Saturday, 27 May 2017

The long weekend

US equities closed fractionally mixed, sp' +0.7pts at 2415. The two leaders - Trans/R2K, settled +0.1% and -0.1% respectively. VIX settled -1.8% at 9.81. Near term outlook offers a gap fill of 2409/04. More broadly, the sp'2500s are a valid target by late September.


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Summary

US equities opened weak, and then saw micro chop across the day. The Friday fractional gain made for a seventh consecutive gain, equalling the February run.

This morning's revised Q1 GDP print of 1.2% was again notably still weak, but then neither is it remotely recessionary. Its just a case of the US economy 'ticking along'.

Market volatility remained very subdued, with the VIX settling the week in the 9s.
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Podcast from Coffey and Najarian


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Day'3 of summer 2017 :)

For extra charts (usually after 7pm EST each day), see https://twitter.com/permabear_uk

Goodnight from London
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*the weekend post will appear Sat' 12pm EST, and will detail the US weekly indexes

Friday, 26 May 2017

Another set of new historic highs

US equity indexes closed broadly higher, sp +10pts at 2415 (intra high 2418). The two leaders - Trans/R2K, settled higher by 1.6% and 0.1% respectively. VIX settled -0.3% at 9.99. Near term outlook offers a little cooling to 2409/04. Any sustained price action under 2400 now looks unlikely.


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Summary

So much for any weakness ahead of the Memorial day break, as we saw new historic highs for the sp'500 and Nasdaq comp'. Market volatility remains very subdued, with the VIX once again cooling into the 9s.

I'm well aware of some of the very bearish chatter out. A fair few are touting a decline to around the 200dma. That will be in the sp'2270s in early June, and is clear 5% lower. Is it possible? Sure, but just what excuse could the market use to see that kind of down wave?

Other than something 'nuclear' in North Korea... I can't think of anything.
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Podcast from Coffey and Dr J.

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Just another sunny evening in the city.

Goodnight from London
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Thursday, 25 May 2017

A day of minor chop

US equity indexes closed a little higher, sp +5pts at 2404. The two leaders - Trans/R2K, both settled higher by 0.1%. VIX settled -6.5% at 10.02. Near term outlook still offers a sig' wave lower, at least to test the 50dma in the 2370s.


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Summary

Equities opened fractionally higher, and there were signs of a reversal from the opening bell, yet.. the sellers never appeared in even a moderate degree. Instead, it was a day of very minor chop. The press release from the Fed at 2pm saw a few minor swings, but leaning on the upside. The closing hour almost saw a new historic high, with the sp'500 just 0.19pts shy.

Market volatility continued to melt lower, with the VIX briefly seeing the 9s. The key 20 threshold looks as far away as ever.

Next Monday is CLOSED, and on balance, Friday will lean to the quieter side, as many will make an early escape for the weekend. The better opportunity for the equity bears will be tomorrow, or next Tuesday. Keep in mind the monthly close is next Wednesday.
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The summer continues

Goodnight from London
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Wednesday, 24 May 2017

Still set for a swing lower

US equities closed moderately higher, sp +4pts at 2398 (intra high 2400). The two leaders - Trans/R2K, settled higher by 0.5% and 0.3% respectively. VIX settled -1.9% at 10.72. Near term outlook offers a sig' wave lower to the sp'2340s.


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Summary

A fourth consecutive net daily gain for the sp', having fully filled the gap from last Wednesday. The psy' level of 2400 is a clear resistance threshold. The 50dma is 2370, with the lower bollinger at 2367.. those are the first soft targets within 1-2 days.

Market volatility was ground lower for a fourth day, with the VIX stuck in the 10s. Cyclically, we're due a bearish MACD cross within 1-2 days, but my guess is that instead we'll see a powerful surge in the VIX.. back to the 15/16s.
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Another piece of my childhood has gone...




I was always a fan of the bond intro' themes.
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After yesterday night's event in Manchester, today's warm sunshine was a welcome relief.

