Thursday, 29 September 2016

Is Mr Inflation lurking?

US equity indexes closed moderately higher, sp +11pts @ 2171, (intra low 2151). The two leaders - Trans/R2K, settled higher by 0.3% and 0.7% respectively. VIX settled -5.4% @ 12.39. Near term outlook offers further upside into the Sept'/Q3 close.




It was a rather interesting day in market land. There was a fair amount of minor chop in the morning, but then a significant swing higher in the afternoon, partly inspired by a surge in oil prices.

VIX cooled for a second consecutive day, unable to even hold the 13s. Despite the looming election, the key 20 threshold looks a stretch.

Inflating commodities

I could highlight 20-30 charts, but the following two will have to suffice for today...

Copper, monthly

Copper has built a strong floor since the Jan' low of $1.94. A move >$2.40 in Oct/Nov', would break the downward trend that stretches back to 2011. First target would then be the 2.80/3.00 zone. Interestingly, the Russian equity market is similar in price structure, and has recently broken out.

sp'500 vs CRB, weekly, 10yr

Since the Jan'19th low of 154.85, the CRB has been battling upward. Its now formed what is likely the first higher low of 176.67. A push to the 210/230 zone before year end looks viable. 

If commodities do climb into next year, it bodes for far higher equity levels, not just for the US market, but across the world.

*I will highlight the world markets this weekend.. and it remains the most important post I provide each month.

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Goodnight from London