Friday 29 January 2016

Awaiting a second bearish monthly close

Regardless of whether the market closes the week in the sp'1920s, 10s, or <1900, the January close will be a very bearish one, with a net decline of -6% to -8%. The Jan' close will fully confirm the bearish December close, with the sp'1600s probable this spring.


sp'monthly1b



Trans, monthly



Summary

*the 'old leader' looks dire, headed back to the 2012 breakout level of 5500 or so.
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So.. regardless of how tomorrow closes, we're seeing important downside follow through.

At best, the equity bulls could make a play to test the monthly 10MA, but as of next Monday's open, that will probably have declined to around sp'2000. 

Sustained action >2K looks out of range for many months.

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Looking ahead

Friday has a rather important set of econ-data points..

Q4 GDP. Market is expecting growth of around 1%. That is of course much lower than consensus from just a month ago.

Its possible - based on other data, that Q4 will come in fractionally negative. In any case... the US, and broader world economy continue to have building problems as a result of the ongoing collapse in commodities.
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Other data: Chicago PMI, market is expecting 45.. which would still be well below the recessionary threshold of 50. Any print <50 should have everyone at least concerned. A print <40 should sound alarm bells.

Consumer sent', employment costs

*Fed official Williams is due to appear in the afternoon.
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Goodnight from London