Weekend update - World monthly indexes

Most world equity markets saw important follow through from the latter half October recovery. Net monthly changes ranged from +10.8% (China), +2.5% (USA - Dow), to -10.2% (Russia). With low interest rates and continued QE, further gains are expected across most.. if not all of 2015.


Lets take our monthly look at ten of the world equity markets

Greece

An important recovery gain of 5.2% for the Greek Athex. 1400 remains key resistance, and  that is a very considerable 45% higher. A broader 'hyper' target of 2500 seems viable by early 2016.


Brazil

The Bovespa only managed a fractional gain for November. This is not surprising though, with Brazil especially vulnerable to the ongoing weakness in many commodities.


France

The French market gained 3.7% in November. First target is the June high of 4598. A break into the 4600s should offer easy upside to the 5000/5250 zone by mid 2015.


Germany

The economic powerhouse of the EU - Germany, managed an exceptionally strong gain of 7%. The DAX looks set to re-take the 10000s in December. There is viable upside to 13k by end 2015... and that only assumes continuation of the trend.


UK

An important monthly gain of 2.7% for the UK market, but remaining stuck under the giant threshold of 7000. On a break >7k, those equity bulls seeking major upside across 2015 should be seeking 8500/9k.


Spain

The ugliest of the EU PIIGS - Spain, managed a fair gain of 2.8%, but remains stuck under the key 12k threshold. A break above will open up huge upside to the Nov'2007 high of 16040... roughly 50% higher.


USA

A net monthly gain of 2.5% for the Dow, and on any basis, we're breaking 'up and away'. Many have been touting some kind of narrowing wedge, but really.. that bearish scenario is surely to be dismissed. The November gains are more than enough to clarify that the Dow - along with other US indexes, are set for much higher levels.

There is viable near term upside to the Dow 18000/200 zone. The giant 20k threshold looks out of range until the late spring.

A break back below 17k looks extremely unlikely, and unless that level is taken out... I'll continue to hold to a 'no index shorts/VIX longs' trading policy.


Japan

A powerful net monthly gain of 6.4% for the 'BoJ fuelled' Nikkei. The giant 20k threshold looks viable by next spring (along with Dow 20k). It will be interesting to see how the mainstream react when 20k is reached. How long until people start talking about a return to the highs from Dec 1989 (38957) ?

There can be ZERO doubt that the BoJ will keep on buying stocks, bonds, and just about everything else. Further, the BoJ will surely increase the rate of buying next year. After all, what else would they do? The BoJ are on a buying spree.. via 'new money' before the Yen (along with the bond market) implodes.


Russia

With Oil/gas prices under severe downward pressure, the Russian equity market continues to slide. The net monthly decline of -10.2% offers no sign of a floor in the near term. With the break under the 1000 threshold, next key support are the low 800s... another 20% lower.

Perhaps President Putin needs to start printing via the BoR? That will solve ALL the problems.. yes?


China

An extremely powerful month for the Shanghai Comp', with a net monthly gain of 10.8% @ 2682 - the highest level since Aug'2011. There is very natural upside to 3500.. which is another 800pts (26%) higher.


Summary

Without question, the broader world equity market has seen some very important follow through to the upside. The spike-floor monthly candles have been confirmed, and we have a solid month of gains.

The only anomaly is Russia... but then, that is almost entirely due to the ongoing collapse in Oil prices.

Taken as a collective... there looks to be a good 30-50% upside for most world markets across 2015. The only thing that could derail such hyper gains would be a major geo-political event. Considering the many 'scares' of the past few years - none of which turned serious, there is little reason to believe next year will be any different.


Looking ahead

A fair number of bits and pieces in the coming week...

Mon - ISM/PMI manu' sector
Tue - Construction
Wed - ADP jobs, Productivity/costs, ISM/PMI service sector, Fed beige book
Thur - weekly jobless claims
Fri - monthly jobs data, intl' trade, factory orders, consumer credit.

*there is a light sprinkling of Fed officials across the week... as ever, Mr Market will be listening, not least for any talk on interest rates.
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back on Monday :)
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Video update from... some guy with a weird accent


ps. posting this first audio update was only marginally less disturbing than going long the market

Energy sector carnage

Despite being just a half day, it was one of the most interesting trading days of the year. With Oil in collapse mode, the energy sector stocks were similarly getting destroyed. Outlook into year end offers little hope that a key floor is near.


WTIC, monthly'2, rainbow

Summary

With the break of WTIC Oil $90 support in early October, the 65/60 zone seemed the obvious target.. and to my own surprise.. we're already about there.. with still one month left of the year!

