Tuesday, 19 September 2017

Awaiting the Fed

US equity indexes closed fractionally mixed, sp +2pts at 2506. The two leaders - Trans/R2K, both settled -0.1%. VIX settled +0.3% at 10.18. Near term outlook offers a key turn, once the Fed are out of the way. A 4-5% main market correction to the 200dma remains on the menu.


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Summary

US equities opened fractionally higher, notably breaking two new historic highs for the Dow and NYSE comp'. With equities still leaning upward, market volatility remained very subdued, with the VIX again dropping into the 9s, but managing to settle fractionally higher in the low 10s.


As for the fed tomorrow...

I sure don't expect a rate hike, and neither does the mainstream. The only uncertainty is whether QT will be announced to begin. The plan was issued some months ago of course, and even if the Fed starts selling T-bonds and MBS back to the market, the amounts are insignificant, at least to begin with.

What will be interesting tomorrow afternoon is the Yellen press conference at 2.30pm. Even if the market initially spikes higher on 'omg, QT has begun!' hysteria, I would see the market at high threat of a sig' reversal, not least with each question that Yellen responds to.
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Quartet of doom: Quakes, terrorism, hurricanes, and fire

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A peaceful end to the day

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Monday, 18 September 2017

Another quartet of highs

US equity indexes closed moderately mixed, sp +3pts at 2503 (intra high 2508) . The two leaders - Trans/R2K, settled -0.3% and +0.6% respectively. VIX settled -0.2% at 10.15. Near term outlook offers chop into the FOMC announcement this Wednesday afternoon. More broadly, a 4-5% down wave is still on the menu.


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Summary

US equities opened just a little higher, but it was enough to generate another quartet of index highs in the sp', dow, nyse comp', and the nasdaq comp'. Overall price action is pretty subdued though, and there is little reason to expect any drama between now and Wednesday 1.59pm.

The VIX opened fractionally higher, but almost immediately cooled into the 9s, last seen Aug'8th. A burst to the low teens seems very viable in the latter half of this week. The key 20 threshold is likely out of range until we're in the more 'dubious' month of October.
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No sun for the equity bears

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Saturday, 16 September 2017

Weekend update - US weekly indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from 2.3% (R2K), 1.6% (sp'500, NYSE comp'), to 1.4% (Nasdaq comp'). Near term outlook offers minor chop into the FOMC. A cooling wave of 4-5% into early October is probable. Broadly though, the end year target of sp'2683 remains on track.


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

sp'500


The sp' settled higher for the third week of the past four, +38pts (1.6%) to a new historic high of 2500.23. Underlying MACD (blue bar histogram) cycle ticked up, and will be close to the key zero threshold next week, ahead of the FOMC. Seasonally, the setup favours a swing lower, and a failure to keep pushing upward from the zero threshold would be especially bearish.

Best guess: minor chop ahead of the FOMC, then a sig' swing lower, stretching into early October. A 5% down wave would see the 200dma tested (currently 2375). Considering 'everything', the market should see a swing back upward into end Oct', avoiding a bearish monthly close. The year end target of 2683 looks a stretch, but its still just about possible.

Equity bears have little to tout unless a sustained break <2400, with some daily closes under the 200dma. For a bearish monthly Sept'29 close, the bears need <2380, and that rises to around 2400 for Oct'31st.
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Nasdaq comp'


The Nasdaq saw a net weekly gain of 1.4%, breaking a new historic high of 6464. Soft rising trend will be around 6270 next week. Core trend from early 2016 is still a considerable way lower, currently in the 5600s, and by end Oct' near 5800. There are multiple aspects of support within the 6000/5900 zone. Any price action <5900 seems very unlikely for the remainder of the year. Its notable that some cooling into October would take 7k out of range until at least early 2018.


