Thursday, 16 November 2017

Naturally rebounding

US equity indexes closed broadly higher, sp +21pts at 2585. The two leaders - Trans/R2K, both settled higher by around 1.6%. VIX settled -10.4% at 11.76. Near term outlook offers a touch of cooling to the mid sp'2570s, but with the 2600s due before end month.


sp'daily5



VIX'daily3



Summary

US equities opened moderately higher, and built broad gains into the afternoon.

It was notable that once again the mainstream have seen their mood swing from effectively 'on suicide watch' to 'everything is fine again'. We're only in the sp'2500s, what happens when we're in the 3000s next year, and we drop 1% at the open? Who at CNBC, Bloomberg, or Fox Business, is responsible for calling the fed to request at least a press release threatening QE4 ?

Market volatility was naturally whacked at the open, and ground down to the mid 11s in early afternoon. With a retrace to the mid sp'2570s, VIX 12.50/13s seem due, before another wave to the 9s. Whether that is before or after the Thanksgiving break.... is of no importance.
--

Appropriate.

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Wednesday, 15 November 2017

More of the same

US equity indexes closed moderately weak, sp -14pts at 2564. The two leaders - Trans/R2K, both settled lower by -0.5%. VIX settled +13.3% at 13.13. Near term outlook offers a bounce to the 2580s before the weekend. More broadly, the 2650/700 zone is still on track in late December.


sp'daily5



VIX'daily3



Summary

The day began with a mild case of mainstream media bearish hysteria...



Its not what Cramer stated, as the mainstream's lack of perspective, seeing equity futures as 'sharply lower', whilst the sp' was set to open lower by just -10pts (0.4%).Would an opening decline of -25pts (1.0%) now justify the word 'crash' being used?

US equities did indeed open moderately lower, breaking below quad-spike support of 2565/66. The market floored at 2557, to whipsaw back upward, although the closing hour price action wasn't exactly great.

Its notable that the VIX broke to the mid 14s, the highest level since Aug'21st. The key 20 threshold still looks out of range for the rest of the year.
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Grey horror - marginally more inspiring than GE CEO/Chair' Flannery.
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Tuesday, 14 November 2017

Another day of moderate chop

US equity indexes closed moderately weak, sp -5pts at 2578 (intra low 2566). The two leaders - Trans/R2K, both settled lower by around -0.3%. VIX settled +0.8% at 10.59. Near term outlook offers further moderate swings into Friday opex. More broadly, the 2650/700 zone remains viable into year end.


sp'daily5



VIX'daily3



Summary

US equities opened a little weak, cooled to 2566, and then hyper spiked. The 2565/66 threshold has indeed been rather important across the last few weeks. Whilst the bulls are struggling to break into the 2600s, neither are the bears able to muster any sustained/significant downside.

Volatility climbed in the morning, with a notable higher low of 12.61, but settling in the mid 11s. The key 20 threshold looks well out of range for the rest of the year, unless things turn hot in the middle east or NK.

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Monday, 13 November 2017

Choppy start to the week

US equity indexes closed on a fractionally positive note, sp +2pts at 2584. The two leaders - Trans/R2K, settled +0.2% and u/c respectively. VIX settled +1.9% at 11.50. Near term outlook offers further moderate chop, with last week's low of sp'2566 appearing very secure. The 2600s are clearly viable before next week's Thanksgiving break.


sp'daily5



VIX'daily3



Summary

US equities opened moderately weak (pressured via Asian/EU markets), but the bears were even weaker than usual, with some indexes turning positive in the 10am hour. The rest of the day was rather tedious micro chop.

The VIX saw a pre-market high of 12.18, notably 0.01pts below last week's cash market high. The 9/8s appear probable into next week's Thanksgiving break. Indeed, with a holiday break on the horizon, the market will be inclined for a great deal more of what we saw today. Clearly, underlying price pressure is still to the upside, and the 2600s are absolutely viable by next Wed/Friday.

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As the fed might say... transient grey gloom rolling in, to conclude a rather cold November's day in London.

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Saturday, 11 November 2017

Weekend update - US monthly indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -0.2% (sp'500, nasdaq comp'), -1.3% (R2K), to -2.6% (Trans). Near term outlook offers renewed upside to the sp'2600s by Thanksgiving. The year end target of 2683 will be just about technically within range.


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

sp'500


Despite a net weekly decline of -0.2%, the sp' is currently net higher for an 8th month, with a new historic high of 2597. Underlying MACD (blue bar histogram) cycle is just flat lining on the high side, showing no sign of a downward swing. The key 10MA stands at 2456. Rising trend from early 2016 is around the 2470s.

Best guess: near term upside to the 2600s by Thanksgiving. The original year end target of 2683 is just about technically viable. More broadly, 3K is a valid target by mid 2018, not least if commodities can break upward (CRB >197s).

