As usual, I'm here to play the bad role, although I'm not a bad omen bird. I am in a rational, factual, and very looking posture, with all the possible coldness of macroeconomic global news. I am interested today to know, if we are really gone, for a new wave bullish as I have read in some analysts yet hyper gifted, which presumably, let themselves be carried away, and distract, by the euphoria of the moment on the Indicators and the overall macroeconomic situation. I ask a little clarity in the face of this observation. To illustrate, my opinion, so I chose, the most traded pairs in the world in each different major categories, and I used the most well-known indicator of the financial professionals of the markets. So we have on the screen, the Eurodollars, the SP500, and the oil; All analyzed in weekly data with the RSI 14 which is the standard analysis setting. However, I personally consider that the RSI (relative strength index), becomes bullish beyond the threshold of 55% contrary to the consensus that setting on it on 50%. The threshold of 50%, at my level, materializes the perfect balance between buyer and seller (45-55). The RSI, being the indicator that shows whether we are in an overvalued, balanced, or oversold market, with standard terminals of 30 -70, to which I personally apply a Pareto distribution; Therefore of the order 20-80.
In so considering this clarification, I can tell you that, Eurodollars, oil, and SP500, are in a phase of stabilization in the absence of bad news (stable macroeconomic data see strong, economic outlook and Neutral inflationary uncertainty at present, political and geopolitical quasi-neutral. But let's not forget also in a technical way on the way see the long-term, as illustrated on the graphics, are in meadows configurations.
At the SP500 level, the RSI is located in the (50-55) area more precisely at 52%; A possible failure could, therefore, condition a reversal on the final level of the 2740 pts. We are currently at 2710, so 30 points from this threshold. This means that, as long as the 55% post on the SP500 is not exceeded, it would be important not to talk about bullish recovery even if the VIX is at extremely low levels, thus favoring an appetite for risk. In oil, which is, therefore, the market boss, it has an RSI around 45%; Thus leaving a margin of progression interesting enough to reach and fall within the range between (45-55%). Being the market leader, it will certainly lead to SP500 and other major pairs in such a scenario. But do not forget, that these flow movements are only a reflection of the increased volatility in these hectic periods.
Therefore, only the final closings, which are monthly, will be held; Either at the end of February if the SP500 closes below 2740, and the oil closes or fails to advantage on the threshold of the $65/barrel that are in the line of sight, we risk returning to areas of turbulence and uncertainties. This means that in Intraday or regular session, we can very well break these thresholds but if we do not close any advantage above the thresholds indicated, at the end of the month, it would be in vain!
As for the Eurodollars, in view of the current situation in Italy (pre-recession area), one can only expect a possible decline. The failure signal is 1.15; As long as we remain below 1.15, we should not seek to pay the Eurodollars in the short and medium term, because also of the different exhibitions on this pair.
In short, by looking at these three major assets globally, we can then, therefore, so that the overall macroeconomic context is still sensitive; We observe a global reversal scenario, with a central point of convergence SP500 and oil, as inferred from these three graphs with the RSI indicator studied on these different assets.
In so considering this clarification, I can tell you that, Eurodollars, oil, and SP500, are in a phase of stabilization in the absence of bad news (stable macroeconomic data see strong, economic outlook and Neutral inflationary uncertainty at present, political and geopolitical quasi-neutral. But let's not forget also in a technical way on the way see the long-term, as illustrated on the graphics, are in meadows configurations.
At the SP500 level, the RSI is located in the (50-55) area more precisely at 52%; A possible failure could, therefore, condition a reversal on the final level of the 2740 pts. We are currently at 2710, so 30 points from this threshold. This means that, as long as the 55% post on the SP500 is not exceeded, it would be important not to talk about bullish recovery even if the VIX is at extremely low levels, thus favoring an appetite for risk. In oil, which is, therefore, the market boss, it has an RSI around 45%; Thus leaving a margin of progression interesting enough to reach and fall within the range between (45-55%). Being the market leader, it will certainly lead to SP500 and other major pairs in such a scenario. But do not forget, that these flow movements are only a reflection of the increased volatility in these hectic periods.
Therefore, only the final closings, which are monthly, will be held; Either at the end of February if the SP500 closes below 2740, and the oil closes or fails to advantage on the threshold of the $65/barrel that are in the line of sight, we risk returning to areas of turbulence and uncertainties. This means that in Intraday or regular session, we can very well break these thresholds but if we do not close any advantage above the thresholds indicated, at the end of the month, it would be in vain!
As for the Eurodollars, in view of the current situation in Italy (pre-recession area), one can only expect a possible decline. The failure signal is 1.15; As long as we remain below 1.15, we should not seek to pay the Eurodollars in the short and medium term, because also of the different exhibitions on this pair.
In short, by looking at these three major assets globally, we can then, therefore, so that the overall macroeconomic context is still sensitive; We observe a global reversal scenario, with a central point of convergence SP500 and oil, as inferred from these three graphs with the RSI indicator studied on these different assets.
Francois Abley