Frankly, with Oil in the mid $60s, it is now starting to become clear that the 50s.. even 40s are viable next year - more likely in second half (after a spring bounce from 60/55 to 70/80).

So long as Oil remains weak... energy stocks are naturally going to remain under severe pressure. Q4 Earnings (due Jan'2015) are going to make for real interesting reading!

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*normally, I would cover individual stocks on my 'fair value' page, but.... on this occasion... lets take a look at four particularly notable ones...

Devon Energy (DVN)

Massive break... with a black-fail candle just recently. Key downside is $40.. but that is going to take some months.


Chesapeake Energy (CHK)

A huge Friday decline of -12.1%. A break under the recent low of $16.69 will open up the $12s, where I would expect a key floor to be put in.


Transocean (RIG)

Approaching target zone of $20/17... worse case.. (if Oil $40s next summer/autumn).. $10


Seadrill (SDRL)

Approaching target of $12.... 10 now seems likely. The dividend looks unlikely to be (even partly) reinstated until Q4 of next year.... I don't think Mr Market has fully priced that in yet.
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Have a good weekend

Goodnight from London
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*the weekend post will be on the World monthly indexes

Daily Index Cycle update

US equities saw a mixed day, but with notable new historic highs in the Transports (9310), and the sp'500 (2075), but settling -5pts at 2067. Outlook is for the low sp'2100s before year end... and then a minor retrace of 4-6%.


sp'daily5

R2K

Trans

Summary

Yes, the R2K saw considerable weakness in late morning... but then...with new historic highs in two indexes.. equity bears can't get in the least bit excited about things.

There is zero reason why the market can't keep on clawing higher.. at least to the sp'2110/30s... before a moderate pull back.

The only thing that is holding the market lower than it otherwise would be... the energy sector... but then lower energy prices are bullish for the rest of the economy. In the bigger picture, its a small trade off.. nothing for the equity bull maniacs to be concerned about.
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a little more later...

Volatility climbs into the weekend

With equities seeing a touch of weakness into the close, the VIX built some gains, settling +10.4% @ 13.33. Near term outlook is for continued broader equity strength, which should keep the VIX capped firmly in the low/mid teens.


VIX'daily3

VIX'weekly

Summary

*across the week, the VIX gained 3.3%.
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There is not much to be said on the VIX. A brief spike higher is always viable, at best, 18/20 zone.. but even that looks a stretch.

I've ZERO interest in being long VIX until late 2015/early 2016. 
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more later.. on the indexes

Closing Brief

US equities closed with some mixed chop, sp -5pts @ 2067 (new historic high 2075). The two leaders - Trans/R2K, settled u/c and -1.4% respectively. Near term outlook is for continued upside to the low sp'2100s.


sp'60min

Summary

*no doubt, some equity bears will be getting moderately excited with the late morning weakness, but frankly.. its all minor noise.
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Little to add.... will post a great deal on the metals... and energy.. in later posts.

Have a good weekend!
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*A full set of updates across the rest of the day.. to wrap up the trading week.

12pm update - an early closing hour

US equities remain in micro chop mode, but with the usual underlying upward bias, with notable new historic highs in the sp'500 and Trans. Oil remains in collapse mode.. heading for the target zone of $65/60. Metals are similarly weak, Gold -$17.


GLD, daily

Summary

*Sunday night futures could be real interesting for the precious metals. Once the Swiss vote is out of the way, there is zero reason why Gold won't see another severe wave lower... first target is a move to the $1100/1080 zone.
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There are so many powerful individual stock moves... it is hard to know what to highlight...

I can merely refer anyone to CHK, RIG, SDRL,  FCX

.. for upside... JDST, DAL, UAL.. and my new favourite... INTC (headed for $50s.... which is partly why I am resigned to sp' 3k).
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time for lunch... back at the close of 1pm.

11am update - forget the market, we got X-wings and the Falcon

Whilst the broader equity market sees micro chop into the early 1pm close.. far more important developments have occurred. We have a teaser for Star Wars ep'7. Who needs ETFs, when we have X-wings, Tie-fighters, or the gods damn Millennium Falcon?

Bullish

Very bullish

Summary

... the new teaser trailer...



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*there is actually also a fan made trailer doing the rounds today. Its rather good, but entirely fake, see HERE
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re: precious metals.

Gold bugs are getting a little taste of what Sunday night futures will probably bring.
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back at 12pm

10am update - very mixed open

US equities open exceptionally mixed, although with a notable new historic high in the Transports. Energy stocks are crushed with severe falls of 6-8% common, whilst miners are weak as the metals are sharply lower, Gold -$17, with the ETF of GDX -5.4%.


