Saturday, 15 December 2018

Weekend update - US equity indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -4.4% (Trans), -2.6% (R2K), -1.6% (NYSE comp'), -1.3% (sp'500), -1.2% (Dow), to -0.8% (Nasdaq comp').


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

sp'500


The sp'500 fell for a second consecutive week, the fourth week of five, with a net decline of -33pts (1.3%) to settle at 2599. MACD (blue bar histogram) cycle continues to increasingly favour the bears. It can be argued we're cyclically very low, but that has been the case since late October.

A formal test of the Feb' low of 2532 appears a given, whether before the FOMC, or shortly after. Any daily close <2532 will offer grander downside to the 2300/250 zone. The bigger monthly charts suggest the latter zone will be seen no later than late Jan/early Feb, which is a seasonally weak time.
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Nasdaq comp'


Tech was the most resilient index this week, seeing just a moderate decline of 0.8% to 6910. Further cooling to the Feb' low of 6630 appears highly probable. A daily close under 6630 will offer grander downside to giant psy'5K.


Dow


The mighty Dow settled -1.2% to 24100. The April low of 23344 appears set to be tested. A failure to hold will offer grander target of 21k, with secondary support of the 20400/20k zone.


NYSE comp'


The master index settled -1.6% to 11755, the lowest weekly settlement since Aug'2017. Next support is the May 2015 high of 11254.


R2K


The R2K settled -2.6% to 1410, which made for decisive close under the Feb' low. Next support around 1350, which is another 4% lower.


Trans


The 'old leader' continues to lead the way lower, settling -4.4% at 9514. Last week's bearish engulfing candle was indeed a warning of trouble, as the tranny is back to levels last seen in Nov'2017. Next support is around 9k, with secondary of the 8700s.



Summary

All six indexes closed net lower for the week.

The Transports is leading the way lower, whilst the Nasdaq was resilient.

With the Trans, R2K, and NYSE comp' having decisively taken out their Feb' lows, the Sp'500, Dow, and Nasdaq comp' can be expected to follow.

YTD price performance:


The Nasdaq comp' is the lone index net higher for the year, and only by a fractional 0.1%. The Dow is -2.5%, with the spx -2.8%. The R2K is -8.1%, NYSE comp' -8.2%, with the Transports -10.3%
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Looking ahead 

*It will be the last 5 day trading week until the week of Jan'7-11
**there are just 9.5 trading days left of the year


Key earnings: ORCL (Mon'), MU, FDX (Tue'), NKE (Thurs')


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

FOMC announcement (2pm), which will (very likely) detail the eighth rate hike since Dec'2015, of +25bps to a new target range of 2.25-2.50%. There will be a press conf' at 2.30pm.

T - Weekly jobs, phil' fed, leading indicators
F - Durable goods orders, Q3 GDP (3rd print), pers' income/outlays, consumer sent'. *OPEX*
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Final note

Whilst the US econ-data is still coming in broadly fine, its increasingly problematic in other parts of the world. In particular, the EU appears close, if not already in recession. When the Q4 GDP print for Germany appears in mid/late January, it will likely also be negative, making Germany officially in recession. Where Germany goes, the rest of Europe can be expected to follow.

There is the recent break in the US bond market. If the US 10yr does cool to natural target of 2.25%, it will result in far higher bond prices, which will have bearish implications for equities.

Whilst many within the mainstream are still seeing the ongoing equity cooling - since the Sept'21st high of sp'2940.91, as just a mid term correction, it increasingly appears to be the start of something bigger.
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Have a good weekend
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*the next post on this page will likely appear 5pm EST on Monday.

Friday, 14 December 2018

Falling into the weekend

US equity indexes closed very significantly lower, sp -50pts (1.9%) at 2599. Nasdaq comp' -2.3% at 6910. The two leaders - Trans/R2K, settled -1.6% and -1.5% respectively. VIX settled +4.7% at 21.63.


sp'daily5



VIX'daily3



Summary

US equities opened significantly lower, pressured via overnight Asian and European markets, all of which were spooked by some weaker than expected econ-data. The closing hour broke a new intraday low of 2593, as many were (understandably) unwilling to get involved ahead of the weekend.

Volatility settled moderately higher in the mid 21s. Relative to equities, the VIX remains bizarrely low, and arguably should be well north of 30.


Bonus chart: Germany, monthly


The DAX is lower for a fifth consecutive month, currently -2.9% at 10924. Psy'10K support, but a grander run to 8k appears on track. The German market and economy bodes very bad for the rest of the European markets/economies in 2019.
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Winter solstice is near
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Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
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Thursday, 13 December 2018

Bearish Robinhood

US equity indexes closed on the weaker side, sp -0.5pts at 2650. Nasdaq comp' -0.4%. Dow +0.3%. The two leaders - Trans/R2K, settled -1.6% and -1.5% respectively. VIX settled -3.8% at 20.65. Near term outlook offers further choppy upside ahead of the Dec'19th FOMC.


sp'daily5



VIX'daily3



Summary

US equities opened on a positive note, but the gains were shaky, with the spx turning negative in late morning. The afternoon saw a low of 2637, and then clawing back upward. Despite sig' weakness in the Trans' and R2K, volatility remained in melt mode, settling in the mid 20s.
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Robinhood

I've occasionally considered Robinhood as a possible broker to use, but I never liked the idea that I'd be having my stocks/options hosted with a relatively new company. There is a lot to be said for a brokerage with a history spanning decades. Most of all though, very few good products/services are free.

Technical problems, with co-founder of Robinhood - Baiju Bhatt

Robinhood has grown rapidly since 2013, with more than six million accounts. The number of staff remains very small. When things go wrong, as happened yesterday... for those clients who could not exit/close existing positions, it turned into an outright horror movie.

Today's CNBC interview...



... which (ironically) had its own technical problems at t+2.18.

T+2.18>2.26 would make for a very appropriate gif, for those inclined. 

For a sample of the VERY angry retail amateurs out there, see the infamous: Wallstreetbets

Yours, sleeps soundly, via Charles Schwab.  
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Rarely a sky without aircraft

A little closer

Bullish moon
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Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
--
If you value my work, subscribe to my intraday service. 
For details and the latest offers, see: permabeardoomster.com