Saturday, 28 May 2016

Weekend update - US weekly indexes

US equity indexes climbed for a second consecutive week, with net weekly gains ranging from 3.4% (Nasdaq comp', R2K), 2.3% (sp'500), to 1.3% (Transports). Near term outlook is extremely borderline, as the market remains broadly stuck within a narrow trading range of 2111-2025.

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


The sp'500 saw a rather powerful gain of 46pts (2.3%), settling at 2099, a mere 35pts (1.7%) from the May'2015 historic high of 2134.

Underlying MACD (blue histogram) cycle is starting to tick higher again, but there will be high threat of a divergent lower high forming in first half of June. Right now, a bearish cross looks out of range for 3-4 weeks, which will (interestingly) line up with BREXIT week.

Best guess: a break of the sp'2025 low by June 10th, which will open the door to the lower monthly bollinger - around 1950 in late June. 

However, if equity bulls can break the Nov'2015 high of 2116, that would likely spiral to a new historic high, at which point the market will (from a pure technical perspective) be inclined to grind higher across the rest of the year.

Nasdaq comp'

The tech' gained an impressive 3.4%, settling at 4933, teasingly close to the giant psy' level of 5K. Indeed, if equity bulls can break 5K in early June, it'll open the door to new historic highs (>5231) this summer. Equity bears really need to see renewed downside, back to the 4600s.


The mighty Dow gained 372pts (2.1%), settling @ 17873. The 18K threshold remains strong resistance. If that is re-taken, then new historic highs >18351 will be probable. If the market starts to unravel, first downside is the 16500/400 zone, which is still a clear 1000pts above the Aug' 2015 low.

NYSE comp'

The master index gained 2.1%, settling @ 10469. A break into the 10600s would be very bullish, and suggestive that the main market is headed broadly higher across the rest of 2016.


The second market leader - R2K, gained a powerful 3.4%, settling at the soft psy' level of 1150. Next resistance is the 1180/1200 zone. The June 2015 high of 1296 is still a long way higher.


The 'old leader' - Trans, was the weakest index/sector this week, but still climbed a net 1.3% @ 7772. Declining trend/resistance will be around 8K in early June, and that will be a key level to keep in mind. If the equity bulls are willing to buy the Transports >8K (the 8200s to make it decisive), the broader bearish outlook will have to be dropped.


Unquestionably, a week for the equity bulls. Yet, broadly, the market remains stuck in the same range it has for much of the past year.

The headline indexes - sp'500, dow, nasdaq, continue to lead the NYSE comp', R2K, and the laggard... Transports.

Equity bulls just need another 2-3% higher to achieve a provisional breakout.

Equity bears need to take out the recent low of sp'2025, and break to the mid/low 1900s by end June.

Looking ahead

A short week of course, as the US market is closed on Monday, but there is plenty of key data due.

T - Pers' income/outlays, Case-Shiller HPI, Chicago PMI, consumer con'
W - ADP jobs, PMI/ISM manu', construction, Fed Beige book
T - weekly jobs, EIA report
F - monthly jobs, PMI/ISM serv', factory orders

*the only scheduled fed officials are Powell and Evans on Thurs/Friday respectively.

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*I will return here on Tuesday, 7pm EST.