Saturday 30 May 2020

Weekend update - World equity markets

It was a very mixed month for world equity markets, with net monthly changes ranging from +8.6% (Brazil), +8.4% (Russia), +8.3% (Japan), +6.7% (Germany), +4.9% (Australia), +4.3% (USA), -0.3% (China), -1.9% (South Africa), -3.8% (India), to -6.8% (Hong Kong).


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

USA - Dow


The mighty Dow settled +1037pts (4.3%) to 25383. The key 10MA stands at 26226, and (under my criteria) May still made for a bearish monthly settlement. Note the MACD (green bar histogram) cycle, as price momentum is starting to tick back upward. Even if price continues broadly upward, its going to take at least 5-6 months before momentum turns positive.


Germany – DAX


The economic powerhouse of the EU - Germany, saw the DAX settle +726pts (6.7%) to 11584. A bearish monthly settlement under the 10MA.


Japan – Nikkei


The Japanese market climbed very powerfully higher, settling +1684pts (8.3%) to 21877, a notable close above the key 10MA. At the current rate, momentum will turn positive by late July/August.


Brazil – Bovespa


Brazilian equities lead the way higher in May, settling +6896 (8.6%) to 87402, although that still made for a bearish monthly settlement under the 10MA.


Russia - RTSI


Russian equities settled +94pts (8.45) to 1219. The close above the 1200 threshold is s/t bullish, and offers a challenge to re-take the key 10MA in June/July.


India – SENSEX


Indian equities continued to struggle, settling -1293pts (3.8%) to 32424. A bearish monthly settlement under the 10MA.


China – Shanghai comp'


China equities struggled, settling -7pts (0.3%) to 2852. A fourth consecutive bearish monthly settlement under the 10MA.


South Africa – Dow


The South African market struggled, settling -29pts (1.9%) to 1503. A bearish monthly settlement under the 10MA.


Hong Kong – Hang Seng


Hong Kong equities settled powerfully lower by -1682pts (6.8%) to 22961. A bearish monthly settlement under the 10MA. A fifth consecutive bearish monthly settlement under the 10MA.


Australia – AORD


Australian equities climbed for a second month, settling +274pts (4.9%) to 5872, but that still made for a fourth consecutive bearish monthly settlement under the 10MA.



Summary

Six world equity markets settled net higher for May, with four net lower.

Brazil, Russia, and Japan lead the way upward, with China, South Africa, India, and Hong Kong continuing to struggle.

Nine markets remain under their respective monthly 10MA, the exception was Japan.
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Looking ahead

There will be a light sprinkling of earnings, but a fair amount of econ-data, especially in terms employment... or rather, the lack of.

Earnings:

M -
T - GME, AMBA, CRWD, DKS, ZM, CBRL
W - CPB, AEO, PVH, CLDR, CPRI
T - SJM, GPS, WORK, AVGO, DOCU
F - TIF
-

Econ-data:

M - PMI/ISM manu', construction
T - Vehicle sales
W - ADP jobs, PMI/ISM serv', Factory orders, EIA Pet'
T - Weekly jobs, productivity/costs
F - Monthly jobs, consumer credit
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Full moon will be Friday June 5th

Final note

Although the Dow didn't manage a bullish monthly settlement above the monthly 10MA, the SPX and Nasdaq comp' notably did. On balance, the Dow can be expected to follow within the next few months.

Whilst the lockdown restrictions are being broadly lifted, its left a broken and deeply traumatised populace, especially within Europe and North America. The collapse in USA GDP across Q1/Q2 likely amounts to around -40%. Even if you assume half of that is recovered in Q3/Q4, that still makes for a devastating net 2020 decline of -20%. On any basis... 2020 is to be seen as a depressionary year.

Yet the equity market doesn't care, as its being juiced by $3trn of Fed QE, never mind the ongoing REPOs. We didn't forget about the latter, did we? Ironically, even the mainstream cheerleaders appear somewhat embarrassed at the strength of equities, whilst the economy remains in a horrific state.

Such a depressionary economy and a traumatised populace make for a tinder box of social unrest. The death of George Floyd has been the spark, and some are starting to recognise that this summer is going to be a hot one.

