Saturday 31 January 2015

Weekend update - World monthly indexes

The year has started very mixed for world equities. Net monthly changes ranged from +9.1% (Germany), +2.8% (UK),  -3.7% (USA), to -12.6% (Greece). Outlook for 2015 remains broadly bullish, not least with the ECB QE-pomo program due to start in the spring.


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

Greece


With Syriza winning the recent election, the Athex has been seriously shaken, with a net monthly decline of -12.6% @ 721. The Greek financials have been absolutely destroyed, and most look set to be nationalised within the relatively near term. From a pure price perspective, there is no real support until the 2012 low of 471.


Brazil


With weak commodity prices, the Bovespa slipped lower for the second consecutive month, with a net decline of -6.2%. Near term outlook is weak, with key support around 44k, which is another 5-6% lower.


France


With the ECB announcing QE-pomo (set to begin in March), the CAC gained a powerful 7.8% @ 4604, the highest monthly close since May 2008. There looks to be viable upside to the giant 5k threshold by late spring.


Germany


The economic powerhouse of the EU - Germany, began 2015 with an extremely strong gain of 9.1% in the 10600s. There looks to be viable upside to the 11500/12k level by late summer.


UK


The UK market - having been stuck for a full two years, is battling hard for a break above the giant 7k threshold. The January gain of 2.8% was somewhat significant, and a new historic high looks due by April/May - even if there is near term weakness in the first half of February. Once a monthly close is attained in the 7000s, there is arguably 'straight forward' upside to 9k by end year... and from there.. 10k by spring 2016.


Spain


The largest of the EU PIIGS - Spain, saw a modest gain of 1.2%, and remains stuck in a rather tight range. The monthly candle is offering a spike floor, with near term upside to the resistance threshold of 12k. It is notable that despite the price gains, underlying MACD cycle turned negative for the first time since late 2012.


USA


The mighty Dow ended January on a particularly bearish note, with a net monthly decline of -658pts (-3.7%) at 17164. The 17k threshold remains rather critical, if that is lost, there is viable downside (as suggested on the weekly charts to 16500...(4% lower)... which would equate to sp'1920/00 zone.

Underlying MACD (green bar histogram) closed negative for the first time since late 2012. Certainly, outlook in the near term is bearish.. .before the ECB QE-pomo fuel begins to kick in. By March/April, the lower monthly bollinger will be offering supreme support around 15k.


Japan


The QE/BoJ fuelled Nikkei saw a monthly gain of 1.3% in the 17600s. The giant 20k threshold looks due this year, although there is near term viable downside to 16250/000 zone.


Russia


With energy prices continuing to fall, the Russian market fell for the seventh consecutive month, with a net monthly decline of -6.7%, although notably holding above the Dec' low. The Russian market is likely in the process of building a multi-month floor - much in the style of late 2008/09. Once Oil prices put in a key floor.. and turn upward... the Russian market will follow. First upside target will be the psy' level of 1000.


China


The China market saw its run of eight consecutive monthly gains come to an end, although it did manage a new cycle high of 3406 - very close to next key resistance of 3500s. Once we see a monthly close >3500, there looks to be relatively easy upside to 5k... before year end.


Summary

So... a very mixed month for the world equity markets. There was distinct strength in most of the EU markets, without question, largely due to the announcement by the ECB of a giant QE-pomo program that is set to last at least 18mths.

Meanwhile, with weak commodities, the Brazilian and Russian markets continued to weaken.

With a new leadership, the Greek market remains the train wreck of Europe. If Syriza refuse to play the game of 'placate Mr Market', then further weakness looks inevitable. Further, the partial.. if not complete default of their national debt looks a given... its just a matter of when. No doubt, that will give the world capital markets a real (if brief) scare.


Looking ahead

A pretty busy week is ahead...

M - Pers' income/outlays, PMI/ISM manu' sector, constru' spending
T - Factory orders
W - ADP jobs, PMI/ISM serv' sector
T - weekly jobs, intl' trade, productivity/costs
F - monthly jobs data, consumer credit

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Back at the Monday open :)

Big moves in January

The year has started with some rather dynamic events.. and financial price changes. Oil saw a net monthly decline of -$5.47 (-10.2%) @ $48.24. Copper fell -11.7%. Gold climbed on a classic 'fear bid', +$100 (8.5%). The USD climbed for the seventh consecutive month, +4.8% @ 94.96.


A few bits and pieces... to round up the month...

