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Sunday, June 2, 2013

The S&P 500: Welcome to day 59 of the Secular Bull Market

The S&P 500 uptrend is in good health.  From the long-term perspective, SPX has broken out from a massive decade-long consolidation. There has been media speculation lately that the present rally may be over, but the long-term technical perspective suggests this may be the early innings of a Secular Bull Market.

Looking back we see the multi-decade uptrend of the 80's and 90's leading into the ten year consolidation that begins  in 2000.  In March 2013, SPX breaks out from the range.

A closer look at the last decade.  Lots of market turmoil in the last ten years. And now, a fresh breakout. This is where bull markets can be born.

If we take a closer look, we see that the last leg of the ten-year consolidation consisted of an uptrend that began in March 2009.

The 2009 uptrend, still in progress.

The March 2009 trendline is the line in the sand for this market. The multi-year investor can use this trendline, in conjunction with the 200 day moving average, to decide whether to be allocated in the stock market. If the uptrend breaks, get short or get out.

The latest development in this 2009 uptrend has been a prominent acceleration that began in November 2012.

Since November 2012 SPX has been traveling in an accelerated upward channel that currently tracks along the 50 day moving average.

For investors with intermediate timeframe objectives and tighter risk controls, this is the trendline that will be used to time their allocations, as opposed to the long-term 2009 trendline indicated above. With the November intermediate trendline currently tracking the 50dma, it should provide a useful gauge of market sentiment when it is eventually breached.

No one can say how long a trend will last. I cannot tell you if the 2009 uptrend will end in 2013 or 2033.  But as long as these trends are intact, the investor's job is to simply go along for the ride.  When the trend eventually comes to an end, price will tell us. As for now, until price says otherwise, welcome to day 59 of the Secular Bull Market.

Saturday, June 1, 2013

The party is over in Japan... for now. A toast to the hottest trade of 2013

All trends eventually come to an end.  For Japan's Nikkei 225, that sweet sweet uptrend in effect since mid-November of 2012 has finally come to a close.  With the violation of the 50dma and the intermediate trendline, expect NKD to take some time to cool off and recuperate after making an ascent to rival the peaks of Mt. Fuji.

Nikkei 225 (NKD)
Congratulations are in order to the traders that caught this uptrend on the Nov. breakout and held it through last week. That's a sweet piece of trend-following.

Rates are up, treasuries are down, and yield chasers are nervous

U.S. Treasuries have bearish formations that appear to be gathering steam. 5-year, 10-year and 30-year Treasuries have inverted 50dma's below their 200 day moving averages and each has breached significant multi-month support levels.

10 Yr Treasury (ZN)

30 Yr Treasury (ZB)

 Following suit to the weakness in  ZF, ZN and ZB, TLT is also breaking support. At the same time, yield chasers in the utility space are selling XLU hard, pushing it officially into bear market territory with a correction, peak-to-trough in excess of 20% as of Friday.

TLT (Treasury ETF)

XLU (Utilities ETF)

Whether the "Great Rotation" into equities has begun I'll leave to the pundits and prognosticators, but rates look poised for a meaningful uptick.

Gold is losing its luster

The gold trade could easily be in a long term devaluation.  Indeed, with the dollar recently testing new highs, the commodity complex -and the metals in particular- have been showing significant signs of top formation and downtrend generation across the board.

A look at GLD shows a multi-year uptrend that destabilized into a consolidation pattern in December 2011.  From 2011 until April 2013 price was contained between $150-$175.

Then on April 12th all heck breaks loose as the lower support of the range at $150 is breached, precipitating the current downtrend, and plenty of volatility.

According to these technicals, goldbugs need to step aside. Since April the best position in gold has been to be short.

The AAPL trade as it stands today

AAPL finally broke free of a September 2012 downtrend during May, but traders still need to be wary.

Currently in consolidation between $385 and $470, and trading below the declining 200d average, AAPL is attempting to repair itself.  This is a neutral formation.  Ultimately it will need to trade back above the 200dma and pull that 50dma up with it to get this chart right side up. No action is probably the best action here.  In time the chart will provide further direction, after the consolidation has been resolved.