SDRL

GDX

Summary

Frankly, I ain't in the best of moods.

It is a vile time of year, as the masses go even more insane than normal (not least with pre Christmas sales).

I'm sick of the gold bugs.
I'm tired of the idiot top callers (yeah.. that includes YOU deflationland)
I'm pissed at the dollar doomers, not least the Schiff, who is now an utter embarrassment, utterly inflexible in his outlook for a full decade.

There just seem so many gods damn idiots out there right now. Everyone is getting more out of touch with reality each month.

Where are the 'balanced' ones?

Ohh, and I can already hear '... ohh, says the guy who is now touting sp'3k'. To hell with all those who don't see what is happening.

All the signs are there.. .ignore them... as you wish.

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back soon

Pre-Market Brief

Good morning. Equity futures are broadly flat, we're set to open at sp'2072. Metals are very weak, Gold -$10, with Silver -2.9%. Oil is severely lower, -5.8%. Energy stocks are naturally under strong downward pressure.


sp'daily5

Summary

A short trading day ahead.. .we close at 1pm.

Notable early weakness.. not surprisingly... energy stocks..

CHK -5.7%
RIG -7.7%
SDRL -6.3%
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With weak metal prices, miners are under pressure...

FCX -4.6%
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On the flip side, with Oil prices much lower.. airlines are very strong. DAL and UAL are both higher by around 4.5%.
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As for the broader market.. there is near term upside to 2080 or so, certainly the 2100s are viable by mid December.
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Have a good Friday.

The sp'500 - naked

Stripped of any trends/channels, support/resistance lines, bear/bull flags... or any of that Fibonacci nonsense, one thing should be clear to anyone since summer 2013 - the old double top of 2000/2007 was decisively broken, and this market ain't likely going under sp'1500...  EVER again.


sp'monthly3c - bare bones

Summary

For those few of you out there this evening/early morning, I will no doubt have annoyed some of you with the opening paragraph.

Yet... I did originally state it last summer... after we failed to break back <1500.... which was when I waved a giant white flag, and didn't short the indexes again until this past Sept/early October.

Despite the US fed ending QE... now we have the BoJ picking up the slack, and no doubt the ECB will make a serious attempt to also start buying T-bonds early next summer. Frankly, I see zero reason to attempt any index shorts... nor be long VIX, until late 2015/early 2016... at the earliest.


A reminder on the recent 'crazy fib nonsense'...

sp'monthly5b - fib levels

Without restating everything from last Friday's post... the next fib level of sp'2138 is easily within range.. and after that... its arguably 'empty air' to the 3k level. Whether that hits late 2015, or early 2016... I really don't think is the important issue.
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Looking ahead

There is no data of significance due tomorrow.  Market will of course be reacting to the failure of OPEC to cut output... energy stocks will no doubt be under some downward pressure. As ever, I'll be keeping a close eye on the oil/gas drillers of RIG, SDRL, and DO.

Market closes early at 1pm.... so... an early start to the weekend :)
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Goodnight from London

OPEC fail to agree on supply cuts

With OPEC failing to agree to reduce output, Oil prices have strongly snapped lower.. losing the $70 threshold.. now in the low $68s. The original target zone of 65/60 looks set to be hit before year end. Now the question is... 50/40s in 2015 ?


WTIC, monthly'2, rainbow

Summary

As I type (11.30am EST).. WTIC oil futures are at $68.38, a fall of $5.11... 6.9%. On any basis, it is a severe drop but not unexpected.

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*gold bugs beware.... a 'Sunday night surprise' (post Swiss vote) is equally VERY likely...

Gold is currently -$5 at $1190...  I'd expect the 1080s at least 'briefly' before year end. That of course would have 'interesting' implications for the mining stocks.
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Update from Mr Carboni


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time for lunch.... more later....

Daily Wrap

US equities saw a natural day of micro chop, with the sp'500 settling +5pts @ 2072. VIX remains subdued, -1.5% @ 12.07 (intra low 11.91)... back to levels from mid September. Broader outlook remains for another 2-3% of upside before the next minor retrace of 4-6%


sp'daily5

R2K, daily

VIX,daily3

Summary

Not surprisingly, a quiet day.
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Looking ahead

For many.. it will be a day of roasted Turkey. I guess that is bullish.. yes?

Happy Thanksgiving to my American readers!

Goodnight from London
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*I will probably post something on Thursday... not least on Oil, which will likely react strongly to the outcome of the latest OPEC meeting.