WTIC, Oil, rainbow'2



Copper, monthly



Gold, monthly'2, fibs


USD, monthly'1


Summary

*its been a long week, I really need to keep this short!
--

The commodity moves are pretty incredible... we have huge deflationary pressures (not least in the EU), and the higher USD is not helping. The notable resilience to that downward pressure are the precious metals.


Equity outlook for February?

Despite the recent weakness, with ECB QE-pomo, I'm still looking for continued broad upside. Yet, the January close was a bearish one, and bodes for further weakness in the immediate term.

sp'weekly6


A red weekly candle, with a failure to re-take the imporant 10MA. To my own surprise, we also have a bearish monthly close under the giant sp'2000 threshold, and that now opens the door to the sp'1920/00 zone... as especially suggested on the weekly cycle...

Goodnight from London
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*the weekend post will be on the world monthly indexes - the most important post of each month!

Daily Index Cycle update

US equities unravelled into the monthly close, sp -26pts @ 1994. The two leaders - Trans/R2K, settled lower by -2.3% and -2.1% respectively. Near term outlook is increasingly bearish, and the door opening to the sp'1920/00 zone by mid February.


sp'daily5


R2K


Trans


Summary

Suffice to say... an ugly end to the week.. and month.

The two leaders - R2K/Trans, both have breaks of rising trend... and frankly.. near term outlook is increasingly dire - as supported (finally) by both the weekly AND monthly cycles.

Lets be clear.. the door is now opening to the sp'1920/00 zone.. within the next two weeks. Certainly, I didn't expect this, but that is how it is.

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a little more later...

Friday 30 January 2015

Volatility climbs into end month

With US equities unravelling into the weekend, the VIX built rather significant gains, settling +11.8% @ 20.97 (intra high 22.18). Near term outlook is offering a possible VIX explosion into the 30s... if a daily close <sp'1970. Across the week, the VIX gained a very significant 25.9%


VIX'daily3


VIX'weekly



VIX'monthly


Summary

*I very rarely highlight the giant monthly chart on the VIX. Usually, there is little point... but with the VIX itself becoming more volatile.. I think it is becoming increasingly important.

The MACD (green bar histogram) cycle will turn positive at the Monday (Feb'2) open. The last time that happened was Sept'2011... when the market was being smashed around in the sp'1100s.. with VIX in the upper 40s.
--

The net weekly VIX gain of 25.9% is certainly significant, but equity bears should be seeking a break into the 30s.. if sp' fails to hold the 200dma (1973 or so) next week.

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more later... on the indexes

Closing Brief

US equities saw further swings, but with very significant weakness into month end, sp -26pts @ 1994 (intra low 1993). The two leaders - Trans/R2K, settled lower by -2.3% and -2.1% respectively. Near term outlook looks increasingly bearish.. the door is opening to sp'1920/00 by mid February.


sp'60min


Summary

*I bailed on a legacy R2K (long) position into the close. Price action looks stinky, and there seems little point holding across the weekend.
---

This afternoon was a major failure for the equity bulls, having broken declining trend, but with a clear spike fail on the hourly chart.

Looking at the VIX monthly cycle... I have to say.. it looks like the market might be looking for a full washout to the low sp'1900s before the next multi-week up wave.

Have a good weekend
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*the usual bits and pieces across the evening.. to wrap up yet another week...

3pm update - Oil jumps into the weekend

US equities have seen a notable break above declining resistance, but are now slipping again. Meanwhile, far more dynamic, Oil, which just earlier was higher by a rather extreme 8%. Metals are similarly building gains, Gold +$23.


sp'60min


USD, daily'2, rainbow


Summary

*first green candle since late November, and infinitely more powerful. Without question... today's upside in Oil is one of the strongest gains in a long while.. although January is still set for net monthly decline of around 10%
---

As for equities.. it remains a real mess.

We do have a clear break above declining trend... but now its looking somewhat ugly again.

A Friday close <2k would be something of a train wreck for the bull maniacs....
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3.11pm... sp'2005.... its getting real edgy... with VIX 20.63.. close to high of the day.


3.22pm.. sp'1999... NEW daily low... and it turns the sp'500 cycle BEARISH.

If we close <2k.. it'll be the first bearish monthly close since Jan'2012.


3.25pm... Even AAPL has turned red (new historic high of $120.00 earlier)...

*to be clear... sp'2002 is the threshold for a monthly bearish MACD cross.. which to the technical maniacs out there... is the one to watch.. into the close.


