Indonesian Equities On Support

Second chart of the day focuses on the Indonesian stock market, which has been under pressure since Dr Ben Bernanke (remember him?) started to discuss Federal Reserves plans to taper the QE3 program. Indonesian equities priced in US Dollars peaked in May of 2013, and despite a rally throughout early 2014, has failed to push towards new highs like US, Japanese and European equities.

Chart Of The Day: Indonesian stocks aren't a bargain, but could bounce

Indonesian Stock Market Source: Short Side of Long

I am not necessarily advising long term investors to start opening up positions in Indonesia stocks right now, despite the fact that they have under-performed other developed markets since May 2013.  While these stocks offer some value, they aren't necessarily cheap. However, traders with shorter term horizons might find it interesting that Indonesian ETF (NYSE: IF) is currently trading on a major support line.

Could it bounce and rally for awhile from the current price level? Readers should remember that any execution of trades should be taken with serious tight risk management protocols in highly volatile markets, such as these.

Japanese Yen Weakness

Today's chart of the day focuses on the currency market. US Dollar has been under correction mode ever since I've discussed it here on the blog in middle of March. However, one of the currencies that has failed to take advantage of greenbacks weakness is the Japanese Yen. Contrary to all other majors which have rallied (such as Euro, Pound, Loonie and Aussie), the Yen has merely moved sideways, displaying no signs of strength whatsoever.

Chart Of The Day: Japanese Yen could remain under pressure for longer

Japanese Yen COT Source: Short Side of Long

One could argue that the currency has been really oversold for a long time now and overdue for a rally. However, the BOJ is planning to print so much money relative to the Japanese GDP, that it dwarfs anything US and Europeans are doing. Moreover, while sentiment on the Yen was very negative coming into late 2014, the sideways movement has forced just about all hedge funds to cover their shorts, pushing sentiment back to neutral levels. Could the Yen be ready for yet another leg down?

Emerging Markets Triangle

Today's chart of the day focuses on the global stock market conditions and in particular the under-performance of the emerging market equities. I recently written an in-depth article about emerging market equities and why I hold this asset a major long position in my portfolio. The post can be read by clicking here.

Chart Of The Day: Emerging markets have been trend-less since late '09

Emerging Markets vs 200 MA Source: Short Side of Long

Since the article was published emerging market equities have managed to rally back above the 200 day moving average, as can be seen in the chart above. In my opinion, this is a very positive development. Having said that, the price needs to clear the technical triangle setup to confirm that a major rally could be underway. After six years of disappointing performance, could emerging markets stage a recovery similar to what the eurozone stocks are going through right now? Only time will tell!

Crude Oil At A Bottom: Part 2

Second chart of the day refocuses our attention back to Crude Oil prices. In a recent article, I discussed Oil's crash, extreme oversold levels and recent bottoming attempt. One of the most important questions investors are asking themselves is whether the recovery in Oil prices will be V shaped, U shaped or L shaped. Frank Holmes over at US Global Investors analysed previous Oil recoveries since 1980s and created an analogue. So far at least, Crude Oil prices seem to be following it.

Chart Of The Day: Frank Holmes discusses previous Oil recoveries...

Oil Recoveries Oil Recovery Analogue Source: Frank Holmes / US Global Investors

Euro’s Short Squeeze!

Today's chart of the day focuses on the currency market and the extreme volatility we have witnessed in recent months. Basically, when we observe the Euro, it is almost as if we are looking at the US Dollar Index. I was very fortune to pick the top tick of the US Dollar Index, when I discussed the middle of March FOMC decision as short term Dollar negative. One month later in April, I reminded investors that the Dollar has a lot of potential downside from the short term perspective.

Chart Of The Day: Euro has rallied as hedge funds close bearish bets!

Euro COT Source: Short Side of Long

A lot of clients and investors I met on my travels recently were extremely optimistic on the US Dollar, which further cemented my views that a correction for the greenback was coming. Basically, what has driven the weak US Dollar trade is the short covering of hedge funds and other speculators in currencies such as the European Euro.

