Saturday, 15 December 2018

Weekend update - US equity indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -4.4% (Trans), -2.6% (R2K), -1.6% (NYSE comp'), -1.3% (sp'500), -1.2% (Dow), to -0.8% (Nasdaq comp').


Lets take our regular look at six of the main US indexes (weekly candle charts)

sp'500


The sp'500 fell for a second consecutive week, the fourth week of five, with a net decline of -33pts (1.3%) to settle at 2599. MACD (blue bar histogram) cycle continues to increasingly favour the bears. It can be argued we're cyclically very low, but that has been the case since late October.

A formal test of the Feb' low of 2532 appears a given, whether before the FOMC, or shortly after. Any daily close <2532 will offer grander downside to the 2300/250 zone. The bigger monthly charts suggest the latter zone will be seen no later than late Jan/early Feb, which is a seasonally weak time.
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Nasdaq comp'


Tech was the most resilient index this week, seeing just a moderate decline of 0.8% to 6910. Further cooling to the Feb' low of 6630 appears highly probable. A daily close under 6630 will offer grander downside to giant psy'5K.


Dow


The mighty Dow settled -1.2% to 24100. The April low of 23344 appears set to be tested. A failure to hold will offer grander target of 21k, with secondary support of the 20400/20k zone.


NYSE comp'


The master index settled -1.6% to 11755, the lowest weekly settlement since Aug'2017. Next support is the May 2015 high of 11254.


R2K


The R2K settled -2.6% to 1410, which made for decisive close under the Feb' low. Next support around 1350, which is another 4% lower.


Trans


The 'old leader' continues to lead the way lower, settling -4.4% at 9514. Last week's bearish engulfing candle was indeed a warning of trouble, as the tranny is back to levels last seen in Nov'2017. Next support is around 9k, with secondary of the 8700s.



Summary

All six indexes closed net lower for the week.

The Transports is leading the way lower, whilst the Nasdaq was resilient.

With the Trans, R2K, and NYSE comp' having decisively taken out their Feb' lows, the Sp'500, Dow, and Nasdaq comp' can be expected to follow.

YTD price performance:


The Nasdaq comp' is the lone index net higher for the year, and only by a fractional 0.1%. The Dow is -2.5%, with the spx -2.8%. The R2K is -8.1%, NYSE comp' -8.2%, with the Transports -10.3%
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Looking ahead 

*It will be the last 5 day trading week until the week of Jan'7-11
**there are just 9.5 trading days left of the year


Key earnings: ORCL (Mon'), MU, FDX (Tue'), NKE (Thurs')


M - Empire state, housing market index
T - Housing starts
W - Existing home sales, EIA Pet' report.

FOMC announcement (2pm), which will (very likely) detail the eighth rate hike since Dec'2015, of +25bps to a new target range of 2.25-2.50%. There will be a press conf' at 2.30pm.

T - Weekly jobs, phil' fed, leading indicators
F - Durable goods orders, Q3 GDP (3rd print), pers' income/outlays, consumer sent'. *OPEX*
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Final note

Whilst the US econ-data is still coming in broadly fine, its increasingly problematic in other parts of the world. In particular, the EU appears close, if not already in recession. When the Q4 GDP print for Germany appears in mid/late January, it will likely also be negative, making Germany officially in recession. Where Germany goes, the rest of Europe can be expected to follow.

There is the recent break in the US bond market. If the US 10yr does cool to natural target of 2.25%, it will result in far higher bond prices, which will have bearish implications for equities.

Whilst many within the mainstream are still seeing the ongoing equity cooling - since the Sept'21st high of sp'2940.91, as just a mid term correction, it increasingly appears to be the start of something bigger.
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Have a good weekend
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*the next post on this page will likely appear 5pm EST on Monday.

Friday, 14 December 2018

Falling into the weekend

US equity indexes closed very significantly lower, sp -50pts (1.9%) at 2599. Nasdaq comp' -2.3% at 6910. The two leaders - Trans/R2K, settled -1.6% and -1.5% respectively. VIX settled +4.7% at 21.63.


sp'daily5



VIX'daily3



Summary

US equities opened significantly lower, pressured via overnight Asian and European markets, all of which were spooked by some weaker than expected econ-data. The closing hour broke a new intraday low of 2593, as many were (understandably) unwilling to get involved ahead of the weekend.

Volatility settled moderately higher in the mid 21s. Relative to equities, the VIX remains bizarrely low, and arguably should be well north of 30.