Goodnight from London
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Tuesday, 23 May 2017

Inclined to lean weak

US equities closed moderately higher, sp +12pts at 2394 (intra high 2395). The two leaders - Trans/R2K, settled higher by 1.0% and 0.7% respectively. VIX settled -9.2% at 10.93. Near term outlook offers renewed weakness, with a primary target of sp'2348 and Nasdaq comp'5910. More broadly... nothing has changed, as the 2600s appear highly probable before year end.


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Summary

It was a day for the equity bulls, as the recovery that began Thursday morning from sp'2352 continued. Its notable that today's high of 2395 was a mere 10pts shy of last week's historic high. Market volatility was naturally still continuing to cool, with the VIX falling back into the 10s.

Despite today, near term outlook remains unchanged.The US market will be cyclically inclined to increasingly lean weak..
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Katie agrees with yours truly


Watching the breakfast show on clown finance TV this morning (I rarely do), there was an appearence from Katie Stockton. Her outlook was effectively the same as I hold. Short term weakness to around sp'2340, but broader mid term upside to 2640 (my year end target is 2683).

I would refer anyone who didn't read my weekend post to go look.
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Summer arrives.. finally.
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It has indeed happened again. After a wait of 25 years, season'3 of Twin Peaks began last night on Showtime.


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As ever... extra charts in AH @ https://twitter.com/permabear_uk

Goodnight from London
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Saturday, 20 May 2017

Weekend update - US weekly indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -1.3% (Transports), -0.6% (Nasdaq comp'), -0.4% (sp'500, Dow), to -0.1% (NYSE comp'). The mid term outlook remains broadly bullish though, as the US market is still regularly breaking new historic highs.


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

sp'500


A net weekly decline of -9pts (0.4%), settling at 2381. However, the week did begin on a positive note, with a new historic high of 2405.77. Underlying MACD (blue bar histogram) remains negative, as price momentum is leaning to the bears.

Best guess: another brief washout to fully fill the gap zone of 2348 - before Memorial day, and then leaning back upward into end May. If the fed raise rates in June (or July), the market should be able to continue broadly climbing. The 2500s seem a realistic target by late September, when a moderate 5% retrace is just about viable. The year end target of 2683 remains on track.

Equity bears have nothing to tout unless a break of the mid term rising trend. That will be in the 2290s next week, and in the 2350s by late July.
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Nasdaq comp'


The Nasdaq started the week on a positive note, with a new historic high of 6170, but then swinging to an early Thursday low of 5996, settling net lower by -0.6% at 6083. There remains a notable unfilled gap at 5910. Underlying MACD has a divergent cycle high relative to the Feb' peak. There is a threat of a bearish cross before end month. Things would turn bearish with any closes <5900. Rising trend from summer 2016 will be around 5800 as at end May.


Dow


The mighty Dow declined for a second consecutive week, settling -0.4% at 20804. Its notable that we've not traded under 20k since late January. Indeed, first big support is the 20k threshold, and that does look secure for the mid term. Any price action under 20k from June onward would merit alarm bells.


NYSE comp'


The master index settled -0.1% at 11542, having also filled the big price gap from April 24th. Renewed weakness to the 11300/200s seems probable, before another swing upward into June, and across the summer. Things would turn very bearish with any price action <11200.


R2K


The second market leader - R2K, settled lower for a third consecutive week, -1.1% at 1367 (intra low 1351). Underlying MACD remains negative. Things would turn provisionally bearish <1315. Alarm bells would need to sound on any daily/weekly closes <1280.


Trans


The 'old leader' - Transports, remains the market laggard, with a net decline of -1.3%, settling at 8879. The weekly close <9k is rather bearish, and is supportive of the notion that the US market will see another sig' wave lower before memorial day (May 29th). Next support is the 8600/300 zone. Alarm bells would need to sound on a break <8k, but that is another 10% lower.
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Summary

All US equity indexes are holding their mid term upward trends from early 2016.

The Nasdaq remains the market leader, with the Transports still lagging.

Most indexes have around 4% of downside buffer before the mid term trends are challenged.

