Saturday, 19 August 2017

Weekend update - US weekly indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -0.5% (NYSE comp'), -0.6% (sp'500, Nasdaq comp'), to -1.2% (R2K). Near term outlook offers a bounce of around 1.5%, but if the market can't achieve at least a couple of new historic highs by mid September... it would be a serious issue.


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

sp'500


The sp' settled net lower for a second consecutive week, -15pts (0.6%) at 2425. Short term rising trend from mid May has been broken. Underlying MACD (blue bar histogram) cycle continues to tick lower, as price momentum increasingly favours the equity bears.

Best guess: a near term bounce to at least 2462/68. A daily close >2474 will offer new historic highs to the low 2500s in September. A 5% retrace looks very probable within the late Sept/early Oct' period. The year end target of 2683 remains on track.

Equity bears have nothing to tout unless a break under 2360/50, where the monthly 10MA, 200dma, and rising trend - from Feb'2016, all intersect. Keep in mind, those numbers are rising with each month.
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Nasdaq comp'


The tech settled lower for a fourth consecutive week, -0.6% at 6216, the most bearish run since May 2016. Price momentum moderately leans to the bears, and in theory, could tick lower for another 2-3 weeks. There is huge support within the 6000/5900 zone. It will be important for the equity bulls to break >6460 in the next multi-week up cycle within Sept/Oct. A lower high around 6300, with a new low under first rising support (<6100) would be a serious problem.


Dow


The mighty Dow settled lower for a second week, -0.8% at 21674. A bounce to the 22000 threshold is highly probable within the very near term. A marginally lower high (<22179) would be a problem for the equity bulls. First soft support is the rising 10MA - in the 21600s, then core rising support in the 20900s, rising to 21k in early September. Any price action <20900 would offer a test of the giant 20k threshold by early October.


NYSE comp'


The master index settled lower for a second week, -0.5% at 11699. Core rising trend - from Feb'2016, has been fractionally broken under. Next support is not until around 11400... almost 3% lower, which would arguably equate to sp'2360/50.


R2K


The second market leader - R2K, is still leading the way lower, settling lower for a fourth consecutive week, -1.2% at 1357. Its notable that from the recent historic high of 1452, the R2K has declined by a rather significant 6.5%. Underlying MACD is now on the rather low side, with a probable bounce to attempt to re-take the 1400 threshold. A key lower high would be a serious problem, and threaten basic downside to the 1300/1280 zone.


Trans


The 'old leader' - Transports, settled lower for the fourth week of the past five, -1.1% at 9095. There is natural psy' level support around 9k, but the weekly close under the 200dma (9190) is rather bearish. This week's candle is a clear spike fail against the key 10MA. It strongly suggest that the 9400s are now strong resistance, and will restrain any bounces into end August/early September.

Any break <9k would offer basic downside to the 8700s. In early October, rising trend will be around 8800. Any price action in the 8700s would merit alarm bells, and threaten a crash wave to around 7000 (sp'500 equivalent: 1900) - which is a powerful 23% below current levels.
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Summary

2 of the 6 indexes - R2K and NYSE comp' have settled below key rising support - that stretches back to early 2016.

It remains notable that recent cooling remains relatively moderate, with the sp'2490>20 wave amounting to just 2.8%.

All six indexes recently broke new historic highs, which is very bullish on any basis.
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Keeping things in perspective

First, consider... sp'monthly1b



I recognise some prefer the 13MA, but regardless, the point is... the mid/long term trend remains outright bullish. For now, other than day/swing trading shorts, there is no reason to be strategically bearish on a mid term basis.

Things only get interesting with a break AND monthly close under 2360/50. That range/threshold is climbing with each month of course.


Second... VIX'weekly


Last week saw the VIX decisively break AND settle above declining trend. The series of lower highs from Aug'2015 has concluded. Any price action above last Friday's (pre-market) high of 17.28 would merit alarm bells, and offer an initial jump to the key 20 threshold, and then possibly much higher.

So, for now, there is still no real reason to be particularly bearish. The VIX is offering a hint of 'something' this Sept/Oct, but equities are still broadly strong, and close to recent historic highs. If you want that kind of perspective during the market day, then subscribe!
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Looking ahead 

In terms of earnings and econ-data, there is very little, and it will likely be the quietest week since early July.

