Saturday 30 March 2019

Weekend update - World equity markets

It was a mixed month for world equity markets, with net monthly changes ranging from +5.1% (China), +2.1% (France), +1.9% (Greece), +0.8% (Russia), +0.1% (USA, Germany, Australia), -0.2% (Brazil), -0.4% (Spain), to -0.8% (Japan).


Lets take our regular look at ten of the world equity markets

USA - Dow


The mighty Dow climbed for a third consecutive month, settling +12pts (0.1%) at 25928. Note the monthly 10MA at 25293, which was comfortably held above, and makes for an outright bullish March settlement.

Underlying MACD (green bar histogram) cycle ticked higher for a second month, as price momentum is slowing swinging back toward the bulls. At the current rate, a bullish cross is due June/July.

New historic highs (>26951) are a mere 1023pts (3.9%) to the upside, and look viable in May/June. Next key fib' level is 26702. Equity bears have nothing to tout unless an April (or beyond) monthly settlement back under the key 10MA.

It is realistic to see equities battle upward until the fed cut rates. Right now, that appears likely no earlier than the FOMC of Oct'30th or Dec'11th.
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Germany – DAX


The economic powerhouse of the EU - Germany, saw equities climb for a third month, +10pts (0.1%) to 11526. The key 10MA is 11720, which was briefly crossed over this month. Price momentum still favours the bears. There remains a stark divergence between price/momentum stretching from April 2015>Jan'2018.

The German economy continues to weaken, as Q4 GDP is flat-lining at 0.0%. The ECB's NIRP is not helping, with the derivatives time-bomb of Deutsche Bank ticking toward zero. 
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Japan – Nikkei


The Nikkei saw some swings, spiking to 21860, but settling net lower for March by -179pts (0.8%) at 21205. The March settlement does rank as a failure to break above the key 10MA. Things only turn bullish >22k. Maybe the BoJ just need to buy even more ETFs, or 3D print some babies?


China – Shanghai comp'


Chinese equities climbed for a third month, with the Shanghai comp' settling +149pts (5.1%) to 3090. Technically, its open air to the 3400s, which are around 10% higher. Price momentum is set to turn positive at the April'1st open. No doubt, the communists at the PBOC are continuing to meddle. In theory, the China bulls should control things at least into mid year.


Brazil – Bovespa


It was a mixed month for Brazilian equities, with the Bovespa breaking a new historic high of 100438, but settling -169pts (0.2%) to 95414. Things only turn bearish under the key 10MA, currently in the 86000s.


Russia - RTSI


Russian equities saw a choppy March, settling +9pts (0.8%) to 1198. The 1200 threshold remains powerful resistance. A monthly settlement >1200 would offer a run to the 1500s by late summer. Higher energy prices would really help this market/economy.


France – CAC


French equities climbed for a third month, settling +110pts (2.1%) to 5350. Whilst March price action was rather choppy, it was a clear settlement above the key 10MA. Things would turn very bullish >5500. No comment on the yellow vests.


Spain – IBEX


Spanish equities saw a failed attempt to break above m/t declining trend, settling -37pts (0.4%) to 9240, although this was a monthly settlement above the key 10MA.



Australia – AORD


Australian equities climbed for a third consecutive month, settling +9pts (0.1%) to 6261, a notable second monthly close above the key 10MA. Soft target is the Aug'2018 high of 6481, and that is only another 3.5% higher.


Greece - Athex


Greek equities climbed for a third month, with the Athex settling +13pts (1.9%) to 721, which was notably above the key 10MA. Soft upside resistance is the Feb'2018 high of 895.
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Summary

Seven markets were net higher, whilst three were net lower.

China and France lead the way upward, whilst Spain and Japan were lagging.

The Brazilian market broke a new historic high.

Eight markets settled above their monthly 10MA, the exceptions being Germany and Japan.
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Looking ahead

Earnings: WBA, GME (Tues'), SIG (Wed'), STZ (Thurs'),
 
M - Retail sales, PMI/ISM manu', busi' invent', construction
T - Durable goods orders
W - ADP jobs, PMI/ISM serv', EIA Pet' report
T - Weekly jobs
F - Monthly jobs, consumer credit

*UK/EU clocks jump ahead the night of March 30/31th.

**there are a few fed officials scheduled next week, and Mr Market will be looking for any further rate comments.

***The BREXIT drama continues, with further Parliamentary 'indicative votes' due. As things are, the UK is scheduled for a no-deal/hard exit April 12th. However, there is increasing support for a 'People's vote', aka.. second referendum. If such a vote is held, the UK populace would choose to remain within the EU, by a margin of around 53/47.
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Final note

Whilst the equity/econ' bulls can tout a broadly positive March and Q1, there are clearly some major issues out there.