3.31pm.. back to 2005... it remains pretty wild out there.. with VIX 21s

sp'500 Net monthly decline... -2.6%  biggest since Jan'2014

Notable weakness, airlines, DAL/UAL, both lower by -5%... on the oil jump


3.35pm.. looking at the VIX monthly chart... it will break positive MACD cycle at the Monday open... is suggestive of a full wave lower to sp'1920/00 zone within 1-2 weeks. Make of that.. what you will.
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3.43pm.. its getting fast and dirty.. sp'1998.... vix 21s + 15%


3.49pm.. Gold +$25.... almost fully reversing the Thurs' drop... huge monthly gain.... more on that.. later.

Still marginal as to whether we see a monthly bearish close in the sp'500.... need <2002.


3.53pm... ugly close...

*I'm bailing on a legacy R2K position, I'm out....  since the door is now wide open to sp'1920/00.... no point holding across the weekend in my view.
 --

3.55pm... So.. now its a case of sp'1988 double low to be taken out...

Yes..there is support at the 200dma... but price action looks increasingly lousy... and we're set for a monthly BEARISH close.

Bulls failed................ back at the close.

2pm update - almost a breakout

With a spike floor of sp'2000, the market is making another play to break the declining resistance (which will be around 2012/13 this hour). A clear break >2015 would trigger a fair few short-stops... with a marginal net daily gain... not that it will be enough to negate a January net decline.


sp'60min



VIX'daily3


Summary

*Tis a long day... and I'm getting tired.... I'm trying to hold off on the chocolates until late night (.. a Gold Rush night)
--

Suffice to say... lets see if we get a break...

VIX daily candle... now a black-fail... bodes in favour of the bull maniacs.
--

stay tuned!


1.58pm... sp'2015... short-stops are clearly getting hit... market pushing here...... to turn green.

R2K is notably weak though, -1.2%... urghh


2.10pm... sp'2016... market starting to break up and away... first upside target is 2035... viable at the Monday open.


2.26pm.. clear break of trend in equities.

What is surprising.. Gold is not cooling, in fact... gaining, +$23, almost negating the Thursday decline (27$)


2.29pm... sp'2021... a full 1% above the low.... 2030s for the close?  VIX set to turn red 

Woah.................... just noticed...... Oil +8%


What the hell ? Did peak oil just get declared... again?
-

2.43pm... twitchy Oil cools 1% or so... sp' back to red.. but still.. we have broken resistance... 

12pm update - still weak

US equities continue to struggle, unable to break declining resistance (currently sp'2020). VIX is confirming some mild concern, +10% @ 20.66. Metals are still building gains, Gold +$18. Oil is holding gains of 1.5%. A monthly close under sp'2k would be a fairly important victory for the equity bears.


sp'60min


Sp'monthly


Summary

For me, how we close the month will be particularly important.

Monthly MACD (blue bar histogram) is on the threshold of settling the month with a bearish cross.. something not seen since Jan'2012.... THREE full years ago.

A close <1999/98 would probably do it... with MARCON 6... and starting Feb' at 6.

...you could say... I am 'moderately concerned'.
-

Notable strength: AMZN +13%.. as the momo shorts get nuked

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VIX update from Mr T.



--
time for lunch... back at 2pm

11am update - it remains messy

US equities see renewed weakness, with an apparent morning low of sp'2002, with VIX 20.49. With a little market concern, the metals have built gains, Gold +$12. Oil is holding sig' gains of 2.0%, but will still settle January with a net monthly decline of an extreme -15%


sp'60min


Summary

So far then.. bulls have been unable to break declining resistance.

At the close of today, resistance will be around 2012. Any net daily gain would bode bullish for next week, but still... this remains a bit of a mess.

--
Notable gains: AMZN +11%


A mere PE of somewhere around 150... clearly... 'cheap', urghh

10am update - spike floor

Equities opened moderately lower, but price momentum is building to the upside.. with a rather clear hyper-spike floor hourly candle. A break >sp'2025 will open up 2045/50 zone... which would be on crazy way to end the month. Metals look vulnerable, Gold +$3


sp'60min



VIX'60min


Summary

*opening black-fail candle on the VIX.... bodes in favour of the equity bulls
---

So.... the opening declines are much less than expected... and now its a case of whether the bulls can break declining trend... and battle into the 2030/40s by the close.