Bonus chart: Germany, monthly


The DAX is lower for a fifth consecutive month, currently -2.9% at 10924. Psy'10K support, but a grander run to 8k appears on track. The German market and economy bodes very bad for the rest of the European markets/economies in 2019.
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Winter solstice is near
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Goodnight from London
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Thursday, 13 December 2018

Bearish Robinhood

US equity indexes closed on the weaker side, sp -0.5pts at 2650. Nasdaq comp' -0.4%. Dow +0.3%. The two leaders - Trans/R2K, settled -1.6% and -1.5% respectively. VIX settled -3.8% at 20.65. Near term outlook offers further choppy upside ahead of the Dec'19th FOMC.


sp'daily5



VIX'daily3



Summary

US equities opened on a positive note, but the gains were shaky, with the spx turning negative in late morning. The afternoon saw a low of 2637, and then clawing back upward. Despite sig' weakness in the Trans' and R2K, volatility remained in melt mode, settling in the mid 20s.
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Robinhood

I've occasionally considered Robinhood as a possible broker to use, but I never liked the idea that I'd be having my stocks/options hosted with a relatively new company. There is a lot to be said for a brokerage with a history spanning decades. Most of all though, very few good products/services are free.

Technical problems, with co-founder of Robinhood - Baiju Bhatt

Robinhood has grown rapidly since 2013, with more than six million accounts. The number of staff remains very small. When things go wrong, as happened yesterday... for those clients who could not exit/close existing positions, it turned into an outright horror movie.

Today's CNBC interview...



... which (ironically) had its own technical problems at t+2.18.

T+2.18>2.26 would make for a very appropriate gif, for those inclined. 

For a sample of the VERY angry retail amateurs out there, see the infamous: Wallstreetbets

Yours, sleeps soundly, via Charles Schwab.  
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Rarely a sky without aircraft

A little closer

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

Goodnight from London
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Wednesday, 12 December 2018

Battling upward

US equity indexes closed rather mixed, sp +14pts (0.5%) at 2651. The two leaders - Trans/R2K, settled u/c and +1.0% respectively. VIX settled -1.4% at 21.46. Near term outlook threatens early Thursday weakness.

sp'daily5



VIX'daily3



Summary

US equities opened significantly higher, and built gains into the afternoon. With Trump not having any on-camera arguments with the democrats, the market was notably stronger, but the late afternoon saw distinct cooling.

Volatility was naturally in melt mode, with the VIX settling in the mid 21s. Today's black-fail candle in the spx favours s/t weakness.. at least for early Thursday.


Battling upward

Today's gains (especially within tech') will give some confidence to the more resilient equity bulls...

Ice Cold in Alex, 1957

... but I'm guessing it will end in tears, certainly before the Christmas break.


Unless the spx can clear the recent 'trade truce' high of 2800, it still looks like the equity bears will  control the market into year end/early 2019. A few minutes of staring at the following monthly chart should suffice...

sp'monthly3


The situation is not so bullish, holding under the key 10MA, with a red Elder candle.
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Another day closer to the solstice

Crescent moon at dusk

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

Goodnight from London
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Tuesday, 11 December 2018

Bounces are to be seen as such

US equity indexes closed moderately mixed, sp -0.9pts at 2636. Nasdaq comp' +0.2%. The two leaders - Trans/R2K, settled -0.4% and -0.2% respectively. Near term outlook offers a push to the 2680/2700 zone, but then another rollover. A challenge to break and settle under the Feb' low of 2532 remains on the menu.

sp'daily5



VIX'daily3



Summary

US equities opened significantly higher, partly helped via a Trump tweet that 'big announcements are coming' in terms of trade. The spx saw a high of 2674, but the gains eroded to fractional declines, not helped via....


... a very public feisty exchange between Trump and Pelosi/Schumer. Today's event is an early example of the political deadlock that will be one of the key themes in 2019. The spx swung from 2621>2659 in the afternoon, but the closing wasn't pretty, settling effectively u/c at 2636.

Volatility saw relatively minor swings within the 21/23 zone, settling -3.9% at 21.76.

Yours truly continues to see bounces as such. A challenge of the Feb' low of 2532 appears still on the menu. I'd actually only drop that notion if we break and hold >2800. The latter looks very difficult in the remaining 12.5 trading days of the year.
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Bonus chart: Japan, monthly


The Nikkei is currently -1203pts (5.4%) at 21148. A monthly close <21k would be decisive, and offer far lower levels in 2019. Five clear waves, and its not entirely a stretch to target 12k.
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Ten days until the winter solstice

Full moon due Dec'22nd
--
Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
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Monday, 10 December 2018

May tainted Monday

US equity indexes closed moderately mixed, sp +4pts (0.2%) at 2637. The two leaders - Trans/R2K, settled -0.8% and -0.3% respectively. VIX settled -2.5% at 22.64. Near term outlook offers a challenge of the Feb' low of sp'2532.


sp'daily5



VIX'daily3



Summary

US equities opened in minor mode, which was a somewhat impressive recovery from overnight lows. However, with May announcing that the Tuesday BREXIT vote would be delayed, the market spiraled lower, taking out the Oct' low of 2603.