The market will be unsettled by such mass social unrest, if only briefly. After all, more US Govt' stimulus appears on the menu, and the market will be delighted with another few trillion of Fed QE.

There is increasing background chatter about eventual inflation and a jump in bond yields/rates, but for now... there are far more important things to focus on. We have truly wild times ahead... in the twilight zone.

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Have a good weekend
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*the next post on this page will likely appear 5pm EDT on Monday.

Friday 29 May 2020

May settles

US equity indexes closed rather mixed, sp +14pts (0.5%) at 3044. Nasdaq comp' +1.3%. Dow -0.1%. The Transports settled -0.4%.

sp'daily5



VIX'daily3



Summary

US equities opened on a weak note, ahead of the Trump press conf'...

Meanwhile...


The above came after...


... as things continue to escalate between Twitter and Trump. This can't possibly end well for the former.

Powell appeared at 11am, with ex vice-chair Blinder, in what was an outright propaganda piece...


The Fed chair admitted he had crossed a number of red lines, but that it was appropriate, and he would deal with the implications 'later'.

The afternoon saw the US President appear...



.. although the market decided to interpret Trump's speech as 'less bad than expected'. With no Q/A, the market was further relived, and rallied (if choppy) into the close.

Volatility printed 30.16 with sp'2998, but was knocked back lower in late afternoon, the VIX settling -3.8% to 27.51.
--

The sun sets on May trading.

Full moon... Friday June 5th.
--
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Goodnight from London
--
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Thursday 28 May 2020

Ending the day badly

US equity indexes closed on a distinctly weak note, sp -6pts (0.2%) at 3029. Nasdaq comp' -0.6%. Dow -0.5%. The Transports settled -1.6%.

sp'daily5



VIX'daily3



Summary

US equities opened a little choppy, but did claw upward to new cycle highs.

Meanwhile...


... and continued...


The 'hater' - Roth, is the head of site integrity, someone who its been reported has called Trump a 'Nazi'. Not great, and is arguable is about as balanced as the San Andreas fault.

The afternoon saw equities continue to claw to a new cycle high of sp'3068, but the closing hour saw a very significant cooling wave, ending on a distinctly weak note.

Volatility was mixed, the VIX printing 27.43, but settling +3.5% at 28.59. As things are, the SPX is comfortably on track to settle the week/month above giant psy'3K, the 200dma, and the key monthly 10MA. To yours truly, such a May settlement will turn the m/t trend back to outright bullish, and it will arguably solidify the March low of 2191 as a washout low.

I have to add, Tom Lee of Fundstrat...

Tom Lee - April 20th 2020

*original tweet: https://twitter.com/permabear_uk/status/1252267736157376512

Lee's notion that the equity market recovery will be V-shaped, regardless of the type of economic recovery, has turned out to be correct. Considering the likely bullish May settlement, he could be seen to be doing a little bullish dance into the weekend.
--

The number of planes is very.... very slowly increasing

A fine day

Full moon is Fri' June 5th
--
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Goodnight from London
--
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Wednesday 27 May 2020

Trump verses Twitter

US equity indexes closed broadly higher, sp +44pts (1.5%) at 3036. Nasdaq comp' +0.8%. Dow +2.2%. The Transports settled +2.9%.

sp'daily5



VIX'daily3



Summary

US equities opened significantly higher, but the gains were shaky from the start, with the market reversing lower, lead by the Nasdaq.

The SPX printed 2969, but then clawed upward... all the way into the closing hour, even managing to break a new cycle high. Volatility was mixed, the VIX printing 30.53, but settling -1.4% at 27.62.
--


Trump verses Twitter

Twitter has always been left leaning (Dorsey admits this himself), but the tensions have notably increased, as seen last evening...


Twitter has effectively labelled the above tweets as a lie, false... or whatever you want to call it.

Trump pushed back...



... and continued....


Big action huh, such as? Twitter itself is struggling, recent earnings were outright lousy. Q2/Q3 will be horrific, with companies/advertisers having massively cut back on spending. In any case, the Trump verses Twitter war will surely spiral into/across the summer, not least with an election ahead.
--

A fine day in the capital of semi-mass hysteria

Full moon will be June 5th
--
Extra charts in AH (usually around 5pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
--
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Tuesday 26 May 2020

Black candle within key zone

US equity indexes closed broadly higher, but distinctly below their early highs, sp +36pts (1.2%) at 2991. Nasdaq comp' +0.2%. Dow +2.2%. The Transports settled +5.0%. The key issue is how the market will settle the month.

sp'daily5



VIX'daily3



Summary

US equities opened the short four day week on a very positive note, with the SPX jumping right above giant psy'3K.

