Its time for another update on the six main US indexes, although I'm also going to cover the issue of deflation. Lets go!
IWM
A slight drop of 0.7% for the R2K. Arguably, a bounce off rising support. Most noticeable, IWM - and the Transports, have exceptionally narrow candles, far more stable than other indexes..and they remain the markets leader indexes.
We have an initial rollover on the MACD (blue bar histogram) cycle, but its nothing for the bears to get excited about..yet. Only if we break <88, could the bears consider a major down wave underway.
Nasdaq Comp
The laggy tech sector slipped almost 1% this week. Initial signs of a rollover on the MACD, but it remains nothing significant yet. Without question, the bears need to break below 3000 again..but that's a good 5% lower.
Dow
The mighty Dow actually managed a fractional gain this week, although we can still see a little rollover on the MACD cycle. 14k continues to be a key resistance level, and this is the fourth week stuck here.
Bears need to break <13600 to have any hope of major downside into the spring.
NYSE Comp
The master index slipped barely 0.5%. Its looking a little flat-toppy, but really, there is nothing significantly bearish here either.
SP
The all important sp'500 broke another new post 2009 high this Tuesday, only to see that somewhat sharp 2 day reversal to 1497...yet the Friday close was pretty bullish.
Like the other indexes, we do have the first sign of a rollover on the MACD cycle.
Bears need a weekly close <1475 to break key rising support. If that is achieved..then its game on. The provisional target would then be the lower bollinger..currently @ 1350
Trans
The old leader closed effectively flat on the week Its important to note it did manage to break the psy' level of 6000. We have a rollover on the MACD cycle, but until we are back <5600, the bears are facing an extremely powerful up trend.
Summary
Without question, the two day decline of Wed-Thursday was the highlight of the week. It was the first decent downside action we've seen since late December. Eight weeks..and we get two days..only to be followed by a lousy Friday of algo-bot melt.
I am trying to be (bearishly) hopeful for next week, but as we've just seen, any declines in this market are usually met with equally strong bounces.
Mr Deflation...is still lurking
I thought it'd also be useful to again highlight a few of the key commodities that might be signalling that deflation is still an issue..despite the central banks QE.
First..consider Dr Copper.
Copper, monthly
Like many of the giant monthly charts spanning the last 4 years or so, we have a pretty clear H/S formation.
The doomer bears merely need to see Copper break <3.50 (base of narrow wedge)..and then 3.40. If we're trading - at any point, in the 3.30s in March/April...it will be a VERY serious warning for the equity bulls.
Now, consider Oil...
WTIC, monthly2, rainbow
Right now we're obviously bullish, but the trading range is getting pretty tight.
First bearish warning will be a daily/weekly close <$90. The $80 level is even more important though, and if we break under that..then I'd have to believe equities will be starting a major multi-month decline.
Now consider the wider world equity situation
VEU, monthly - world indexes (ex-USA)
Again, we have a pretty good H/S formation. The problem for the bears since last December is we appear to have a clear breakout. We've still not broken above the highs of spring 2011 - which is also where commodities peaked, but we're getting close.
We're seeing resistance at the upper bollinger of 47. I have to say, I won't be a confident permabear until I see the VEU chart back <40.
Mr Dollar - a surprising, and early breakout
USD, monthly5 - bullish outlook
*As you can see, I'm not hiding anything here. I was indeed seeking a much lower level sometime this summer..but instead...the dollar is breaking up and out!
If this move from July 2012>Jan 2013 was indeed a wave'2 (blue)..then we are now starting a fierce wave'3 higher.
Target would be the 88s - the peak of the last two major up cycles..if not even higher.
Looking ahead
Next week will be largely about the Bernanke. Its time for the Chairman to do his twice yearly report to the US House and Senate finance committees. That will span both Tuesday and Wednesday. You can be sure - as usual, it will get blanket coverage on the main clown finance TV networks.
Often is the case, the market will drop hard on the first day, but will bounce on the second.
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To wrap up, those bears seeking major equity weakness should watch those key levels on Copper, Oil, and seek continued strength in the USD.
As ever, all comments always welcome. Good wishes from London
I will be back on Monday :)