Saturday, 15 June 2019

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from +1.6% (Transports), +0.7% (Nasdaq comp'), +0.5% (SPX, R2K), +0.4% (Dow), to +0.2% (NYSE comp'). Near term outlook offers some cooling.


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

sp'500


The SPX gained 13pts (0.5%) to 2886. Price action was pretty tight, with a weekly trading range just 36pts wide. Its arguable we have a completed bounce from 2728>2910, with a secondary down wave to come.

First support is the 2800 threshold, with an open gap of 2762/44. Note the lower weekly bollinger at 2691, which will jump/adjust to around 2719 with next Monday's open. Its going to be very difficult to see any price action <2700 for the remainder of June.

If June settles back under the monthly 10MA - currently at 2780, it will offer the 2675/50 zone in July. Monthly support in July will be around 2560. If we're anywhere near the latter, Print Central might even be inclined for the 50bps cut that Kudlow (and some notable others) have been calling for.
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Nasdaq comp'


The Nasdaq gained 54pts (0.7%) to 7796. Its notable that despite a two week bounce, weekly price momentum remains moderately negative.


Dow


The mighty Dow gained 105pts (0.4%) to 26089. First big support is around 25500. Keep in mind, the key monthly 10MA is at 25478. If June settles under <25400 (to be decisive) it would bode very bearish for July.


NYSE comp'


The master index settled +21pts (0.2%) to 12787, and that made for a black candle, which leans s/t bearish. Note the last such black candle in late February, with the following week in early March not so great for the bulls.


R2K


The second market leader gained 8pts (0.5%) to 1522. Weekly price momentum remains negative.


Trans


The 'old leader' - Transports, lead the way higher this week, +164pts (1.6%) to 10305. Weekly price momentum remains negative. There are multiple aspects of resistance within the 10400/600s. It is notable that if WTIC screams higher on any US/Iran confrontation, the transportation stocks would be hit especially hard on fuel/cost concerns.



Summary

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

The transports lead the way higher, with the NYSE comp' lagging.

Price structure - since February, is a pretty clear H/S in most of the indexes. A break under the neckline/recent lows would be very bearish. In the case of the SPX, that would be last week's low of 2728. The downside would be (2954-2728 = 236pts), and then extrapolate 2728-236pts = 2492. Again, I would keep in mind the lower monthly bollinger, which in July will offer support around 2560. Such downside numbers will be moot, if the SPX doesn't settle June <2770 (to be decisive).

Its very notable that despite a second week of gains, the Transports and R2K are still trading under their respective monthly key 10MA. I don't call them the 'two leaders' for nothing. Both are suggestive other indexes are to be seen as vulnerable in the remaining ten trading days of June.

YTD price performance:


We're almost half way through the year, and the Nasdaq comp' continues to lead, currently +17.5%. The SPX is +15.2%, the R2K +12.9%, with the NYSE comp' and the Transports both +12.4%. The Dow is lagging, but still net higher by a respectable 12.8%.
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Looking ahead 

Earnings: ADBE (Tues'), ORCL (Wed'), KR, DRI, CGC (Thurs'), KMX (Fri').

Special note: SLACK (ticker: WORK) will be listed Thurs' June 20th.

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

*FOMC announcement (2pm). I do not expect any change in rates, although its possible the QT program - currently due to be wound down by end Sept', will be moved forward to end July, or even end June. Powell will host a press conf' at 2.30pm, and he can be expected to threaten rate cuts 'if necessary'.

T - Weekly jobs, phil' fed, leading indi'
F - PMI comp', existing home sales. *QUAD-OPEX*

*As Friday is quad-opex, expect increasing price chop on much higher volume. 
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Final note

Whilst a rate cut doesn't look due until the July 31st FOMC, the market is going to be obsessing over every single word from the monetary masters of Print Central. Powell has a tough task to retain some degree of credibility, whilst also sweet talking the mainstream cheerleaders.

Price action next week should be more dynamic. Both the equity and vix daily cyclical setup will increasingly favour the equity bears next week, especially from Thursday onward. However, even if we drop to the sp'2800 threshold, that won't be enough to negate the recent bounce back above key monthly support.

Arguably, the bolder s/t traders will be short just ahead of the fed, with a basic target of sp'2800. The more cautious bulls will wait to see how the market trades and settles next Wednesday. Any daily close >2910 would be where the more cautious bulls could chase (not least in such stocks as DIS, MSFT, LULU, or even AMD). 

Regardless of your short, mid, or long term view, it should be clear, we're already way beyond the twilight zone, as things are more crazy with each day.

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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, 14 June 2019

Transient Sympathy

US equity indexes closed on a weak note, sp -4.7pts (0.2%) at 2886. Nasdaq comp' -0.5%. Dow -0.1%. The two leaders - Trans/R2K, settled -0.4% and -0.9% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened on a weak note, pressured via most other world markets. Price action quickly slipped into micro chop mode. The closing hour broke a new intraday high of 2894, but there was a touch of cooling into the weekend. Volatility was subdued, only seeing a high of 16.40, and settling -3.4% at 15.28.


Meanwhile, Trump continues to bash Fed chair Powell...

"We call it quantitative tightening. If he didn't do tightening, if he did nothing, or perhaps even loosened, we would be, in my opinion - just an opinion - 10,000 points higher than already a very high number".


Full clip; see https://twitter.com/ABC/status/1139512541850349568

I can't but wonder what Powell makes of this. Will he capitulate to the US President, cut rates faster and deeper, and also spin up the printers earlier than almost anyone expects? Or will he be inclined to resist? As a sideshow issue, its kinda entertaining. For the record, Powell has my sympathy, if only transient.
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The first sunny day in a week

Another arrival to the land of geo-political chaos

Full moon... Monday June 17th
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Goodnight from London
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Thursday, 13 June 2019

Thursday gains

US equity indexes settled broadly higher, sp +11pts (0.4%) at 2891. Nasdaq comp' +0.6%. The two leaders - Trans/R2K, settled +1.0% and +1.1% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened on a positive note, but the gains were rather shaky. The chop continued into the late afternoon, with a closing hour mini spike from 2882 to settle at 2892.

Volatility was subdued, with the VIX cooling for the 6th day of 8, settling -0.6% at 15.82. The s/t cyclical setup is somewhat mixed. The daily cycles aren't offering the equity bears anything until at least next Tues/Wed'.

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Goodnight from London
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