Wednesday, 17 July 2019

Transports whacked

US equity indexes closed on a broadly weak note, sp -19pts (0.6%) at 2984. Nasdaq comp' -0.5%.  Dow -0.4%. The two leaders - Trans/R2K, settled -3.6% and -0.7% respectively.

Transports, daily



VIX'daily3



Summary

Whilst the broader market leaned weak, the Transports was powerfully lower on Wednesday, dragged lower by CSX. The irony is that the double miss in EPS/Rev' was only marginal, earnings weren't that bad. The closing hour saw equities break a new intraday low, and that was before the massive miss in Netflix subscriber growth!

Volatility remains subdued, with the VIX settling 8.6% at 13.97. The s/t cyclical setup favours the bulls, although the bigger daily equity and VIX cycles both threaten sig' downside into next week.
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Tuesday, 16 July 2019

Trade concerns

US equity indexes closed rather mixed, sp -10pts (0.3%) at 3004. Nasdaq comp' -0.4%. The two leaders - Trans/R2K, settled +1.8% and u/c respectively.

sp'daily5



VIX'daily3



Summary

US equities opened in minor chop mode, although it was still enough to see the Dow break a new historic high. The market turned moderately lower in the lunchtime hour, as Trump again threatened to increase tariffs on Chinese goods. The afternoon saw a minor recovery, but still settling on a weak note.

Volatility remained subdued, with the VIX settling +1.4% at 12.86. Whilst the s/t cyclical setup will favour the bulls on Wednesday, Thursday should lean to the bears.
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Sunset ahead of a lunar eclipse
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Monday, 15 July 2019

Q2 earnings begin

US equity indexes closed a little mixed, sp +0.5pts 3014. Nasdaq comp' +0.2%. Dow +0.1%. The two leaders - Trans/R2K, settled -0.3% and -0.5% respectively.

sp'daily5



VIX'daily3



Summary

The week begun on a mixed note, early minor gains to new historic highs in the SPX, Dow, and Nas', but there wasn't any follow through, with prices leaning a touch weak into the afternoon.
Volatility churned in the 12/13s, with the VIX settling +2.3% at 12.68.

Meanwhile...


It would be unusual if Trump wasn't taking a swipe at the fed, at least once within a weekend.
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Another lucky group departing the UK

A fine summer's evening
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Saturday, 13 July 2019

Weekend update - US equity indexes

It was a bullish week for most US equity indexes, with net weekly changes ranging from +1.5% (Dow), +1.4% (Transports), +1.0% (Nasdaq comp'), +0.8% (SPX), +0.2% (NYSE comp'), to -0.4% (R2K).


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

sp'500


The SPX broke a new historic high, the fifth week higher of six, settling +23pts (0.8%) at 3013.


Nasdaq comp'


The Nasdaq broke a new historic high of 8245, settling +82pts (1.0%) to 8244.


Dow


The mighty Dow lead the way higher this week, breaking a new historic high of 27333, settling +409pts (1.5%) at 27332.


NYSE comp'


The master index settled +23pts (0.2%) to 13234.


R2K


The R2K was the laggard this week, settling net lower by -5pts (0.4%) to 1570.


Trans


The 'old leader' - Transports, settled +152pts (1.4%) to 10637. The weekly candle has a pretty powerful floor spike from 10260. Note weekly price momentum has turned positive.



Summary

Five of the six US equity indexes saw net weekly gains.

The Dow and Transports lead the way higher, whilst the R2K settled moderately lower. 

The SPX, Dow, and Nasdaq comp' broke new historic highs.

YTD price performance:


The Nasdaq comp' continues to lead the US market higher, currently net higher for the year by 24.2%. The SPX is +20.2%, with the mighty Dow +17.2%. The R2K and NYSE comp' are both +16.4%, with the Transports lagging, but still higher by a considerable 16.0%.
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Looking ahead

A busy week is ahead, as Q2 earnings begin to pour in...

Q2 earnings to begin

Earnings:

M - C, JBHT
T - JPM, WFC, GS, SCHW, JNJ, CSX, UAL IBM, BSX
W - BAC, ABT, LVS, KMI, NFLX, EBAY, AA
T - UNH, BX, ALLY, MS, HON, UNP, CHWY, MSFT
F - AXP, SLB, CLF
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Econ-data:

M - Empire state manu'
T - Retail sales, import/export pri', indust' prod', bus' invent', housing market indx
W - Housing starts, EIA Pet', Fed Beige book
T - Weekly jobs, phil' fed, leading indi'
F - Consumer sent'. *OPEX*
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Final note

We have just 13 trading days until the July 31st FOMC, when rates can be expected to be cut by -25bps to 2.00/2.25%. Further, I'd look for the fed to end QT, two months ahead of schedule, as a consolation prize to those who wanted a -50bps cut.

At best, the equity bears might manage a washout to around the sp'2900 threshold before end month. From there, the initial market reaction to rate cut'1, can be expected to be positive.

Lets be clear though, even some of the cheerleaders recognise that if Q2 earnings come in weaker than expected, the fed cutting rates will do nothing to fix any underlying corporate or economic weakness into year end/early 2020.

For the Fibonacci people out there...


The SPX is just 34pts from the next giant fib' extension of 3047. Its notable that the market was 4pts shy in May 2015, before rolling over. Any daily closes >3047 would offer another 30% higher to near 4K.

