The following Weekly charts are illustrations of
one of our proprietary price modeling systems that shows trends, market breadth
and much more. We use this almost exclusively on longer-term (Weekly,
Monthly, and Quarterly charts) to help us understand where longer-term support
and resistance levels are, where the market ranges are truly important and to
determine true market breadth. When we are studying Daily chart or
intra-day charts – the shorter term price rotation can often clutter our
interpretation of the long term expectations. Yes, we have other modeling
systems, predictive analysis systems, Fibonacci systems, Adaptive Cycles
systems and more. Our collection of proprietary analysis tools is very
deep. Yet, one has to know how to use these tools and what value they can
provide at different times.
This proprietary modeling system is designed to
model price swings/rotation and provide clear overall objective analysis of key
price levels/pivots. We call it “TT Charger”.
Weekly chart of the SPY using our TT Charger
This first Weekly chart of the SPY using our TT
Charger modeling system is clearly still bullish. The price breadth
contracting a bit near the current prices and support is currently functioning
near $252. The current market price has recently broken higher above the
short term price channels in addition to the longer term price channels.
This is a pretty good indication that price may attempt another rally attempt
that may extend for many weeks. In 2017, we witnessed more than 5 to 15+
weeks of extended price rally above both of these channel levels at
times. The recent rotation in February 2018 may operate as a “recharging
of price” in terms of a future rally attempt.
Weekly NQ chart with the TT Charger
This Weekly NQ chart with the TT Charger applied
for shows an even more incredible setup. Support is currently setting
near $6190 and price has extended beyond both of the price channels for more
than 11 weeks now. Market Breadth is expanding, therefore the implied
volatility is increasing as well. Although we may not see a very big
volatility rotation in price, the capability of increased volatility is still
Weekly Transportation Index chart
This Weekly Transportation Index chart paints a
clearer picture of the struggling Transportation Index in terms of the recent
price rotation. The TT Charger analysis still shows a solidly bullish
price trend with support at $10,005. Price is within the longer term
price channels and just above the shorter term price channel. The
Transportation index typically leads the US equities markets by about 4~8
months, so it is important that we see the Transportation index rally in
support of the equities markets rally. If this fails to happen, then we
are likely experiencing a “capital appreciation” that is not supported by
economic fundamentals. In other words, without a rally in the Transports,
any price advance in the equities markets is likely short-lived (3~6 months at
best) before one of the two will break.
At this point, our interpretation of these
charts is that the US earnings season should drive equities prices higher,
within and above these price channels, and create a real opportunity for
investors/traders. Yes, support is quite a bit below the current price
levels, but these support models will adjust as price advances. Unless a
reversal trigger is generated, which does not seem likely right now, or the
support levels are broken, which is not likely right away, we should be looking
for advancing prices and breakout rallies over the next few weeks or months.
Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic.
Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.
He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris also contributes market insight to several financial hubs like SprottMoney.com
The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.