Weekend update - US monthly indexes

The Oct' net monthly gains were very decisive for the US equity market. Regardless of any near term retrace to the 200dma (sp'2060s), the 50dma (2020s).. or even a little lower, it will do nothing to negate a huge multi-month turn back upward. New historic highs look due in some indexes before year end.


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

sp'500

Having ramped 159pts (8.3%) in October, the sp' continues to make new highs. There is a viable short term peak of 2116 - a mere 18pts (0.9%) from the May historic high of 2134. Underlying MACD (blue bar histogram) cycle remains negative, but is now ticking upward. At the current rate, we'll see a bullish monthly cross at the Jan'4th 2016 open.


Nasdaq comp'

The tech' is comfortably back above the giant psy' level of 5K, and indeed, already above the important 10MA (4958). Even a short term retrace of 3% would do no significant damage to the giant Oct' gains. First upside target is the July high of 5231.


Dow

The mighty Dow is already within 1% of the 18000s, and new historic highs (>18351) look due within the next 2-3 months. A few daily closes in the 18400s should give clarity that the next psy' level of 20K will be hit next year.


NYSE comp'

The master index is still trading under the monthly 10MA (10670), but the 11000s do appear within range by late Dec/early January.


R2K

The second market leader is within a fraction of the 1200 threshold, and looks set to break new highs (>1296) in Q1 2016. At the current rate of recovery, the monthly MACD cycle will see a bullish cross in Feb/March.


Trans

The 'old leader' - Transports, is still struggling relative to the rest of the market, currently @ 8241. A Nov/Dec' close above the 10MA (8314) will be very important to confirm the upside seen in the rest of the market.


Summary

The US market continues to recover from the Aug' low of sp'1860. The fact we saw 2116 this past week was indeed testament to just how strong the underlying upside is.

For the hyper-bulls out there, it will be important to see ALL of the US indexes settle the year above their respective monthly 10MA. Further, a couple of new historic highs (viable in the sp'500, Dow, Nasdaq), would further support the notion of broad upside across 2016.

Best guess: sp'2116 as a short term high, with a moderate retrace to either floor around the 200dma in the sp'2060s.. or 2020s - where the 50dma will be lurking by Nov' opex.

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Looking ahead

A much quieter week is due.

M - -
T - Import/export prices, wholesale trade
W - -
T - EIA report, weekly jobs, US Treasury budget
F - PPI, retail sales, bus' invent' consumer sent'

*there are a few fed officials set to appear, notably, Bullard and Dudley on Thursday.
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Back on Monday :)

Interest rates set to be increased

With the monthly jobs data coming in much better than almost anyone expected, the market saw a rather strong reaction to end the week, with the sixth consecutive net weekly gain for the sp'500 of 19pts (0.9%) @ 2099). It now seems extremely likely the Fed will raise rates at the Dec'16'th FOMC.

Fed rates/sp'500

sp'weekly1b

Summary

Suffice to add, it would seem finally... we shall soon see the beginning of an interest rate up cycle.

In my view this is bullish for the broader economy.. and the US equity market.

I did find it laughable today how a fair few of the media/analysts were asking today whether March will see the second rate hike. Those same maniacs were on economic/market suicide watch just a month ago with the last jobs report.

A month indeed... sure can swing things.

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

Daily Index Cycle update

US equity indexes closed moderately mixed, sp -0.7pts @ 2099 (intra low 2083). The two leaders - Trans/R2K, both settled higher by 0.7%. Near term outlook remains for a retrace, at least to the 2060s, if not the 2020s, before resuming broadly upward into year end.


sp'daily5

Trans

Summary

A choppy day to end the week, but then, the market was clearly battling it out, after a much better than expect jobs report.

New historic highs in some indexes (sp'500, Dow, Nasdaq), look due before year end, but first.. a retrace from the recent high of sp'2116 still seems already underway.

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a little more later...