Equity bears have nothing to tout unless a break of the mid term trends, with a monthly close under the 10MA, which for the sp'500, is currently in the 2260s.
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Looking ahead 

M -
T - New home sales, Richmond Fed' manu'
W - FHFA house price indx, Existing home sales, EIA Pet' report, FOMC Mins
T - Weekly jobs, intl' trade
F - Durable Goods orders, GDP (second est'), corp' profits, consumer sent'

*Monday May 29th, the US market will be CLOSED, and thus the Friday May 26th session will be inclined to be very subdued once the econ-data is out of the way by 10am.

**there are a great many fed officials on the loose next week. Mr Market will be listening for any sign of dithering about a June rate hike, which would be a prime excuse for another wave lower.
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Have a good weekend
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The next post on this page will appear Monday at 7pm EST.

From suicide watch to renewed cheerleading

US equity indexes closed moderately higher, sp +16pts at 2381 (intra high 2389). The two leaders - Trans/R2K, settled higher by 0.7% and 0.4% respectively. VIX settled -17.9% at 12.04. Near term outlook threatens gap fills to sp'2348 and Nasdaq comp' 5910, within 2-4 days.


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Summary

The upward swing from the Thursday low of sp'2352 continued, with borderline significant gains to sp'2389. There was some late day cooling, which does offer a hint of another big wave lower next week.

Volatility was crushed, with the VIX seeing a low of 11.72, but notably settling back in the 12s. Even if sp'2348 next week, VIX shouldn't be able to claw any higher than the mid teens.
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The changing narrative of the mainstream maniacs...


On Wednesday, the cheerleaders of clown finance TV were visibly spooked. Today's push into the sp'2380s saw a swing back in mood to 'everything is fine' again.

Its truly incredible how bi-polar the mainstream have become. If we're not breaking a new historic in at least one index each day, they are twitchy. A mere 1-2% decline, and they are indeed... frankly, all on suicide watch.

My 'best case' outlook is for sp'3K in 2018, and then a natural bear market (with a cyclical recession) to the sp'1600/1500s. If correct, how are the cheerleaders going to cope with that? Will they all need to put in a safe space or something?

I dream of Cramer appearing in 2019... touting 'take the money out, that you might need for the next five years'... when we're trading somewhere around sp'1600.


A little flashback...



In Cramer's defence, that was from Oct'2008, and the market did indeed plunge a further huge amount into March'09. The point is, if we do ever trade down to the sp'1600/1500s again, I'd imagine many - even the cheerleaders, might start to become resigned to a deflationary collapse.

However, it remains my view that the central banks simply won't permit it. The fed will buy student debt, infrastructure bonds (you know they are coming, right?), and of course, we're yet to experience outright 'helicopter drops' to the unwashed masses.
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Here in the metropolis...

Into the west... sunshine and showers
Goodnight from London
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*the weekend post will appear Sat' at 12pm EST, and will detail the US weekly indexes

Friday, 19 May 2017

Meanwhile.. in Brazil

US equity indexes closed moderately higher, sp +8pts at 2365 (intra range 2352/75). The two leaders - Trans/R2K, both settled higher by 0.4%. VIX settled -6.0% at 14.66. Near term outlook offers choppy weakness for Friday-opex. The lower gaps of sp'2348 and Nasdaq comp' 5910 remain set to be filled.


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Summary

It was a day of moderate swings, with the sp' seeing early weakness to 2352, but then battling upward. The sp'500 became stuck at first natural resistance of 2375. Its still possible we'll see a brief pop to around 2382.. before resuming low to fully fill the price gap at 2348.

Volatility remains a little elevated in the teens, and its notable the VIX did print a new multi-week high of 16.30. There is resistance (weekly cycle, not shown) around the 16s. Only a daily close >16 would offer any real threat of the key 20 threshold being seen.
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Meanwhile... in Brazil

Those getting overly hysterical at yesterday's US market decline should take some time to consider what a real drop looks like...

Brazil, daily


A net daily decline of -5943 (8.8%), settling at 61597, notably under the 200dma. The Dec'2016 low of 56828 looks vulnerable to being tested. Broadly though, the Brazilian market is still strong, having climbed from 37k in Jan'2016 to 69k in Feb'2017.



Beyond the short term political issues, the grander issue for Brazil are commodity prices. If commodities can climb across the second half of 2017, then the Bovespa should be able to challenge the 2008 historic high of 73920.

