Saturday, 21 September 2019

Weekend update - US equity indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -3.3% (Trans), -1.2% (R2K), -1.0% (Dow), -0.7% (Nasdaq comp'), -0.5% (SPX), to -0.2% (NYSE comp'). Near term outlook threatens cooling of 2-3%.


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

sp'500


The SPX broke a new multi-month high of 3021.99, but settled -15pts (0.5%) at 2992. Weekly price momentum ticked higher for a fourth week, but remains fractionally negative. S/t outlook threatens downside to tag the upper end of secondary gap to the 2920s, and that would likely equate to VIX near the key 20 threshold. Right now, I don't see any price action <2900 in the near term.


Nasdaq comp'


The Nasdaq settled -59pts (0.7%) to 8117. Weekly price momentum remains fractionally negative.


Dow


The mighty Dow cooled by -284pts (1.0%) to 26935. Weekly price momentum still managed to turn positive though. Note the July historic high of 27398.


NYSE comp'


The master index settled -30pts (0.2%) to 13093. Weekly price momentum continues to tick upward.


R2K


The R2K settled -18pts (1.2%) to 1559. Price has notably reversed on the underside of m/t rising trend, and it leans s/t bearish. First support in the 1520s.


Trans


The 'old leader' - Transports, settled -359pts (3.3%) to 10454. Weekly support in the 10300s.



Summary

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

The two leaders - Transport and R2K, lead the way lower, whilst the NYSE comp' was most resilient.

YTD price performance:


The Nasdaq comp' continues to lead for the year, currently +22.3%. The SPX is +19.4%, R2K +15.7%, and the Dow +15.5%. The NYSE comp' +15.1%, with the Transports lagging at +14.0%.
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Looking ahead

Earnings: NIO, BB, NKE (Tues'), KBH (Wed'), ACN, CAG, MU (Thurs')

Econ-data:

M - PMI comp'
T - Case-Shiller HPI, FHFA HPI, consumer sent', Rich' fed
W - New home sales, EIA Pet'
T - Weekly jobs, Q2 GDP (third/final print), intl' trade, pending home sales
F - Durable goods, Pers' income/outlays, consumer sent'
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Friday, 20 September 2019

Mostly quad-opex chop

US equity indexes closed moderately weak, sp -14pts (0.5%) at 2992. Nasdaq comp' -0.8%. Dow -0.6%. The two leaders - Trans/R2K, settled -0.5% and -0.1% respectively.

sp'daily5



VIX'daily3



Summary

With it being quad-opex, it was a natural day of (mostly) minor chop. I note mostly, as there was a brief upset in early afternoon, on a headline that a Chinese delegation had cancelled a visit to some farm in Montana. Seriously, did that really merit an SPX drop from 3009 to the 2984s? The late afternoon saw minor chop resume, with the SPX settling -14pts at 2992.

Volatility picked up a little, with the VIX settling +9.0% at 15.32. S/t outlook leans bearish for equities, especially from Tuesday onward.
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Another group making an escape

Still a touch of summer sun
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Thursday, 19 September 2019

Post FOMC chop

US equity indexes closed mostly on a weak note, spx +0.1pts at 3006. Nasdaq comp' +0.1%. Dow -0.2%. The two leaders - Trans/R2K, settled -0.7% and -0.4% respectively. Near term outlook offers chop into quad-opex.

sp'daily5



VIX'daily3



Summary

Suffice to note, it was a day of moderate chop in equity land, although the SPX did come very close to the July historic high of 3027.98, maxing out at 3021.99. The afternoon saw a s/t cyclical rollover, with the SPX cooling to 3003, and settling effectively flat at 3006.

Volatility was ground to 13.31, but settled +0.7% at 14.05. S/t outlook offers quad-opex chop, with the market makers inclined to try to settle the week around the sp'3000 threshold.
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Summer fading away

... the moon also fading away.
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Wednesday, 18 September 2019

Are you serious?

US equity indexes closed mostly on the weaker side, sp +1pt at 3006. Nasdaq comp' -0.1%. Dow +0.1%. The two leaders - Trans/R2K, settled -1.2% and -0.6% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened on a weak note, and entered a holding pattern into the 2pm FOMC announcement. The 2pm press release saw the usual initial swings both higher and lower, before the market decided to pick a direction and run with it... in today's case... downward.

