6 October 2016 – More Volatility ahead of NFP

It was another day of volatility with the indices dropping in early morning trading before ripping higher by midday. Market participants are in a waiting game ahead of the Non-Farm Payroll Report on Friday. The Dow Jones Transportation continues to lead the market upward while the rest of the other indices are trending sideways.

NFP is estimated to come in at 172K and the market will react to it on perception of what the FED with do with interest rates.

WTI crude oil futures crossed $50 per barrel and held above it by days end. Gold continued selling off.

US Dollar index gapped up and exited its upward squeeze.

Bond futures continue its sell-off and closed below its 200 SMA.

Dow Transportation probed for its bottom of the day before rallying upward for the rest of the day. It closed with a small doji candle above its moving averages and is leading the market upward. Momentum remains upward. Volumetric buying pressure is at 79.8%. The index is in a weekly and monthly Squeeze.

Dow Industrial suffered a sharp drop on market open before stabilising and rallying upward in late morning trading. It range traded and flatlined for the rest of the day and closed with a high closing doji candle on its 21 EMA. Momentum is sideways. Short term volumetric buying pressure is at 99.5%. The index is in a daily and monthly Squeeze.

Russell 2000 dropped sharply in the first hour of trading and was under selling pressure till late morning. It rallied sharply upward by midday and flatlined for the rest of the day to close with a high closing doji candle on its 8 EMA and 21 EMA. Momentum remains upward. Volumetric buying pressure is at 79.6%.

Nasdaq 100 dropped sharply in the first two hours of trading before rallying sharply upward by late morning. It flatlined for the rest of the day and closed with a doji candle above its moving averages. Momentum remains upward. Volumetric buying pressure is at 99.8%. The index is in a monthly Squeeze.

S&P 500 dropped sharply in the first two hours of trading before rallying sharply higher by late morning. It flatlined for the rest of the day and closed with a doji candle on its 8 EMA and 21 EMA. Momentum is sideways. Volumetric buying pressure is at 99.6%. The index is still in a daily and monthly Squeeze.

Metals and Commodities
WTI Crude oil futures is trading at $50.46 and continue to trend sharply upward.

Gold futures continued its sharp sell-off and is trading at $1257.9 per ounce and has found support on its 200 SMA. Momentum is downward.

Silver futures continued its sharp sell-off and is trading at $17.345 per ounce and found support on its 200 SMA.

Agriculture (DBA) ETF closed at 20.04 below its 8 EMA and 21 EMA and continued its downtrend.

Commodities (DBC) ETF closed at 15.22 above its moving averages and continue its uptrend.

Bonds
High Yield bond ETF (HYG) closed at 86.95 with a small doji candle above its moving averages. Momentum remains upward.

Bonds ETF (TLT) closed at 133.83 and closed below its 8 EMA, 21 EMA and 50 SMA. Momentum is downward.

Currencies
The dollar index is at 96.930 and has exited its Squeeze upwards. The uptrend continues.

EUR/USD is trading at 1.11345. Momentum is downward.

USD/JPY is trading at 103.725 and is trading above its 8 EMA, 21 EMA and 50 SMA. The uptrend continues.

Relative Strength – Sectors
On a monthly lookback, the relative strength order of the ETFs that are outperforming the S&P 500 are XLE, XLK, XLF, XLI, XLY and XLB respectively.

On a 3-month lookback, the relative strength order of the ETFs that are outperforming the S&P 500 are XLE, XLK, XLF, XLI, XLY and XLB.

The bull market is not over when the technology and industrial sector are still outperforming the S&P 500. We will have to watch out for the defensive sectors such as Utilities and Consumer Staples for sign of a turn in the market.

Market Internals
Vix closed at 12.84. Vix futures is at 15.20 and has formed a Squeeze. Skew is at 120.48. Market sentiment is bullish. Market breadth is sloping downward. Volumetric accumulation/distribution is sloping upward.

The Week Ahead
The Dow Jones Transportation continues to outperform the rest of the indices. Market internals are showing mixed signals with market breadth showing a weakening. The prognosis is to remain cautious ahead of the Non Farm Payroll due on Friday.

Stock of the Day
The Stock of the Day is HSBC. HSBC is in the banking and financial services comppany. It manages its products and services through approximately four businesses such as Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets and Global Private Banking.

To YOUR wealth!