Global Trend Report #10
Market trend analysis – issue 10, September edition – a bit later in the month than usual, due to vacation time and some changes in the methodology. I will now include longer-term trendlines on some charts as they seem to add value to the big picture and help to determine “decision zones”. Also MACD-settings have been adjusted at certain instruments to smooth out some noise. As I stated in the intro to Market Trend Reports, I am not dogmatic about methods and details like indicator settings. Based on market data from Sep 6-10, 2019. Early month analysis focusing on monthly and weekly timeframes. Global stocks, bonds, forex, crypto, commodities. Subjective, for information only, no investment advice.
How it works:
Depending on your investment time horizon, monthly, weekly or daily analysis might be useful. For example, if you focus on medium-term investments from a few months to a year, you might prioritize weekly charts and MACD signals and use the bigger monthly picture for reference or confirmation. The daily charts and MACD signals can add value in timing entries and exits in this case. The technical picture may vary between timeframes and present itself either conflicting or confirming.
uptrend = price > 200 day/40 week/10 month moving average. Uptrend stronger, if supported by rising MACD and RSI indicators.
downtrend = price < 200 day moving average. Downtrend stronger, if MACD and RSI falling.
MACD buy signal = MACD line (blue) crosses signal line (orange) from below.
MACD sell signal = MACD crosses signal line from above.
price data: for trend changes as well as buy and sell signals, closing prices are considered (on each timeframe).
Note: MACD and RSI with individual settings. Different settings may lead to different signals.
Click on charts to enlarge.
I) Global stock markets
US – S&P500 – SPX
S&P 500 long-term view – monthly chart
status: uptrend with monthly MACD buy signal active since June 2019.
outlook: bearish divergence of MACD and RSI with price continues. Since 2018, every new high in price was accompanied by lower MACD and RSI levels, signalling underlying technical weakness.
S&P 500 intermediate-term view – weekly chart
status: uptrend with MACD sell signal active since week of Aug 5, 2019.
outlook: price dropped below the 2019 trendline and is testing it from below right now. Also RSI is showing a clear bearish divergence on every new high in price. This week may be crucial to see whether price can re-capture the 2019 trendline and break out to new highs, or if we see at least another test of the 200 day moving average around the 2800-2825 area.
US – Russell 2000 – RUT
Russell 2000 long-term view – monthly chart
status: downtrend with MACD sell signal from Oct 2018 still active.
outlook: Technically, RUT is in a bear market since September 2018 with price around 15% off its highs and below its 200 day moving average. You could see the rallye in 2019 as bear market rallye. Crucial for the bulls to hold the long-term trendline from 2009 around 1400-1425.
Russell 2000 intermediate term-view weekly chart
status: downtrend with weekly MACD sell signal active since week of Aug 5.
outlook: 2019 trendline broken to the downside along with MACD sell signal in August. Bulls would need to re-capture the 200 day MA and break above 1600 on a weekly close to invalidate the bear market thesis and open up a window to new highs.
Europe – Eurostoxx50 – ESTX50
Eurostoxx 50 long-term view – monthly chart
status: uptrend with MACD buy signal active since April 2019.
outlook: market on the brink of breaking out above the 2009 downtrend-line on the third attempt since 2015 at lower highs. Confirmation of a potential breakout in RSI will be important.
Eurostoxx 50 intermediate term view – weekly chart
status: uptrend with MACD sell signal active since week of Aug 29, 2019.
Germany – DAX
DAX long-term view – monthly chart
status: uptrend with MACD buy signal active since May 2019.
outlook: 10 month moving average holding for now with price trying to push for new highs. Please note DAX has clearly broken its multi-year uptrend from 2009.
DAX intermediate term view – weekly chart
status: uptrend with MACD sell signal active since week of July 15, 2019. MACD close to new weekly buy signal.
outlook: price has broken out above the 2018 downtrend-line, RSI hasn’t confirmed yet. Bulls need to hold 200 day MA and 2019 uptrend-line around 11700-11800 area.
Emerging Markets – EEM
EEM long-term view – monthly chart
status: downtrend with monthly MACD sell signal from May 2018 still active.
status: market trying to stay above its long-term downtrend-line (part of a massive ascending triangle that formed since 2008), right below the 200 day moving average. Holding the dotted uptrend-line in RSI may be key for bulls to realize a lasting breakout. On the downside watch out for the 35-36 area (lower trendline).
EEM intermediate term view – weekly chart
status: downtrend with weak MACD sell signal active since weak of July 29, 2019.
outlook: a break above 43.50 would open up a new high-window but for now bears are still in control.
Long-term 20+ years US treasury bonds – TLT
TLT monthly chart
status: strong uptrend with MACD buy signal active since November 2018.
outlook: RSI in overbought zone for the third time in 10 years. In 2009 and 2015 there was a deeper correction of more than 15% at these RSI levels. The upper trendline from 2009 suggests a little more upside into 150-160 though.
TLT weekly chart
status: strong uptrend with MACD buy signal active since last week of November 2018.
outlook: RSI quite overextended and with price this far from its 200 day MA a correction would not be a surprise and also not violate the underlying bullishness of the market.
US intermediate term bonds 7-10yr IEF
IEF monthly chart
IEF weekly chart
status: strong uptrend with MACD buy signal active since week of November 17, 2018.
outlook: RSI in overbought area for the first time since 2016, a correction is overdue.
Eurozone Bonds – VETY EUR GOV ETF
VETY weekly chart
status: uptrend with active MACD buy signal since end of November, 2018. outlook: RSI overbought and price far above 40 week/200 day moving average. Very strong trend in 2019 with first signs of exhaustion – MACD and RSI turning down from very high levels.