Dow


The mighty Dow climbed 470pts (2.2%), breaking a new historic high of 22275, just a touch under the upper bollinger. Underlying MACD is set to turn positive next week, with the key 10MA offering support around 22k. In early October, key rising trend - from early 2016, will be in the 21300s. Key psy' levels are 21k and 20k. No sustained price action <21k is expected.


NYSE comp'


The 'master index' climbed 1.6%, breaking a new historic high of 12080. Underlying MACD is set to turn positive next week. A failure to keep pushing upward would be rather bearish, and offer a 5% down wave to around the lower bollinger in the 11500s. That would notably break the mid term trend from early 2016. Things would turn decisively bearish with a Sept' or Oct' close <11500, which would be under the key monthly 10MA.


R2K


The R2K was the leader this week, +2.3% to 1431, just 21pts shy of the July historic high. Underlying MACD is set to be near the zero threshold next week, as price momentum is swinging back to the equity bulls.

Its important to note that the R2K was the first - and so far only index, to decisively break the mid term upward trend from early 2016. Any new historic high would negate the break, and offer the 1500s within a few months. For a bearish Sept' close, the bears only need to settle the R2K <1380, which isn't that far down. That 'break threshold' will climb to around 1400 for the Oct'31st close.


Trans


The 'old leader' - Trans, climbed for a fourth consecutive week, +1.7% to 9546, just 2.2% shy of the July historic high. Like other indexes, underlying MACD is set to be near the zero threshold next week. In theory, the tranny could climb for another 3-5 weeks. However, seasonally, the setup favours the equity bears. First big support is the 9k threshold. Things would only turn bearish with any price action <8800.
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Summary

A very bullish week for all six of the main indexes, with a quartet of historic highs in the sp'500, dow, nasdaq comp', and nyse comp'.

The Trans and R2K continue to lag, although both are only 2% from breaking their July historic highs.

The R2K remains the one index that decisively broke the mid term upward trend - from early 2016, but that issue would be negated with a new historic high.

Five indexes (R2K being the exception) have around 5% of downside buffer before doing any real damage to the mid term trend.
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Looking ahead

M - Housing market index
T - Housing starts, import/export prices
W - Existing home sales, EIA Pet' report.

The FOMC announcement will be at 2pm. No rate hike is expected. Its also unlikely that QT (quantitative tightening) will begin until at least December. There will be a Yellen press conf' at 2.30pm, and that will likely last an hour.

T - Weekly jobs, Phil' fed, FHFA house price indx', leading indi'
F - -

*In addition to Yellen on Wednesday, there will be 3 fed officials on the loose on Friday, notably - George and Kaplan, at a conf' discussing global oil supply/demand.
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Friday, 15 September 2017

A bullish week

US equity indexes ended the week on a fractionally positive note, sp +4pts at 2500. The two leaders - Trans/R2K, settled higher by 0.4% and 0.5% respectively. VIX settled -2.6% at 10.17. Near term outlook offers micro chop into the FOMC, with a subsequent 4-5% swing lower into October. Broadly though, the US market remains powerfully strong.


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Summary

US equities opened in micro chop mode, but with a minor wave upward, the US market broke new historic highs in a quartet of indexes: sp'500, dow, NYSE comp', Nasdaq comp'. On any basis, that is an especially bullish end to the week.

Market volatility naturally remained very subdued, with the VIX settling lower for a fifth consecutive day, but (almost surprisingly) not falling into the 9s.

Near term outlook offers further equity price chop into next week's fed meeting. A 4-5% down wave into October remains on the menu, but that won't be enough to cause any problems to the mid/long term bullish trend.
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... and the week comes to a close.

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*the weekend post will appear Sat'12pm, and will detail the US weekly indexes.
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Thursday, 14 September 2017

Chop chop

US equity indexes closed fractionally weak, sp -2pts at 2495. The two leaders - Trans/R2K, settled lower by -0.1% and -0.2% respectively. VIX settled -0.6% at 10.44. Near term outlook offers a great deal of minor chop into the FOMC of Sept'20th. From there, prime opportunity of a 4-5% down wave, before broad upside, all the way into spring 2018.


