Tuesday, 19 February 2019

Supermoon Tuesday

US equity indexes closed a little higher, sp +4pts (0.1%) at 2779. Nasdaq comp' +0.2%.  The two leaders - Trans/R2K, settled +0.5% and +0.3% respectively. VIX settled -0.2% at 14.88. Wed/Thurs' should lean to the equity bears.


sp'daily5



VIX'daily3



Summary

It was a subdued start to the week, with the morning consisting entirely of minor chop. The afternoon did see some distinct algo-bot upward melt, with the spx breaking a new cycle high of 2787.

Volatility opened to 16.15, but immediately started to cool. The afternoon saw the VIX break a new multi-month low in the mid 14s... confirming the equity strength.


Another ten year anniversary

Its been a full decade since Rick Santelli went on his tea party rant...



Perhaps the most surprising thing since that time is that NBC/CNBC haven't kicked Santelli off the network. I can only assume they want at least one 'token opposition' to play against.

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Another day closer to spring
The supermoon
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Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
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Saturday, 16 February 2019

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from 4.2% (R2K), 3.8% (Trans), +3.1% (Dow), +2.5% (SPX, NYSE comp'), to +2.4% (Nasdaq comp').


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

sp'500


The SPX climbed for a third consecutive week, the 7th week of 8, settling +67pts (2.5%) to 2775. MACD (blue bar histogram) cycle continues to tick higher, as weekly price momentum increasingly favours the bulls. Note the upper weekly bollinger at 2892, and which is falling by around 45/50pts a week. From Feb'25th onward, it will offer prime resistance around 2800. The SPX has climbed 429pts (18.3%) since the late December low of 2346.


Nasdaq comp'


The Nasdaq comp' climbed for an eighth consecutive week, settling +174pts (2.4%) to 7472. Note upper bollinger at 7820, and that will offer major resistance in the 7600s into end month.


Dow


The mighty Dow climbed for an eighth consecutive week, settling +776pts (3.1%) to 25883. The Oct'2018 historic high of 26951 is a mere 4.1% to the upside.


NYSE comp'


The master index climbed for the 6th week of 8, settling +311pts (2.5%) to 12603.


R2K


The R2K climbed for an eighth consecutive week, settling +62pts (4.2%) to 1569.


Trans


The 'old leader' - Trans, climbed for the 7th week of 8, settling +390pts (3.8%) to 10567. Next major resistance is around 11k, where the upper bollinger will be in around two weeks.



Summary

All six of the main US equity indexes saw very significant net weekly gains.

The R2K and Trans lead the way higher, whilst the NYSE comp' and Nasdaq comp' lagged.

YTD price performance:


The R2K is leading the way higher, currently net higher for the year by 16.4%. The Transports are +15.2%, the Nasdaq comp' +12.6%, and the Dow +11.0%. The NYSE comp' is +10.8%, with the SPX lagging at 10.7%.
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Looking ahead 

It will be a short four day trading week, with a light sprinkling of earnings...

M: RIG, CLR
T: WMT, DVN,
W: CVS, BHC, ALB,
T: ROKU, BIDU, NEM, DBX
F: AN

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M - CLOSED
T - housing market index
W - FOMC mins (2pm)
T - weekly jobs, durable goods orders, phil' fed, existing home sales, leading indi', EIA Pet' & NG

F - German Q4 GDP (second print) Flash print 0.0%. Its very possible (if not probable) the refined number will be negative for a second consecutive quarter, and deem the economic powerhouse of the EU, as officially in recession.
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Rates, yields, and inversions

US equities have seen a monstrously powerful ramp from the late Dec' low. Its partly cyclical of course, along with the mainstream having been 'inspired' by threats from Print Central to cut/adjust QT. We are seeing increasing chatter from the cheerleaders, that the next rate change will be a cut.



It remains the case that the ultimate equity sell signal will (ironically) be a rate cut. Clearly, a cut/suspension of QT would be a pre-cursor. Whilst the global econ-data and corp' earnings are increasingly weak, until we see such a rate cut, there is still threat of new historic highs. Even a sig' retrace of 5-7% into the next FOMC of March 20th won't negate that.



Whilst equities are back to 'everything is fine again' mode, the bond market sure doesn't reflect that, with the US 10yr yield at 2.66%. Natural/prime target of 2.25% remains on track. If yields do continue to broadly cool into/across the spring, equities should see some degree of retrace.

Ohh, and a yield curve inversion of the 10s/2s is still on the menu...


