Thursday, 26 May 2016

Daily Wrap

US equities settled broadly higher for a second consecutive day, sp +14pts @ 2090 (intra high 2094). The two leaders - Trans/R2K, settled higher by 0.8% and 0.5% respectively. VIX remained in cooling mode, -3.6% @ 13.90. Near term outlook is extremely borderline, as the sp'2100 threshold remains major resistance.




So, a second day of equity gains, with the VIX continuing to cool from last week's high of 17.65.

With a three day holiday weekend approaching, price action will be leaning on the quieter side, and that will favour the equity bulls.

A move back above the key VIX 20 threshold looks inevitable in June, but then, are we only looking at a brief foray to the low/mid 20s, before renewed equity upside (to new historic highs) across the summer?


Market chatter from the Schiff

Three days left

With next Monday CLOSED in the US market for Memorial day, my attention is increasingly focused on how the month will settle.

sp'monthly2 - boll/Keltner

I highlight the above monthly chart as I see some people posting overly bearish downside targets for June.

As I often like to say... first things first.

First, the equity bears need to break last week's low of sp'2025, then the giant psy' level of 2K, and then show some downside power to the low 1900s.

Indeed, across June, the lower monthly bollinger will be around 1930/20s. Any initial break <1900 looks overly difficult.

The lower Keltner band will be offering first viable chance of the low 1800s in July.

...and of course, any break above sp'2134, with Dow >18351, would negate ALL bearish targets, and open up an entirely different outlook, the far more scary inflationary scenario.

Goodnight from London

Wednesday, 25 May 2016

Daily Wrap

US equity indexes closed significantly higher, sp +28pts @ 2076, with the two leaders - Trans/R2K, higher by 0.6% and 2.1% respectively. The VIX was naturally ground lower across the day, settling -8.8% @ 14.42. The mainstream mood is back to almost maximum complacency, as rate hikes and a BREXIT vote are no longer seen as a problem.




It was a pretty damn bizarre day in market land, with even some of the cheerleaders on clown finance TV recognising that the degree of gains were not remotely justified.

It is understandable that some of the bull maniacs are now seriously looking for a break back into the sp'2100s, broadly higher across the summer, and indeed... the rest of 2016.

Yet... has anything really changed?

Today's gains do nothing, as the market remains stuck in a relatively narrow trading range. Aside from a few brief forays >2100, and the two down waves to the 1800s, the market has been broadly stuck in a 4-5% range for an entire year.

Trading ranges won't last forever... and whichever side we do break, will likely determine the market direction for many months.. if not years.

The bare bones view...


We've been broadly stuck for an entire year (1.5yrs for the 'old leader' - Transports). The obvious break levels are >2134 and <1810.

Very few in the mainstream now consider the latter as remotely possible this year, and its that degree of near total complacency that should actually concern the bulls right now.

*I realise a fair few of the wave counters out there are calling the move from 2134-1810, a giant 4, with a fifth now underway. But hey... I'm not much one for counting this nonsense.

So.. what about the Fed/rates... and the BREXIT vote?

I'm still of the view the Fed will not raise rates ahead of the BREXIT vote, which many realise would be a very valid excuse for the market to at least cool (if briefly) back under sp'2K.

As for how the UK populace will vote (June 23rd), the outcome is likely to be pretty close - much like the Scottish independence vote in 2014. I'm still leaning on the conservative side.. which would see a 'STAY' outcome. Were that the case.. the market would rally.. at least initially.

Goodnight from London

Tuesday, 24 May 2016

Daily Wrap

US equities closed a little weak, sp -4pts @ 2048. The two leaders – Trans/R2K, settled lower by -0.4% and -0.1% respectively. VIX managed a minor gain of 4.1% @ 15.82. Near term outlook offers a break of the recent sp’2025 low, and that will re-open the door to a valid H/S target of 1970/60s.


VIX, daily3


It was not exactly the most exciting start to a week, as the market saw a great deal of price chop... but was distinctly leaning weak into the close.