With Dow 25K, and sp'3K, the US President (not surprisingly) appeared...



The afternoon saw considerable chop, but the closing hour saw some distinct cooling. Today saw the SPX settled with a black candle, with a mirroring hollow red reversal candle in the VIX. I will merely say... its 'curious'.

Volatility subtly held up, the VIX settling -0.5% at 28.01.
--


Twilight skies
--
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Goodnight from London
--
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Saturday 23 May 2020

Weekend update - US equity indexes

It was a very bullish week for US equity indexes, with net weekly gains ranging from +9.1% (Trans), +3.5% (NYSE comp'), +3.4% (Nasdaq comp'), +3.3% (Dow), to +3.2% (SPX).


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

sp'500


The sp'500 climbed for the fifth week of nine, settling +91pts (3.2%) to 2955, having broken a new cycle high of 2980. Weekly momentum has turned positive for the first time since mid February, back when the market was maxing out at 3393.

There is natural resistance at giant psy'3K. I would keep in mind, the 200dma at 2993, and the monthly 10MA at 2994. If the SPX manages a May settlement above the monthly 10MA, I would have to see that as a bullish monthly close, and the m/t trend could be argued as decisively turning back to bullish.

On the flip side, a failure to break AND hold above 3K would have to seen as a massive failure, and it would offer renewed downside. In theory, there is 'technical necessity' of the mid 2300s. That really isn't that bold, as even a fair number within the mainstream have a retrace target of the 2500/400s.
-


Nasdaq comp'



Dow



NYSE comp'



Trans





Summary

All five of the US equity indexes settled net higher for the week.

The Transports lead the way higher, with the SPX trailing.

More broadly, four of the five indexes remain under their respective monthly 10MA, the exception being the Nasdaq comp'.
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Looking ahead

It will be a short four day week, with Monday closed for Memorial day.

Key events:

Tuesday: The NYSE floor will reopen, if with a great many restrictions.

Wednesday: 'Launch America' - the first NASA manned launch from the US since 2011. The vehicle is by SpaceX, scheduled for liftoff at 4.33pm EST. I expect this to garner considerable mainstream coverage.

-
Earnings:

M - *CLOSED*
T - BNS, AZO, LL, KEYS, NXGN
W - RY, RL, GOOS, CPRI, ERJ, BMO, HPQ, NTNX, TOL, BOX
T - TD, DG, DLTR, MOMO, SHOO, CRM, JWN, COST, VMW, ADSK, WDAY, DELL, MRVL, ZS, AMC
F - BIG, CGC
-

Econ-data:

M - *CLOSED*
T - Case-Shiller HPI, FHFA HPI, consumer con', new home sales
W - Richmond Fed' manu', Fed Beige book (2pm)
T - Weekly jobs, Q2 GDP (print 2), durable goods orders, EIA Pet', fed bal' sheet (4.30pm)
F - Pers' income/outlays, Chicago PMI, consumer sent', Fed chair Powell (11am)

*As Friday will be the end of the month, I would expect significantly higher volume.
-


Late spring... in the depressionary economy

Final note

With just four trading days left of the month, yours truly is already thinking ahead to the May/monthly settlements. Whilst I look at an array of indexes, I'll remain focused on the SPX. If we close much above 3K, the m/t trend will have to be seen as having turned outright bullish. On the flip side, a rollover from around 3K would be very bearish, and offer at least the mid 2300s.

Everything I've noted in recent weeks holds, not least that whilst there will be a powerful economic recovery of the collapse seen within Q1/Q2, it will likely only be half. This year is to be seen as depressionary, and it should be clear... further QE is coming, along with negative rates.

Life within the twilight zone is set to continue become ever more insane. We're going to need considerably more popcorn, is there a leveraged ETF for that?

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Enjoy the Memorial day break.
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*the next post on this page will likely appear 5pm EDT on Tuesday, May 26th.