Jackson Hole: there will be a meeting of economists, central bankers, and other miscellaneous lunatics, beginning on Thursday, and stretching into the weekend. Yellen is scheduled to speak Friday morning at 10am, and that will no doubt garner major media coverage.

M -
T - House price index, Richmond Fed manu'
W - New home sales, EIA Pet' report
T - Weekly jobs, existing home sales
F - Durable goods orders, Jackson Hole: Yellen (10am)

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Have a good weekend

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*the next post on this page will likely appear 6pm EST on Monday. 

Friday, 18 August 2017

Naturally choppy

US equity indexes closed moderately weak, sp -4pts at 2425 (intra low 2420). The two leaders - Trans/R2K, settled lower by -0.6% and -0.1% respectively. VIX settled -8.3% at 14.26. Near term outlook offers choppy upside to at least 2462/68. Things will turn very bullish again with a daily close >2474. Broadly, the 2500s do seem very viable in September, before chance of a full 5% retrace.. the horror!


sp'daily5



VIX'daily3



Summary

Equities opened a little weak, and saw a moderate washout to 2420. Notably - as I was seeking, the VIX stayed well below last Friday's closing high of 16.66, and that made for a particularly stark divergence. The market battled upward into the early afternoon, helped with a 'Bannon leaves, Cohn to stay' story.

Cyclically though, the market was always going to be inclined to stabilise/rally anyway. Its just a case of the mainstream always seeking to pin an 'excuse' for a particular market swing.

Market volatility climbed in early trading, with the VIX maxing out at 16.04. As equities recovered, the VIX was quickly crushed to the 13s. Having seen the 11s (with sp'2474) this Wednesday, its not a stretch to see the 10/9s before end month, especially if the market believes US-DPRK relations are at least not getting any worse.
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The London crane index continues to increase

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Goodnight from London
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... or you could buy 1 share of NVDA every 8 months.
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*the weekend post will appear Sat'12pm, and will detail the US weekly indexes

Thursday, 17 August 2017

Target zone tagged

US equity indexes closed significantly weak, sp -38pts at 2430. The two leaders - Trans/R2K, settled lower by -2.4% and -1.8% respectively. VIX settled +32.4% at 15.55. Near term outlook offers some weak chop, before building a floor into the opex-weekly close. More broadly, the 2500s still appear highly probable into September.


sp'daily5



VIX'daily3



Summary

US equities opened moderately weak, and after a few micro swings around 10am, saw increasing downside, all the way into the late afternoon. Last week's low of 2437 was taken out, and that resulted in the market finally trading within the July 12th gap zone of 2435/25. Note how yesterday saw a black-fail doji candle... a warning of trouble.

With equities on the slide, volatility picked up, with the VIX settling in the mid 15s. Note how the previous two days saw hollow-red reversal candles... a warning of upside, and fully confirmed today.

Equity bulls should be seeking the market to floor no lower than sp'2425, with a notably divergent lower VIX high (<16.66). 

The outlook for next week would only be bearish if VIX printed above 16.66 at any point during Friday, and/or, the sp' settled <2425, both of which seem unlikely.
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Good weather for the bears
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Goodnight from London
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Wednesday, 16 August 2017

Gap talk

US equity indexes closed fractionally mixed, sp +3pts at 2468 (intra high 2474). The two leaders - Trans/R2K, settled +0.1% and u/c respectively. VIX settled -2.5% at 11.74. Near term outlook offers a swing lower to at least 2454 before the weekend. It remains notable that the gap zone of sp'2435/25 is yet to be tagged.


sp'daily5



VIX'daily3



Summary

US equities opened a little higher, and battled upward, becoming stuck at upper gap resistance of sp'2474. There was a rollover, helped by more 'Trump drama', and a pretty uninspiring press release from the Fed. The close was somewhat weak, and note the settling black-fail doji candle.

Market volatility remains rather subdued, with the VIX settling in the 11s. However, another spike to the 15s seems probable, not least as the gap zone of sp'2535/25 is yet to be tagged. A divergent lower VIX high (<16.66) - relative to last Friday, would give high confidence of a floor.
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Gap talk

Anyone who has watched, or directly traded equities for as little as a few months, should have come to recognise that opening price gaps - whether up or down, are (almost always) filled.

