Saturday, 16 February 2019

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from 4.2% (R2K), 3.8% (Trans), +3.1% (Dow), +2.5% (SPX, NYSE comp'), to +2.4% (Nasdaq comp').


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

sp'500


The SPX climbed for a third consecutive week, the 7th week of 8, settling +67pts (2.5%) to 2775. MACD (blue bar histogram) cycle continues to tick higher, as weekly price momentum increasingly favours the bulls. Note the upper weekly bollinger at 2892, and which is falling by around 45/50pts a week. From Feb'25th onward, it will offer prime resistance around 2800. The SPX has climbed 429pts (18.3%) since the late December low of 2346.


Nasdaq comp'


The Nasdaq comp' climbed for an eighth consecutive week, settling +174pts (2.4%) to 7472. Note upper bollinger at 7820, and that will offer major resistance in the 7600s into end month.


Dow


The mighty Dow climbed for an eighth consecutive week, settling +776pts (3.1%) to 25883. The Oct'2018 historic high of 26951 is a mere 4.1% to the upside.


NYSE comp'


The master index climbed for the 6th week of 8, settling +311pts (2.5%) to 12603.


R2K


The R2K climbed for an eighth consecutive week, settling +62pts (4.2%) to 1569.


Trans


The 'old leader' - Trans, climbed for the 7th week of 8, settling +390pts (3.8%) to 10567. Next major resistance is around 11k, where the upper bollinger will be in around two weeks.



Summary

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

The R2K and Trans lead the way higher, whilst the NYSE comp' and Nasdaq comp' lagged.

YTD price performance:


The R2K is leading the way higher, currently net higher for the year by 16.4%. The Transports are +15.2%, the Nasdaq comp' +12.6%, and the Dow +11.0%. The NYSE comp' is +10.8%, with the SPX lagging at 10.7%.
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Looking ahead 

It will be a short four day trading week, with a light sprinkling of earnings...

M: RIG, CLR
T: WMT, DVN,
W: CVS, BHC, ALB,
T: ROKU, BIDU, NEM, DBX
F: AN

 --
M - CLOSED
T - housing market index
W - FOMC mins (2pm)
T - weekly jobs, durable goods orders, phil' fed, existing home sales, leading indi', EIA Pet' & NG

F - German Q4 GDP (second print) Flash print 0.0%. Its very possible (if not probable) the refined number will be negative for a second consecutive quarter, and deem the economic powerhouse of the EU, as officially in recession.
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Rates, yields, and inversions

US equities have seen a monstrously powerful ramp from the late Dec' low. Its partly cyclical of course, along with the mainstream having been 'inspired' by threats from Print Central to cut/adjust QT. We are seeing increasing chatter from the cheerleaders, that the next rate change will be a cut.



It remains the case that the ultimate equity sell signal will (ironically) be a rate cut. Clearly, a cut/suspension of QT would be a pre-cursor. Whilst the global econ-data and corp' earnings are increasingly weak, until we see such a rate cut, there is still threat of new historic highs. Even a sig' retrace of 5-7% into the next FOMC of March 20th won't negate that.



Whilst equities are back to 'everything is fine again' mode, the bond market sure doesn't reflect that, with the US 10yr yield at 2.66%. Natural/prime target of 2.25% remains on track. If yields do continue to broadly cool into/across the spring, equities should see some degree of retrace.

Ohh, and a yield curve inversion of the 10s/2s is still on the menu...


The US 10yr/2yr spread stands at just 14bps. It won't take much to generate an inversion, and it will be fascinating to see how the mainstream react to such a signal.
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Supermoon due Feb'19th.
Tuesday will see the closest approach of the moon, until Dec'24th 2026.
https://astronomynow.com/2019/02/15/dont-miss-the-largest-supermoon-of-2019-on-19-february/

A few stray closing thoughts... what will the financial markets and global economy be like then? Interest rates? WTIC/commodity prices? Will most of the central banks have been taken over by govt'?  The USD, will it still be king of FIAT land? Will Tesla have a charging station on the moon?
--

If you value my work on Blogger and Twitter, subscribe to my intraday service...
For details/latest offers: Permabeardoomster.com


Enjoy the three day break
--
*the next post on this page will (probably) appear 5pm EST on Tues' Feb'19th.

