Market Update: 1/4/2021 – The Most Important Update of the Year?

S&P 500 FUTURES (ES) DAILY

The first trading day of the year sometimes ‘sets the tone’ for the rest of the year.  With that in mind, today’s post might be the most important of the year.  Nearly everything reversed.  ES made a massive bearish outside day on high volume.  SPY (ETF) reversed on volume 50% higher than its 20 day average (see below).  The ONLY other time that has happened on the FIRST trading of the year was in 2000 (see 2 charts down).

SPY DAILY

SPY DAILY

XLB (MATERIALS) DAILY

XLB also made a high volume reversal.  The only other time that has happened on the first day of the year was last year.  XLB is arguably the most ‘USD sensitive’ sector.  In other words, a short signal here is a long signal in the USD.  I’ve plotted XLB with EURUSD and AUDUSD below.  Look at what happened after last year’s first of the year reversal.

XLB (BLACK), AUDUSD (MAGENTA), EURUSD (BLUE)

DIA (DOW INDUSTRIAL ETF) DAILY

DIA has made a high volume reversal on the first day of the month on 3 previous occasions, 2007, 2005, and 2000.  In 2007, the market held up until October.  2005 was a choppy year that ended flat.  The 2000 reversal marked a top that wasn’t broken for over 6 years.

DIA DAILY

DIA DAILY

CRUDE OIL DAILY

Crude oil reversed sharply lower in what may have marked the end of a 5 wave rally from the -40 print in April.  If this interpretation is correct, then price heads back towards 33.55.

SPOT SILVER 4 HOUR

Support was tested again and silver made a new high.  The rally from the 11/30 low is in 5 waves so expectations are that a corrective pullback begins from nearby levels.  Eventual support is probably the top side of the former resistance line (in blue).  That line is currently about 24.40.

12/21 – Silver pulled back and nailed mentioned support.  Respect potential for this support zone (24.86-25.07) to be tested a few more times in the current volatile environment but the general idea of ‘bullish on weakness’ remains favored.

USDOLLAR DAILY

Today’s USDOLLAR low…11635.  Price reversed sharply higher after low print.  UUP, the USD ETF, made a high volume reversal today.  The only other volume reversal on the first day of the year was in 2017, which was a high.  This is only the 4th bullish reversal since inception of the ETF.  The previous 3 worked.  Those charts are below.

12/17 – The USD continues to get absolutely destroyed.  The 2015 and 2016 lows are 11634/81 (highlighted).  The lower end of the zone is in line with a parallel so I’m focusing on this level as support.

UUP (US DOLLAR ETF) DAILY

UUP (US DOLLAR ETF) DAILY 2010-2011

GBPUSD DAILY

Cable tagged the Brexit day close (6/24/2016) and reversed sharply lower today.  The Brexit day close identified the September 2017 high.  Price sold off 6 big figures from that high.  Again, the median line from the structure that originates at the Brexit spike low is here as well along with the line off of the March and December 2019 highs.  I am looking lower.  Watch for resistance at 1.3630/45.

USDSEK WEEKLY

A parallel that relates to the life of chart channel in USDSEK has been reached.  This parallel crosses the 2012 high and 2018 low.  Great spot for a turn!