The European economy is falling into recession, not helped via the geo-political BREXIT crisis in the UK. There is global weakening, which has already leaked into the US economy. The central banks are increasingly twitchy. The ECB and BoE have announced rates will not be raised for the remainder of the year. The Fed have announced an end date of September for QT.

World equities have clearly been juiced by increasingly dovish talk from the central banks, with threats of renewed monetary easing. Certainly, the US will fair better than almost anywhere else, but it won't be able to escape the next crisis... whether that is later this year, or more likely within 2020/21.

Yours, awaiting a rate cut... much like Kudlow, and an increasing number of others. 
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Have a good weekend
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*the next post on this page will likely appear by 5pm EDT on Monday.

Friday 29 March 2019

The Rate Cut

US equity indexes ended the month/Q1 on a broadly strong note, sp +19pts (0.7%) at 2834. Dow and Nasdaq comp' both settled +0.8%. The two leaders - Trans/R2K, settled +0.9% and +0.3% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened moderately high, and whilst the opening gains were a little shaky, there was very little selling pressure, as the mainstream were very much focused on the LYFT IPO. The afternoon saw a lot of chop, but leaning upward, helped by Kudlow and a light sprinkling of end month/Q1 'window dressing'.

Volatility was naturally subdued, settling in the 13s, and fully reflective of a complacent mainstream.


The Rate Cut

If you've garnered anything from yours truly, I would hope its the notion that a rate cut will (ironically) be the ultimate equity sell signal.

Today saw Kudlow calling for an immediate 50bps cut, whilst Fed official Quarles said further hikes might be necessary. 

Rate cuts are a bearish sign

SPX, fed rates, 20yr


We've already had our precursor signal of an end date for QT. Its not a question of if rates are cut... but when. Right now, I'd look to the FOMC of Oct'30th or Dec'11th.
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Sunset 6.10pm GMT. In two days that will jump to around 7.12pm BST

A Lyft coloured wheel of doom!
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Goodnight from London
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Thursday 28 March 2019

Leaning upward into end month

US equity indexes closed on a positive note, sp +10pts (0.4%) at 2815. The two leaders - Trans/R2K, settled +1.2% and +0.8% respectively. Nasdaq comp' +0.3%. Near term outlook favours the bulls into end month/Q1.


sp'daily5



VIX'daily3



Summary

US equities saw a day of relatively minor chop, but still mostly leaning on the upward side. Volatility saw a high of 15.62, but settled -4.7% at 14.43.

Friday will be end month/Q1, and some degree of window dressing can be expected, which will inherently favour the bulls. March is on track to settle outright bullish for 4 of the 6 main indexes (Trans and R2K the exceptions).

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High above


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Wednesday 27 March 2019

Another loss maker IPO

US equity indexes closed on a weak note, sp -13pts (0.5%) at 2805. Nasdaq comp' -0.6%. The two leaders - Trans/R2K, settled +0.9% and -0.4% respectively. Near term outlook offers upside (if choppy) into end month/Q1.

sp'daily5



VIX'daily3



Summary

US equities opened in minor chop mode, but turned lower as bond yields broke new cycle lows. The spx saw a low of 2787, followed by a latter day recovery, settling at 2805. Volatility was a little twitchy, swinging from the mid 14s to 16.71, and settling +3.2% at 15.15.


Another loss maker IPO

This Friday morning, Lyft (LYFT) will be listed on the Nasdaq. That will garner a great deal of attention from the mainstream cheerleaders, who are rather desperate to see a major IPO proceed without any problems. As a company though, Lyft is just another loss maker...


Of the other four names on that list, things never turned out so great for GRPN or SNAP. As Friday is end month/Q1, there will be at least some degree of 'window dressing', and that will likely favour the equity bulls.
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Extra charts in AH (usually around 7pm EDT) @ https://twitter.com/permabear_uk

Goodnight from London
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Tuesday 26 March 2019

Rate outlook shifting

US equity indexes closed broadly higher, sp +20pts (0.7%) at 2818. Nasdaq comp' +0.7%. The two leaders - Trans/R2K, settled +1.1% and +1.0% respectively. Near term outlook offers moderate upside, before another swing lower, probably on BREXIT 'hard-exit' concerns.

sp'daily5



VIX'daily3



Summary

US equities opened moderately higher, and quickly built significant gains to 2829. There was a distinct cooling wave in late morning to 2803, with the afternoon seeing renewed upside. Volatility was in cooling mode, with the VIX settling -10.1% at 14.68.


Rate outlook shifting

Today saw the cheerleaders on the lunchtime show, argue over the next move in interest rates. It is increasingly the case that many now expect a rate cut as early as September.


For the record, I don't expect a rate cut until at least the FOMC of Oct'30th or Dec'11th. In any case, a rate cut will be the ultimate sell signal.

