Saturday, 21 October 2017

Weekend update - US weekly indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from 2.0% (Dow), 0.9% (sp'500), to 0.3% (Nasdaq comp'). S/t outlook is bearish, as the market is clearly overbought, and due a cooling wave of around 4%. M/t bullish, with the year end target of sp'2683 only 4.2% higher!


Lets take our regular look at six of the main US indexes

sp'500


The sp' climbed for a sixth consecutive week, +22pts (0.9%), settling at a new historic high of 2575. This was the 8th gain of the past 9 weeks. Core support from the Feb'2016 low will be around 2450 next week, just a little below the 'technical necessity' gap zone of 2474/61. Underlying MACD (blue bar histogram) cycle is on the somewhat high side.

Best guess: short term cooling of 4% to the 2470/60s. Ironically, even that degree of downside would likely be enough to spook some of the weaker bulls. Broadly, the market looks strong into year end, with the target of 2683 just about within reach. It will clearly require almost everything to be fine, with a Dec' rate hike of 25bps (to inspire the financials), and WTIC around 54/55 (for energy stocks).

Equity bears have nothing to tout unless an Oct' monthly close under the monthly 10MA, currently at 2426. That number will jump around 35pts to the 2460s from Nov'1st onward, and be near the 2500 threshold across December. I do not anticipate such a bearish monthly close before year end.
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Nasdaq comp'


The tech settled higher for a fourth week, +0.3% at 6629, but with a notable new historic high of 6640. Core rising trend from 2016 will be in the 5780s next week, and the 5900s by year end.


Dow


The mighty Dow is leading the way higher, with a very significant net weekly gain of 456pts (2.0%) to settle the week at a new historic high of 23328. Cyclically, the Dow is on the high side, and there is threat of a brief 4% washout of around 1000pts (4%) to the low 22000s. No price action <21k can be expected. There is monstrous support at the giant psy' level of 20k,


NYSE comp'


The master index climbed for a sixth week, settling +0.6% at a new historic high of 12430. First soft support is the 12k threshold, where first soft rising trend also is. Secondary support is in the 11600s, and that looks out of range for the rest of the year.


R2K


The second market leader - R2K, settled +0.4% at 1509. Underlying MACD cycle is on the very high side, and will be prone to rolling over into end month/early November. First soft support are the 1450s, with secondary (valid until mid Nov'), the 1430s. No price action <1400 can be expected. A year end close in the 1600s is just about technically possible.


Trans


The 'old leader' - Transports, settled higher for a second week, +0.4% at 9972.The 10k threshold does offer some resistance. The tranny could cool by 5% to the 9400s and it would do nothing to negate the recent historic high. Broadly bullish, with a likely year end close >10250.
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Summary

A bullish week for US equities, with 4 of the 6 indexes breaking new historic highs. The Trans/R2K are notably still a little laggy.

All US indexes have downside buffer of 4-5% before their core rising trends - from early 2016, would be tested.

Cyclically, there is near term threat of a cooling wave, but nothing more than 5%, before a likely whipsaw back upward into year end.
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Looking ahead

It will likely be the busiest week left of this year, with a truck load of corp' earnings.



M - -
T - Richmond Fed'
W - Durable goods, FHFA house price ind', new home sales, EIA Pet'
T - Weekly jobs, pending home sales, intl' trade

F - GDP (Q3, first estimate), market is seeking growth of 2.5%, somewhat lower than Q2 (3.1%), arguably on the justification of 'adverse hurricanes'. Other data: consumer sent'.

*the only fed official on the loose is Kashkari (Thursday), but it will be of no relevance, not least as it is during the usual 8 day blackout period ahead of the next FOMC of Nov'1st.
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Extra charts (usually around 7pm EST) @ https://twitter.com/permabear_uk

Have a good weekend
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*the next post on this page will likely appear 6pm EST on Monday.

Friday, 20 October 2017

Opex gains

US equity indexes closed moderately higher, sp +13pts at 2575. The two leaders - Trans/R2K, settled higher by 0.9% and 0.5% respectively. VIX settled -0.8% at 9.97. With a new historic high of sp'2575, the year end target of 2683 has come within 4.2% of being hit, with 48 trading days left of the year (scary thought?).


sp'daily5



VIX'daily3



Summary

US equities opened moderately higher, and it was enough to generate the usual quartet of index highs (sp, dow, nas' comp', nyse comp'. With a new historic high of 2575.44, the equity bears are back to square one. Clearly, the market remains overdue a cooling wave, but until we take out yesterday morning's low of 2547, the bears can't have any confidence.

With equities breaking new highs, volatility was naturally subdued, with the VIX settling the week in the upper 9s. A burst to the mid teens remains highly probable, and looks viable next Wed/Thursday.
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As for 2683: sp'monthly6b


Today's close brings my year end target within just 4.2%. Even to me, its pretty incredible to see, as we've two full months left of the year. You know we're currently headed for 3k by mid 2018, right?
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Just another bullish week
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Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
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*the weekend post will appear Sat'12pm, and will detail the US weekly indexes.
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Thursday, 19 October 2017

A break lower

US equity indexes closed fractionally mixed, sp +0.8pts at 2562. The two leaders - Trans/R2K, settled lower by -0.1% and -0.2% respectively. VIX setttled -0.2% at 10.05. Near term outlook offers soft target of 2540/37, that would be negated on any new historic high >2564.11.


sp'daily5



VIX'daily3



Summary

US equities opened moderately lower, with an early floor of sp'2547. There was a choppy recovery that took the market fractionally higher into the close. Its notable that 4 of the 6 main indexes did settle fractionally lower.

Market volatility remains broadly subdued, with the VIX seeing a cash market high of 11.10 (pre-market high was 11.77), but then cooling all the way back to around the 10.00 threshold.

To be clear, unless we break a new historic high >sp'2564.11, we have a valid s/t high, with initial soft target of 2540/37. More broadly, primary target is the Sept'11th gap zone of 2474/61.
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Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
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