Trump naturally chimed in....


 Schiff responded to that...


 --
The late afternoon saw an equity recovery, with the SPX turning fractionally higher.
Volatility picked up, with the VIX spiking to 15.80, but settling -3.4% at 13.95.


Are you serious?

Powell stated that the Fed's view on interest rates has significantly changed since the start of the year. Just reflect upon that at the Dec'2018 FOMC, the fed expected 2-3 hikes in 2019. In early January the threats of ending QT began... and here we are... rate cut'2, with another 1-2 to come before year end.


... and yet we're supposed to put some faith into the following, which is the most ludicrous financial outlook I've seen this year...


The monetary masters at Print Central, expect rates to remain u/c into year end and across all of 2020, and then begin to rise again in 2021 and into 2022.

I shall merely respond with this...



The scary thing is that I believe the FOMC are serious. They actually believe the garbage outlook they have issued.

The Federal Reserve never saw the last recession coming, and they sure won't see the next one coming, until we're already mired within it. The only issue is when will US rates turn negative, and at what level of rates will QE4 be initiated? 
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Tuesday, 17 September 2019

Tier'1 LMCG

US equity indexes closed a little mixed, sp +7pts (0.2%) at 3005. Nasdaq comp' +0.4%. Dow +0.1%.  The two leaders - Trans/R2K, settled -0.2% and -0.4% respectively.

sp'daily5



VIX'daily3



Summary

Aside from the powerful retracement in WTIC, which pulled the related energy stocks lower, it was a day of micro churn in equity land. The SPX saw a trading range of just 12.48pts. Volatility was itself very subdued, with the VIX settling -1.6% at 14.44.


Tier'1 LMCG

CNBC are naturally continuing to give some attention to the going IPO debacle that is WeWork (ticker symbol: WE... if it ever gets listed).

When you consider some of the other loss making IPOs in market history, its pretty incredible...


UBER, WeWork, LYFT, NIO, and SNAP, are all multi-billion companies that can't turn a profit. *Genuity dates back to 2000: see https://money.cnn.com/2000/06/28/deals/genuity/

Many of these same companies have multiple tiers of stock, each with different voting rights, which I find especially contemptible.

However, even yours truly would not compare the current market to the truly insane tech bubble of 1999/2000.

Perhaps the key question is which of the remaining quintet of tier'1 loss making corporate garbage, will not survive the next recession (whenever that might be)?  WeWork and NIO look doomed, and I still see SNAP as similar to MySpace. I would expect UBER and LYFT to eventually merge.

Whilst many seem intent to invest/trade in tier'1 LMCG, there is lot to be said for a nice boring Dow component, such as DIS, MSFT, or HD.
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More leaving the land of geo-political chaos

Sunset, 6.57pm BST


The mighty moon!
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Monday, 16 September 2019

Energy market drama

US equity indexes mostly closed on a weak note, sp -9pts (0.3%) at 2997. Nasdaq comp' -0.3%. Dow -0.5%. The two leaders - Trans/R2K, settled -0.8% and +0.4% respectively. Near term outlook offers a holding pattern into the Wed' FOMC announcement.

sp'daily5



VIX'daily3



Summary

US equities opened on a weak note, but that was impressive considering the chaos within the energy market, where WTIC jumped from the $54s to $63s, after the weekend attacks on Saudi facilities.

Trump naturally stepped in last evening...


... that helped to restrain oil's hyper jump, with some cooling to the $58s, before resuming upward in the afternoon to a fractional new cycle high of $63.38.
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Early Monday morning saw the (almost daily) presidential swipe at the fed...


As things are, Wednesday should see rate cut'2 of -25bps, but that clearly won't be enough to satisfy Trump.

Just before the close...


Note the massive gain in WTIC of 12.9% to $61.91, but equities were very resilient.