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Summary

US equities opened in micro chop mode, and stayed that way across the day. It was notable that the sp'500 and Dow did break new historic highs. That makes three indexes so far this month, the third being the NYSE comp'.

With equities effectively in churn mode, the VIX remained very subdued, settling lower for a fourth day in the 10s.

Near term outlook offers a great deal of micro chop all the way into next Wednesday afternoon's FOMC announcement. Once that is out of the way, the equity bears will have the best opportunity of seeing some sustained/significant downside into October... but right now, no more than 4-5%.. to the 200dma.
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An autumnal evening in the metropolis

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Wednesday, 13 September 2017

Mainstream lunacy

US equity indexes closed fractionally mixed, sp +1.9pts at 2498. The two leaders - Trans/R2K, settled -0.1% and +0.2% respectively. VIX settled -0.8% at 10.50. Near term outlook offers weak chop, but nothing <sp'2474 until after quad-opex is out of the way.


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Summary

US equities opened a little weak, but quickly slipped into micro chop mode (trading range 6.23pts), clawing to fractional new historic highs into the close. Market volatility was naturally very subdued, with the VIX stuck in the mid 10s.

There remains an open gap (orange zone) of sp'2474/61, which is going to have be filled at some point. The only issue is whether that is before... or after the 2500s. Right now, sp'2474 would likely equate to VIX no higher than the 12/13s. The key 20 threshold looks probable, but not until early October.

Keep in mind, we have an FOMC announcement next Wednesday afternoon. No rate hike can be expected, and that will surely be a downward pressure for the financials, which have been broadly stuck since the spring. 
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Mainstream lunacy

The day began with the infamous Cramer talking about how recent storm destruction in Texas and Florida was a 'net positive for GDP'.


I'd imagine he never reads anything from here...

http://market-ticker.org/akcs-www?post=232354

Whether you like Denniger or not, the article is soundly based. Cramer, and far worse... Paul Krugman, are both academically insane. I'd like to see either of them tell any of the 'real people' in Texas or Florida, that such destruction is a net positive for the broader economy.

Certainly, some construction companies will profit from the huge amount of repair work to be done, but for the broader economy, its bizarre that anyone could deem the event 'a net positive for the economy'. Ohh, and if Q3/Q4 GDP comes in weak, its probably safe to assume those SAME people will blame the 'Harvey' and 'Irma' storms for weaker growth.
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London sunset, 2.05pm EST.

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Tuesday, 12 September 2017

A new historic high

US equity indexes closed moderately higher, sp +8pts at 2496. The two leaders - Trans/R2K, both settled higher by 0.6%. VIX settled -1.4% at 10.58. Near term outlook offers at least a tag of the 2474/61 gap zone. More broadly, the 200dma (2370 and rising) remains prime target into October.


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Summary

US equities opened just a little higher, but it was more than enough to generate a new historic high for the sp'500. The day remained positive, with the sp' breaking a new historic high in the closing minutes of 2496.77. Clearly, there is a 'magnet/attraction' to the psy' level of 2500, and it could easily be seen tomorrow morning.

With equities clawing upward, market volatility remained subdued. The VIX printed 10.29 shortly after the open, and settling in the mid 10s. If sp'2500s, the 9s are briefly viable.

On balance, some cooling to at least sp'2474 is likely, certainly by late Thursday. Keep in mind Friday is quad-opex, and that will lean to chop. Right now, a net weekly gain looks probable.
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An early glimpse of Autumn... aka, 'grey horror'

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Monday, 11 September 2017

Starting positive

US equity indexes closed significantly higher, sp +26pts at 2488. The two leaders - Trans/R2K, both settled higher by 1.1%. VIX settled -11.5% at 10.73. Near term outlook threatens a brief foray into the low 2500s, before another swing lower. A 4-5% retrace to the 200dma remains on the menu.


