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


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.


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.


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.


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.


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.


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.


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.


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.


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.


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.


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

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


*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.


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
*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.





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.

a little more later...