Saturday, 6 February 2016

Weekend update - US monthly indexes

With an opening bearish week for February, the mid term outlook remains very negative for the US equity market. The sp'500 looks set for the 1600s within the next few months. On a multi-decade perspective, the double top of 2000/2007 - sp'1553/76, should hold, before hyper upside across the next few years.


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

sp'500


February has started on a very bearish note, with a net weekly decline of -60pts (3.1%), settling @ 1880. The monthly 10MA continues to spiral lower, now offering upside resistance at 2019. At the March open, the 10MA will likely be around 2K. Sustained action >2K looks out of range for many... many months.

Underlying MACD (blue bar histogram) cycle is ticking lower, now at levels last seen in May 2009. At the current rate, the MACD (black line) will likely cross below the zero threshold in late March/April.

Best guess: renewed short term upside.. at least to the 1950/60s, not least if Fed chair Yellen 'inspires' next week. Regardless of where any such bounce maxes out, the sp'500 is headed far lower into the spring.
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Nasdaq comp'


The Nasdaq was especially hit on Friday, resulting in a net weekly decline of -5.4%, rather close to the January low of 4313. First big target is the 4K threshold. From there, the 3000/2750 zone looks viable, which is more than 40% lower from the July 2015 high.


Dow


The mighty Dow is currently lower for the third consecutive month, settling the week -261pts (1.6%) at 16204. First resistance of the 10MA is at 17161, but that is set to spiral lower into the spring. First downside target for the equity bears should be a monthly close <16K, which will open up next support in the 14200/000 zone.. where the 2007 peak (14198) lurks. As things are, sustained action <13400 looks difficult.


NYSE comp'


The master index continues to slide, net lower on the week by -2.5% @ 9390. The 8000 threshold looks highly viable this spring.


R2K


The second market leader - R2K, saw a rather brutal net weekly decline of -4.8%, settling @ 985. Regardless of any near term bounce (first resistance 1030/40 zone), much lower levels look due. Next big downside target is the 875/850 zone.


Trans


The 'old leader' - Transports, was the anomaly this week, with a net weekly gain of 0.5%, settling @ 6942. However, like all other indexes, regardless of any near term bounce, broader downside to the 5500/5000 zone looks due. Best case downside is likely no lower than 4500.

It is extremely notable that 4655 would be an effective 50% crash from the Nov' 2014 high of 9310.
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Summary

Unquestionably, the mid term outlook remains increasingly bearish. It would seem most indexes are set to decline by a further 15/20% within the next 2-3 months.

Indexes syncing up for this?

sp'1625/1550 zone
Dow 13500
Trans 4750/4500

Until the equity bears can attain a monthly close under the old double top of 2000/2007, which in the case of the sp'500 is 1553/76, I am still highly concerned that the market will floor by early summer, and then see hyper upside into end year.. even to new historic highs in some indexes.

We're still due industry capitulation within the oil/gas/mining sector. Some of the listed mid tier names are set to disappear. Those equity bears seeking anything <1500, are going to need to see the 1400s by May. To me... the clock is ticking, and now its a case of how powerful the next multi-week down wave will be.
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Looking ahead

The coming week will center around Fed chair Yellen, who is due to testify across Wed/Thursday to the US house/senate. The only data of particular note will be retail sales on Friday.

M -
T - wholesale trade
W - EIA report, Yellen will appear before the US financial services committee at 10am
T - weekly jobs, Yellen to testify to the US senate banking committee at 10am
F - retail sales, import/export prices, bus' invent', consumer sent'
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Back on Monday :)

Net weekly declines

It was a very mixed week for US equity indexes, with the sp' breaking a new cycle high of 1947 on Monday, but then seeing rather significant weakness into the weekly close. Across the week, the sp'500 settled net lower by -60pts (3.1%) at 1880. Near term outlook remains bullish to the 1960/80 zone.


sp'weekly1b



Summary

Its been a pretty interesting week in market land.... and I'll leave it at that.

Goodnight from London
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*the weekend post will be on the US monthly indexes

Daily Index Cycle update

US equity indexes closed significantly lower, sp -35pts at 1880 (intra low 1872). The two leaders - Trans/R2K, settled lower by -1.5% and -2.9% respectively. Near term outlook offers distinct threat of renewed upside, but on any broader outlook, the recent key low of 1812 looks set to be broken under by late March.


sp'daily5



R2K



Trans


Summary

Price structure in the R2K is already suggestive of a bear flag break/confirm, but the trans is not as bearish.

Best guess: broadly.. another push higher still looks due next week.

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a little more later...

Friday, 5 February 2016

VIX climbs into the weekend

With US equity indexes closing the week on a negative note, the VIX was on the rise, settling +7.0% @ 23.38. Near term outlook offers renewed equity upside to the sp'1960/80 zone, and that should equate to VIX 18/17s. Across the week, the VIX saw a net weekly gain of 15.7%.


VIX'60min



VIX'daily3



VIX'weekly



Summary

*it is notable that the most recent four weekly candles all have rather spiky tops.. which is suggestive of renewed cooling in volatility.
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So.. equities end the week on a very bearish note, but to me, the VIX never really showed the appropriate amount of upside kick/power today.

For now, there is very little market panic/upset, and its just a case of seeing rather powerful swings, but still broadly climbing from the Jan'20th low of 1812.

Hyper upside in the VIX - to the 40s.. or even higher, seems out of range until at least mid March.

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more later.. on the indexes