Considering the market mood.... a move to sp'1970s now looks... unlikely.
--

re: econ-data

GDP was clearly a miss at 2.6%.. but the Chicago PMI of 59.4 is pretty damn good, and well above the recessionary threshold of 50.0.
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Notable gains, V +5.9%.... accounting for roughly 100pts on the Dow (yeah... such a balanced index).


10am.. Consumer sent' 98.1.... powerfully bullish... no doubt, largely due to lower gasoline prices.

Equities want to turn net positive today.... eyes on a break >sp'2025.

Pre-Market Brief

Good morning. Futures are somewhat lower (ahead of GDP data), sp -13pts, we're set to open at 2008. Metals are seeing a minor bounce, Gold +$5. Energy is mixed, Nat' gas -2.4%, whilst Oil is +0.8%.


sp'60min


Summary

*awaiting key GDP data
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The last trading day of the year.... whether we close above sp'2000 is very important... it will determine whether we get a closing monthly MACD bearish cross.. something not seen in a full THREE years.

more on that later though...
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Notable gains, AMZN +11% on earnings. At $2 EPS a year... the PE is only 150 or so now.  What a bargain!

Visa (V), +4%, earnings... with a 4 for 1 stock split. Everyone loves a stock split, right?
--

8.31am Q4 GDP: 2.6% growth, but that is a fair bit below expectations.

Equities a little weaker, sp -14pts @ 2007 (briefly -20pts)


8.52am.. Market remains weak, sp -17pts,  2004.

next up... PMI at 9.45am


9.42am.. sp -6pts... and far better than most expected.... won't take much to turn market positive.

9.45am.. PMI 59.4... pretty damn good... and negates worries about GDP...

Hyper-spike floor hourly candle on the indexes... bears beware!

Two months in a row

With just one trading day left of the month, US equities are set for the second consecutive net monthly decline. Even if the sp'500 can rally 1% on Friday (which won't be easy), it would still result in a red January.


sp'monthly


Dow, monthly'2



Summary

*Its been a tiresome day... I'll keep this short.

Suffice to say, a second month of declines, but overall.. it is NOT significant, and the primary upward trend remains intact.
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Looking ahead

Friday is rather important.

US GDP Q4, market is expecting 3.2% growth. Clearly, any number in the mid/low 2s would be a real disappointment. Personally, I'm expecting something in the 3s,, but as ever... this will only be a first reading... and subject to some possibly major revisions.

Also due, Chicago PMI, employment cost, consumer sent'
-

Goodnight from London

Daily Index Cycle update

US equities closed moderately higher, sp +19pts @ 2021 (intra low 1989). The two leaders - Trans/R2K, settled higher by 0.6% and 1.3% respectively. Near term outlook is uncertain, with threat of a hit of the 200dma of sp'1973... before renewed upside.


sp'daily5


R2K


Trans


Summary

*Trans - 'old leader', is particularly interesting, since it is bouncing off rising trend.
-

The sp' and most indexes though, look a bit of a mess. Market has been broadly stuck since early December. Until we're back above sp'2064.... market is vulnerable to more considerable downside.

--
a little more later...

Thursday 29 January 2015

Volatility remains volatile

With equities seeing further swings today, the VIX itself was on the move, with a peak of 21.56 (with sp'1989), but settling -8.7% @ 18.66. Near term outlook is uncertain, whilst there remains risk of a hit of the 200dma of sp'1973, which would equate to VIX 22/24.


VIX'60min


VIX'daily3


Summary

Little to add.

Things are uncertain in the immediate term. How we trade and close Friday/January.. will be rather critical.

Arguably, equity bulls should be satisfied with any weekly close in the VIX <20... along sp >2000.

--
more later... on the indexes

Closing Brief

US equities closed with somewhat significant gains, sp +19pts @ 2021 (intra low 1989). The two leaders - Trans/R2K, settled higher by 0.6% and 1.3% respectively. Near term outlook is uncertain, with threat of a hit of the 200dma of sp'1973... before renewed upside.


sp'60min


Summary

*the last two hours of the trading day were somewhat of a mirror to yesterday afternoon. The break to sp'2024 is arguably a test of the declining resistance.
--

A relatively tedious day.. were it not for the free entertainment provided via the precious metals market.

All things considered, it remains something of a mess. Are the bulls going to be able to rally on GDP/PMI data into the sp'2030/40s... or will a renewed down wave take us to the 1970s?

Friday will not be dull !

