Saturday, 23 April 2016

Weekend update - US weekly indexes

It was a very mixed week for US equity indexes, with net weekly changes ranging from +1.5% (NYSE comp'), +0.5% (sp'500), to -0.6% (Nasdaq comp'). Near term outlook offers significant cooling into end month, but that won't likely be enough to rule out another push to new historic highs in May.

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


The sp'500 saw a second consecutive net weekly gain of 10pts (0.5%), settling @ 2091. Most notable, a new multi-month high of 2111.

The closing weekly candle is a little spiky... and offers a hint that next week offers opportunity for sig' downside, at least to the 2065/61 gap zone.

First key support are the two soft lows of 2039/33. Any break into the 2020s would be provisionally suggestive that we have a mid term high of 2111.

Best guess: 2050/40s post-FOMC... then a bounce to 2080/90... before breaking <2K in latter half of May.

However, if the market settles April near/at the highs, it would bode strongly in favour of new historic highs in May.. and that would negate what remains of the broader bearish outlook.

Nasdaq comp'

With a wheel barrow of bad earnings from the likes of MSFT and GOOGL, the tech' was the weakest sector/index this week, with a moderate net decline of -0.6% @ 4906. There is huge resistance at the giant psy' level of 5K. Equity bears need a weekly close <4800 to offer some initial clarity that the bulls have again been faked out, with another marginally lower high.


The mighty Dow gained 0.6% @ 18003, with a notable new cycle high of 18167. The weekly candle is a little spiky, and offers threat of significant cooling into end month. Equity bears need a break back under the 17K threshold to have clarity that much lower levels are due in the months ahead.

NYSE comp'

The master index gained 1.5% to the 10500s. There is strong resistance in the 10600s. Equity bears need a break back under the 10K threshold before there can be renewed confidence in the broader bearish scenario.


The second market leader - R2K, saw a second consecutive weekly gain, +1.4% @ 1146 - the best level since late Dec'2015. There is strong resistance in the 1150/60s. Equity bears need a break back under 1080 to have renewed confidence.


The 'old leader' - Trans, gained 1.3% @ 8085, the best level since Nov'2015. Next resistance are the 8200/300s. Equity bears need to see the Tranny back under 7600 to have renewed confidence.


Unquestionably, it was another week for the equity bull maniacs, as all indexes broke new multi-month highs.

There remains a disparity between the headline indexes - sp'/dow/nasdaq, and the NYSE comp'/Trans'/R2K.

Equity bulls can sustain cooling of 3-5% into early May, and it won't wreck the current upward trend from the Jan/Feb' lows.

In contrast, the equity bears need to not only see cooling, but then contain an inevitable subsequent bounce... and achieve a marginal lower high (<sp'2111). That would likely take at least 2-3 weeks to play out.

What does seem clear, we remain on the edge of a very big move.  Either the bull maniacs are about to achieve a massive breakout that will extend many months... or the equity bears will drive the market lower.. breaking new lows this summer/autumn.

Either way... it won't be boring.

Looking ahead

M - New home sales
T - Durable Goods orders, Case-Shiller HPI, consumer con', Rich' Fed.
W - intl' trade, pending home sales, EIA report

The FOMC will issue a press release at 2pm, with a Yellen press conf' around 2.30pm, which will likely last an hour.

T - weekly jobs, GDP Q1, PMI serv'

re: GDP: market consensus is for weak growth of just +0.7% (Q4 1.4%). A recessionary number seems somewhat unlikely. In any case, the cheerleaders will have to face the fact that the US economy is struggling. They would likely then try to spin it as a bullish sign that another rate increase won't happen until the autumn/winter.

F - pers' income/outlays, employment costs, Chicago PMI, consumer sent'.

As Friday will be month end, expect increasingly dynamic price action into the close.

Back on Monday.

Has the USD floored in the DXY 93s?

Having formed a clear double top at the DXY 100 threshold in Nov'2015, the USD has seen a great deal of chop, but leaning to the downside. Having cooled 7% across five months, from a pure cyclical perspective, there is now threat of a push higher, not least with the BREXIT vote in June.

USD - DXY, weekly

GDP/USD, monthly

Euro/USD, weekly, 7yr


Weekly MACD (blue bar histogram) for the USD is ticking upward, at the current rate, we'll see a bullish cross in 5-6 weeks.

GDP/USD: critical support is the Feb' low of 1.3830. The ultimate level is from Jan'2009 @ 1.35. ANY price action in the 1.34s or lower would likely result in 'freefall' action to the 1.10s.. or even parity.

Euro: 1.20 remains massive resistance, and the Euro looks to have recently maxed out in the 1.14s. First downside target are the 1.08/1.07s.


The UK vote on whether to leave or stay in the EU is June 23rd. It will be a pretty damn important vote, with huge economic and societal implications.

Best guess: the UK populace vote to STAY within the EU.  

Why? Think back to the Scottish independence vote. Even though the Scots waited centuries for a vote to regain their independence, when it came down to it.. they were conservative minded.. and stayed.

There is clearly a very significant number of the UK populace who are mad as hell about anything related to mainland Europe... but its still not a clear majority.

Indeed, across the last 15-20yrs, the UK - esp' southern England, has become extremely closely tied with mainland Europe, for business.. as well as for tourism. 


If I'm correct in thinking the UK vote to stay, the UK Pound would rebound, along with the Euro.... with the USD cooling. The implications of a weaker USD would be very bullish for most world equity markets. Further, the precious metals and Oil would likely soar.

In nine weeks time... we'll find out.

Goodnight from London

*the weekend post will be on the US weekly indexes

**Video bonus - Mr Long, with Mr Casey

For those in the mood for some fed/economic chatter... this is superb.

Daily Index Cycle update

US equity indexes closed mixed, sp u/c @ 2091 (intra low 2081). The two leaders - Trans/R2K, settled higher by 0.9% and 1.0% respectively. Near term outlook offers pre-FOMC cooling to the 2065/61 gap zone. How the market trades after Yellen is out of the way... very difficult to say.



Nasdaq comp'


sp'500: fractional break of rising support, and closing the week effectively flat.

Dow: a marginal break of rising support, having cooled from 18167 to 17909. First downside is the 17600/500s. Those seeking clarity that the broader bearish scenario is intact, will need to see a break under 17K.

Nasdaq: a very decisive break of rising trend, with a weekly close just above the 4900 threshold. The daily candle was of the reversal type.. and bodes in favour of the equity bulls.. at least for the Monday open.

An intraday video from Mr C... I think merits some attention... 

The 'failed head test' scenario remains valid unless a break and hold above the Nov' high of sp'2116. It remains notable the Dow has already broken the equivalent level (17977).

There is also some interesting commentary on the USD and Gold.

re: Gold is NOT going up for no reason, and although Oscar hasn't said, I'll define it as underlying capital market unrest.

a little more later...