Just consider the opening price gap from April 24th, leaving a gap of 2348/70. After some weeks of chop, the market saw a one day washout on May 17th, with a slightly lower low on May 18th of 2352. So, it wasn't a 100% fill.. but it was close enough.

July 12th saw a new gap of 2425/35. Last Thursday saw a washout to 2437, but that was notably 2pts shy of the minimum target of the upper end of the gap.


Not all indexes are the same...

In terms of the July 12th gap... consider this..

SPX - not even partly filled
COMPQ - partly filled
INDU - not even partly filled
NYSE - partly filled, with a notable reversal candle
RUT - fully filled (Aug 2nd)
TRAN - fully filled (July 19th)

So.. of the six main indexes: 2 are yet to even be partly filled, 2 partly filled, 2 fully filled.

The sp'500 is arguably the most representative of the US equity market, as most would agree. Until that index at least partly fills the gap, I consider this 'technical issue' unresolved. The fact the two leaders - Trans/R2K, have both filled the gap, lends credence to the notion that the sp' and dow will eventually follow.

Clearly, the primary trend remains bullish, but there will always be sporadic drops, and those will (usually) fill any recent opening gaps. To me, there is zero reason why sp'2435/25 won't at least be partly filled, before resuming upward to the 2500s in September.

I hope that gives clarity to the basis for some of my recent reasoning.
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Mixed skies.. somewhat appropriate

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Goodnight from London
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Tuesday, 15 August 2017

A tedious day

US equity indexes closed moderately mixed, sp -1pt at 2464. The two leaders - Trans/R2K, settled +0.2% and -0.8% respectively. VIX settled -2.3% at 12.04. Near term outlook offers minimum target of sp'2454, and more broadly.. a tag of 2435, but with a notably divergent lower VIX high (<16.66).


sp'daily5



VIX'daily3



Summary

US equities opened a little higher, there was a clear opening reversal, but neither were the equity bears able to manage anything of even a moderate degree. The day soon became one of tedious minor chop.

Market volatility opened in the 11s, saw a brief spike to fractionally positive, but then cooled back into the 11s. If sp'2435 - as remains technically due, the VIX should see the 15s again, and that would make for a notably divergent lower high - relative to last Friday (VIX 16.66), when sp'2437.
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Goodnight from London
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Monday, 14 August 2017

2435 remains a minimum target

US equity indexes closed broadly higher, sp +24pts at 2465. The two leaders - Trans/R2K, settled higher by 1.6% and 1.5% respectively. VIX settled -20.5% at 12.33. Near term outlook offers a retrace to at least sp'2454, but more broadly, prime target of 2435 is yet to be tagged.


sp'daily5



VIX'daily3



Summary

US equities began the week on a positive note, with indexes quickly building sig' gains into late morning. Price action was pretty choppy in the afternoon though, with short term price structure of a baby bull flag. At most, the bulls look like they could manage to hit 2474, before another swing lower to at least 2454.

With equities opening higher, the VIX was duly whacked, settling in the 12s. If another swing lower to sp'2435 - as is due, the VIX should see the 15/16s... but a divergent lower high to last Friday's intra high of 16.66.
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Ambulance for the London equity bears?
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Goodnight from London
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Saturday, 12 August 2017

Weekend update - US monthly indexes

It has been a very mixed month so far for the US equity market. We've seen another set of new historic highs, but the market has swung significantly lower, on concerns of being 'overly pricey', and the 'Korean situation'. 4 of 6 indexes are comfortably holding the mid term trend, the NYSE comp' is borderline, whilst the R2K is offering an early warning of trouble.


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

sp'500


A new historic high of 2490, but swinging lower to 2437. The key 10MA is currently at 2357, which is around the mid term trend that stretches back to the Feb'2016 low of 1810. Underlying MACD (blue bar histogram) cycle is slowly ticking lower, as price momentum is swinging back toward the bears. However, at the current rate, a bearish cross is out of range until at least early October.