Q. Will we ever see such a daily decline in the next US bear market?

Its tough to imagine those at Print central ever allowing it. We know various Fed officials would start issuing threats of QE, with just a 10% correction spanning 3-6 weeks.
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I shall end today with a few tracks by Chris Cornell... who will be missed by many.



Seasons is a personal favourite, originally in the indie movie 'Singles', and later in 'Man of Steel'. During many hundreds of rainy afternoon walks, I have listened to that one.


Something lighter...




As ever, extra charts in AH @ https://twitter.com/permabear_uk

Goodnight from London
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Thursday, 18 May 2017

Pre-opex washout

US equity indexes closed significantly lower, sp -43pts at 2357. The two leaders - Trans/R2K, settled lower by -3.1% and -2.8% respectively. VIX settled +46.4% at 15.59. Near term outlook offers renewed upside into the opex/weekly close. Sporadic (and brief) washouts are to be expected, in what remains a powerful upward trend.


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Summary

Based on cyclical issues yesterday, I had expected the market to cool to sp'2393/90 this morning. Yet overnight 'Trump' chatter gave the HFT algo-bot's the excuse to washout much lower. The break into the gap zone of 2370/48 is a surprise, as that genuinely seemed to have become one of those rare 'breakaway gaps'.

Market volatility naturally jumped, with the VIX soaring into the mid teens, settling at the high of day in the brief 15mins of AH trading. Today's candle does look rather insane. Its notable that we've filled the big gap zone to the mid 14s
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A somewhat random news item, but it caught my attention...


So, according to the NY Fed, Q1 household debt has finally surpassed the pre-crash peak of 2008. Congrats to the American consumer, yes? This is a good sign of the underlying strength of the economy, right?
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Podcast from Coffey and Dr J'



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Will 'normal service' resume?

Broadly though, nothing has changed. We'll continue to occasionally see sporadic 0.25%, 0.5%, even 1-2% washouts, but the equity bears still won't likely be able to muster anything sustained. The underlying bid for equities (not least from the central banks) remains 'scary strong'.

I'll be the first one to sound alarm bells if the mid term trends are broken, and right now, that is still around 4% lower. I can't see that happening any time soon, can you?

Goodnight from London
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*extra charts in AH (usually after 8pm EST) @ https://twitter.com/permabear_uk

Wednesday, 17 May 2017

Reading around

US equity indexes closed moderately mixed, sp -1pt at 2400 (intra high 2405). The two leaders - Trans/R2K, settled -0.1% and +0.1% respectively. VIX settled +2.2% at 10.65. Near term outlook offers brief cooling to 2393/90. More broadly, a May settlement in the 2410/20s remains well within range.


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Summary

It was another day for the equity bulls, with new historic highs in the Nasdaq comp' and sp'500. Some cooling to 2393/90 zone looks due, before choppy upside into this Friday's opex.

Market volatility remains very subdued, with the VIX firmly stuck sub-teens. Does anyone seriously think we'll see the VIX >20 this summer? There is simply no threat of it, other than via something 'nuclear' in Asia.
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Reading around

I read around far less than I used to. As you might realise, I'm writing a great deal, and I just don't have the free time that I used to. I do however make a point of periodically browsing most of the sites/blogs I have listed on this very page.

I am still seeing a lack of capitulation. There are some notable names whom the market has yet to break. A number of infamous sites/blogs need to disappear before Mr Market is arguably satisfied. I could name names... but you can probably guess the ones I am thinking of.

Yours truly will remain bullish until the mid term trends in both the US - and most other world markets, have been broken and closed under. That looks at least 3-4 months away, if not spring 2018.

Goodnight from London
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Tuesday, 16 May 2017

Nasdaq still leading the way

US equity indexes closed moderately higher, sp +11pts at 2402 (new historic high 2404). The two leaders - Trans/R2K, settled higher by 0.7% and 0.8% respectively. VIX settled +0.2% at 10.42. Near term outlook offers a touch of weakness to 2393/90, before resuming upward to the 2420/30s into end month.


