Saturday, 19 September 2015

Weekend update - US weekly indexes

It was another wild week in the US equity market, with net weekly changes ranging from +0.5% (R2K), -0.1% (sp'500, Nasdaq comp', NYSE comp'), to -0.3% (Dow). Near term outlook offers threat of another powerful wave lower into mid October.. at least to the sp'1860/20 zone.

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


Like most other indexes, the sp' saw a notable higher high and higher low... which is clearly somewhat bullish. However, the swing from the FOMC spike high of 2020 to the Friday afternoon low of 1953 bodes badly for the market.

With the break of rising support - seen better on the daily/hourly cycles, the door is closing on any further price action in the sp'2000s. Indeed, its entirely possible Monday will see further strong downside... first target is the 1900 threshold, which would take out recent key lows of 1911 and 1903.

Underlying MACD (blue bar histogram) ticked higher for the second consecutive week, but remains deeply negative. Price momentum remains powerfully bearish, and a test of the 1867 double floor (Aug 24/25th) looks a given. Best downside case looks to be the 1750/25 zone.. viable by mid Oct'. New historic highs (>2134) look unlikely for the remainder of this year.

Nasdaq comp'

The tech' saw the second consecutive net weekly gain (if fractional) of 0.1% @ 4827. The weekly 10MA has provided clear resistance this week, and sustained action >5K now looks out of range for some considerable time.. perhaps even the rest of 2015. First downside target is the 4200/4000 zone.


The Dow saw a moderate net weekly decline of -0.3%... but that was almost a full 600pts below the Thursday afternoon high of 16933. Considering the Friday close, sustained action >17K looks unlikely in the near term. First downside target is 15300.. after that... 14300.

NYSE comp'

The master index slipped a minor -0.1%, settling @ 10031, having cooled from the FOMC high of 10362. First downside target are the 9500s.. and then the psy' level of 9K.


The second market leader - R2K, was the most resilient index this week, climbing 0.5%. However, the weekly 10MA was clear resistance, and the Friday close of 1163 bodes well for the equity bears into October. First target is the 1100 threshold.. and then the Oct'2014 low of 1040... the latter of which does seem probable by mid Oct'.


The 'old leader' - Trans, made a very valiant attempt to break and hold the 8300s.. but failed, settling net lower on the week by -0.2% @ 8036. First downside target is the 7K threshold.. which is a very significant 12% lower.


On first glance, the market held up okay this week, but the weekly candles do offer a clear spike-fail high from FOMC-Thursday.

Price structure on the weekly chart is a rather clear bear flag, and with initial breaks of rising support on Friday (esp' Trans), there is a high probability that the market maxed out on FOMC day.

Best case downside for the doomer bears.

Naturally, the big question is.. how far down can we go into October?


The above fib' chart offers a few hints as to why the 1750/25 zone is viable within the next 2-4 weeks. I suppose the next down wave could drag out into early November, but seasonally, the bears 'prime time' will have concluded by mid Oct'.

Looking ahead

There is a Greek election this weekend, and the market might react to that early Monday.

M - existing home sales
T - Richmond Fed manu'
W - PMI manu', EIA oil report
T - weekly jobs, Durable Goods orders, New home sales
F - Q2 GDP (2nd rev), PMI serv', consumer sent'

*there are a few Fed officials due to speak next week, notably, Yellen, after the Thursday close.

Seeking to build short positions

Yours truly had another net positive week.. so I can't complain, despite missing out on the FOMC reversal. Its obviously very difficult to guess how Monday will open. I shall hope the market can rally across next Mon-Wed, it would make for a much better level to short from. Regardless, I will look to take short positions at some point next week.

Back at the Monday open :)