Equity bears have nothing to tout unless a bearish monthly close, which (to me) would constitute a settlement under the key 10MA. Keep in mind, the 10MA is rising around 35pts a month, so from Dec'1st onward, it'll be around 2490.. possibly even the 2500 threshold.
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Nasdaq comp'


The tech remains broadly super strong, having seen a new hist' high of 6795. The 7000s are clearly viable before year end. The 8000s are a valid target for late spring/summer 2018. Recent earnings from most tech stocks have come in fine, with some (such as INTC, MU, NVDA) outright superb. The 'comp @ 10k' is a valid target for 2019, although I realise most will be laughably dismissive of it.


Dow


The mighty Dow remains broadly strong, with a recent historic high of 23602. The key 10MA is currently in the 21700s, and will be around 22000 from Dec'1st onward. A year end close in the 24000s is very much within range. Things are arguably only bearish with a monthly close <21500, and that sure doesn't look likely.


NYSE comp'


The 'master index' saw a net weekly decline of -0.4%, holding just a little shy of the Oct' historic high of 12415. Near term outlook offers renewed upside to the 12500s. Upper monthly bollinger will offer the 12700s 'on a stretch' by year end. 13k looks out of range until at least early 2018.


R2K


The R2K settled lower for the 4th week of the past 5, -1.3% at 1475. However, broadly, the R2K is super strong. Another push upward is due, not least if financials climb into year end on 'higher rate hopes in 2018'. Only bearish if <1425.


Trans


The 'old leader' - Trans, saw a very sig' net weekly decline of -2.6%. Underlying MACD cycle ticked lower for a second week. At the current rate, a bearish cross will be due by early December. However, considering earnings and econ-data, the broadly super strong main market, the tranny should resume upward. A 2017 settlement >10k is very much within range.
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Summary

Net weekly declines for all US indexes, but its highly notable that the sp', dow, and nasdaq comp' still broke new historic highs.

Most indexes have around 4-5% of downside buffer, before the core upward trend from early 2016 would be challenged.

Equity bears have nothing to tout unless the majority of indexes see a monthly close under their respective 10MAs.
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Looking ahead

Notable earnings: JD (Mon'), HD (Tues') CSCO (Wed'), WMT (Thurs'), FL (Fri')


M - US T-budget
T - PPI
W - CPI, retail sales, empire state, bus' invent' EIA Pet' report
T - Weekly jobs, phil' fed, import/export prices, indust' prod, housing market index
F - Housing starts  *OPEX*

*there are a few fed officials on the loose, notably: Bullard (Tues), Evans, (Wed' in London), Mester (Thurs)

**As Friday will be opex, expect a lot of price chop with increasing vol' into the weekend.
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Friday, 10 November 2017

A mixed week

US equity indexes closed fractionally mixed, sp -2pts at 2582. The two leaders - Trans/R2K, settled -0.2% and u/c respectively. VIX settled +7.5% at 11.29. Near term outlook offers the sp'2600s by Thanksgiving. The year end target of 2683 will be technically within reach.


sp'daily5



VIX'daily3



Summary

US equities opened a little weak, saw a morning low of 2575, with a moderate upswing into the late afternoon. A few indexes even turned fractionally positive.

Market volatility remains broadly subdued, with the VIX settling the week in the low 11s. The key 20 threshold looks out of range for the rest of the year. Near term outlook offers the sp'2600s by Thanksgiving. If correct, the VIX will be back in the 9/8s.
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A mixed week


A notable new historic high of 2597.02, but a net weekly decline of -5pts (0.2%), the first decline since early Sept'. Broadly, the m/t trend remains super strong.
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Thursday, 9 November 2017

A sporadic drop

US equity indexes closed broadly weak, sp -9pts at 2584 (intra low 2566). The two leaders - Trans/R2K, settled lower by -1.2% and -0.5% respectively. VIX settled +7.4% at 10.50. Near term outlook offers some weak chop, but nothing sustained <2560. Broadly, nothing has changed, as the 2600s are due into Thanksgiving.


sp'daily5



VIX'daily3



Summary

US equities opened moderately lower, saw a bounce in the 10am hour, but with some sporadic 'spooky news' about the Senate possibly delaying a corp' tax reduction until 2019, the market resumed back lower. There was a distinct latter day recovery, with most indexes only settling moderately lower.