Closing Brief

US equities (naturally) saw a day of micro price chop, with the sp'500 settling +5pts @ 2072. The two leaders - Trans/R2K, settled -0.1% and +0.4% respectively. Near term outlook is for continued gains... into the low sp'2100s.


sp'60min

Summary

*an important daily close in the 1190s for the R2K
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Suffice to say... for those few who were around today.. YOU are the diehard market traders.

If you're also around this Friday morning... you deserve a prize.

To all my American readers.. (and that is 70/80% of you).... have a great Thanksgiving holiday.
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*I'll post a daily wrap at 8pm EST

3pm update - micro chop into Thanksgiving

US equity indexes look set for continued micro chop into the Wednesday close, with the Sp'500 around 2070, Dow 17800, and R2K making a viable attempt to get a daily close in the 1190s. VIX is naturally subdued in the low 12s.


sp'60min

Summary

Price action is entirely to be expected....  looks like we'll settle around sp'2070.

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*Friday is also an early close at 1pm EST... so.. in many ways its almost the weekend!

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Notable weakness: (along with the drillers), CHK -2.6%. The fact that Nat' gas is -1.6% is not helping!

2pm update - R2K clawing higher

Whilst the broader market is seeing micro chop, there is a touch of notable strength in the second market leader - the R2K, +3pts @ 1189. A few daily closes in the 1190s will confirm that an attempt to break the double top of 1212/13 is due in December.


R2K, daily

Summary

Here is the bigger issue though...

If can accept Trans 10k... and then R2K >1212... then what does that imply for the broader market next year?
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I've already posted a provisional target zone for end 2015....but really.. what do YOU think?
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Notable weakness: RIG -8%, SDRL -21%.   

1pm update - VIX in holiday melt mode

With very light holiday trading, the VIX is merely melting lower... now in the upper 11s... the lowest level since the Alibaba top of Sept'19. Single digit VIX looks probable at some point next year... as Mr Market continues to remain almost entirely fearless.


VIX'daily3

Summary

*It has to be assumed, if broad equity strength across 2015.. then VIX in the single digits looks probable.. at least from time to time.
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Notable severe collapse in the oil/gas drillers.

SDRL -22%
RIG -7%

...both look set for much lower levels.. not least if Oil continues to slip to the low $60s next spring.

12pm update - no thanks for the drillers

US equities remain in micro chop mode.. with the VIX naturally melting.. having lost the 12s. There remains absolute carnage in the oil/gas service sector, after SDRL suspended the dividend. With oil prices set to continue falling in early 2015... outlook is dire.


SDRL, daily

Summary

Little to add... on what is naturally, a generally very quiet day.
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VIX update from Mr T. (due)

..seemingly not to be posted today... I can't blame him.

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time for tea....

11am update - Oil set for much lower levels

Whilst the broader equity market is merely in micro chop mode ahead of the holiday, the real action is in the energy sector. Oil prices remain under severe downward pressure (not least via the strong USD).. and this is causing havoc in the oil/gas service sector.


USO, daily

SDRL, weekly

Summary

*if Oil $60 or so, USO will be somewhere in the 24/20 zone by next spring.
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As for Sea Drill, not only did they miss estimates by 50%.. but they suspended the dividend. This is pretty serious, and it would seem that Q4 and Q1 earnings will be much worse. There is little hope of a dividend again until Q4 of next year.
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Meanwhile... it is a beautiful sunset in the land of Fire and Ice..


Enjoy the view.
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back 12pm

10am update - oil service sector in flames

Whilst the broader market is generally flat, there is an outright meltdown in the Oil/gas service stocks. With Sea Drill (SDRL) suspending the dividend after missing earnings by 50%, SDRL is collapsing, -17% in the $17s. RIG.. DO... they are all following.


SDRL, daily

RIG, monthly

Summary

*I could drone on all day about the oil/gas drillers, a fair few of which I traded in the early summer....
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Suffice to say... with Oil prices set for $65/60 (at least) by spring 2015, the energy sector is in real trouble.

Broader downside targets...

RIG 20/17
SDRL 12/10.

On any basis though... both stocks will be fine across the longer term, and I will be looking for 'bargain buys' in the spring.
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Since the main market will be quiet today, I'll instead mostly be covering individual stocks, sectors.. or commodites.

Pre-Market Brief

Good morning. Futures are a touch higher, sp +1pt, we're set to open at 2068. Metals are a little weak, Gold -$2. Nat' gas remains weak, -1%, although Oil is flat.. ahead of the Thursday OPEC meeting.


sp'daily5

Summary

Well, tis the day before the holiday. Trading will no doubt be very muted, and probably dry up almost completely by early afternoon - once all the econ-data is out of the way.

For those around today, I will look at some individual stocks.. since the main indexes will likely be flat.

