Saturday 9 March 2013

Weekend update - US monthly indexes

The main US indexes are in their fourth consecutive month higher. We're not even half way through March, and the indexes are already 2.1-3.6% higher. With the transports, Rus'2000, and now the Dow at all time highs, there is currently no sign of a multi-year cyclical top.

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

IWM (repre' Rus'2000 small cap)

The R2K is leading the pack so far this March, already 3.6% higher, and shows absolutely no sign of a turn/levelling phase. It is notable though, we are trading above the upper bollinger band.

Underlying MACD cycle is still ticking relentlessly higher, since the July 2012 lows.

Nasdaq Comp

The laggy tech sector - still pinned back by AAPL, is also managing to climb. Upper bollinger offers an easy 3% higher. There is nothing bearish here.


The mighty Dow broke the Oct'2007 high this past week - as those cheer leading maniacs on clown finance TV got utterly hysterical over. I can't blame them though, it was an important marker point for the US market.

There is easy upside of another 1%, but it will get real difficult to get a March close >14500.


The master index achieves its first weekly close in the 9000s since June 2008. However, there is still a very considerable distance to hit a new historic high - Oct'2007 @ 10387, which is around 13% higher.


The sp' is still to break its Oct'2007 high of 1576.09,  Considering the Trans, R2K, and now the Dow have done it, the sp' is very likely to at least make a challenge at some point this spring/summer.

It is a remarkable thing to note that since the Oct'2011 low, the sp' has only seen 4 monthly closes to the downside..out of 18.

In terms of a 'big break of support', the bears need to take out the sp'1400 level. That is a good 10% lower, and frankly, I don't think its viable in the next multi-week down cycle.


The old leader continues to power upward, nothing bearish here either.

*I will note that noted Futures trader Oscar Carboni is seeking the Trans in the low 7000s. I'm not aware of what time frame that is being sought within, but the 7000s are almost 20% higher.

That would probably bode for Sp' at least in the 1700s..if not 1800s


The doomer bears continue to face a US equity market that simply won't stop going up.  I have to say, I'm now resigned to a higher market for some months - if not a few years, so long as the Fed QE-pomo program continues.

We see the same thing almost EVERY day. Even if the market opens lower, there is usually a latter day recovery rally..and we close at least marginally higher.

With the HFT algo-bots causing the default trend to be up - for reasons I won't highlight again, bears face an almost impossible situation. I can only suggest anyone go stare at the NY Fed Pomo page for a good hour or two.

The next down cycle, if low?

First, consider the following two charts...

sp'daily7 - fib levels

Next...the 'hyper-bullish' outlook


Whether we max out in the 1550s, 60s..or 70s, I don't think is too important to focus on.

What is important is the downside potential. Fibonacci would indicate a move down to at least the 1470s. The weekly charts would suggest 1425/00, which would be a 61% fib retracement - from the November lows.

So..right now my best guess for downside is 'somewhere between 1470s and 1425. A break <1470 should indicate another 50pts lower. I do not believe its possible to break the 1400 level in the next cycle.

I should note the 'hyper bullish' chart is something I am still dwelling on, not least since the longer term upside would suggest somewhat crazy targets in the sp'2500s by early 2016. That is obviously not the...most pleasing of thoughts for yours truly.

Looking ahead

In terms of econ-data, there is only moderately important data next week, and there isn't much of anything until retail sales on Wednesday. Certainly, there is no reason why bulls will lose control until the tail end of next week.

Even then, next Friday is opex, and we're more than likely to just see minor chop on Thur/Friday.

On any basis, there would seem NO point re-shorting the indexes, nor trying to go long VIX until at least March'18.

In the meantime, I intend to just continue to meddle in Silver and Oil, both of which have reasonable upside opportunity. The fact they held up - despite the rallying USD is somewhat impressive.

back on Monday :)

Daily Index Cycle update

The main indexes all closed higher, although the opening gains did temporarily evaporate. Primary trend remains UP..although from a wave count perspective..this is likely the end of a fifth tiny wave. Primary downside for April/May is sp'1425/00, with VIX in the mid 20s.





So..another day higher..the sixth for the sp'500. Understandably, the bulls can feel pretty confident. Yet, as many chartists have been projecting..this is probably the end of a major wave that began last November.

The issue for the next week or two will be about putting in a clear top..and waiting for a confirmed rollover..and break of support - which by end March is sp'1520.

That's all for the week...have a good weekend.

*next main posting..late Saturday..on the US monthly indexes