VIX is still broadly subdued. A move to the key 20 threshold looks due... the bigger weekly chart is offering the 24/27 zone into early June.. although I realise most would be dismissive of that kind of powerful (if brief) spike.

Day'1.. again

Today sure was different for yours truly. After four years here, it was kinda bizarre not to be posting via blogger/google. I'm not great with change, and my mind has been spinning just trying to figure out a type of DTP software.

If you have liked my work since 2012, then subscribe to me - see HERE, where I now reside each and every trading day.

Goodnight from London

Saturday, 21 May 2016

Weekend update - US weekly indexes

It was a somewhat mixed week for US equity indexes, with net weekly changes ranging from -0.2% (Dow), +0.3% (sp'500), to +2.2% (Transports). Near term outlook offers further weakness to at least sp'2000/1990, if not a very valid H/S target of the 1970/60s.

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


A minor net weekly gain of 5pts (0.3%), settling at 2052. Most notable, another lower high.. with a lower low, as the key lows of 2040/39, and 33 were decisively broken.

2025 is recognised by a fair few as 'market critical'... although that could be endlessly argued over. What should be clear... the market has been quietly cooling from the April 20th high of 2111. Price action remains very choppy.

Underlying MACD (blue bar histogram) cycle ticked lower for a fourth week. At the current rate, there will be a bearish cross in the last week of May... or first week of June. By definition, that will be the first realistic opportunity for a powerful move lower.

Best guess: near term downside to the 1990/1960 zone... before another bounce of 3-4%.... and then the first big move lower. 

Unless equity bulls can break back into the 2100s, they have little reason to be confident, and should instead be concerned about a down wave that should (at minimum) be equivalent in scale to Jan'2016 and Aug'2015.

Nasdaq comp'

The tech' saw a net gain of 51pts (1.1%), settling at 4769. The giant psy' level of 5K remains extremely powerful resistance, and unless the equity bulls can break above it, they should be concerned of an eventual break lower. First big target is the 4400/4200 zone.


The mighty Dow settled lower for the fourth consecutive week, with a notable lower high.. and lower low. The opex close of 17500 was somewhat natural. Equity bulls should be desperate to re-take the 18K threshold, whilst bears should be seeking an eventual break of 17K. First downside target is 16K, and then the Aug' 2015 low of 15370.

NYSE comp'

The master index saw a minor net weekly gain of 0.2%, settling at 10250. First support remains the big 10K threshold. If that fails to hold - as seems probable, an eventual capitulation low around 8K seems viable.


The second market leader - R2K, settled net higher by 9pts (0.9%) at 1112. Like other indexes, despite the gain, there was a notable lower high.. and lower low. First big target in June is the 1K threshold. Best case downside is the 875/850 zone, a price level not seen since late 2012.


The 'old leader' - Trans, saw the strongest gains this week, +164pts (2.2%) at 7671. The 8K threshold is very strong resistance, and equity bulls are going to struggle to break any higher into end month/early June. First downside target is 7K. If that fails to hold, the lower bollinger offers fast downside to the 6600s.. which is currently around 13% lower.


So... net weekly gains for 5 of 6 indexes, with only the Dow seeing a minor decline.

Most notable, most indexes saw a lower high.. and lower low... and that is pretty bearish.

Price structure, and also style of price action, is very similar to that seen across Nov/Dec' 2015.

An eventual sig' break lower looks due, with the lower weekly bollinger currently offering the sp'1840s... and that is a clear 10% lower.

Looking ahead

M -
T - PMI manu', New home sales, Richmond Fed'
W - Intl' trade, EIA report
T - weekly jobs, Durable Goods Orders, PMI serv, Pending home sales
F - GDP (rev'1), consumer sent', corp' profits

*there is a light sprinkling of fed officials on the loose, notably Bullard - who is touring Asia. Yellen is due at Harvard on Friday... but the appearance is to receive an award (for service to the printing industry?), and I don't expect any policy remarks to be made.

**Monday May'30th is Memorial day - where the US market will be CLOSED. So.. the Friday before will be increasingly subdued.

.... back on Monday.... but as noted in the previous post, things will be different.