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*notable SEVERE early weakness.. SDRL, -10% in the mid $18s. Most bearish target remains $12/10 by spring 2015... but that will need Oil 65/60.

After a little digging, it would seem SDRL has suspended the dividend after lousy Q3 earnings (or lack of).   31 cents profit.. vs exp' of 68 cents.....

So.. SDRL still made almost $150 million, but considering future Oil prices... Q4 and Q1 will likely be far worse.

Spring 2015... it might make for a tempting long term buy.
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Have a good Wednesday

Daily Wrap

Yet another quiet day for the US equity market, sp -2pts @ 2067 (new historic high of 2074). The broader hyper-ramp from mid October continues, and there looks to be high probability of the low sp'2100s, before the next minor retrace... at best 'sp'2000'.


sp'weekly7

VIX' daily3

Summary

*VIX remains in melt mode, settling -2.9% at 12.25... headed for the 11s.
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The sixth consecutive green candle on the weekly 'rainbow' chart, and there is little reason why the market won't be able to break into the low 2100s before year end.

On any basis... this ongoing hyper-ramp from mid October is incredible... but then, what will people say when we're close to sp'3000 within the next 9-15 months?
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WTIC Oil - the $60s are still on track

As I mentioned in early October, with the break of $90 support, the door opened wide for the next key level of the $60s. We're well on the way...

WTIC, monthly'2

The 65/60 zone looks a relatively easy target for spring 2015. The only issue then will be... does supply start to be reduced.. and/or demand start to increase?

There is increasing talk of the $40s.. the first to suggest (that I know of) was Oscar Carboni. Just this morning, the Cramer was touting 40s for next year. Regardless, lower oil prices are bullish for the broader US and world economy... even most doomer bears should be able to accept that.
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Closing update from Riley

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Looking ahead

Wed' will see a veritable truck load of data... Durable goods orders, weekly jobs, pers' income/outlay, consumer sent', new/pending home sales.

*The EIA Oil and Nat' gas reports are reportedly also due, but I would not be surprised if they don't appear until Friday.

With the Thanksgiving holiday this Thursday, trading will be even lighter tomorrow. No doubt.. a fair few traders are just taking the entire week off anyway.
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Goodnight from London

Closing Brief

Another very quiet day in market land, but once again, with new historic highs. The sp' settled -2pts @ 2067 (intra high 2074). The two leaders - Trans/R2K, settled +0.4% and -0.1% respectively. Near term outlook remains bullish into the sp'2100s.


sp'60min

Summary

*earnings due.. HPQ.
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Little to add...

In many ways, the market should just close for the remainder of the year.

The NYSE could just add 3% to every stock.. and tell everyone to 'enjoy a long holiday', and 'come back Friday Jan'2nd'.  Its just a thought.
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HPQ Q3 earnings... $1.06.. in-line, but revenue was a little lighter than market expected. Outlook is reasonable, and there is little reason why Mr Market won't eventually bid HPQ higher into next year.

Initial stock reaction is -3% or so, but really... earnings were unquestionably fine.
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A daily wrap at 8pm EST.

3pm update - just another day for the bulls

With new historic highs already achieved this morning, it has been just another day for the equity bull maniacs. Even a retrace to the sp'2000 threshold looks increasingly unlikely until Jan/Feb... before renewed 'hyper ramp'.


sp'daily5

Summary

*Oil remains very weak, -2.4%, Oil futures now in the $73s,.




Copper is similarly weak, -5 cents.. around $2.95. a deflationary target would be 2.30/20s by the spring.
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Its cold, and with the next 'warm sunny day' at least 5 months away.. I am not in the best of moods.   

...as ever though...I welcome all messages.
 -

Notable weakness, DRYS, -2.7% @ $1.46.. I'll detail more on that shipper on my 'fair value' page after the close.

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back at the close.

2pm update - hyper bullish Transports

With Oil prices remaining broadly weak - not least ahead of the Thursday OPEC meeting, the transportation index is showing notable strength, now higher by 19.8% across just 30 trading days. Incredible gains... but with much higher levels still to come.


Trans, daily

Summary

So... the Tranny is now in the 9200s.. and 10k is just another 8% or so higher.

Trans 10k will surely equate to R2K >1212.. .and thus.. is an extremely bullish sign.

If sp'2200s by the early spring, then a straight hyper-run to 3k... very probable.

*ohh, and I realise that is what some of you do not want to hear, but I ain't painting a bearish scenario just to please those with a closed mind.
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Notable weakness, Oil, -1.9%...

USO,weekly

If Oil to the low $60s, then USO to 22 or so.. by the spring.
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stay awake... if you can :)