Saturday, 20 May 2017

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.




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.

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.

Here in the metropolis...

Into the west... sunshine and showers
Goodnight from London

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