Saturday, 24 August 2019

Weekend update - US equity indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -2.3% (Trans, R2K), -1.8% (Nasdaq comp'), -1.4% (SPX), -1.3% (NYSE comp'), to -1.0% (Dow). Near term outlook offers further downside.


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

sp'500


The SPX fell for a fourth consecutive week, net lower by -41pts (1.4%) to 2847. Weekly price momentum ticked lower for a fourth week. The recent break of m/t rising trend offers a push to at least the June low of 2728.

More broadly, the SPX is currently net lower for August by -133pts (4.5%). If August settles under the monthly 10MA (currently at 2805), it would threaten the most bearish s/t scenario of the lower monthly bollinger, currently at 2548.
-


Nasdaq comp'


The Nasdaq comp' fell for a fourth week, settling -144pts (1.8%) to 7751. Note the June low of 7292.


Dow


The mighty Dow cooled for the fifth week of six, settling -247pts (1.0%) to 25628. Note the June low of 24680, a clear 1000pts lower.


NYSE comp'


The master index cooled for the fifth week of six, settling -163pts (1.3%) to 12416. Note the June low of 12238.


R2K


The second market leader cooled for a fourth consecutive week, settling -34pts (2.3%) to 1459. Note that we've already broken below the June low. Next support is key price threshold of the 1430s, and then the 1400 threshold.


Trans


The 'old leader' - Transports, fell for a fourth week, settling -227pts (2.3%) to 9739. Note that we've already broken the June low. Next major support is the Dec' low of 8636.



Summary

All six of the US equity indexes fell for a fourth consecutive week, settling with significant net weekly declines.

The Trans and R2K are leading the way lower, with the Dow most resilient.

Its notable that the Trans and R2K have already broken below their June lows, and its highly supportive of the notion that the SPX will see further cooling to its June low of 2728. 
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Looking ahead

After the rough Friday close, the Monday open should be 'real interesting'. We have a light sprinkling of earnings, with a fair amount of econ-data. I would especially look to the Chicago PMI, which will likely remain under the recessionary threshold of 50.0.

Earnings:

M -
T - MOMO, HPE,
W - TIFF, PVH, BOX
T - BBY, DG, DLTR, ANF, AMTD, ULTA, DELL, MRVL
F - CPB, BIG

--

Econ-data:

M - Durable goods orders
T - Case-Shiller HPI, FHFA HPI, consumer con', Richmond Fed
W - EIA Pet' report
T - Q2 GDP (print'2), weekly jobs, intl' trade, wholesale invent', pending home sales
F - Pers' income/outlays, Chicago PMI, consumer sent'.

*Friday will be end month, so expect some chop on higher volume. Further, as Monday Sept'2nd is CLOSED, trading could be expected to be lighter, but still with threat of 'rats selling into the weekend'.
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Final note

It sure wasn't a great week in equity land, and the bulls can place the blame on none other than the US President. After all, until 10.57am on Friday, most indexes were set for sig' net weekly gains.

Instead, all the main indexes were lower for a fourth week, with a couple already under their June lows. The following comes to mind...

Fed rates with SPX, monthly, 20yr


*note that the July rate cut still hasn't been accounted for in this EOM chart.
-
I will merely add, the recently added red vertical line isn't something to be dismissed lightly. If the headline indexes (SPX, Dow, Nas') also make it to their June lows within 1-2 weeks, it will make new historic highs even more difficult.

Seriously, does anyone still think rate cut'2 (Sept'18th: -25bps to 1.75/2.00%), is going to help?

Arguably, the ultimate question right now, would even QE4 being announced, be enough to generate net gains in the US market, whilst the econ-data and earnings continue to weaken?
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Friday, 23 August 2019

Enemy of the State?

US equity indexes closed powerfully lower, sp -75pts (2.6%) at 2847. Nasdaq comp' -3.0%.  Dow -2.4%. The two leaders - Trans/R2K, settled -3.3% and -3.1% respectively. Near term outlook threatens a sig' gap lower at the Monday open.

sp'daily5



VIX'daily3



Summary

US equities were somewhat wild even before the market opened, with the SPX swinging from around +8pts to -20pts. The market opened moderately weak, but then battled upward to fractionally positive with the Powell press release/statement.

At 10.57am EDT, the US President decided to get involved...


Its a rather incredible tweet, but also somewhat disturbing.

Q. If you were Powell, what the hell would you make of it?  You're effectively being equated to the leader for what is (arguably) an enemy state.

A serious question, might Powell just quietly walk away before year end?

Trump continued...


The FOREX market took this as alluding to an announcement that the US Treasury will actively try to weaken the dollar.

