The Mars Market Update — Live Research

Bears' shot across the bow... but no support broken  Yen, Gold and TY Bonds at a critical juncture What we know: - US equity markets turned down where we needed them to - the SPX formed a weekly bearish key reversal candle - the decline is only in 3 waves so far (corrective until proven otherwise) - bull markets don't give up easily - the Russell 2000 and DAX held near term support - gold, Yen and 30yr Bonds are at key inflection points for risk The weekly SPY ETF clearly shows an outside bar...

Last week, equity markets held near term support with only the Russell breaking lower.  We had an "inside week" for the SPX and Nasdaq while the DJIA continued on to new ATH's. The Bond markets broke lower as expected after reaching our upside targets and it is important for the bears that last week's highs are not exceeded. Precious metals and the Yen turned lower in line with bonds keeping the strong correlation in tact. The net short positioning on VIX futures is making new extremes... this...

We are bearish US equity markets here. All key markets have enough waves in place to complete their near term rallies. With investor sentiment and complacency at extreme levels, near term risk remains to the downside. The US$ is also approaching downside targets with investor sentiment at extremes. The Aussie$ and Dr Copper near term trends are close to exhausting. PM's have rallied strongly as expected questioning the near term implications for bonds. The US equity markets reacted to our near...

US equity markets have now achieved upside objectives to complete respective wave 5 of (3) so risk is now firmly to the downside. Bonds have rallied into our sell zones but there is a risk that these waves are impulsive - high risk of failure for the bear trade. US$ shorts are a heavily one-sided trade but remains shy of our downside targets. Is Gold setting up for a strong rally? That will have important implications for the Yen and US bonds. One chart that has been exercising my mind about...

Some equity markets made new ATH's last week as we had been anticipating while the US$ continued its decline as a reaction to weak economic data and a more accommodative Fed. While we see further US$ weakness to come across the board, the near term bearish US$ sentiment is approaching extreme levels so be careful shorting in the hole here. We are looking for a bearish turn in equities this week. I am expecting increased US$ volatility later this week as the short US$ trade is very crowded and...

Last week saw a continuation of the rising global bond yields we had been focusing on. This trend was supported by a weakening Yen and Precious Metals. Global equities mostly churned sideways in non-directional trade. In an ideal world, we would like to see one more marginal new high in the SPX, DJIA and RUT to complete this most recent impulsive wave higher. We would then be looking to trade a bearish reversal. I remain flat equities, bearish bonds (but alert to a near term low) and looking...

Last week we got the major bond bearish reversal we had been tracking closely. This will likely have significant implications for the FX, commodity and equity markets over time. The "price of money" and "global liquidity" is determined by the bond market. Fortunately, our technical analysis helped us see this coming before everyone else! Central are clearly signalling an END to this global liquidity cycle. Take note. Importantly, these rising yields are occurring at a time when global equity...

As noted last week, global equity markets remain in near term topping patterns - I see no value in being long equities at this point in the cycle. There remains no convincing evidence of a sustainable top in place so I remain flat equities until further notice. I just don't see the risk/reward here for long positions. I am watching for a potential bearish reversal in Bonds.  Last week I highlighted the potential for a triangle thrust higher in the SPX which is what we got on Monday. There are...

Sometimes, when the markets are quiet, it helps to step back and look at where we are in the bigger picture. This helps anchor our risk/reward trading decisions on the shorter time-frames. I continue to posit that we are late in the 9th inning of an ending multi-decade bull market. It is important to keep this in mind when positioning long term portfolios. What we can see on the monthly SPX chart below is that we are nearing the end of wave 5 of V. The expectation being that when this bull...

Last week's volatile price action has created a lot of uncertainty in the charts with a lot of trend momentum breaking down. As such I have flattened positions until we get a clearer picture of market structure. FOMC later this week should help provide clearer market direction. The clearest trade potential is for ES shorts against Friday's highs but this is a very risky trade to try and pick tops in a bull market. The near term trends in JPY, PM's and Bonds appears to have broken down near...