Saturday, 16 July 2016

Weekend update - US weekly indexes

US equities continued to climb from their BREXIT lows, with net weekly gains ranging from 3.9% (Trans), 2.0% (Dow), to 1.5% (sp'500, Nasdaq comp'). Near term outlook offers cooling to test the breakout level of sp'2134, with a moderate threat of the 2105/2095 zone. Mid term upside to the 2200s looks extremely likely by late Aug/September.

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


The sp'500 has swung from 1991 to 2169 - gain of 178pts (8.9%). On any basis, this is a very powerful upward swing, and considering the breakout to a new historic high, it bodes for broader upside across the summer and into September. Underlying MACD (blue bar histogram) ticked higher for a third week.

Best guess: a moderate retrace/cooling ahead of the next FOMC, to at least the 2130s, possibly 2105/2095 zone. A July close above the key 10MA (2055) looks extremely likely.

Unless equity bears can break back under rising trend - which by end August will be around 2070, there is zero reason to be bearish.

Nasdaq comp'

The Nasdaq gained 72pts (1.5%), settling the week above the giant psy' level of 5K. There is a clear break above descending resistance, with prices already brushing the upper weekly bollinger. Next key levels are 5150, and then the historic high of 5231. Considering the sp'500/Dow, the Nasdaq looks set for the 5300s by late September. Talk of 6K by end year can now begin.


The mighty Dow saw a net weekly gain of 369pts (2.0%), decisively breaking the May'2015 high of 18351, with a Friday morning high of 18557. Next resistance are the 18600/700s, and then the psy' level of 19K. Any price action in the 19000s should then offer a straight run to the giant 20K threshold.

NYSE comp'

The master index saw a net weekly gain of 1.9%, settling @ 10773. Next upside targets are the 11k threshold, and then the 2015 high of 11254.


The second market leader - R2K, settled +2.5% at 1205. The door is now open to challenge the June 2015 high of 1296. Mainstream talk of the 1300/1400s is already starting to appear.


The 'old leader' - Trans, continued to power higher, with a net gain of 3.9%, settling at 7985. Despite not closing above 8K, there was a notable Thursday high of 8048 - the best level since late April. There will be considerable resistance around 8600. After that... the Nov'2014 high of 9310, but that remains a very considerable 16.6% higher.


A third week of significant upside, lead by the sp'500, and followed by the Dow.

With new historic highs for the sp'500 and Dow, the Nasdaq looks set to follow (>5231) in Aug/Sept.

Some near term cooling ahead of the next FOMC is probable, but with July set for significant net gains.

The 'fifth wave' scenario

Regular readers will be well aware I have a somewhat cynical view of Elliott wave theory, not least as its arguably inflexible and dismissive of sporadic news events.

However, I am aware of most of the main counts/ideas. The following is the most basic, but also most valid count from the March 2009 low


Effectively, wave'4 was an ABC sideways correction spanning 9-10 months, with a fifth wave having begun in Jan/Feb.

How high and for how long?

There are a fair few scenarios, and I'll detail this issue in more depth another time. Suffice to say, I'm resigned to mid term upside to the sp'2300/500s into next spring.

Looking ahead

There are a truckload of corp' earnings, but in terms of econ-data.. there isn't much.

The ECB will meet/announce on Thursday, and the market will be looking for some provisional idea about a new bank support program, particularly for the Italians.

M - Housing market index
T - Housing starts
W - EIA report
T - weekly jobs, phil' fed, existing home sales
F - PMI manu'

*no fed officials, as its the blackout period until the next FOMC announcement of July 27th.

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Have a good weekend

*the next post on this page will appear Monday at 7pm EST.