In any case, lets see how earnings come in, and how the market reacts to rate cut'1. 
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Have a good weekend
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Friday, 12 July 2019

Historic highs into the weekend

US equity indexes ended the week on a very positive note, sp +13pts (0.5%) at 3013. Nasdaq comp' +0.6%. Dow +0.9%. The two leaders - Trans/R2K, settled +2.4% and 0.8% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened a little higher, but it was more than enough to generate a new high in the SPX and Dow, with the Nasdaq comp' following a few hours later. The closing hour saw further new historic highs. On any basis, a very bullish end to the week.

Volatility was naturally subdued, with the VIX settling -4.2% at 12.39.
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A golden evening sky.

Full moon is next Tues' July 16th
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Thursday, 11 July 2019

Fedspeak overload

US equity indexes closed rather mixed, sp +6pts (0.2%) at 2999. Nasdaq comp' -0.1%. Dow +0.8%.  The two leaders - Trans/R2K, settled +1.0% and -0.5% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened on a marginally positive note, and the SPX got stuck just under yesterday's high of 3002. It makes for a s/t double top. A cooling wave to around 2900 isn't a stretch, ahead of rate cut'1 July 31st.

Volatility was subdued, with the VIX printing 12.65 (cash market low), and settling -0.8% at 12.93.

Meanwhile...


Powell was rather confident there is no threat of corp' debt causing any systemic issues. He added there appears no risk of 'a run on the CDOs' as happened in 2008.

Five hours and 26mins of Powell...


... across two days, made at least one bear pretty sleepy.

The fedspeak never really ends though, as Quarles was talking with the Liesman...


... Quarles is just another one of the monetary masters of Print Central, who are now boxed into cutting rates, even if they don't believe the data merits it. The Fed have to cut, as they are well aware how Mr Market would otherwise react. Far from being proactive, the fed remain reactive.
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Full moon, Wed' July 16th.

A quiet evening
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Wednesday, 10 July 2019

Powell induced SPX 3000

US equity indexes mostly closed on a positive note, sp +13pts (0.4%) at 2993   (new historic high 3002). Nasdaq comp' +0.7%. The two leaders - Trans/R2K, settled -0.5% and +0.2% respectively.

sp'daily5



VIX'daily3



Summary

Pre-market futures were weak, but the release of Powell's prepared remarks at 8.30am (the timing by the fed was carefully scheduled) saw futures swing to moderate gains. The SPX broke above giant psy'3000 just before 10am.


Powell, and an appropriately capped Art Cashin

The SPX printed 3002, before a moderate cooling wave to 2984, before a secondary wave higher to 2999. The closing hour saw minor chop.  Volatility was ground lower, with the VIX settling -7.5% at 13.03.

Meanwhile...

Most definitely... not fake news.

Finally, with SPX 3000, the bears have started to turn on each other...



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Tuesday, 9 July 2019

The historical irony

US equity indexes closed a little mixed, sp +3pts (0.1%) at 2979. Nasdaq comp' +0.5%. Dow -0.1%. The two leaders - Trans/R2K, settled -0.7% and +0.1% respectively. Powell-Wednesday will be real interesting.

sp'daily5



VIX'daily3



Summary

US equities opened moderately lower to 2963, but then clawed back upward, and then saw minor chop across the afternoon. Volatility picked up, with the VIX settling +0,9% at 14.09.


Meanwhile, the Kudlow made a breakfast appearance with Ms. Evans...

"The economy is in great shape".
Larry did his best to appear coherent, but he simply isn't firing on all thrusters lately, for some obvious reasons. The ongoing mantra of 'the economy is great, but we need lower rates, because prices are too low", I find as twisted logic, but also an outright wilful delusion.

Regardless, rate cut'1 of -25bps to 2.00/2.25% is on schedule for July 31st. I'd accept the initial reaction to that will likely be positive, but that was also the case in Sept'2007, when almost everyone believed the economy was in great shape. Those rare few - such as Peter Schiff, were openly derided, and literally laughed at on the various financial networks.




*yes, the video quality is lousy, but it still merits highlighting.

It shall forever be a historical irony that Schiff has been largely black-listed by the mainstream financial networks, whilst Laffer, who regularly derided Schiff, was just recently given the Congressional Medal of Freedom.

see: https://edition.cnn.com/2019/06/19/politics/arthur-laffer-curve-medal-of-freedom-donald-trump/index.html

In many ways, if you're credited by the mainstream collective, you're probably doing something wrong.
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Another uninspiring day
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Monday, 8 July 2019

Starting weak

US equity indexes closed moderately weak, sp -14pts (0.5%) at 2975. Nasdaq comp' -0.8%. The two leaders - Trans/R2K, settled -0.6% and -0.9% respectively. Near term outlook offers an 'interesting' Wednesday.

sp'daily5



VIX'daily3



Summary

US equities opened on a moderately weak note, and slipped into chop mode into the afternoon, still leaning on the weaker side. Volatility picked up, with the VIX peaking at 14.44, and settling +5.1% at 13.96.

Meanwhile, Trump continues to bash the fed...


... suggesting the Dow would be 5000 to 10000 points higher, were it not for the actions of the fed.
Make of that, what you will.
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Somewhat moody summer skies
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