Tuesday, April 1, 2014

Still keeping an eye on the USD/JPY currency cross. It’s responding with the yen losing ground with the Tankan business survey weak enough to provide hopes for more “Abenomics” stimulus, despite a rise in consumption taxes by 300 bps to 8% to set aside for their growing entitlement expenditures last night. There has been fiscal and monetary expansions in the past, but gains were feeble. The current stimulus policy holds more promise as the impact on asset prices were immediate. Given the how cheap Japanese equities are, Japan is just a few stumbling blocks away from exiting its secular bear market.

ImageFrom a current DeMark perspective, the daily/weekly/monthly price exhaustion confluence at the end of 2013 indicated a price halt on the USD/JPY cross (falling yen). It has been three months of testing the downside, and the cross on the daily is showing signs it is about to resume the uptrend. With the daily USD/JPY on an active TD Sell Setup, the weekly will show a bullish price flip if it closes above 103.24 this week. A higher USD/JPY is considered bullish for US equities. 

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S&P 500 (SPX) SHORT TERM OUTLOOK: NEUTRAL

Bullish with a SPX close above 1882.35.

ImageImageThe market continues to vacillate between the stated ranges. The 2 hour SPX is the better arbiter of the next move. The current interpretation is the SPX should stall again here with a qualified TD Sell Countdown @13 and TD Sell Setup @8. As of the current writing, TD Sell Setup is “perfected”, but the SPX is trading on the cusp of a new breakout. If the SPX clears 1882.35 and holds intraday, there is high probability a DeMark “recycle” is in play for the 2 hour SPX, and the 4 hour SPX continues with an active TD Sell Setup. 

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S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL

Bullish with a SPX close above 1882.35.

ImageImageThe TTM_Squeeze is still coiling. However, the VIX is giving indications of breaking under 13.50, indicating fear is abating. The VIX is also showing confirmation from the 10 day moving average crossing below the 80 day moving average. The moving average crosses are lagging indicators but it gives a good general overview on the perception of risk for the equity markets. 

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S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH

Switch back to neutral if SPX closes above 1878.04. That will also record a TD Sell Countdown@13. 

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S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH

Flip to neutral if SPX closes below 1805.81 on the last day of March (updated March 3rd). 

 

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