Saturday, 7 May 2016

Net weekly declines

It was a messy end to the week, with the sp'500 breaking to 2039, a latter day bounce, settling +6pts @ 2057. Despite the Friday gains, all US indexes saw net weekly declines, with the sp -8pts (0.4%), but with more sig' weakness in the Trans, -132pts (1.7%).


Trans, weekly


Suffice to add... a pretty messy end to what was a moderately bearish week. From a pure cyclical perspective, the bigger weekly cycles are on the high side, and in theory... should see increasing weakness into June.

First realistic opportunity for significant and sustained downside looks to be in the last week of May.

A failure to break new highs (>2111.. if not 2134).. bode for another major down wave. If you believe in the H/S scenario...


... downside to the sp'1600 threshold would be the natural target.

I am still of the view that the sp'500 will never trade under 1500 again. Not least as the central banks remain on standby to initiate more QE, and next time, it could include buying student debt and actual stocks.

Market chatter from the Schiff

Poster 'atraderfx' asked about the Australian equity market...

$AORD - Aus' 200 ord' comp', monthly

The Australian market is not one I've looked at before. Most would probably be aware that the Australian economy is heavily reliant on the mining sector, which has had massive problems since the secondary commodity peak in spring 2011.

From a technical perspective, the Aus' market has been broadly stuck for over three years.

Equity bulls need a break >6K to have confidence.

Equity bears need <5K.. which would open up the 4000/3750 zone in late summer/autumn.

My view is that commodities (especially Oil and copper) remain highly vulnerable to renewed downside, and that will particularly affect the Aus' economy. Further, there is a property bubble, one which when it breaks.. will cause all manner of problems.

So... look for 6k.. or sub 5K in the months ahead... and I'll hold to the latter.

Goodnight from London

*the weekend post will be on the US monthly indexes