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Summary

US equities began the week on a moderately positive note. Short term price structure does threaten a baby bull flag, which offers the sp'2410/20s.. but a swing lower to 2393/90 seems a given, before renewed upside. In the scheme of things though.. its all minor moves. The important point is that the US market is still broadly pushing upward.

Market volatility remains very low, with the VIX firmly stuck sub-teens. The key 20 threshold looks out of range until at least late September.
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Nasdaq comp', monthly


A new historic high of 6153, with the 6200s just about in range before end month. The trend is bullish, right?

Goodnight from London
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Saturday, 13 May 2017

Weekend update - US weekly indexes

It was a mixed week for US equity indexes, with net weekly changes ranging from +0.3% (Nasdaq comp'), -0.3% (sp'500), -1.0% (R2K), to -2.0% (Transports). The mid term outlook offers upside across the summer. The next realistic chance for even a 5% retrace appears late Sept/Oct. The year end target of sp'2683 remains on track.


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

sp'500


A net weekly decline of -8pts (0.3%), settling at 2390. There was a notable new historic high of 2403. Underlying MACD (blue bar histogram) remains moderately negative, but is threatening a bullish cross before end month. Core rising trend is in the 2280s, and is rising around 20/25pts a month.

Best guess: near term upside into mid/late June, at least to the 2420/30s. The 2500s appear viable by late September. No retrace >7% seems likely this year. The year end target of 2683 appears on track.

Equity bears have nothing to tout unless a break of the monthly 10MA - currently at 2268, and which is rising 20/25pts a month.


Nasdaq comp'


The tech sector continues to lead the way, with a net weekly gain of 0.3%, settling at 6121. There was a notable new historic high of 6133. First soft support are the 5900s, whilst the 6200s seem a valid target for June, when the fed are set to raise rates for a second time this year. It remains rather bizarre how very few are talking about the 7000s, which are very much a valid target, whether by year end.. or early 2018.


Dow


The mighty Dow declined -110pts (0.5%) to 20896. Its notable the Dow came within just 23pts of the Feb' high of 21169. Underlying MACD remains negative, and there is plenty of potential for a grander run to around 23k by year end.

Its highly notable that the giant psy' level of 20k is now first big support. If 20k is broken under at any point from June onward, it would not just be a break of an important support/psy' level, but also the rising trend from early 2016, along with the very important monthly 10MA.


NYSE comp'


The master index saw a moderate net weekly decline of -0.6%, settling at 11547. Upper bollinger is currently offering the 11700s. The 12000s look a stretch before July. Rising trend - from the early 2016 lows, will be in the 11700s in August. It should be important to the equity bulls to keep pushing.. with no retraces bigger than 5%.


R2K


The second market leader - R2K, declined for a second consecutive week, settling lower by a significant -1.0% to 1382, but still above the key 10MA. Renewed upside into the 1400s remains highly probable, with the 1500s a viable target for late summer. Cyclically, the R2K is on the lower end, and the threat is indeed of upside, rather than a break of core rising trend.


Trans


The 'old leader' - Transports continues to lag, with a net weekly decline of a significant -2.0% to 9001. Underlying MACD remains very negative, and is showing little sign of a decisive turn back upward. Things would turn very bearish with a break under 8k, but that is a clear 1000pts (11%) lower.
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Summary

All US equity indexes remain within their mid term upward trends that extend back to early 2016.

The Nasdaq continues to lead the way upward, with the Transports remaining the market laggard.

Underlying price action is powerfully strong, with most retraces being only of a moderate degree.

Most indexes have around 5% of downside buffer before core rising trend is tested.
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Looking ahead

It will likely be a very quiet week, as Q1 earnings have largely concluded. There isn't much econ-data due, and it will give Mr Market the opportunity to pause. That does bode for further price chop, but leaning on the bullish side.

M - Empire state manu', housing market indx'
T - Housing starts, indust' prod'
W - EIA Pet' report
T - Weekly jobs, phil' fed, leading indi'
F - *OPEX*

*there are just two fed officials scheduled, notably Bullard, early Friday.
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If you want the most balanced market commentary and outlooks, then subscribe.


Or you could buy around two shares of SNAP each month... by late summer.

Have a good weekend
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*the next post may appear next Monday at 7pm EST