Friday 13 September 2013

An important weekly close

The market closed Thursday a little lower, but much more important will be how we close the week. Equity bulls should be satisfied with any close above the weekly 10MA of sp'1675. The bears should look to break back under the (still rising) 50 day MA of 1671


sp'weekly8 - bullish outlook


Trans'weekly2


Summary

A down day for the market, but really, its nothing for the equity bears to get overly excited about, not least with the VIX still in the low 14s.

I can only think that the market will soon be entirely focused on the FOMC of next Wednesday, where we will probably see the first reduction in QE, if only 10/15bn. That still leaves a VERY sizable $70bn or so a month, which will continue to be a problem for the bears into spring/summer 2014.

Re: charts. The transports just need to clear the 6600s, and that should open up a straight run to the 7000s. That should equate to sp'1750/75, perhaps by mid/late October.


USD flashing red

I have not been following the currencies that closely lately, but noticed that the USD monthly chart is not looking so bullish.

USD, monthly'2, rainbow.


We certainly do NOT have a break of trend yet, but you can see the underlying weakness in the MACD (green bar histogram) cycle, which is set to go negative in October. Also of note, the monthly bollinger bands are getting very tight. A big move is coming. As ever..the only issue is which way? Right now, I'm guessing up, but that is dependent upon the EU (and Japan) still being perceived as weak.

Arguably, much of what happens in the world financial system is due to market perception, and that sure doesn't have to reflect the reality of the situation. Despite the continued 'dollar doomer' talk*, I still think that the EU and Japanese currencies will fall first.

*Many recognise of course that sooner or later, the global currency system will be 'reset' in some manner. 


Looking ahead

There is a fair bit of econ-data to conclude the week, producer prices, business inventories, consumer sentiment, and most importantly...retail sales. If those all come in 'reasonable', the market should be able to hold flat..or moderately climb into the weekend.

*there is sig' QE-pomo of 3-4bn, which will surely help give the market an upside kick.
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*I am long the market (gods help me) from sp'1687, seeking the 1700s next week.

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Two video updates to close the day, the first from Mr Permabull...




You can see the chart line Oscar is talking about, on the Dow, weekly


The doomer bears could justifiably argue it is a back test of broken support. However, you can see an outright bullish green candle at the important 10MA. You could even argue the Dow is offering the top of a RS  Other indexes are much stronger though, not least the Nasdaq.

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The second from Walker, who remains even more permabearish than yours truly



Goodnight from London