In middle of March, net short positions were built to near record highs at around 30 billion dollars. With the recent rally in currencies such as Euro, Pound, Aussie, Loonie, Sing Dollar and so forth; we can expect hedge funds to be closing a large amount of their bearish bets. The most important question is whether or not this a major bottom for the Euro, or will the trend eventually continue lower?

Silver Attempting To Break Out

Today's chart of the day focuses on yet another beaten down and very depressed asset within the Precious Metals sector. Silver's bear market started in May of 2011 and at its worst point was down more then 70% over a four year span. Silver is currently trading around the same levels as in 2009/10 period.

Chart Of The Day: Could silver break out from a downtrend and rally?

Silver COT Source: Short Side of Long

The downtrend line has been in place since September 2011 (same time as when Gold peaked out). Silver's price is currently attempting to break out from this resistance line, as well as the nearby 200 day moving average (not shown in the chart). Sentiment isn't as bearish as it was during recent intermediate lows, but nonetheless there is a possibility price could rally for awhile. Is this the final bottom or just another short squeeze before another leg down?

Gold Miners vs 200 MA

Second chart of the day focuses on the beaten down and very depressed Gold Mining sector. The bear market that started in September 2011 is slowly closing in on its four year anniversary (we have only three months left).

Chart Of The Day: Gold miners are holding the important support level

Gold Miners vs 200 MA Source: Short Side of Long

So far the Gold Mining sector has failed to staged a strong rebound from the very important support level at around 160 on in the HUI Gold Bugs Index (refer to chart above). While the price still remains  above support, it has not yet moved above the 200 day moving average (red line on the chart).

While I am not some great technical analyst, it should be totally clear to all market participants that major rallies usually occur when price is above, and not below, this trending line. Therefore, keep a close eye out on the miners in coming weeks as the flirt with this important resistance level.

Interest Rates Rising

Today's chart of the day focuses on the US interest rates and the bond yield curve. At the beginning of 2014, longer maturity bonds were oversold and market participants were positioned heavily on the short side, expecting prices to drop even further and yields to rise as the Fed ends the QE program and potentially start rising rates.

Chart Of The Day: Global interest rates have once again started to rise 

US Treasury Yield Curve Source: Short Side of Long

Well, that didn't really work out for the consensus. Instead, one of the strongest rallies in the bond market developed throughout 2014, where the US 30 Year Yield dropped from 3.96% in December of 2013, all the way down to 2.25% in January of 2015. As we can clearly seen in the chart above, yield curve faltened across the board from 2s10s all the way to 10s30s.

Moreover, while the 30 Year Yield made a new low, none of the other maturities confirmed this move. The lowest low for the 10 Year Yield seems to be holding at 1.43% back in July 2012. Now it seems that infection point has occurred once again, and in recent weeks bonds all across the world have been selling off hard. In other words, interest rates are starting to rise again.

Funds At Record Short Against Wheat

Sticking with the commodity theme, today's second chart of the day focuses on the sentiment in the agricultural sector and especially looks at Wheat. This grain originally made a new high all the way back in early 2008, just shy of $12.

A powerful bear market followed, where Wheat lost over two thirds of its value, bottoming out in summer of 2010. Interestingly, this was around the time just as hedge funds and other speculators held very large net short bets against the grain. Therefore, it shouldn't be a surprise that over the following year, prices doubled.

Chart Of The Day: Speculators are currently at record short vs Wheat

Wheat COT Source: Short Side of Long

Similar type of an event occurred once again in the summer of 2012. Recently, prices have been trending downwards, with short term strong rallies working off oversold conditions. Wheat is now once again resetting the bottom we saw during the 2009 - 2010 period, while hedge funds and other speculators pushed the net short count to a new record high. In other words, just about every man and his grandmother dislike agriculture right now.

Crude Oil At The Bottom

Today's chart of the day focuses on the long term price and performance of Crude Oil. The crash that started in June of 2014 finally turned into a crescendo in January of this year. Crude Oil has most likely found a bottom on a long term support line, as it became incredibly oversold.

However, the question now is what will the recovery look like? Most market experts are on record saying that $100 per barrel will not be seen again. What do you guys think? V shaped recovery, U shaped recovery or an L shaped bear market?

Chart Of The Day: Brent Crude Oil price has most likely bottomed out!

Crude Oil Performance Source: Short Side of Long