Saturday 17 January 2015

Weekend update - US weekly indexes

US equity indexes saw a third consecutive weekly decline, with net changes ranging from -1.5% (Nasdaq comp), -1.2% (sp'500), to -0.5 (NYSE Comp'). Near term outlook offers downside to the 200dma of sp'1965 before Mr Draghi announces he is going to start printing more money out of nowhere, and using it to fund t-bond purchases.

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


So.. the third week lower for the sp'500.. with a new cycle low of 1988. Seen on the smaller 15/60min cycles, there is a viable micro double floor of 1988. There is still a minor chance of renewed downside to the 200dma of 1965.. before a key floor is achieved.

The underlying MACD (blue bar histogram) cycle ticked lower for the third week, and shows no sign of a turn yet.

In theory, 'best doomer downside' case is the lower weekly bol'... around sp'1910.. where there is also a very notable price gap that is yet to be filled. I would imagine if Draghi upsets the market... a brief sharp washout is a valid scenario.. but I'd only put a probability on that outcome of 5%.

The big issue now is how high will the next multi-week up cycle go? Will it result in a lower high...or a break above 2093... into the 2100s? Considering the QE of the BoJ and ECB... I have to assume the market will continue broadly higher.

Nasdaq comp'

The tech' fell -1.5% this week, but is holding above the December low. There is no clear turn/floor yet, with key support of 4500... around 3% lower. Regardless of the near term.. an attempt to break the March'2000 bubble high of 5132 looks due this late spring/summer.


The mighty Dow fell 225pts this week, but is still holding above the key 17k threshold. Underlying MACD cycle is now bearish.. with no sign of a turn.

NYSE comp'

The master index slipped a moderate -0.5% this week. The closing weekly candle has something of a spike floor - similar to last week.. and bodes slightly in favour of the equity bulls.


The second market leader saw an intra week low of 1151, but settled lower by -0.8%. It was not a significant weekly decline, and certainly not suggestive that the broader market is in 'dire trouble'. It remains important to keep in mind the recent new historic high of 1221, with the upper bollinger offering the 1240/50s in February.


The 'old leader' fell -1.1% this week. Price structure could be argued to be a large ABC corrective wave (4?) from the Nov' high of 9310. The giant 10k threshold looks likely by the late spring. If Oil prices can start to see a bounce (even one of just 2-3 months).. the Tranny will climb higher, but will notably lag the broader market.


So, a third consecutive week to the downside, but the declines are not particularly significant. Considering the major event of the SNB decoupling from the Euro, it is a real testament to the underlying strength, that the market did not fall much further.

All things considered, with the ECB set to announce what will effectively be QE-pomo for the EU markets, the US market will similarly likely begin a new multi-week up wave into end month.. and beyond.

The ultimate issue is will the next wave higher break new historic highs... or put in the first critical lower high? Right now... best guess is the broader upward trend will continue into the late spring.

Looking ahead

Were it not for the ECB next Thursday, I would be looking for a quiet week.

M - US markets CLOSED
T - housing market index
W - housing starts
T - weekly jobless data, PMI manufacturing

The ECB will (almost certainly) announce at 7am EST... a huge new QE program to fund T-bond buying. It will be based (I believe) on the respective contributions of each member nation. Germany and France will naturally see the larger share of their bonds being purchased.

Draghi will hold a press conf' around 8.30am EST... and that will likely drag on for an hour.

F - existing home sales, leading indicators

back on....... Tuesday :)

A third week for the equity bears

Despite some significant Friday gains, it was a third consecutive week of downside for US equities, with the sp'500 -25pts (-1.2%) @ 2019. Near term outlook offers a chance of downside next Tue/Wed', before the ECB spool up the digital printing machine.



It has been a long week.... and I'll leave it at that.

Goodnight from London

*the weekend post will be on the US weekly indexes

Daily Index Cycle update

US equities closed significantly higher, sp +26pts @ 2019, but that still made for the third consecutive net weekly decline. The two leaders - Trans/R2K, settled higher by 1.2% and 1.9% respectively. Near term outlook offers decreasing chance of a hit of the 200dma of sp'1965 next week... before renewed upside.





So... significant net daily gains to close the week.

Market still looks a little vulnerable to a further wave lower next Tue/Wed, to the 200dma of sp'1965... ahead of the ECB spooling up the printers.

Regardless of another minor wave lower... renewed upside after the ECB looks highly probable.

a little more later...