Friday, 13 November 2015

It is just a natural equity retrace

US equity indexes closed significantly lower, with the sp -29pts @ 2045. Chatter is naturally increasing in some of the more bearish corners of the financial sphere, about much lower levels into year end and across early 2016. Yet.. the October equity close argues strongly against sustained weakness.


Copper, monthly

WTIC, weekly2


I do understand why some are getting a little excited in equity bear land. After all, commodity prices are seeing another rather powerful move lower, and that is clearly pressuring the broader market lower.

Yet.. having ramped from sp'1871 to 2116, even a retrace to the 2020s would be very natural.

For now, I see the current wave as merely one for existing shorts to offload... with an opportunity (for those that can stomach it) to go long into Christmas/New year.

re: Copper, a net daily decline of -2.0% to $2.17. Sub $2.00 looks very probable, as King dollar - set for sustained action >DXY 100, will keep downward pressure on most commodities into 2016.

re: Oil.  A second consecutive red candle on the 'rainbow' chart. Absolutely bearish, sustained price action under the $40 threshold looks imminent.

Looking ahead

The week will conclude with an array of key data... PPI, Retail sales, Busin' invent, consumer sent'.

*Fed official Mester is speaking in the late morning, and Mr Market will be listening.

Goodnight from London