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Summary

With no nuclear explosions in the Korean peninsula, and Hurricane Irma 'better than expected', US equities opened moderately higher, and built significant gains into the afternoon.

As equities climbed, volatility was duly ground lower, with the VIX back in the 10s, which is again reflective of the mainstream's high confidence that 'everything is going to be just fine'.

Despite today, nothing has changed. A 4-5% correction for the main market is due into October. That won't likely be enough though to result in a Sept' or Oct' bearish monthly close.
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Dusk in London city, at a disturbingly early 2.15pm EST.

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Saturday, 9 September 2017

Weekend update - US monthly indexes

It was a somewhat bearish week for most US equity indexes, with the sp'500 net lower by -15pts (0.6%) to 2461. More broadly though, most indexes are holding the mid term bullish trend from early 2016. Near term outlook is bearish into early October, with a conservative down wave target of around 4-5%.


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

sp'500


First, note that August broke a new historic high of 2490, with some cooling to 2417. The August close of 2471 actually made for a black-fail doji candle. Those are exceptionally rare on the bigger weekly/monthly cycles. The August candle is a subtle warning of at least some degree of 'problems' across Sept-Oct'.

September has been choppy so far, pushing to 2480, but is starting to lean weak again. Underlying MACD (blue bar histogram) cycle is ticking lower. At the current rate, a bearish cross is viable in November. The key 10MA is currently at 2386, and rising by 25-30pts a month. Core mid term trend - from early 2016, is currently around 2400, which itself is a key psy' threshold.

Best guess: near term weakness to test the 200dma - soon in the 2370s, where the lower weekly bollinger is also lurking. Renewed upside >2400 looks probable. The year end target of 2683 remains valid, and would only be negated with a bearish monthly close.

Equity bears should be focused on how Sept' and Oct' settle. It won't take much to achieve a monthly close under the key 10MA, but this market remains scary strong, and for now... such a monthly close looks unlikely. October 2014 is a good example where we broke the 10MA, but then whipsawed upward into end month, with a subsequent 7 months of upside into May 2015.
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Nasdaq comp'


The tech sector remains super strong, with the Nasdaq comp' just 100pts (<2%) from recent historic highs. The key 10MA is currently near 6k, which is almost 6% lower. Even if the equity bears see the market retrace that far down, there will be extreme threat of a whipsaw back upward, with further broad upside into spring 2018. From October onward, 6K will be core support.


Dow


The mighty Dow saw a new historic high of 22179 in August, and settled this week at 21797. The key 10MA is around the 21k threshold.. roughly 4% lower. From October onward, core rising trend - from early 2016, will be around 21k. Indeed, the 21k threshold is something to keep in mind across the next few weeks. Even if 21k fails, there will be massive support at the giant psy' level of 20k. If the equity bulls can hold things together across Sept/October, a yearly close >23k is still within range.


NYSE comp'


The master index (as I like to call it) broke a new historic high of 12019 in August. However, it then saw a borderline break of rising trend. The key 10MA is currently in the 11500s, and still rising. Equity bears need to see a monthly settlement <11500 to have some clarity that August was a mid/long term high. Any bearish monthly close would offer the lower bollinger, currently at 9741, and soon around 10k - which is 17% lower (equivalent to sp'2K).


R2K


The second market leader saw a very decisive break of mid term rising trend in August, swinging from 1452 in July to 1349 in August. This break merits serious consideration. The key 10MA is currently at 1390, and a Sept' or Oct' close under it looks increasingly probable. That would be suggestive other indexes would eventually follow within 1-2 months.

Underlying MACD is threatening a bearish cross in October. The lower monthly bollinger will have likely risen to around 1150 by November, which was the pre-election Nov'2016 low. Note that 1150 is currently 17% below current levels. Finally, keep in mind the key Feb'2016 low was 943, which would be another 18% lower from 1150.


