Carl Futia: July 2015

Friday, July 31, 2015

Guesstimates on July 31, 2015

September S&P E-mini Futures: Today’s range estimate is 2102-2118. As long as no weakness below 2080 develops I think the market will move up to 2126.25 and above.

QQQ: Support is at 108. Upside target is 120.

TNX (ten year note yield): I think that the market yield is headed up to 3.00%.

Euro-US Dollar: The market has dropped visibly below 1.10 support. I think it is headed to 0.96 over the coming months.

Dollar-Yen: Support is at 116. The bull market has much further to go over the coming months. 140-45 is my longer term target zone while 127-28 is near term resistance.

August Crude: I am beginning to suspect that the bear market is oil is over and that this long trading range is a precursor to a sustained advance. Meantime support is at 45.

August Gold: Gold has made a new bear market low but is getting closer to long term support at 1030. I think a new bull market is likely to emerge from a low near that support level.

September Silver: I think the bear market in silver may be over. If so support is at 13.50.

Google: GOOG will probably drop to 635 before its bull market resumes.

Apple: There is no reason for thinking the bull market is over. Support is at 121.

Facebook: Next upside target is 110. Support is at 80.

Twitter: TWTR broke below 35 support and is now headed for 25.

Alibaba: BABA is on its way to 70. Resistance above the market is at 85.

Visa: Upside target at 72 has been reached but there is no sign that the advance is over. Next stop is 80. Support is still 63.

Thursday, July 30, 2015

My favorite long term trend indicator for the US stock market uses the 200 day moving averages of the Dow, the S&P 500, and the NYSE advance-decline ratio (top three charts). When two of these three averages are above their respective 200 day averages the long term trend is bullish and when two of three are below their 200 day averages the long term trend is bearish.

At Monday's low you can see that the Dow and the advance-decline ratio were both below their 200 day moving average, in principle a long term bear signal. But I found this mechanical indication unconvincing at the time and still think the longer term trend of the US stock market is upward. Here is my thinking.

First, you can see that the Nasdaq Composite and the Russell 2000 are both above their 200 day averages, the Nasdaq substantially so. Thus the tech and small cap sectors are not following the Dow downward (yet). This coupled with the oversold status of the 10 day advancing issues oscillator (bottom chart) makes me think a rally is more likely now than the start of a bear market.

The European stock market as represented by the Stoxx 600 is also visibly above its 200 day moving average as is the Japanese Nikkei. This is significant because both the European Central Bank and the Bank of Japan are implementing quantitative easing policies. As long as their respective stock averages remain above their 200 day averages I think we can assume these policies are having their desired effect on asset prices. This increase in liquidity has world-wide effects and in particular is bullish for US stock prices as well.

Consequently I am still a long term bull on the US stock market. I think the surprise lying in wait for traders and investors is an upside breakout from the trading range of the past 7 months. Only if the S&P 500 joins the Dow and the advance-decline ratio below its 200 day moving average will I reconsider my bullish views.

Guesstimates on July 30, 2015

September S&P E-mini Futures: Today’s range estimate is 2086-2099. As long as no weakness below 2080 develops I think the market will move up to 2126.25 and above.