The US 10yr/2yr spread stands at just 14bps. It won't take much to generate an inversion, and it will be fascinating to see how the mainstream react to such a signal.
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Supermoon due Feb'19th.
Tuesday will see the closest approach of the moon, until Dec'24th 2026.
https://astronomynow.com/2019/02/15/dont-miss-the-largest-supermoon-of-2019-on-19-february/

A few stray closing thoughts... what will the financial markets and global economy be like then? Interest rates? WTIC/commodity prices? Will most of the central banks have been taken over by govt'?  The USD, will it still be king of FIAT land? Will Tesla have a charging station on the moon?
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Enjoy the three day break
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*the next post on this page will (probably) appear 5pm EST on Tues' Feb'19th.

Saturday, 9 February 2019

Weekend update - US equity indexes

It was a mixed week for US equity indexes, with net weekly changes ranging from +0.52% (Trans), +0.47% (Nasdaq comp'), +0.29% (R2K), +0.17% (Dow), +0.05% (SPX), to -0.31% (NYSE comp').


Lets take our regular look at six of the main US indexes (monthly candle charts)

sp'500


The sp'500 saw a net weekly gain of 1.3pts (0.05%) to 2707. There was a new multi-week high of 2738, just fractionally shy of the key 200dma.

More broadly, the spx is currently net higher for February by 3.8pts. Note the key 10MA at 2744. Underlying macd (blue bar histogram) cycle remains on the low side, as m/t price momentum still favours the bears. Whilst it could be argued the market might broadly climb for the rest of the year, the bears could equally argue recent price action is analogous to April/May 2008.

Best guess: no monthly close above the key 10MA or 200dma. Equity bears need to see a break back under the January low of 2443 to have confidence the m/t bearish trend will remain intact. Many other world markets are supportive to that notion.


Nasdaq comp'


The Nasdaq saw a net weekly gain of 0.47% to 7298. More broadly, tech is holding under the key 10MA. Price momentum remains at levels last seen in early 2009.


Dow


The mighty Dow saw a net weekly gain of 0.17% to 25106. The Dow is the only index currently trading above the key 10MA.


NYSE comp'


The master index saw a net weekly decline of -0.31% to 12292, notably just under the key 10MA.


R2K


The R2K saw a net weekly gain of 0.29% to 1506, still 4.8% below the key 10MA.


Trans



The 'old leader' - Transports, saw a net weekly gain of 0.52% to 10177. More broadly, the trans is net higher for Feb' by 1.17%, but still under the key 10MA.



Summary

Five indexes were net higher for the week, with one net lower. The Trans and Nasdaq are leading, with the SPX and NYSE comp' lagging.

More broadly, five of six indexes remain under their respective 200dma and monthly 10MA, with the Dow being the exception.

The m/t trend remains outright bearish, but the current situation is clearly borderline. 

YTD price performance:


The R2K continues to lead, currently +11.7% for the year. The Transports are +11.0%, with the Nasdaq comp' +10.0%. The NYSE comp' is +8.1%, the spx +8.0%, and the Dow lagging +7.6%.
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Looking ahead

Earnings: 
ATVI, UAA (Tues'),
GOLD, TEVA, AIG, CSCO (Wed'),
KO, CGC, NVDA, AMAT, AUY (Thurs')
DE, PEP (Fri')
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M -
T -
W - CPI, EIA Pet' report, US T-budget
T - Weekly jobs, PPI, retail sales, bus' invent'.

Thursday will see first print for German Q4 GDP. If it comes in negative (as seems probable), it'll make for the second consecutive quarterly decline, and deem the economic powerhouse of the EU as in recession. Where Germany goes... the rest of the EU can be expected to follow.

F - Empire state manu', import/export prices, indust' prod', consumer sent'. *OPEX*

**As Monday 18th is CLOSED, I would expect higher volume ahead of the three day break. Friday Feb'15th will be further complicated by it being OPEX, which will inherently lean to chop.
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Final note

Since late December, its become clear, the fed are planning to cut/adjust QT. If equities unravel into early/mid March, then we'll see that first cut announced at the March 20th FOMC. No doubt, equities would rally on such monetary easing.

Further, a QT cut will be a pre-cursor to a rate cut. Again, equities could be expected to initially rally on such a rate cut... much like Sept'2007. Yet... a rate cut would be the ultimate equity sell signal. Most would disagree with that, but then most seem to have little memory of events from the collapse wave of 2007/09.

We're almost a full decade from the March 6th intra low of 666.79. Despite the many trillions of global QE, low/negative rates, and debt fueled govt' spending, the endgame remains clear... a monetary reset. The following is very appropriate indeed...


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Have a good weekend
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*the next post on this page will likely appear 5pm EST on Monday.