May delaying the vote

The 12pm hour saw a distinct ramp, partly helped via an overt cheerleader pump on CNBC, It is the case that the cheerleaders are desperately trying to retain hope. Santolli (seen below) is trying to hold onto the notion that price action is similar to Feb>April.


Hanging onto hope
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Meanwhile, volatility saw a high of 25.94, and with equities recovering, the VIX settled a little lower in the mid 22s.
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Bonus chart: Germany, monthly


The DAX is lower for a fifth consecutive month, currently -5.6% at 10622. Psy'10k will offer some support, but more broadly, a run to 8k appears well underway. Bodes badly for rest of the European markets.

--
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Goodnight from London
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Saturday, 8 December 2018

Weekend update - US equity indexes

It was a powerfully bearish week for US equity indexes, with net weekly declines ranging from -8.0% (Trans), -5.6% (R2K), -4.9% (Nasdaq comp'), -4.6% (sp'500), -4.5% (Dow), to -4.1% (NYSE comp'). Near term outlook threatens another 5/10% downside ahead of the Dec'19th FOMC.


Lets take our regular look at six of the main US indexes (monthly candle charts)

sp'500


The spx saw a net weekly decline of -127pts (4.6%) to 2633 (intra low 2621). Note the key monthly 10MA of 2744, some 111pts higher. Underlying macd (blue bar histogram) cycle is lower for a third month, as price momentum is increasingly negative. Note the lower monthly bollinger at 2371, which will likely jump to around 2400 at the Jan'2nd 2019 open.


Nasdaq comp'


The Nasdaq settled -361pts (4.9%) to 6969. Price momentum is at levels last seen in March 2016. First major support is around 6k, and then giant psy' 5k. The latter would be 28.2% below current levels, and 38.5% from the Aug' high of 8133.


Dow


The mighty Dow settled -1149pts (4.5%) to 24388. Note the Oct' low of 24122, which is easily within range for next week. The lower bollinger is notably around 21k.


NYSE comp'


The master index settled -515pts (4.1%) to 11941. The lower monthly bollinger will offer major  support in the 11500s, some 4% lower.


R2K


The R2K imploded by -85pts (5.6%) to 1448, notably breaking the Oct' low. Soft support of the Feb' low of 1436 looks set to fail, with secondary target of the lower bollinger at 1340.


Trans


The 'old leader' is leading the way lower, with a semi-crash fall of -869pts (8.0%) to 9951. Note the lower bollinger around 9k, offering a further 10% downside.



Summary

All six of the US equity indexes saw powerful net weekly declines.

The Transports is leading the way lower, with the NYSE comp' somewhat resilient.

The weekly close offers zero sign of a s/t floor/turn.

The monthly charts offer a further 5/10% downside within the immediate term.

YTD price performance:


The Nasdaq comp' is the remaining index that is net higher for the year, by a fractional 0.9%. The Dow is -1.3% with the spx -1.5%. The R2K is -5.7%, the Transports -6.2%, and the NYSE comp' -6.8%.
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Looking ahead 

M -
T - PPI, UK Parliament BREXIT vote
W - CPI, EIA Pet', US T-budget
T - Weekly jobs, import/export prices, EIA Nat' gas
F - Retail sales, indust' prod', bus' invent' 
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Final note

Remember how from 2009 to late 2015, that rate hikes were seen as a bad thing. With the Dec'16th 2015 rate hike, the mainstream opinion then flipped to 'higher rates are bullish'. Things remained fine for a further seven hikes. Since early October the market has abruptly flipped back to the 'higher rates are bad' view. This is disappointing, as the econ-data and earnings are still broadly coming in fine.

From an October high of sp'2940 to 2603, we've seen the fed increasingly attempt to placate the equity market, culminating with Powell touting rates as 'close to the neutral rate'. The novelty of that 'good news' has already worn off.

Powell's Nov'28th speech has directly resulted in breaking the bond market...


We have a clear conclusion of the rally in the 10yr yield that began in July 2016. Psy' 3.00% has failed, and we've already printed 2.82. Technically, its empty air to around 2.25%  Note the macd cycle, we're due a bearish cross by year end, or certainly at the start of 2019. An acceleration to the downside in yields is underway. Lower yields/higher bond prices, are inherently bearish for equities.

There are 7.6 trading days until the Dec'19th FOMC announcement. I'd imagine the fed would stall if we break and hold under the Feb' low of sp'2532. Keep in mind the NYSE comp' and Trans' have already broken under their respective Feb' lows. It bodes for the other indexes to follow.

Other than an actual suspension of QT and/or rate cut, a fed 'stall'/no rate hike this December, would merit as a very serious warning of grander trouble. If the fed do back off, those equity bears seeking a grander retrace to around the sp'1500s, can start to get moderately confident.

With just 14.5 trading days left of the year, keep yourself strapped in, as the wild ride continues, for what is the world's most twisted and rigged casino.
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Have a good weekend
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*the next post on this page will likely appear 5pm EST on Monday.