Saturday, 7 June 2014

Weekend update - US monthly indexes

US indexes continue their broad and extremely powerful rally from the Oct'2011 low of sp'1074. All indexes are already higher this month by at least 1.2%, with the R2K leading the way with a gain of 2.7%. Further upside into the next FOMC of June'18 looks likely.

Lets take our monthly look at six of the US indexes


If June manages to close with a net gain, it'd be the fifth consecutive monthly gain, and the 25'th (of 33)  since the Oct'2011 floor.

The 10MA is primary rising support, now in the 1830s. Trend support is currently around 1750, a rather sizable 200pts to the downside. Underlying MACD (blue bar histogram) cycle continues to slip, but there is nothing remotely bearish in overall price action.

Nasdaq Comp'

The Nasdaq comp' is battling back - just like the R2K, and is just 1% below the March high. Considering the broader market, the March high does look set to be broken. Upper bol' is offering the 4500/600s in the near term.


The mighty Dow has been one of the weaker indexes - with fractional breaks of the broader up trend, but is already 207pts higher this month. First key support is the 10MA, now in the 16200s.

Equity bears need a break back under 16k to get somewhat interested in a possible multi-month fall this summer/early autumn. As it is, upper bol' is offering 17500s in the immediate term, although the weekly charts will be restrictive of that until at least July..if not August.

NYSE Comp'

The master index continues to push higher, and to my own surprise, looks set for the 11000s within the near term. There is nothing bearish here.


The R2K is battling to push away from the danger zone of the 1080s. The big 1200 level is a must for equity bulls this June, or a possible large H/S formation might indeed be the case. Underlying MACD cycle remains marginally positive, but is vulnerable to turn negative in the near term..certainly on any break back under 1100.


The 'old leader' - Transports, continues to break new historic highs, almost day after day. The tranny is now in the 8200s, and the 8400/500s look viable by late June/early July.


So..we're started month'33 of the giant wave from Oct'2011, with a pretty strong week. Without question, there is ZERO sign of the current rally ending.

Even if the market was to slip 6% lower to the sp'1830s, that would not break the 10MA. A fall to the 1750s would still not break the broader upward rising support in the sp'500.

The outlook - from summer 2013

To my own continuing horror, the 'crazy bullish' outlook from almost a year ago is about reached...


Equity bears should be waiting for 2 or 3 blue candles before getting overly hopeful of any significant downside. As ever, primary downside in the first multi-week down wave would be the lower weekly bollinger, and that is currently flat lining in the 1770s, but will start to soon rise.

So, even if the market (for whatever reason) starts to cycle lower after the next FOMC, there will be huge support in the 1850/25 zone across July.

Looking ahead

Next week is almost entirely devoid of scheduled data/events. The only notable aspects are retail sales and jobless claims, both due Thursday.

There are two fed officials on the loose on Monday. As ever, any comments could be an excuse for Mr Market to move.

*there is sig' QE-pomo: Tuesday, $2-3bn.

Still wondering

The question remains, are the equity bears going to see a multi-month down wave this year? Even a decline of just 2-3 months would be 'something', right? The original target zone of 1625/1575 now looks such a long way down, is that kind of fall still possible this summer/early autumn?

As ever, I am trying to be extra careful, and generally just biding my time before this market does break. I want to be there, with available capital to short this nonsense. I don't have much inclination to attempt any index shorts until the next FOMC. If we can get a few blue candles on the weekly 'rainbow' charts, then perhaps... the long awaited correction will have finally begun.

back on Monday :)