Tuesday, 1 September 2015

Bits and pieces to wrap up August

It was a mighty bearish month for the US and most world equity markets. The sp'500 saw a net monthly decline of -6.3% @ 1972 (intra low 1867), with the Dow -1161pts (-6.6%) @ 16528. The VIX saw an incredible net monthly gain of 134.5%, having hit a Monday equity flash-crash spike of 53.29.

A few bits and pieces to close the month...


We have a clean break of the broader upward trend from 2009. There is serious technical damage, and the sp'500 looks set to at least test the Oct' 2014 low of 1820 in the next wave.. which itself doesn't look due to start until mid Sept. Considering the broader picture, an even more extreme drop to the low 1700s looks possible.

Dow, monthly2

The monthly 'rainbow' chart saw the first settling red candle since Sept' 2011. With the Dow already piercing the lower monthly bollinger (something I did not expect), the outlook remains bearish at least into early October. The mid May high of 18351 will probably not be challenged in the remainder of this year.

VIX, monthly

I rarely highlight the VIX monthly, but it is highly notable that we saw the VIX reach heights last seen in Jan' 2009. If the market does unravel to the low sp'1700s in October, that might equate to VIX in the 60s.. or even 70s.

USD, monthly

A net August decline of -1.6% @ DXY 95.89, however, this was significantly above the intra low of 92.52. Indeed, we have another monthly candle with a rather clear spike floor. The USD looks set to break back above the giant 100 threshold.. and from there.. the 120s will be due.

China, monthly

Despite a great deal of intervention, the Shanghai comp' saw the third consecutive net monthly decline, settling -12.5% @ 3205 (intra low 2850). With a monthly close below the old breakout threshold in the 3400s, the SSEC is in real trouble of a complete implosion back to the starting point from summer 2014 @ 2k.

Indeed, if most world equity markets see renewed trouble in late Sept/Oct', then the China market will very likely be trading somewhere in the 2500/2000 zone.

No doubt the communist leadership will be furious at the ongoing selling, and rather than just continued threats against the 'malicious short sellers', maybe we'll soon starting seeing press reports of execution by firing squad. After all... the bears were responsible for the equity bubble pop, right? Ohh, and don't forget the ghost cities too. Yes, those bears are clearly the underlying cause of a great many economic problems.

*I will cover China, along with the other World monthly indexes this coming weekend

Update from Oscar


Looking ahead

Tuesday will see PMI/ISM manu' sector, construction

*Fed official Rosengren will speak on the economic outlook around 1pm... and Mr Market will be listening.

Goodnight from London