Saturday 20 February 2016

Weekend update - US weekly indexes

It was a very bullish week for US equity indexes, with net weekly gains ranging from 3.9% (R2K, Nasdaq comp'), 2.8% (sp'500, NYSE comp'), to 2.6% (Dow). Near term outlook offers further upside to the sp'1950/60s. A test of the 2K threshold looks difficult, but even if hit, a major down wave still looks due spanning late March/April.

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


The sp'500 saw a net weekly gain of 53pts (2.8%) @ 1917. Underlying MACD (blue bar histogram) cycle is starting to tick higher. At the current rate, a bullish cross is viable around mid March.

Best guess: market to battle upward to at least the 1950/65 zone. Best bullish case, a brief test of 2K, before a critical rollover in mid March. In theory, the next down wave should see a break <1810, and quickly proceed to the 1750/30 zone by end April.

Nasdaq comp'

The tech saw a powerful weekly gain of 3.85% to 4504. It would seem the Nasdaq comp' will manage to battle upward to around 4750/800 by mid March. From there.. the renewed downside target is the 4K threshold... which will make for a straight forward drop of 20%.


The mighty Dow climbed 418pts (2.6%), settling @ 16391. There is viable near term upside to the 16900s. Sustained action above the key 17K threshold looks out of range. First key downside is the 14200/000 zone. At best.. the 13500/400s.

NYSE comp'

The master index climbed a net 2.8%, settling @ 9485. The giant 10K threshold is core resistance. Equity bears should be seeking the NYSE comp' to not see any daily closes >10K. First key downside remains the 8K threshold.


The second market leader - R2K, has already seen a powerful rebound from the Feb'11th low of 943 to 1016, settling the week +3.9% @ 1010. Next key resistance is the 1040/60 zone. Equity bears need to see the R2K stall no higher than the 1100 threshold. From there.. first downside target is the 875/850 zone.


The 'old leader' continues to lead, with a very notable fifth consecutive net weekly gain, +3.4% @ 7285. The tranny has now climbed a powerful 13.8% since the Jan'20th low of 6403. Broadly, the 5500/5000 zone looks probable... equating to the low sp'1600s by early summer.


Having broken a marginally lower low last Thursday, US equity indexes are in strong bounce mode.

It would seem most indexes have a viable 4-5% further upside.

If the market gets stuck around mid March, then (in theory) renewed downside of 20% looks due.

Best case downside?

I'm still concerned that the current multi-month down wave from May'2015, is going to get stuck at the double top of 2000/2007....


It would be the ultimate, and obvious outcome, not least if the central banks continue the path they seem intent on.

In terms of levels....


You can see the 50% retrace of the 2011/2015 wave offers sp'1604, with the 38.2% retrace of the 2009/2015 wave offering 1573.

If we're trading close to sp'1600.. whether in April, May.. or some time later this year, the equity bears are going to need to be EXTREMELY mindful of a probable major swing back upward.

Looking ahead

M - PMI manu'
T - Case-Shiller HPI, consumer con', existing home sales, Rich' fed
W - PMI serv' , new home sales, EIA report
T - weekly jobs, Durable goods orders
F - GDP (rev'1), pers' income/outlays, consumer sent'

*there are a lot of fed officials on the loose next week, notably Bullard, Wed' AH

Have a good weekend

Daily Index Cycle update

US equity indexes closed moderately mixed, sp -0.1pts @ 1917. The two leaders - Trans/R2K, settled u/c and +0.5% respectively. Near term outlook offers renewed upside to the 1950/65 zone. A daily close in the 1970s will open up a test of the 200dma and the 10mma by mid March. From there... things get real.... real interesting.




Suffice to add... a day of moderate chop... but then it was OPEX.

Further upside looks due... the only issue is whether the market maxes out in the sp'1950/60s... or can manage to claw to around 2K by mid March.

In theory, the next down wave should at least reach sp'1750/25 zone.. where there are a number of key fib' levels, and other aspects of support.

*the weekend post will appear at 11pm EST... on the US weekly indexes