Saturday 5 October 2013

Weekend update - US monthly indexes

The US indexes are continuing in their relentless climb from the Oct'2011 low of sp'1074. It remains ironic (but not entirely surprising) that despite the US shutdown/debt ceiling concerns, most indexes are already showing moderate gains for the month.

Lets take our monthly look at the US monthly index charts...


So, despite the price chop this past week, and general concern over the shutdown/debt ceiling, the sp'500 is already showing net gains for October. Upper bollinger is offering easy upside to the 1740s.

There is simply nothing bearish here. The sp' has not seen any significant monthly declines since June 2012. Underlying MACD (blue bar histogram) is still outright bullish. Key trend support from the 2009 low is currently 1550, and will be 1625 by end year.

Nasdaq Comp'

The tech is continuing to power higher, with the comp' in the 3800s, and already almost 1% higher for October. There is incredible underlying strength, and there is absolutely nothing bearish here. The bulls should now be charging for 4k..and of course, the ultimate target is the tech bubble high of 1999/2000 in the low 5000s.


The mighty Dow remains weak, and is actually showing net declines of 0.4% so far this month. Indeed, the Dow has been stuck just under 15700 for six months now. Trend support from 2009 is around 14700 - which is also the key low from August. Equity bears need to see Dow 14600s to have any hope of much lower levels this autumn.

A break of 14600, will open the door to best case downside of around 12500..which of course is a clear 20% lower than current levels. Indeed...for those who are still looking for a wave analogous to summer/autumn 2011..the Dow is the index that is offering some 'small hope'.

NYSE Comp'

The master index continues to relentlessly cruise higher, with the upper bollinger almost offering the big 10k level as early as this month. There is nothing bearish here, and equity bulls should find good support around 9300 in any down move next week.


The second market leader has already broken new highs this week, and the 1100s are now viable at any point. Underlying momentum remains extremely positive. If the market does turn down briefly on panic that the political maniacs won't be able to raise the debt ceiling in time, there is strong trend support around 950...which is a good 15% lower.


The old leader is trading close to new highs, and if the transports can put in a few weekly closes in the 6700/6800s, then the big 7k level will be hit this Nov/Dec.


More than anything, its truly bizarre to see most indexes showing net gains for the month so far. Yet, we really shouldn't be surprised, as the QE continues, along with the mainstream delusion that 'everything is just fine'.

For the equity doomer bears out there, it is important to note that this market could sustain a drop of 15/20%, and that still would do nothing to the broader trend. So..even if we somehow drop to the sp'1500s..even 1400s on some 'brief panic' can be sure that it will merely be another 'buying opportunity'.

Hell, if we do drop 20%, I could imagine the Fed actually increasing QE to $100/125bn a month, along with any other 'liquidity programs'. How do you think the market is going to react to that?

Bigger picture remains outright bullish

With the monthly charts still showing continued underlying strength, I am resigned to the following outlook

sp'weekly4 - hyper-bullish outlook

Only if we can hit the lower weekly bollinger - currently 1594 (and finally levelling out), could I consider much lower levels into year end. Sp'1600/1590 is around 6% lower, and sure won't be easy to hit, even if the debt ceiling is only raised at the last minute.

Looking ahead

With the continuing govt' shutdown, most of the econ-data is simply not going to appear. Perhaps the most notable issue next week are the FOMC minutes - to be released on Wed' at 2pm. Mr Market will be particularly curious to learn more details about the previous fed meeting.

Other than that, it will be a week consumed with speculation and chatter about when the US shutdown and debt ceiling will be resolved.

*the only sig' QE-pomo next week is on Monday, $3bn.

A tired permabear

The past few weeks have been difficult for yours truly. I have endeavoured to keep an open mind on where this nonsense market is 'likely headed'. My best guesses remain just that...guesses. With QE continuing, I still think the bears face almost insurmountable problems in the weeks..and months ahead.

As ever, I will try to adapt to each day as it comes, but I'm sure getting tired of it. It feels like I've been in a washer/dryer for the past few years, set at 1500rpm, on a high heat.

Many good traders and posters have 'moved on' in the past few years. I just hope I am still around long enough to watch this twisted market implode.

back on Monday.

A messy week in market land

Despite the continuing US shutdown and concerns about the debt ceiling, the market ended the week on a slightly positive note. Across the week, the sp' closed fractionally lower, settling -1pt at 1690. Weekly charts remain broadly bullish, in a trend that is now two years old.

sp'weekly8 - mid-term bullish outlook


There really isn't much to say to conclude what has been a messy trading week. I think many traders have been whipsawed at least once or twice in the past few days.

The US equity market remains vulnerable to sporadic news headlines on the shutdown/debt ceiling, but what should be clear to even the more ardent doomer-bears out there...

The debt ceiling WILL be raised, whether 'in-time'..or a few days after Mr Market gets briefly upset.

Two years..and still going

sp'weekly, 2yr

The bigger picture remains starkly bullish, after a rally that is now two years old...from sp'1074 to 1690...roughly 60%.  So...with continuing QE..why not another 60% by late 2015...which would be sp'2700? Doesn't sound so bearish huh?

Goodnight from London

*next main post, late Saturday - on the US monthly Indexes

Daily Index Cycle update

The main indexes closed the week on a moderately positive note, with the sp +11pts to 1690. The near term trend remains slightly to the downside, but bears are still lacking any consistent and significant downside power. Bulls merely need a break into the 1700s to re-take this market.





For the bears, this remains a deeply frustrating, and almost entirely pointless market to try to short. The down cycles are still weak, and the mid-term trend - since Oct'2011, remains strongly to the upside.

In terms of the Dow', equity bears need to break below 14760 to put in the first lower low since Oct'2011. Frankly, that looks a tough task for next week.

What is clear, once the debt ceiling issue is resolved - as it will be, this market will likely soar to new historic highs. Even worse though, there remains the real risk of a very strong ramp..all the way into next spring.

a little more later...