Market Watch: Update

I'm going to be posting more on global markets, trend structure and their respective signal status going forward. From the list below, we can see directional nature as per time period in weeks, months and quarters, respectively (you can find more information about how I evaluate this here). Each of these time frames represent psychological bias by virtue of directional status (or embedded bias). The status is displayed with a 'value' which demonstrates trending bias at rest (ie., Weekly: Bullish=3 ==> Long Trend (Weekly Level), Sideways 3 Weeks) --- markets are either moving up, down or sideways and will pause in the course of its trending state for some period until the supply/demand of the product (float) has been distributed/accumulated to re-initiate directional activity. So we see Bullish vs Bearish biases with values attached to more accurately characterize state within trend. This can provide important insights to realize asymmetric risk-adjusted opportunities when used in conjunction with my trend- momentum signal -- as a continuation/reversal set-up/entry.

More importantly, from the chart below we can gauge overall inter-market correlation which provides an objective overlay to your position as all markets are driven by capital concentrations and flows around the world, impacting different markets and products. So, I want to keep a close eye on developments from a market generated, trend-based perspective as an insight into my positioning in the Nasdaq100 (Us Equity space). 

In addition to time frame trend status, there are important reversal levels that I have not reported, which I intend to include in future posts; these price levels imply areas where trends can expect to be supported/resisted and price change beyond these levels, would imply overall change in bias/direction which will impact overall positioning. 

To provide a working example of how I may use this template to trade out a certain market, with my systematic trend-indicator for entry/exit, let's look at the Bonds (ZB #F) in the top panel of the chart below. We can see that the Bonds are Weekly Bearish=3, Monthly Bearish=1 and Quarterly Bullish=2. This is valuable structural information because we now know that despite the pull back in the bonds, we have a Bullish (Macro) long term backdrop as per the Bullish Quarterly Trend status. The intermediate trends Weekly/Monthly are in Bearish mode. What we can also derive is that Weekly Bearish=3, implying that the weekly trend has been moving sideways for the past 3 weeks and the Bearish Monthly=1, implies the last month has been sideways as well. So the overall characterization is Bullish long term, and Bearish intermediate term with reluctance to move lower and/or slowing bearish momentum bias. In terms of trading the bonds I'm still bullish and would be looking for a momentum long signal in conjunction with the weekly trend to turn bullish. Though we have the 'Long' signal generated Feb 25/13', the weekly time frame is down. I would want to see the equities also struggling at Quarterly, Monthly, Weekly highs, or starting to move sideways in the weekly time frame, to imply a topping development, in conjunction with other objective measures such as extent /duration of weekly swing i.e, current Nasdaq100 weekly Bullish trend duration = 75 days and Intermediate High - High (Last Intermediate Top Sept 21) = 115 days -- which classifies the current weekly duration of Nasdaq 100 in an exhaustive phase, though it may continue unabated as capital pours into the US (Dow at new highs) as a flight to safety out of Europe. I'm also watching my March 27/13' Natural 4-month Cycle inflection point for Stocks as a potential turning point for stocks, and using my (abnormal market since 2008) seasonal bond-cycle buy point of late March-Early April inline with a Long momentum signal to get back in the bonds. This would be an objective Top-Down way to approach the Long Bond trade.