Best guess: a brief hit of 2435, and swinging upward to the 2500s into September. A 5% retrace seems probable within Sept-Oct, before another major wave higher. The year end target of 2683 remains on track.

Equity bears have nothing to tout unless a monthly close under the key 10MA, which is notably rising by around 35pts a month.
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Nasdaq comp'


The Nasdaq has been broadly following the main market, currently net lower for August by -1.4%. The key 10MA, along with rising trend is currently around 5900. Even if the Nasdaq has maxed out for the mid term, a bearish MACD cross looks out of range until early 2018.


Dow


The mighty Dow broke a new historic high of 22179 on Tuesday, and settled the week at 21858. The key 10MA is in the 20700s, and will be around 21k in early September. Price momentum remains powerfully bullish, with an RSI in the 78s. On any basis, that is exceptionally high. Things would only turn mid term bearish with a break <20k, and that looks very unlikely, even if the Korean situation worsened.


NYSE comp'


The master index has notably seen a new historic high of 12019, but settling the week at 11763. Current price action is effectively on rising trend, but still well above the key 10MA (11475). The outlook only turns bearish with a decisive monthly close <11400, but that number is of course rising each month.


R2K


The second market leader - R2K, is the one problem for the equity bull maniacs, having swung from a July historic high of 1452, but currently net lower for August by -3.6% at 1374. The key 10MA is at 1379. Underlying MACD is ticking lower for a fifth consecutive month, as price momentum is increasingly swinging back toward the bears. At the current rate, a bearish cross is possible in September.

An August close at or below current levels, would qualify as an early warning of trouble for the broader equity market. The R2K is just one index of many, but it does merit serious attention. 


Trans


The 'old leader' saw a new historic high of 9763 in July, but ended the month bearish. August has begun with relatively minor chop. First soft support is the 10MA, currently at 9196... just 3pts below this weeks close. Rising trend (if you include the lower end spikes) is around 8700. At the current rate, a bearish MACD cross will be due in October.
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Summary

4 of 6 equity indexes are comfortably holding the mid term trend from early 2016. The NYSE comp' is borderline, whilst the R2K has seen a rather decisive break.

The Sp'500, Dow, and NYSE comp' are still regularly breaking new historic highs, as recently as this past Tuesday.
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Q. Will the R2K be later seen (in early 2018) as the first 'early warning of trouble'?

Its very possible, but first things first... lets see if the R2K and/or any other indexes can settle August under rising trend, along with the 10MA.

Further, for those seeking a 'grand top' of the rally from spring 2009, other world markets will be absolutely vital for a balanced analysis. Just consider...

Germany, monthly


The DAX is currently net lower for a third consecutive month, but still above the key 10MA. Underlying MACD (green bar histogram) is continuing to tick lower, and a bearish cross is threatened for this October.

Those who believe the US market is at/close to a key multi-year top are going to need to see markets - especially the DAX, break and hold under key supports. Its notable that typically, the EU markets will lead the US.
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Looking ahead 

There is a fair amount of data due, along with some remaining earnings, such as BABA and JD.

However, the market will clearly have particular attention on US-DPRK relations. This past week has seen some pretty fierce war talk from both sides, and if one of the players decides to tip over the chess table, then the market is going to be at least briefly traumatised.

I have heard a fair amount of chatter from mainstream media hacks that markets will quickly rally on 'US military' action, but it negates the underlying issue that North Korea is no Syria, nor Iraq. NK has nuclear weapons, and literally an entire mountain range of artillery weapons pointed at the South Korean capital of Seoul. If things turn 'hot', this is not likely going to end quickly.

M - -
T - Retail sales, Empire State Manu', Import/export prices, Bus' invent', housing mkt' indx
W - Housing starts, EIA Pet' report, FOMC mins (2pm).
T - Weekly jobs, phil' fed, indust' prod', leading indicators
F - Consumer sent'   *OPEX*

*the only scheduled fed officials are Kaplan and Kashkari (Thurs/Friday).


Kashkari has been notably against both fed rate hikes this year, and was complaining again on Friday, that weak CPI data supported his notion that the Fed should wait to hike rates. Its pretty incredible that after 8 years, there are still some who believe we should maintain what is an emergency rate of interest. 
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Or you could buy 2 shares of SNAP per month, sometime real soon.

