It was a moderately mixed week for US equity indexes, with net weekly changes ranging from +0.37% (NYSE comp'), +0.05% (sp'500), to -0.75% (Trans). Short term outlook offers further upside into the Labor day holiday. Broader upside into spring 2017 looks increasingly probable after recent new historic highs.
Lets take our regular look at six of the main US indexes
A fractional gain of 1.2pts (0.05%), settling at 2184, having broken a new historic high of 2188. Underlying MACD (blue bar histogram) cycle ticked lower, but remains broadly positive.
Best guess: a fair amount of summer chop, with upside to the 2225/50 zone by mid/late September. A pull back of around 4-5% then looks viable, but holding above the breakout level of 2134. A year end close in the 2300s is within range, especially if financials can rally ahead of a probable rate hike at the Dec' FOMC.
Equity bears have no realistic hope of significant/sustained downside in the near term.... barring a sporadic 'spooky news' event. Considering last August saw a major (if brief) upset, a repeat of that is highly unlikely.
The Nasdaq climbed for a very impressive seventh consecutive week, settling +0.2% at 5232. With a new historic high of 5238, the Nasdaq has followed the SP & Dow. A monthly close in the 5300s looks due in Aug' or September. That should start to awaken mainstream chatter of an eventual push to the 6000s by late spring 2017. Core support is the giant psy' level of 5K.
The mighty Dow settled +0.2% @ 18576.. having broken a new historic high of 18638. The upper weekly bollinger is offering the 18700s... with 18800/900s more viable in September. Any price action >19k should confirm we'll see broad upside into next year... with the psy' level of 20k just about within range by year end. Core support is the 18K threshold.
The master index settled +0.37% @ 10822 - the best level since Aug'2015. Further upside to the 11K threshold looks due within a few weeks. The May 2015 high of 11254 looks set to be taken out by late Oct'. Core support is the 10600/500 zone.
The second market leader - R2K, settled -0.1% at 1229, but did manage a new multi-year high of 1235. Broader upside to challenge the June 2015 high of 1296 looks due in Sept/Oct. A year end close in the 1300s seems probable. First support is the 1200 threshold.
The 'old leader' - Trans, continues to struggle, with a net weekly decline of -0.75% to 7807. The 8k threshold remains very strong resistance. However, considering the historic highs in the sp/dow/nasdaq, the Trans can be expected to catch up... eventually. A break >8k will offer the 8300/400s by late October. The Nov'2014 high of 9310 looks out of range until early spring 2017.
A week of pretty subdued price action, yet still managing new historic highs in the 'headline' indexes - sp/dow/nasdaq.
The R2K and NYSE comp' look set to follow, with new highs within 1-3 months. The Transports will likely take another 5-7 months to break a new historic high.
Equity bulls currently have 4-6% of downside buffer, before rising trend/support is broken.
A relatively quiet week is due. Other than CPI, the latest Fed minutes, and a few sporadic retail earnings, there really isn't much of significance.
M - empire state, housing market index
T - CPI, housing starts, indust' prod
W - EIA report, FOMC minutes (2pm)
T - weekly jobs, phil' fed', leading indicators
F - *OPEX*
*Fed officials Lockhart, Bullard, and Williams will be on the loose, and Mr Market will be listening for any talk about a possible rate hike in September.. or far more likely... December.
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Have a good weekend
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