timeframe (with the green above the red above the blue), and for price to break and hold above all of them, to confirm that a sustainable rally is supported.
In the longer term, watch for all three of the moving averages to curl upwards on the monthly timeframe (with the green above the red above the blue), and for price to break and hold above all of them, to confirm that a sustainable rally is supported.
As well, the NQ is the only index that is above both the 50 and 200 moving averages on all three timeframes. These two moving averages pose as resistance or support levels on the YM, ES and RTY on all three timeframes. Look for the YM, ES and RTY to eventually break and hold above both of these moving averages in order to support any further rally and breakout to new record highs by the NQ.
Furthermore, we're about to see a bullish Golden Cross form on the 50 and 200 MAs on the NQ daily timeframe. If that occurs and holds, we'll likely see the rally continue.
If the NQ fails to continue its bullish leadership, we may see all four indices drop to, potentially, new lows, especially if the NQ drops and holds below its 50-week MA (currently at 8245).
Get The News You Want
As of Friday's close, the Balance of Power still rests with the bulls on the SPX, as shown on the monthly chart below.
If the BOP drops and holds below the zero level, that control will switch to the bears on this timeframe, and we may see the SPX drop to around 2675 (the apex of the expanding triangle), or lower.
The SPX:VIX ratio is holding above 80 and may be headed towards its next resistance level at 100, as shown on the following daily ratio chart.
All three technical indicators (RSI, MACD and PMO) are hinting of higher prices for the SPX.
Under that scenario, the RSI should hold above 50, and the MACD and PMO should begin to swing upwards.
SUMMARY
If I were a betting woman, I'd say that the SPX has around a 55% chance of moving higher over the coming days/weeks, albeit in a choppy and, sometimes, volatile manner.
Keep an eye on the information and charts that I've shown above as potential directional gauges in the days/weeks ahead.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.