Have a good weekend
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*the next post on this page will likely appear 6pm EST on Monday.

Friday, 11 August 2017

A very mixed week

US equity indexes closed moderately mixed, sp +3pts at 2441. The two leaders - Trans/R2K, settled higher by 0.9% and 0.1% respectively. VIX settled -3.3% at 15.51. Prime target of sp'2435 still needs to be hit during normal trading hours, and will be due on Monday, before high threat of another big push upward.


sp'daily5



VIX'daily3



Summary

US equities were a little weak in pre-market, but weak CPI data was the old excuse of 'no rate hikes = bullish', and the market opened a little higher. From there, a great deal of minor chop, leaning upward into the afternoon. There was a notable swing lower from 2.15pm, but (surprisingly), none of the indexes broke a new intraday low.

It is notable that the sp' settled with a black-fail candle. Those certainly lean to the bears, and we are still yet to hit at least the upper end of the 2435/25 gap zone.

Market volatility was choppy, but remained elevated. The Friday close of 15.51, was the highest weekly close since late Oct'2016.
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A very mixed week...

sp'weekly


A new historic high of 2490.87 on Tuesday, but swinging lower to 2437.75 on mainstream bearish market chatter, and the geo-political war talk between Trump and NK.
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Moody skies to end the week

Extra charts in AH @ https://twitter.com/permabear_uk

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

Thursday, 10 August 2017

Equities whacked

US equity indexes closed significantly lower, sp -35pts at 2438. The two leaders - Trans/R2K, settled lower by -1.2% and -1.7% respectively. VIX settled +44.4% at 16.04. Prime target of sp'2435 is due on Friday. Things would turn exceptionally bearish with a weekly close of sp <2425 and VIX >15.20.


sp'daily5



VIX'daily3



Summary

US equities opened moderately lower, and for the first time since May 17th, the market slid lower across the day. Even Trump didn't help in the late afternoon, as he complained about himself not making 'strong enough' remarks about North Korea.

With equities significantly lower, market volatility jumped at the open, and climbed across the day, with the VIX settling at the highest level since Nov'8th 2016.
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A special note

For those of you who don't subscribe to me, I wanted to make something clear, as the next post here will not be until after the Friday close.

If we see a Friday close <sp'2425, and with VIX settling in the 14s (>15.20 to be decisive), it would merit alarm bells for next Monday.

If both of those parameters are seen tomorrow - around 3.45pm EST, the cautious bulls will bail into the weekend.

... and the bolder bears will launch 'mini-crash' speculative short positions into the weekend.
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Sunset, London city, 3.20pm EST

Extra charts in AH (usually after 7pm EST) @ https://twitter.com/permabear_uk 

Goodnight from London
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Wednesday, 9 August 2017

Washing out

US equity indexes closed somewhat mixed, sp -0.9pts at 2474. The two leaders - Trans/R2K, settled u/c and -0.9% respectively. VIX settled +1.4% at 11.11. Near term outlook offers a washout within the sp'2435/25 zone, before resuming upward to the 2500s in September.


sp'daily5



VIX'daily3



Summary

US equities opened moderately lower, whilst most other world markets saw sig' declines. There was naturally a bounce, with most indexes leaning upward into the close.

Yesterday's high of 2490.87 marks a key short term high. Prime downside target remains 2435, as a partial gap fill of 2435/25 remains a very basic target.

Market volatility is finally picking up, with the VIX opening in the 12s, and managing to settle higher (if fractionally) for a second day. SP'2435 would arguably equate to the mid teens... much like the washout in mid May.
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Something to consider

Its a huge issue, but I thought I would throw this one out there...

sp'weekly5 - wave count/fib retrace.


A 50% retrace of the gains from 2009 would take the US market to the mid 1500s, an effective back test of the 2000/2007 double top.

To be clear though, right now, there is still zero reason for anyone (other than day trading maniacs) from attempting to short this market, as the mid term trends are still (almost entirely) intact.
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*ohh, and yes... commodities, oil/metals have largely failed to participate, but I thought I'd leave the legacy note (from 2-3 years ago) on there.

Goodnight from London
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