Market volatility picked up, but even the intra day high of 12.19 is still to be seen as broadly subdued. Despite today, the key 20 threshold still looks out of range for the remainder of the year. Its notable that whilst front month VIX was sig' higher, further out months were only a touch higher. The 'big money' does not expect significantly higher volatility before year end.
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Bonus chart: Japan, Nikkei, daily



I thought the Japanese market merited highlighting, after the Thursday session saw a wild swing from 23382 to 22522. The daily candle is one of rather severe 'indecision'. Further, on any basis, the Nikkei is short term cyclically overbought, although that could have been argued since mid September. The Oct' settlement >21k is what matters, and it offers next soft target of 25/26k in 2018.
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Wednesday, 8 November 2017

Moderate chop

US equity indexes closed moderately mixed, sp +3pts at 2594. The two leaders - Trans/R2K, settled -0.4% and +0.2% respectively. VIX settled -1.1% at 9.78. Near term outlook still offers 'natural' target of 2560 with VIX 11s. More broadly, the year end target of 2683 remains within range.


sp'daily5



VIX'daily3



Summary

US equities opened a little weak, saw a floor around 12pm from sp'2585, and then clawed upward across the afternoon to 2595.

Market volatility remains broadly subdued, with the VIX settling in the upper 9s. A burst to the low 11s remains due, and that would equate to at least sp'2570, if not '60. The key VIX 20 threshold looks out of range for the rest of the year.
--

A chilly afternoon sunset

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Tuesday, 7 November 2017

A little weak

US equity indexes closed on the weaker side, sp -0.5pts at 2590 (intra high 2597). The two leaders - Trans/R2K, settled lower by -0.6% and -1.2% respectively. VIX settled +5.2% at 9.89. Near term outlook offers moderate weakness to sp'2560, which should equate to VIX 11s (ohh, the drama!).


sp'daily5



VIX'daily3



Summary

US equities started the day on a positive note, with a trio of new historic highs in the sp', dow, and nasdaq comp'. There was a soft reversal around 9.50am, and then the market broadly cooled into the late afternoon. There was a closing hour mini ramp, but another wave lower to around 2560 seems very probable within the next day or two.

Market volatility opened fractionally lower, climbed to the 10s, but settling in the mid 9s. We're not going to see the VIX above the key 20 threshold before year end, are we? Indeed, we've not see a year without VIX >20 since 2005, and its reflective of just how confident the US/world capital markets are.
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To the APRN and SNAP holders, ohh, and Bill 'no stops' Ackman... the following is for you..


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Monday, 6 November 2017

Starting fractionally bullish

US equity indexes closed fractionally mixed, sp +3pts at 2591. The two leaders - Trans/R2K, settled -0.2% and +0.2% respectively. VIX settled +2.8% at 9.40. Near term outlook offers sp'2560, but more broadly, the year end target of 2683 has now come within 90pts (3.5%) of being hit.


sp'daily5



VIX'daily3



Summary

US equities opened in minor chop mode, but soon leaned back upward, with new hist' highs in the sp', dow, and the Nasdaq comp'. On any basis... it was just another bullish day. Its pretty incredible - even to me, that my year end target has now come within 90pts (3.5%) of being hit, and we've still around 8 trading weeks left of the year.

Volatility stayed positive across the day, but whether VIX 8s, 9s, or 10s... its all noise at these lowly levels. Any price action >12.50 looks out of range for some time, unless a sporadic 'spooky news' story.
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Bullish November skies.

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Saturday, 4 November 2017

Weekend update - World monthly indexes

It was a broadly bullish month for world equity markets, with net monthly changes ranging from +8.1% (Japan), +4.3% (USA - Dow), +3.1% (Germany), +1.6% (UK), to -1.8% (Russia). The mid term outlook into, and across 2018 remains bullish.


Lets take our regular look at ten of the world equity markets

USA - Dow


The mighty Dow climbed for a seventh consecutive month, +972pts (4.3%) to 23377, with a new historic high of 23485. Nov'3rd saw a new hist' high of 23557. The key 10MA is currently at 21793, and looks set to remain intact into year end. Upper bollinger is offering 23850 in the immediate term, with the 24000s viable in December.

Q3 earnings have come in broadly fine, and in some cases (such as INTC, MU, MSFT, AAPL) outright superb. Many companies have raised their outlook for 2018, as they see an acceleration in the economy. The econ-data is supportive of such a view, especially GDP, Chicago PMI, and various sentiment surveys. 

Best guess: broad upside into year end, probably on the order of 3-4%, which would result in a 2017 settlement within 24250/500. Further, a 'conservative' 25% upside will offer 30k in 2018.

Equity bears have nothing to tout unless a bearish monthly close. For me, that would constitute a close under the monthly 10MA. I do not anticipate such a monthly close for a very considerable time to come.
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Germany – DAX


The economic powerhouse of the EU saw the DAX +400pts (3.1%) to 13229, with a new historic high of 13255.Its notable that the DAX is already net higher for November by a sig' 1.9%, with a new hist' high of 13505. The upper bollinger will be offering the 14000s in December. Things only turn bearish with a monthly close <12500, which looks very unlikely.