The afternoon saw continued weakness, with few (understandably) wanting to 'buy the dip' ahead of the weekend. The closing hour printed 2834, and settling at 2847.

Volatility swung from 16.04, to spike above the key 20 threshold, settling +19.1% at 19.87. S/t outlook threatens a Monday gap open <sp'2822, which would offer a test of the June low of 2728.
--

Gold, Silver, and the miners ascending into the weekend

No sunset for the equity bulls
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Thursday, 22 August 2019

Monetary masters on parade

US equity indexes closed a little mixed, sp -1.5pts at 2922. Nasdaq comp' -0.4%. Dow +0.2%. The two leaders - Trans/R2K, both settled -0.3%.

sp'daily5



VIX'daily3



Summary

US equities opened on a positive note, with the SPX pushing to 2939. There was a sig' swing lower on fed official comments, but 2906 was all the bears could manage, before recovering into the afternoon.

Meanwhile... even before the market opened, the US President was issuing new complaints...


We now have Trump complaining that US bond yields are not negative, and blaming the fed. The anti-fed talk is relentless.

A number of people are starting to recognise that the authority of the US Fed is being ground down, and if anything close to the financial collapse of 2008 occurs, the US Govt' will likely take direct control of monetary policy. The implications of that... should be clear.

-
Volatility was itself a little volatile, seeing a morning high of 17.68, but settling +5.6% at 16.68. S/t outlook favours the equity bulls... so long as Powell and/or Bullard don't say anything 'stupid'. 
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Monetary masters on parade



--
CNBC with a long list of fed officials, and a bonus of the (Canadian) BoE Carney.


--
It just makes me think of...



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Summer continues to fade
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Wednesday, 21 August 2019

Midweek rebound

US equity indexes closed moderately higher, sp +23pts (0.8%) at 2924. Nasdaq comp' +0.9%. The two leaders - Trans/R2K, settled +1.0% and +0.8% respectively. Near term outlook offers another swing lower.

sp'daily5



VIX'daily3



Summary

US equities opened broadly higher, inspired by significant gains in European markets, but also good earnings from Target and Lowes.

Meanwhile... 


Once again, the US President cites a guy whose 'best stock for 2008' was Washington Mutual.

Trump continued...


So, does Powell play golf, is that the important question we should be asking?
--

The afternoon saw the press release of the July FOMC minutes from Print Central, with equities seeing minor chop into the close.

Volatility was ground lower, with the VIX settling -9.7% at 15.80. S/t outlook favours another swing lower to price gap of 2864/47, and that should equate to VIX 20/21s.
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Tuesday, 20 August 2019

Tuesday cooling

US equity indexes closed moderately weak, sp -23pts (0.8%) at 2900. Nasdaq comp' -0.7%. The two leaders - Trans/R2K, both settled -0.7%.

sp'daily5



VIX'daily3



Summary

US equities opened on a weak note, and after a late morning bounce to fill the opening gap, the afternoon saw renewed cooling.

Trump appeared in late afternoon...


... and not surprisingly, once again called for lower rates.
--

Volatility was itself a little choppy, but with equities leaning weak into the close, the VIX settled +3.7% at 17.50. S/t outlook favours downside to the sp'2860/50s, which should equate to VIX 20/21. An eventual break <2822 will offer a test of the June low of 2728, which might offer a VIX hyper spike >30.
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The waning moon
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Monday, 19 August 2019

I sure don't see a recession

US equity indexes closed significantly higher, sp +34pts (1.2%) at 2923. Nasdaq comp' +1.3%.  Dow +1.0%. The two leaders - Trans/R2K, settled +1.1% and +1.0% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened significantly higher, with the SPX filling a legacy gap to 2926, and to 2931 in the 1pm hour. 

Trump chimbed in...


The US President continues to play along with the rest of the mainstream, touting the twisted mantra that the US economy is strong, but that rates need to be cut, and for the printers to be spun up.

Just reflect that Trump said the aforementioned, whilst things are still 'ticking along reasonable', what will he be saying and demanding if an actual downturn occurs?

Ohh, and Trump sure has changed his tune on lower rates and QE...


I guess that is what happens when you turn political, as what was once a 'fact' is now a 'lie', and what was seen as a problem is now the solution.
--

Volatility was naturally ground lower, with the VIX settling -8.6% at 16.88. S/t outlook offers another powerful swing lower, with minimum target of the sp'2860/50s, which should equate to VIX 20/21.
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I sure don't see a recession

On Sunday the Kudlow did the media circuit, which included Meet the Press...