Volatility picked up, with the VIX settling +6.8% at 14.67. S/t outlook offers a holding pattern ahead of the Wed' 2pm FOMC announcement. The wild card is of course any further 'surprises' in the middle east.
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Saturday, 14 September 2019

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from +5.0% (Trans), +4.9% (R2K), +1.6% (Dow), +1.5% (NYSE comp'), +1.0% (SPX), to +0.9% (Nasdaq comp').


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

sp'500


The SPX saw a Thursday high of 3020, just 7pts shy of the July historic high, settling net higher for the week by 28pts (1.0%) at 3007. Weekly price momentum ticked higher for a third week, and is set to turn positive at next Monday's open.

I would note the August and June lows of 2822 and 2728 respectively. More broadly, the monthly key 10MA stands at 2838. Equity bears have nothing to tout unless we see a monthly settlement under the August low (to be decisive).

If new historic highs (>3027) are seen, it would offer a challenge of the next Fibonacci extension of 3047. Any price action >3050 would be decisive, and offer far higher levels in 2020/21.
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Nasdaq comp'


Tech was the laggard this week, climbing for a third consecutive week, settling +73pts (0.9%) at 8176. Note the July historic high of 8339.


Dow


The mighty Dow gained 422pts (1.6%) to 27219. Note the July historic high of 27398.


NYSE comp'


The master index climbed for a third week, settling +190pts (1.5%) to 13124.


R2K


The second market leader gained 73pts (4.8%) to 1578, although this was still below the July high of 1599. Things would turn very bullish with a weekly close >1620 (to be decisive).


Trans


The 'old leader' - Transports, lead the way higher this week, settling +510pts (5.0%) to 10813. Note the April high of 11148.



Summary

All six of the main US equity indexes saw net weekly gains.

The Trans and R2K lead the way higher, with the Nasdaq lagging.

More broadly, all six of the indexes are currently above their monthly key 10MA.

YTD price performance:


The Nasdaq comp' continues to lead for the year, currently +23.2%. The SPX is +20.0%, the Transports +17.9%, and the R2K +17.0%. The Dow is +16.7%, with the NYSE comp' lagging, but still higher by a considerable +15.4%.
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Looking ahead

Earnings: CBRL (early Tues'), ADBE, FDX, CHWY (Tues' AH), GIS, WGO (early Wed'), DRI (early Thurs').

Econ-data:

M - Empire state manu'
T - Indust' production, housing market index
W - Housing starts, EIA Pet' report

*FOMC announcement: 2pm. Rate cut'2 can be expected, -25bps to 1.75/2.00%. Powell will host a press conf' at 2.30pm. The market will be focused on whether Powell states its just 'mid cycle', or a sustained rate cut cycle into 2020. I do not expect any threats of QE, although were I one of the mainstream media hacks, I'd ask Powell '... so.. err... Draghi has spun up the printers, how long until you, or your successor Bullard, do the same?". 

T - Weekly jobs, existing home sales, leading indi'
F - *OPEX*
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Final note

This past week saw the ECB cut rates and spin back up the printers. The Fed is clearly going to cut again this coming Wednesday.

The m/t trend in equities is unquestionably bullish, although some indexes remain considerably under their respective historic highs.

The bond market decisively broke in late 2018, and we've seen Gold breakout in June. Those are two indirect signals that all is not entirely well.

The following remains something to stare at... at least for a few minutes...


I would argue the equity bulls need sp>3050, and the US 10yr >2.00%, to have some justification to ignore the m/t price action in bonds and the precious metals. On the flip side, equity bears need to break below the August low of sp'2822 and the recent US 10yr low of 1.44%. Everything in between could be seen as broad chop. 
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Friday, 13 September 2019

Sleepy Friday the 13th

US equity indexes closed rather mixed, sp -2pts (0.1%) at 3007. Nasdaq comp' -0.2%.  Dow +0.1%. The two leaders - Trans/R2K, settled +0.9% and +0.2% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened in minor chop mode, and leaning a touch weak into the late afternoon, seeing a low of 3002, and settling -2pts at 3007. Volatility melted into the weekend, with the VIX settling -3.4% at 13.74.

Ohh, and yes, the US President didn't mention the Fed once today, which is pretty unusual these days. 
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Summer continues to fade

More lucky people escaping the land of BREXIT chaos

The sun sets on Friday the 13th

The Harvest moon
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