Saturday, 9 February 2019

Weekend update - US equity indexes

It was a mixed week for US equity indexes, with net weekly changes ranging from +0.52% (Trans), +0.47% (Nasdaq comp'), +0.29% (R2K), +0.17% (Dow), +0.05% (SPX), to -0.31% (NYSE comp').


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

sp'500


The sp'500 saw a net weekly gain of 1.3pts (0.05%) to 2707. There was a new multi-week high of 2738, just fractionally shy of the key 200dma.

More broadly, the spx is currently net higher for February by 3.8pts. Note the key 10MA at 2744. Underlying macd (blue bar histogram) cycle remains on the low side, as m/t price momentum still favours the bears. Whilst it could be argued the market might broadly climb for the rest of the year, the bears could equally argue recent price action is analogous to April/May 2008.

Best guess: no monthly close above the key 10MA or 200dma. Equity bears need to see a break back under the January low of 2443 to have confidence the m/t bearish trend will remain intact. Many other world markets are supportive to that notion.


Nasdaq comp'


The Nasdaq saw a net weekly gain of 0.47% to 7298. More broadly, tech is holding under the key 10MA. Price momentum remains at levels last seen in early 2009.


Dow


The mighty Dow saw a net weekly gain of 0.17% to 25106. The Dow is the only index currently trading above the key 10MA.


NYSE comp'


The master index saw a net weekly decline of -0.31% to 12292, notably just under the key 10MA.


R2K


The R2K saw a net weekly gain of 0.29% to 1506, still 4.8% below the key 10MA.


Trans



The 'old leader' - Transports, saw a net weekly gain of 0.52% to 10177. More broadly, the trans is net higher for Feb' by 1.17%, but still under the key 10MA.



Summary

Five indexes were net higher for the week, with one net lower. The Trans and Nasdaq are leading, with the SPX and NYSE comp' lagging.

More broadly, five of six indexes remain under their respective 200dma and monthly 10MA, with the Dow being the exception.

The m/t trend remains outright bearish, but the current situation is clearly borderline. 

YTD price performance:


The R2K continues to lead, currently +11.7% for the year. The Transports are +11.0%, with the Nasdaq comp' +10.0%. The NYSE comp' is +8.1%, the spx +8.0%, and the Dow lagging +7.6%.
--


Looking ahead

Earnings: 
ATVI, UAA (Tues'),
GOLD, TEVA, AIG, CSCO (Wed'),
KO, CGC, NVDA, AMAT, AUY (Thurs')
DE, PEP (Fri')
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M -
T -
W - CPI, EIA Pet' report, US T-budget
T - Weekly jobs, PPI, retail sales, bus' invent'.

Thursday will see first print for German Q4 GDP. If it comes in negative (as seems probable), it'll make for the second consecutive quarterly decline, and deem the economic powerhouse of the EU as in recession. Where Germany goes... the rest of the EU can be expected to follow.

F - Empire state manu', import/export prices, indust' prod', consumer sent'. *OPEX*

**As Monday 18th is CLOSED, I would expect higher volume ahead of the three day break. Friday Feb'15th will be further complicated by it being OPEX, which will inherently lean to chop.
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Final note

Since late December, its become clear, the fed are planning to cut/adjust QT. If equities unravel into early/mid March, then we'll see that first cut announced at the March 20th FOMC. No doubt, equities would rally on such monetary easing.

Further, a QT cut will be a pre-cursor to a rate cut. Again, equities could be expected to initially rally on such a rate cut... much like Sept'2007. Yet... a rate cut would be the ultimate equity sell signal. Most would disagree with that, but then most seem to have little memory of events from the collapse wave of 2007/09.

We're almost a full decade from the March 6th intra low of 666.79. Despite the many trillions of global QE, low/negative rates, and debt fueled govt' spending, the endgame remains clear... a monetary reset. The following is very appropriate indeed...


--

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Have a good weekend
--

*the next post on this page will likely appear 5pm EST on Monday.

Saturday, 2 February 2019

Weekend update - World equity markets

It was a powerfully bullish month for world equity markets, with net monthly gains ranging from 13.9% (Russia), 10.8% (Brazil), 7.2% (USA), 6.0% (Spain), 5.8% (Germany), 5.5% (France), 4.0% (Australia), 3.8% (Japan), 3.6% (China), to 3.5% (Greece).


