The following trend observations and trading set-ups are driven by QEG's proprietary trend following software (QuantAction) and systematic processes and presented as our real-time market views and trading activity rather than specific investment advice. See qegmarkettrends.com (note: site is not live yet) for full disclaimers and details on our program and systems.
Live trade update: EMP.A As noted, EMP.A is starting to form a new consolidation area post-breakout. It held on a test of prior resistance as support and is setting up for trend continuation. QuantAction screen shot of EMP.A (1-day bars): Prior resistance tested as support and holding so far.
Equity Market Tone US: HIGH ALERT: As seen in the first chart below (weekly futures) the index traded through its prior high resistance (R2) but closed below it. The second chart (daily futures) shows this week is starting off with some downside follow through to Friday's negative reversal bar so we continue to see signs the market needs to rest/pullback. Following the S&P500 futures charts, the Russell 2000 chart shows further weakness so these are red flags to keep an eye on near term.
S&P500/ES Futures (Dec., weekly) Sept. 19: Weekly close (last traded price) failed to hold last week's breakout attempt.
Live S&P500/ES Futures (Dec., daily): Price tends to be volatile at major turning points which we have seen at two key resistance levels in the current consolidation.
Live Russell 2000/TF Futures (Dec.): The Russell 2000 has been lagging and last week it formed a negative trading pattern, so we continue to see red flags that this market is having difficulty regaining its upside momentum.
INTEREST RATES - US 10 YEAR YIELD INDEX TNX Index (10 year yield proxy - weekly close): A 'compound' trading pattern over the past year is resolving into a breakout scenario for yields.
CANADA Ahead of Friday's break down there were some notable warnings including the descending triangle formed at the R1 resistance level, demonstrations of distribution/supply on rally attempts, and multiple tests of 15425. The break down was significant as both a consolidation low support area (needed for a continuation pattern to develop) and a six-month weekly trend line were broken which suggests further downside for our index. After a break like this markets like to come back to test the prior support level as resistance, so we are watching price action for further clues. For now this remains a 'yellow light' market.
TSX daily: With 15425 broken, we now await a return move test. A reversal below it is bearish and sets up a move towards 15000.
TSX weekly: Break of a six month trend line is concerning for a larger pull back. ~15000 is the make or break level for the larger trend.
Commodities Oil BOUNCE SET-UP: After an early bullish set up for oil Thursday morning we were watching to see if it could follow through on the set-up but it failed. Today's early price behaviour again suggests that it is looking to bounce within its current trading range to make another attempt higher.
Live WTI Oil futures (Oct. daily): Thursday's bar did not complete the set-up, but today's range compression and behaviour appear to be setting up again.
Gold DOWNTREND: Gold attempted to close the gap but came up short and had negative follow through. The downtrend continues to assert itself, so we remain out of the space until prior support levels can be retaken. Gold Futures (Oct. daily): Next support at 1212 is being tested already.
Copper FAILED RETURN MOVE: We watching the 'return move' bounce in copper after the prior week's bearish reversal and secondary trend support break. It started strong but finished weak and is following through to the downside this morning as a result. Major support to watch is just above $3. Live Copper (Oct. weekly): Important support test up ahead ~3.02-3.00.
David Beasley, CFA, CMT Quantitative and Technical Analyst QEG MARKET TRENDS INC.
This communication is derived from the output of a quantitative and technical model ('QuantAction' and the 'QEG Trading System'). The model sources data from third party providers that we do not guarantee with respect to accuracy, completeness or in any other way. Any trade set-ups produced by the model or otherwise and reproduced here are for information purposes and not intended as specific investment advice by QEG Market Trends Inc. or QEG Advisors Inc. and its directors. This material has been compiled from sources we believe to be reliable, but we do not guarantee it as to accuracy, completeness, or in any other way. This material is not a complete analysis of all material facts with respect to any market, sector or security. Quantitative and technical analysis and strategy is fluid by nature and such views may change as market conditions change. For these reasons this commentary is not a sufficient basis alone on which to form an investment decision and is not intended to be considered as specific investment advice. QEG Market Trends Inc. and/or its directors may hold shares or derivatives in any market mentioned here or in any attachments hereto and may buy or sell such securities. Commodity and index futures charting sourced from IB. ŠQEG Market Trends Inc. 2014. All rights reserved.