Kudlow noted 'I sure don't see a recession'. The Kudlow's track record on economic outlooks is beyond abysmal. The following is a superb reminder of just how bad his analysis is...



The guy was still bullish in August 2008, mere weeks before the height of the financial crisis. Even after Lehman imploded in mid September, he was STILL touting tier'1 GARBAGE.

Of course, Kudlow, and likely also CNBC would like you to not remember such things. Most such videos get scrubbed eventually, and its arguably not for copyright reasons, but as an outright re-write of history.

Regardless of the s/t moves in equities and other aspects of the US/global capital markets, the financial endgame should be more than clear to you by now. Get prepared. The clock is ticking.
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Saturday, 17 August 2019

Weekend update - US equity indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -2.3% (Trans), -1.5% (Dow), -1.3% (NYSE comp', R2K), -1.0% (SPX), to -0.8% (Nasdaq comp'). Near term outlook offers further cooling.


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

sp'500


Despite the SPX ending the week on a very positive note, it still made for a third consecutive net weekly decline, settling -30pts (1.0%) to 2888. Note last week's break of m/t rising trend, which offers further cooling to at least the lower bollinger, which will be around the 2800 threshold next week. Price momentum is increasingly negative, having ticked lower for a third week.


Nasdaq comp'


A third week lower for tech, settling -63pts (0.8%) at 7895.


Dow


The mighty Dow fell for the 4th week of 5, settling -401pts (1.5%) to 25886. The s/t outlook is bearish, with first support of the June low of 24680.


NYSE comp'


The master index cooled for the 4th week of 5, settling -168pts (1.3%) to 12580. The May low of 12238 isn't much further down.


R2K


The second market leader fell for a third consecutive week, settling -19pts (1.3%) to 1493.


Trans


The 'old leader' - Transports, lead the way lower this week, settling -239pts (2.3%) to 9967. Weekly technicals are all leaning bearish, and offer the June low of 9715, with secondary support of the 9400s.



Summary

All six US equity indexes settled net lower for the week.

The Transports lead the way lower, whilst the Nasdaq comp' was most resilient.

Last week's break of m/t rising trend offers further downside to the June lows.
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Looking ahead

Another busy week can be expected. The market will continue to give some attention to the China/HK situation, whilst also dealing with further earnings, econ-data, and some central bankers at Jackson Hole.

Earnings:

M - BIDU, WB, SINA, IQIYI, BHP
T - HD, KSS, CREE, URBN, TOL
W - TGT, LOW, ADI, JWN, LB
T - CRM, VMW, GPS, HPQ
F - FL
-

Econ-data:

M -
T -
W - Existing home sales, EIA Pet', FOMC mins (2pm)
T - Weekly jobs, Leading indi'
F - New home sales

*Thurs/Friday: Jackson Hole, Wyoming, where a number of global central bankers will be meeting. The event will receive considerable attention from the media. Sporadic comments can be expected across the two days, although no major policy announcements can be expected. 
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Final note

Recent equity price action has been pretty wild, although the VIX hasn't seen any kind of hyper spike. Its arguable another push lower to the June equity lows might offer such a volatility spike, before better chance of an equity rally. New historic highs look unlikely any time soon. The following merits regular consideration...

Fed rates with SPX, monthly, 20yr


*the July rate cut hasn't yet been factored into what is an eom (end of month) chart.

The recently added red vertical line is not to be dismissed lightly. It is my guess we'll see a rate cut at each of the remaining three FOMCs this year (Sept'18th, Oct'30th, Dec'11th). I expect the fed to cut by -25bps each meeting, taking rates to 1.25/1.50% by year end.

Even some within the mainstream now expect rates to return to zero in 2020 or 2021. We're clearly also going to see QE4. Perhaps the only unknown is whether that is initiated by Powell or Bullard. In either case, there will be massive implications for everything, not least the precious metals and related mining stocks.

Ohh, and no, I don't see the situation as analogous to 1998. The econ-data is coming in increasingly weak, especially across Europe. One thing should be crystal clear, lower rates are not going to help avert a recession.
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Friday, 16 August 2019

Gains into OPEX

US equity indexes closed significantly higher, sp +41pts (1.4%) at 2888. Nasdaq comp' +1.7%. Dow +1.2%. The two leaders - Trans/R2K, settled +2.1% and +2.2% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened moderately higher, and built significant gains into the early afternoon to 2891, just 3pts shy of tagging the Wednesday opening gap. The closing hour saw pretty standard opex chop.

Volatility was naturally ground lower, with the VIX settling -12.8% at 18.47. The s/t cyclical setup favours the equity bears to sp'2860/50s with VIX 19/20.

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