Saturday 7 December 2013

Weekend update - US monthly indexes

Of the last 27 months, only one month (May 2012) saw a significant net monthly decline. US equity indexes continue on a relentless ramp, where the sp'500 has rallied 68% since the Oct'2011 low of 1074. It would appear there is at least another 7-10% higher to go in the current wave. 

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


Despite the Friday gains, we're still a touch lower so far this month, but we're very likely to rally into year end, probably somewhere into the 1830/50s. The 1900s will be viable as early as January, although more likely in April/May. The only issue is whether the 2000s are viable in the current wave, before the next intermediate top.

Nasdaq Comp'

The tech is leading the way, and is already fractionally higher on the month. There is upside into the late spring, probably another 10% or so, to the 4500/4750 zone. A major retracement next year to around 3600/400, would seem a viable downside target, before a final hyper-wave, to challenge the tech bubble high from March'2000 in the 5100s.


The mighty Dow achieved an important weekly close in the 16000s, and we're almost back to evens on the month. There is very reasonable upside to 16400/600 by year end, and eventually 17000/500 by late spring. Downside for summer/autumn 2014 looks to be around 14000/13000. Certainly, no lower than 12k.

NYSE Comp'

The master index is yet to break the Oct'2007 high of 10387, but it will likely break this old high, either later this December, or early Jan. There is viable upside to around 11000 by late spring 2014.


The second market leader is up 88% since the Oct'2011 low of 601, which now seems an unbelievably low number. Primary trend remains very strong, and there looks to be comfortable upside to 1250/1300 by late spring.

Indeed, in terms of a bigger intermediate top, and a multi-month down cycle in the second half of 2014, the primary downside target would be the giant 1000 psy level. That will very likely hold, and be the next floor before a potential doubling up into late 2015/early 2016.


The old leader is -0.5% this past week, but there is easy upside to 7400/500 by end year. By late spring, the Trans will probably be somewhat close to the next psy' level of 8000. From there - much like the R2K, I'd look for a significant wave lower, to somewhere in the 5500/5000 zone.


Without question, the primary trend remains outright bullish, and there is absolutely no sign of the current trend ending. On any basis though, this giant multi-month wave can't last forever, and we're now at month'27. At best, there are probably no more than 4-6 months to go.

It will be interesting to see how the mainstream financial media react if we manage to battle into the upper sp'1900s next spring. Just how hyper-bullish will they get, ahead of what I believe will be a rather significant 2-4 month wave lower of around 20%?

Awaiting an intermediate top in spring 2014

I remain holding to the original outlook that I have been touting since the early summer. The following chart includes the next ECM cycle multi year peak and low, from Armstrong.

sp'monthly6b - the hyper-bullish outlook into 2015/16

What is remarkable is seeing how the current wave from sp'666 is starting to push the 2007 high into the distance below.

Best guess right now, a move to sp'1950/2050 by late spring, then a major back test the old double top of 2000/2007, in the 1650/1575 zone. From there, I'm looking for a hyper-ramp to probably 2500..perhaps..much higher.

Looking ahead

Next week looks to be very quiet. Monday has 4 Fed officials speaking in the afternoon, and if Mr Market decides they all sound like 'no taper' for the Dec'18 FOMC, then market will very likely rally to new highs.

Wednesday has US Treasury budget details, with Thursday seeing the weekly jobs data and retail sales. Other than really is set to be pretty quiet.

However, there is very heavy QE next Monday and Thursday, bears....beware!

General upside into year end

There remains uncertainty about whether a small C wave lower is viable next week. Regardless of that though, we're still set to close the year somewhere in the sp'1800s, along with Dow 16000s, and Nasdaq Comp' in the 4000s.

We have a market fuelled by an annual $1trn of QE, and even if that is cut by 20% to $70bn a month within the next 3-6 months, that still amounts to $800bn a year. For the equity bears out there, this remains a nightmarish market, but will end, as all things do.

Back on Monday :)

Just another typical week

Equity bears have experienced just another typical week, with four days of consistent minor weakness, only to conclude with a major jump higher. The weekly close of Dow 16020, Nasdaq Comp' 4062, and Sp'1805, made for another week that the bears should forget about.


Nasdaq, weekly


*The Nasdaq remains notable, in that it remains within an accelerated channel.

BDI - back to Nov' 2010 levels

Just a short note on the Baltic Dry Index, which is presenting a pretty clear breakout, and what is effectively a multi month bull flag.

Upside for spring 2014 is the 3000/3500 zone. This is very bullish for the shippers - including DRYS, and it will be interesting to see how the BDI proceeds early next year.. My grander upside target for late 2015 are the 6000s.

Well, it has been a pretty interesting week...and I'll leave it at that.

Have a good weekend.

The weekend post (late Saturday) will be on the US monthly indexes

Video from Schiff, which features the doomer Dent

As with most things, there is a little bit of 'right' in both of them.

If the equity market rallies 'broadly' for another two years or so, I wonder if Dent will have the guile to still appear on clown finance TV, to proclaim his deflationary doom. Ironically, it might be when he stops doing TV appearances, that the equity market finally does unravel.

Daily Index Cycle update

The main indexes closed the week with significant gains, sp +20pts @ 1805. The two leaders - Trans/R2K, settled higher by 0.6% and 0.8% respectively. Near term trend is bullish, and there is end year upside to Dow 16400/600, with sp'1840s.





More than anything, the Dow is offering the clearest sign.

We have a text book back test.. a successful one, of old resistance, which is now confirmed support. Equity bears are going to struggle to break back under Dow 15800 for weeks..if not many months.

The broader trend remains to the upside, and frankly..bears look done for at least another 3-5 weeks.

a little more later