Trans


The old leader - Transports, peaked in July (with the R2K), swinging from 9763 to 9010 in August. So far, the tranny is still broadly holding the 10MA, but its only another 2% lower. Underlying MACD has been broadly ticking lower since February of this year. At the current rate, a bearish cross is viable in October. Core rising trend from early 2016 is currently around the 9k threshold. Any Sept' or Oct' close <9k would merit alarm bells. First soft downside target would be around 7500, which is currently a clear 20% lower.

For the equity bulls to have high confidence for a bullish 2018, they need the Trans to break and hold >10k by year end. 
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Summary

Four of the six US indexes are holding the mid term bullish trend from early 2016. The R2K saw a decisive break in August, whilst the NYSE comp' saw a borderline break.

All indexes are still broadly holding their respective key 10MAs.
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Issues into the autumn

Two key problems for the equity bulls into the autumn are within the financial and energy sectors. Financials need another rate hike, which the fed is clearly not going to provide until at least December. Meanwhile, energy stocks look vulnerable as with summer driving season fading away, WTIC could easily test the June low of $42.05.

A third issue is the 'Trump' trade, especially within the heavy industrials. Can the US congress and senate pass any kind of tax or infrastructure bill?

Finally, the debt ceiling issue rumbles on, and is now set to rear up again in December. It increasingly looks like there is a push to just remove the ceiling entirely, and that would not be bullish for the USD.
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Droning on about the 10MA

I recognise many of you use other MAs (or EMAs), but whether you prefer the 13, 12, 11, 10, or 9, from a technical perspective, the monthly close is what really matters.


sp'monthly3 - 10MA and Elder impulse candles


Its notable that despite a new historic high, the August candle actually settled blue, and we have another blue for September. Equity bears should be seeking a red candle which settles under the key 10MA. That is something I will be looking for, whether at the September or Oct' close.

If such a bearish monthly close occurred, the first downside target would be the lower monthly bollinger, currently at 1932, and rising by around 20/30pts a month.

For now, such talk IS crazy talk, and anyone who is trying to short this madness (even with tight trading stops) should keep in mind the broader price action, which remains (almost entirely) bullish. 
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Looking ahead 

The US market will begin the week focused on the aftermath of Hurricane Irma. There is also the ongoing geo-political tension surrounding North Korea. There is always going to be the sporadic threat of another missile launch or nuclear test, or perhaps equally horrifying... if Trump starts tweeting more 'fire and fury' talk.

M - -
T - -
W - PPI, EIA Pet' report, US T-budget
T - Weekly jobs, CPI, EIA Nat' gas report
F - Retail sales, Empire State manu', Indust' prod', Bus' invent, consumer sent'

*Friday is quadruple witching, so expect a lot of chop, especially in the late afternoon.

**As there is an FOMC Sept'19/20, the blackout period is in effect, and there will be no fed officials on the loose.
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Friday, 8 September 2017

A bearish week

US equity indexes closed moderately mixed, sp -3pts at 2461. The two leaders - Trans/R2K, settled higher by 0.4% and 0.1% respectively. VIX settled +4.9% to 12.12. Near term outlook offers downside to at least the 2440s. More broadly, the 2350s seem probable by early October.


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Summary

US equities opened a little weak, occasionally turning fractionally positive, but for the most part, it was a day of micro chop.

Whilst equities saw micro chop, it was notable that volatility stayed positive across the day, with the VIX settling in the low 12s. Near term offers the mid teens, and its difficult not to see the key 20 threshold being at least briefly hit by mid October.
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sp'weekly


A net weekly decline of -15pts (0.6%) to 2461. Clearly, the mid term trend from early 2016 is still intact. Equity bears need a decisive break <2400 to cause some technical damage. On balance, that does look probable, certainly by the first half of October.
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A bullish sign for next week?


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