Ohh, and BREXIT is now just 3 days away. Whilst there will be a truck load of 'indicative' votes in the UK Parliament on Wednesday, it makes zero difference, as UK law has NOT yet been changed.
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More making an escape from BREXIT land

Long evenings begin this Sunday, with the UK/EU clocks changing.
--
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Goodnight from London
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Monday 25 March 2019

BREXIT remains on the menu

US equity indexes closed a little mixed, sp -2pts (0.1%) at 2798. Dow +0.1%. Nasdaq comp' -0.1%. The two leaders - Trans/R2K, settled -0.5% and +0.5% respectively. Near term outlook offers a bounce into the sp'2810/20s.

sp'daily5



R2K, daily



VIX'daily3



Summary

US equities began the week some moderate swings, opening weak, a failed reversal, moderate declines to sp'2785, but then clawing back upward into the afternoon. The closing hour saw further chop, notably failing to hold the 2800 threshold. On balance though, a bounce to the 2810/20s appears more probable, than a straight run to the 2750s.

The second market leader settled +0.5% at 1512. It can be argued price structure from late Feb' is just an ABC, or some kind of big bull flag. That is something I noted in the weekend post. 

Volatility fractionally broke last Friday's high, but then went into cooling mode, settling -0.9% at 16.33. S/t bearish, with a notable gap - from March 22nd (not viewable on daily chart) in the 14s.


BREXIT remains on the menu

As law stands, the UK is set to exit the EU this Friday, March 29th at 11pm GMT. That is the default position, and will ONLY change if PM May decides to have the law re-written.

The UK, EU, US, and other capital markets are not taking the situation seriously. Any 'hard'/no-deal BREXIT will likely be very problematic. It would spook the markets... if only for a few days, much like the actual vote in June 2016.
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Looking ahead

Tuesday will see Housing Starts, Case-Shiller HPI, consumer con', and the Richmond Fed'.

Earnings: Cronos, Carnival, KB Home.
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A mixed day

It was a mixed day for yours truly. I made a run for the exit at the open in ROKU. That was one of my better decisions lately, as the stock duly swung upward, and then hyper ramped on speculative buyers with the AAPL announcement.

I had server issues though, and those stress me out more than any trading loss. I am thankful that I at least have a reliable old home here... courtesy of GOOGL.

Tuesday should be back to normal at http://subscriber.permabeardoomster.com
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More escapees from the UK

A moment of serenity

The equity market is one giant Ferris wheel of crazy.
--
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Goodnight from London
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Closing Brief

US equity indexes closed a little mixed, sp -2pts (0.1%) at 2798. Dow +0.1%. Nasdaq comp' -0.1%. The two leaders - Trans/R2K, settled -0.5% and +0.5% respectively. Near term outlook offers a bounce into the sp'2810/20s.

sp'60min



Summary

closing hour action: leaning upward, with another attempt to break/hold above the hourly 10MA, but failing, with a daily close <2800 threshold.
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... and that concludes Monday. It was a day of moderate swings, mostly leaning toward the bears. On balance though, the bulls should be rather pleased with today, not least after the overnight Asian smack down.

The s/t cyclical setup favours the bulls for Tuesday, but there remains the issue of BREXIT, which does threaten late week/end month turmoil.

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notable stock: MU



A second rough day for Micron, as the post earnings Thursday gains are all being eroded. I see the stock as m/t problematic, until memory prices show some sign of leveling out.
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notable stock: TWTR



Friday saw a clear failure at the 200dma, and today's action wasn't inspiring.
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notable stock: TSLA



Its an ugly s/t trend, with the stock also m/t broken. RBC downgraded 245>210. Yours truly holds to psy'200/190s... only negated with a monthly close >300, and that sure doesn't look likely.

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Have a good evening
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more later on the VIX and Indexes by 6pm EDT

3pm update - into the close

US equities continue to see some swings, but with a viable micro double floor of sp'2785. A s/t cyclical bounce threatens the 2810/20s, before resuming lower.. ahead of BREXIT, which (as things stand).. is scheduled for Friday, 11pm GMT.

sp'60min



VIX'60min



Summary

Suffice to add, the moderate swings continue. The s/t cyclical STILL favours the bulls into early Tuesday. I'm actually concerned of a tag of upside gap to 2844/54, with VIX 14s, before the next swing lower.

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notable stock: AAPL



Despite all the mainstream fawning over Apple, the stock is set to close sig' lower for a second day, and perhaps below the 200dma.

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notable weakness, DIS



Disney has been broadly stuck for over three years. S/t bearish, as giant psy'100 isn't a stretch.
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notable financial: BAC



Bond yields remain leaning weak. If I'm right about the US 10yr to 2.25%, then BAC and others will be dragged lower into early April.
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notable stock: ROKU, 15min



Some crazy swings today, and I'm glad to be out of this one. The break above last Thursday's high does negate the s/t bearish outlook. I'll likely leave this one alone, and switch to indexes instead.

back at the close...