Detailing Deflation: A Flyby of 8 Declining Commodity Charts

Feb 2, 2015: 2:42 PM CST

You’ve heard the increased discussion about “Deflation” in the global economy, but what does that mean?

Let’s take a quick fly-by view of 8 Commodity Charts and see what’s happening and how to put this in context.

We’ll start with four commodities hit worst by declining prices:

A Deflationary Environment is marked (in simplest terms) by declining commodity prices.

We’ll just keep the discussion here in terms of commodities and their charts of continuous contracts in the futures market.

The goal is to broaden the headlines beyond “The Collapse in Crude Oil” and see how other commodity charts are affected along with crude oil as ongoing downtrends continue.

First up, we have four “worst hit” commodity markets which include Sugar, Wheat, Oats, and of course Crude Oil.

All of these markets are at or near fresh new lows on their price charts as we begin 2015. Continue Reading…

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Feb 2 VSpike Market Update and Trending Stock Scan

Feb 2, 2015: 2:07 PM CST

Stocks continued their sell-swing, yet we’re seeing a similar intervention or V-Spike Pattern that played out last Thursday.

We’ll start with the ongoing intraday downtrend the S&P 500 and highlight our trending stocks:

For a broader discussion on this ongoing and important pattern, see my update post “Plotting the Current Range and Future Breakout for the S&P 500.”

We’re seeing a tepid downward break in price under the 2,000 level but we’ve also seen two intervention V-Spike Reversals under 2,000, threatening to spring a Bear Trap.

Nevertheless, the key focal point for traders will still be the 2,000 level and the bull/bear interaction here.

Continue Reading…

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Amazon AMZN Bullish Surge from Big Divergence on Support

Jan 30, 2015: 1:33 PM CST

Amazon’s (AMZN) solidly earnings beat expectations yesterday, resulting in a breakout and stock surge higher.

However, a bullish reversal pattern – coming off a critical support level – preceded this breakout and gives us a great chance once again to study this important reversal pattern.

Let’s chart the pattern and then identify current price levels to watch for triggers and targets.

Building on last night’s “Lessons in Divergences and Reversals” post (reference it for background), Amazon (AMZN) gives us another real-time example of this important pattern and swing trading tactic.

I’ve highlighted the 50% Fibonacci Retracement in prior updates, but use it as the current reference pivot.

The level is roughly the $287.00 level (green highlight) as shown in the chart above.

Notice the three support bounces that developed off this level in 2014.

With the recent earnings announcement, price surged through the $320 level and broke the falling trendline. Continue Reading…

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Quick Lessons from Divergences and Reversals in MannKind MNKD

Jan 29, 2015: 5:25 PM CST

A reader asked me to take a look at MannKind (MNKD) and I wanted to highlight a couple of important lessons from the stock and what levels are important at the moment.

Let’s learn a quick lesson about momentum divergences and trend reversals from this stock.

Let’s take this chart one step at a time.

We’re seeing a daily chart from early 2013 to present.

The blue indicator at the bottom is the 3/10 Momentum Oscillator which is used to highlight divergences.

A Positive Divergence takes place (like that of July 2013) when price rallies to a new swing high BUT the momentum oscillator (at the price high) is showing a lower high.

Similarly, a Negative Divergence occurs when price pushes to a new swing low but the oscillator forms a higher low.

Market reversals are correlated with divergences (keep in mind that divergences do not cause reversals). Continue Reading…

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Jan 29 Reversal Update and Trending Stock Scan

Jan 29, 2015: 2:20 PM CST

After the Fed Day Wednesday, stocks simply traded down to the lower support of the rising trendline and today rallied up logically from the key level.

We’ll start with the ongoing triangle in the S&P 500 which helped us trade today so far:

For a broader discussion on this ongoing and important pattern, see my update post “Plotting the Current Range and Future Breakout for the S&P 500.”

The main idea is that the market structure is consolidating between compressing trendlines.

In simpler terms, look to play price swings up and down within this range as the market plays “Ping-Pong.”

We saw the movement down from the “midpoint” near 2,030 toward (and slightly under) the 2,000 index target, only to see an intervention trigger a bear trap and instant bullish reversal back above 2,000.

This continues the triangle and once again targets the midpoint or higher.

Continue Reading…

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