Have a good evening
-

more later.. on the VIX

3pm update - messy day

Regardless of the exact close, it has been another messy day in market land, very minor opening gains... a sell down to 11am (new cycle low sp'1989)... but latter day strength. Price structure is a bear flag on the smaller 5/15min cycles.


sp'15min


Summary

Suffice to say... despite the latter day gains, I'm not confident the market is going to soar on 'isn't everything fine GDP/PMI' data.

Best guess... a hit of the 200dma of sp'1973 tomorrow, before a rebound. However, I have LOW confidence in the near term. It is a real mess.. and borderline situation.
-

*a monthly/Friday close <sp'2000 will result in MARCON'6 for the sp'500... which would be the first bearish monthly close since Jan'2012.

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Notable weakness: FCX -4.3%, as the metals market is whacked.


3.27pm.. market making a play to break down trend... threshold is around sp'2022.

VIX continues to cool. -7% in the upper 18s.
--

If the bull maniacs are going to pull a late week recovery... this is almost half way there....

2pm update - a teasing bounce?

US equities have built moderate gains to sp'2013... but in the scheme of things, this is probably just a tease to the bull maniacs. A hit of the 200dma of sp'1973 is more probable than not. Meanwhile, metals remain severely weak, Gold -$27, with Silver -6.3%


sp'60min


GLD, daily


Summary

*The precious metals remain especially dynamic... and appear to be unravelling, having put in a multi-week peak.
--

So.. another little bounce.

Equity bulls need to break sp'2022 at the close to have any real hope that a brief test of the 200dma is not on the menu before the weekend.
-

Notable weakness: DRYS -7.5% @ $0.89... a new all time historic low I believe

12pm update - precious metals in real trouble now

Whilst equities see a minor up cycle - the sp'1970s remain very viable tomorrow, there is more interesting action in commodities. The precious metals are seeing some significant falls, Gold -$25, with Silver down a severe -5.6%. A multi-week peak looks to be in.


GLD, weekly


SLV, weekly


Summary

*whilst equities are seeing some chop.. with a short term floor of sp'1989, I thought I'd highlight the metals, which are clearly seeing some pretty sig' downside today. The bigger weekly cycles look as though the up wave from early Nov' is complete. New multi-year lows look due into the spring.

Considering that Copper is in the $2.40s, it is kinda surprising Gold isn't already around the giant $1000 threshold. Clearly, the 'fear bid' has recently helped to prop up the price.
--

As for equities...  the mood out there sure isn't great, a hit of the 200dma @ sp'1973 looks more probable than not.. before the next opportunity of renewed upside.
--

VIX update from Mr T.


--
time for lunch........ back at 2pm

11am update - seemingly headed for the 1970s

US equities are testing the recent micro double low of sp'1988.. but price action remains dowdy, and there is high opportunity for the bears to make a play for the 200dma @ 1973. VIX is confirming the mild market concern, +4% in the 21s. Metals remain weak, Gold -$20.


sp'60min


sp'daily5


Summary

... suffice to say... it ain't so pretty.

A fail of 1970s to hold.. will open up the 1920/00 zone next week.
-

Notable weakness, FCX -5% in the $16.50s.. takes out the low from May.. 2009.... incredible.


11.13am.. 3 spiky hourly candles... offering a sub'3 wave floor of sp'1989.

I suppose some could look for a sub 5' late today/early tomorrow.. for a brief test of the 200dma (1973).. before powerful rebound.


11.34am.... micro up cycle in equities...

more interesting though... Gold -$25 (-2.0%).... a multi-week peak looks to be in... holding to broader targets for the summer.

10am update - grey morning.... grey open

US equities open in a somewhat miserable mood (despite very reasonable weekly jobs data of 265k). The sp' 2k threshold has been broken under... and a hit of the 200dma is viable. Metals remain vulnerable, Gold -$12, with Silver -3.0%


sp'60min


Summary

*the weather this afternoon in London city... just lousy. Grey gloom, rainy... windy.... about as depressingly awful as it gets. I guess it must be like what Seattle is like all year, gods help them!
--

So... 2k fails... and market is showing ZERO sign of leveling out.

The only hope for the bulls is a good GDP data point tomorrow, but by then.. .we could be in the sp'1980/70s.

Lets be clear, if the 200dma fails at 1972... the next support is not until the lower weekly bollinger... around 1910. A hit of the latter.... would open up much lower levels in the spring.

As ever.... in order to turn the bigger picture bearish, how we close the week and month is what really matters!

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Notable weakness... the BABA, -10%


Relatively good earnings, but not good enough to avert a sell down.