Tuesday, 20 February 2018

Leaning weak

US equity indexes closed broadly weak, sp -15pts at 2716. The two leaders - Trans/R2K, settled -1.5% and -0.9% respectively. VIX settled +5.9% at 20.60. Near term outlook offers cooling to around sp'2670, which would likely equate to VIX 25/30. M/t outlook remains bullish, with big target of 2950/3047, where things will get real interesting.




It was a day of moderate chop, opening lower to sp'2717, recovering to 2737, but then breaking a new low in the afternoon of 2706. Volatility remains relatively elevated, with the VIX settling above the key 20 threshold. Further cooling to around sp'2670 is due within days, and that should equate to VIX within 25/30 zone.

To be clear, I do NOT expect 2532 to be broken, before a push to big target of 2950/3047 zone, where they are many key aspects of resistance. That will clearly take some months to play out.

Bonus chart: TLT, monthly

The bond bulls should be very concerned at what is a decisive break of the multi-year upward trend. Inherently, a fall in bond prices leans to higher equity prices. Further, I would look for direct capital flows out of bonds and into equities.

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

Goodnight from London

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