Japan – Nikkei


The BoJ fuelled Nikkei soared 1655pts (8.1%) to 22011, the highest close since June 1996. Indeed, the Oct' gain is very important when seen on a multi-decade chart. It is a massively important breakout, and offers vastly higher levels. Next key threshold is 26k, then the Jan'1990 high of 38915.80. I recognise the secondary target will be seen as outrageously bullish, but the Oct' breakout is suggestive of it within 2-3 years.


China – Shanghai comp'


Chinese equities gained 44pts (1.3%) to 3393. Broader price action does remain rather muted though, stuck around the key 3400 threshold. Its notable the upper bollinger is also currently in the 3400s. A monthly close >3500 looks probable by early 2018, and then its 'open air' to around 4500 by late 2018.


Brazil – Bovespa


It was a mixed month for Brazilian equities, with the Bovespa breaking a new historic high of 78024, but settling +14.98pts (0.02%) at 74308. Even though Oct' closed effectively flat, the fact the 2008 historic high has been decisively exceeded is massively important for the mid term.

Just consider that the Bovespa managed to break a new high, even though commodity prices are still broadly subdued. Soft target is a monthly close above the Oct' high, and from there, a grander target of 100k by late 2019. Eyes on the CRB, a monthly close >197 would be decisive, and suggestive of at least another 10% by mid 2018, which should equate to BVSP around 85k. 


Russia - RTSI


Russian equities leaned weak, settling -20pts (1.8%) to 1111. The 1200 threshold remains critical. Mid term bullish trend from Jan'2016 remains intact, an eventual break >1200 appears probable. A monthly close >1200 will offer soft upside target of 1500/600 in 2018. Higher energy prices would really help kick the Russian market upward. Perhaps Putin is hoping for a long cold winter?


UK – FTSE


The UK market climbed 120pts (1.6%) to 7493, and is currently very close to breaking a new historic high. Most important to keep in mind is the monthly close >7k, as achieved in Dec'2016. Since then, price action has been rather choppy, but 7k is holding as new core support. By definition, the break >7k offers grander upside to around 10k. Clearly that is going to take some time, but it looks just about viable by end 2018.

I shall add, the UK political scene remains 'unstable'. PM May will very likely quit (or be kicked) by her own (Conservative) party within a year. As things are, Labour leader Corbyn, would likely sweep to power. Corbyn is an outright communist, and it'll be fascinating to see how the UK capital markets cope with such a leadership. When the next recession hits, how many hours would need to elapse before Corbyn is dialling the BoE to initiate 'QE for the people'?


France – CAC


French equities gained a very significant 173pts (3.2%) to 5503. Technically, the French market has classic price structure. We have a breakout in March, then a back test across the summer, and we're now pushing to new multi-year highs. Next soft target is the 2007 high of 6168, which is currently another 16.7% higher. That is most certainly viable by late summer 2018. 


Spain – IBEX


The Spanish market saw a very mixed month, settling +142pts (1.4%) to 10523. The intra month low of 9922 was of course due to the Spain/Catalan dispute. Its pretty incredible that the market recovered, even settling sig' higher. Short/mid term outlook remains bullish, so long as the 10k threshold holds. The 12k threshold is obviously critical. A challenge of that seems probable by summer 2018. Any monthly close >12k will offer next target of 15k, and then the hist' high of 16040. It could be argued price structure from May has formed a large bull flag, which would be confirmed with any price action >11k


Australia - AORD


The Australian market soared 231pts (4.0%) to 5976, notably closing above the April 2015 high of 5963. November has already started on a bullish note, hitting 6037. Next big target is the 2007 historic high of 6873, and that is another 14.0% higher. The Aus' market/economy is highly swayed by commodity prices, which have been leaning upward since June. Based on other markets, the 8000s will be a valid target in 2019.
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Summary

Most world equity markets continue to power upward, broadly lead by the US, Germany, and Japan.

Russia and China are lagging, but both are very close to key breakout thresholds.

Commodities appear poised for broad upside in 2018. If correct, it will be especially bullish for the BRICs, but all markets would benefit to some degree.
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Special highlight for commodities...

CRB (with sp'500), monthly, 8yr


The CRB is currently net higher for a third consecutive month, +1.0% at 189.38. The 195/96s are key. To be decisive, a monthly close >197s, will offer confidence of upside to around 230 by late summer 2018. If correct, that would have massive bullish implications for world equities, and see the current upward trend - from early 2016, accelerate.
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Looking ahead

There are still a fair few corp' earnings to appear, but it will be a somewhat lighter week in terms of data.

M - -
T - Consumer credit
W - EIA Pet' report
T - Weekly jobs, wholesale trade
F - Consume sent', US T-budget

*the only fed official scheduled is Dudley on Monday - who will be speaking on 'Lessons from the Financial Crisis', which might garner some media attention.

**US clocks change in the early hours of Sunday Nov'5th. Yours truly will be glad to return to the normal 5hr difference.
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Have a good weekend

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