Emerging Markets Bonds – VDET ETF
VDET weekly chart
status: strong uptrend with MACD sell signal active since week of Aug 19, 2019.
status: RSI already came down from overbought levels. Make or break zone, price will soon either break 2018-2019 uptrend-line heading for 200 day moving average as first downside target or breakout to the upside for new highs.
III) Metals & Commodities
Gold monthly chart
status: strong uptrend with monthly MACD buy signal active since January 2019. RSI in overbought zone for the first time since August 2011.
outlook: Gold broke out of its multi-year downtrend at the end of 2017 and has been rising since mid 2018. Slightly overbought right now but not overextended. The 10 month moving average currently at 1364 should hold for a continued rise.
Gold weekly chart
status: uptrend with MACD buy signal active since June 03, 2019.
outlook: RSI overbought with some signs of exhaustion, heading down. The short-term uptrend is very steep and a correction or sideways movement might be healthy for the longer-term uptrend.
Copper monthly chart
status: downtrend with MACD sell signal active since May 1, 2019.
outlook: Copper is interesting. It’s below the 10 month moving average and bounced a bit up, very close to its long-term uptrend-line from 2009. For Bulls to gain control, a breakout of the giant triangle and above 3.10 would be needed. A break of the huge trendline at 2.40-2.45 to the downside would be very bearish. Watch RSI and MACD for divergences. Copper price (“Doctor Copper“) still seems to be a key precursory indicator for Equities, like mentioned in the last report.
Copper weekly chart
status: downtrend with MACD sell signal still active.
outlook: There is some bullishness in the short-term, as MACD tries to pull-off a new buy signal this week. Keep the monthly chart in mind, as Copper tries to bounce from its long-term uptrend-line. On the other hand, we are clearly in a downtrend since mid-2018 and price has broken the 2016 uptrend-line, which is very significant due to multiple successful tests in the last three years. The short-term bullishness could be seen as a retest of this trendline from below. It coincides with the 200 day/40 week-moving average above, so there is quite some resistance for the Bulls to overcome.
Crude Oil – WTI
Crude Oil monthly chart
status: uptrend by a small margin with weakening long-term MACD sell signal from Oct 1, 2018 still active.
outlook: In the big picture, Oil broke its long-term uptrend-line from 1998 finally in 2012, hitting a low in early 2016. Though there was a huge bounce from around $25 into the $70s, we are still registering lower highs since the peak in 2008. Now it is interesting to watch whether Oil can hold the 10 month moving average and break out above its 2018 downtrend-line. This would open up a test of the upper boundary of the giant range Oil is trading in since 2009, in the $75-80 area. RSI would have to play along, currently also exactly at the 2018 downtrend-line. On the downside, $50-51 should hold, below $42-43 the low $20s might be open for a test of the lower boundary.
Crude Oil weekly chart
status: new uptrend with weekly MACD buy signal active since week of Sep 9, 2019.
outlook: Price heading for a test of the 2018 downtrend-line, 40 week moving average should hold if Bulls want to get in control. RSI as broken out of the 2018 downtrend-line, which has failed twice this year already.
IV) FX Markets
Euro/US-Dollar – EURUSD
EURUSD monthly chart
status: downtrend with MACD sell signal active since June 2018.
outlook: Multi-year downtrend with lower highs and lower lows marked by a big downtrend-channel. As long as Bulls cannot recapture the 10 month moving average and go for the upper boundary of the channel again, parity and lower (0.90-0.95 depending on the time horizon) is open.
EURUSD weekly chart
status: downtrend with MACD sell signal active since July 22, 2019.
outlook: lower trendline of the 2018 falling wedge tested and bounce. A break above the 40 week average would come along with a bullish breakout of the wedge.
British Pound/US-Dollar – GBPUSD
GBPUSD monthly chart
status: downtrend with MACD sell signal active since May 1, 2019.
outlook: GBP lost more than 40% of its value against the US-Dollar over the last decade. The big falling wedge since 2008 marks the upper and lower boundaries in the big picture. Below its 10 month moving average, GBPUSD could be headed for 1.14 and below. However, the downtrendline from 2014 has been broken to the upside and still acts as support in the 1.19-1.20 area. If it holds and Bulls can recapture the 10 month average currently around 1.27 and falling, 1.40 is the bigger target on the upside.
GBPUSD weekly chart
status: downtrend with new MACD buy signal active since Sep 9, 2019.
oulook: Referring to the monthly picture, Bulls want to catch the 200 day moving average and break out above the 2018 downtrendline and break above the 1.27-1.28 area. On the downside, 1.19-1.20 is the line in the sand and upon a break 1.14 and lower is open.
V) Crypto Markets
Bitcoin/US-Dollar – BTCUSD (Bitstamp)
BTCUSD weekly chart
status: uptrend with MACD sell signal active since Aug 12, 2019.
outlook: RSI came down from overbought levels along with price. Bull should hold 9300-9500 level and break out above 11000 in order to stay in control. Upon a breakdown from the small “summer triangle” below 9300 a retest of the 200 day moving average should be open, currently around 6800 and rising.
Ethereum/US-Dollar – ETHUSD (Bitfinex)
ETHUSD weekly chart
status: no clear trend with MACD sell signal active since July 15, 2019.
outlook: 40 week moving average retest in progress with 2019 uptrendline broken. Bulls want to bounce from here in order to avoid potential downside window below $100 again.
Ripple/US-Dollar – XRPUSD (Bitstamp)
XRPUSD weekly chart
status: downtrend with weak MACD sell signal active since Jul 8, 2019.
outlook: 0.22-0.23 seems to be the line in the sand to the downside, the level were XRPs big advance started from in 2017. In order for Bulls to gain control again, the 200 day moving average around 0.33 is the first target with a break of 0.45-0.50 needed for overcoming the 2018 downtrendline, which has been major resistance over the course of the last 18 months.