Follow the Leader

//Follow the Leader

Hawk’s Scan Sentry Report November 19

Last week I introduced the new format to “Hawk’s Scan Sentry Report” and have already gotten several positive responses from regular readers. Thanks for the feedback.

As many of you know, I like to compare indexes and their derivatives to see if one is leading the other and thereby observe which has a better chance of moving in which direction. We all know that all of the American equities markets have been dropping since mid October.  The next significant support level for all of the major American indexes is the lows established and tested last May and early June. This week I note an interesting phenomena… the NASDAQ and Dow are already very close to that level of support whereas the S&P still needs to drop 3-4% to reach that mark. It is likely that the NASDAQ futures contract will test those early summer lows and run through whatever stop-loss orders may be resting there. If the NQ tests those lows in the next few days and then we see a rally, I would expect the ES to follow the rally without testing that support level .  One likely scenario is that that some of the indexes will test those early summer lows, then bounce (perhaps toward the end of the year for a nominal ‘Santa Clause Rally’). Normally I would look for a subsequent retest of those lows to follow, but a lot is riding on the markets perception of the American legislators’ ability to avoid the ‘Fiscal Cliff’.   If they succeed then it’s likely that the buyers will once again become more numerous than the sellers and prices will rise without retesting that support level. If a compromise is not reached and austerity measures are enacted, then we can expect to see the markets continue drop due to low demand from American consumers.

On the charts below I explain my analysis using some of the most highly regarded technical indicators available. These are used by both institutional and private traders across the globe and are built into many of today’s most popular trading platforms. However, if you are not familiar with these indicators please follow this link to a legend describing these tools.

The Charts and Analysis

Index Futures:

S & P

( All of our indicators are currently quite bearish for the S&P. Historical  indications show the NQ contract leading the ES contract on this move down so I will watch how the NQ contract responds to its early summer lows. Next support levels for the ES contract are 1315 and 1285, resistance around 1390. )

NASDAQ

(We are close to the early June lows which coincide with a Bear Flag target at $2426.75. We also see a bullish  oversold Trend Exhaustion1 and a bullish Trend Exhaustion 3 signal. I expect a test of support at 2444 and if Radar1 Fear/Greed does not cross below its previous threshold  of -172 that will create a bullish pivot divergence and good upside potential. )

Equities Setups:

C- Citigroup Inc.

(A bullish Pullback 23 ,and Trend Exhaustion 1, and Trender Pullback at support created by a previous high. A stop-loss should be placed relatively close to this bullish signal. )

Commodities:

GOLD

(Last week I suggested we look for a bearish Pullback 23 which we got.  Now I see that that created  a  bearish ‘Pullback Divergence’ in Radar 2 . I would expect to see gold continue to the downside at least as far as the up-trendline. ) 

CRUDE OIL

(Little has changed in this market over the past week. We are still in a downtrend, resting at a trendline support level looking to achieve a Bear Flag target. Since  Radar1 Fear/Greed is not yet showing us signs that the buyers are stepping up, the path of least resistance is still down).

Forex:

EURUSD

(A bullish Pullback 123 creating a Pullback or “Trend” divergence at support which is going against a bearish Triple Trender. Since this is a bullish setup in a bearish trend  I would like to see the Radar2 Price Leader move above the zero line into acceleration for bullish confirmation. )

May the trend be with you,

Hawk

Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor .

2018-01-08T07:15:14+00:00November 18th, 2012|Hawk's Picks|