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

USA - Dow


The mighty Dow rebounded by 1672pts (7.2%) to 24999.67. Note the key 10MA at 24967, which (as of the Feb'1st close) has climbed to 25057. MACD (green bar histogram) cycle remains on the low end, as broader price momentum still favours the equity bears.

Keep in mind the Dec'2018 high of 25980. Unless the bulls can break/hold above 26k (to be decisive), the bulls should be concerned the January gain is just part of a bounce.

Best guess: February will be a fierce battleground, and on balance, should settle somewhere <25k. A break under the Dec' low of 21712 will be very difficult, and looks out of range until at least mid/late March.

The Fed appear set to announce a cut/adjustment to the QT program, perhaps as early as the FOMC of March'20th. Whilst that can be seen as a s/t upward kick to equities, it bodes badly for the mid/long term. A cut/suspension in QT is a precursor to a rate cut, the latter of which would be the ultimate equity sell signal. Right now, a rate cut appears no earlier than the FOMC of June 19th.
--


Germany – DAX


The economic powerhouse of the EU - Germany, powered upward by 614pts (5.8%) to 11173. The January settlement was still far below the key 10MA of 11937. The break of l/t trend in Sept'2018 remains a very serious issue. Technically, the DAX is m/t bearish. Key supports psy'10, and then 8k.

The first print for Q4 GDP is due Feb'14th, and if that is negative, it will deem the German economy as officially in recession. Where Germany goes... the rest of the EU can be expected to follow.


Japan – Nikkei


The Japanese market saw a net monthly gain of 758pts (3.8%) to 20773. This was notably under the key price threshold of 21k, and far below the key 10MA. Still m/t bearish.


China – Shanghai comp'


The Chinese market settled +90pts (3.6%) to 2584. The m/t declining trend remains intact. Price momentum remains negative. Note the key 10MA at 2771, until that is cleared, the communists have no justification to be bullish.


Brazil – Bovespa


The Brazilian market broke a new historic high of 98405, settling +9506 (10.8%) at 97393. Price momentum continues to increasingly favour the bulls, as the giant 100k threshold is viable in the near term. I have to wonder, as the Bovespa approaches the monstrous psy' threshold of 100k, would the exchange not want to do a 10-1 split on this index?


Russia - RTSI


The Russian market was the strongest of the ten markets I regularly highlight, with a net January gain of 148pts (13.9%) to 1214. The January candle does have a little spike from around what is a very key price threshold. The Russian bulls (or should that be bears?) need to see slightly higher levels to make for a decisive breakout.


France – CAC


The French market climbed 262pts (5.5%) to 4992, notably still under giant psy'5K, and the key 10MA. The bulls need >5300s to negate the m/t bearish trend.


Spain – IBEX


*ignore the spike, its an incorrect high end print. The correct intra month high was 9117.10.
The Spanish market saw a net January gain of 516pts (6.0%) to 9056. The m/t trend remains bearish. That will only change if >9500.


Australia – AORD


The Australian market bounce 227pts (4.0%) to 5937, but that was notably still under the key 10MA. Aussie bulls should be desperate for >6150, to make for a decisive bullish break.


Greece - Athex


The economic and societal basket case of the EU - Greece, gained 21pts (3.5%) to 634. The m/t trend remains bearish, only negated if >700.
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Summary

All ten markets were net higher for January.

Russia, Brazil, and the USA are leading the way back upward, with Japan, China, and Greece lagging.

Brazil was the only market to break a new historic high.

Despite powerful gains, most markets remain m/t bearish.
--

 
Looking ahead 

A busy week is ahead, not least with another truck load of earnings...


M: GILD, GOOGL, STX
T: DIS, EA, SWKS, SNAP
W: GM, LLY, SPOT, CMG, GPRO, ZNGA
T: TWTR, GRUB, WWE, MT
F: PSX, PCG



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M - Factory orders
T - Intl' trade, PMI/ISM serv'

Tuesday 9pm EST: President Trump will give the State of the Union Address to a joint session of congress. That will last around an hour. Its very possible Trump will once again suggest an infrastructure bill, which would have (at least s/t) implications for some of the resource/industrial stocks.

W - Product/costs, EIA Pet' report
T - Weekly jobs, EIA NG report, consumer credit (3pm)
F - Wholesale trade
--

If you value my work, subscribe to my intraday service.
For details, see Permabeardoomster.com




Have a good weekend
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