Saturday, 18 June 2016

Weekend update - US weekly indexes

It was a broadly bearish week for US equity indexes, with net weekly declines ranging from -2.2% (Transports), -1.2% (sp'500), to -0.9% (NYSE comp'). Near term outlook offers weakness of at least 3-4%, possibly double that.. if the UK decide to break away from the EU.

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


A net weekly decline of -24pts (1.2%), with an intra low of 2050, and settling @ 2071. Underlying MACD (blue bar histogram) cycle ticked lower for a second week. At the current of decline, a bearish cross is due before end month.

There are a truckload of aspects of support from the 2030s to the psy' level of 2K. The April low of 2025 is arguably the most important. Any daily close <2025, will open the fire exit door to a swift move to the 1950/00 zone.

Best guess: A test of the sp'2025 low looks due within the next 3-6 trading days. If the UK vote to leave the EU - which appears increasingly probable, then world capital markets will be rocked.

However, it should be clear.. if the UK vote to remain, and the market does not break under 2025 before end June, it would bode for a massive bullish breakout, with new historic highs (in the leading indexes) no later than end July.

Considering the price structure of other world equity markets, the economic fundamentals, and the fact that low rates/NIRP is destroying the financial sector (dare I cite Deutsche Bank?), I remain leaning bearish.

Nasdaq comp'

The tech declined by -1.9%, settling quad-opex at the 4800 threshold. The giant psy' level of 5K remains massive resistance. Underlying MACD cycle is set to turn negative before end month. First downside is the 4500/400 zone. A break under the Feb' low of 4209 looks viable in July.


The mighty Dow settled the week -1.1% @ 17675. 18K remains core resistance. First support is 17k. If that fails to hold in the near term... next support will be 16500/400. The Aug' 2015 low of 15370 will be a key target if June ends on a bearish note.

NYSE comp'

The master index settled -0.9% @ 10347, still a clear 3% above the psy level of 10K. If 10K fails to hold, next support is around 9500... 8% below current levels, and that would equate to around sp'1920


The second market leader - R2K, settled -1.6% @ 1144. The R2K is holding rising trend. However, if lost, first support will be the 1100/1085 zone. Underlying MACD cycle has a clear divergent lower cycle high. At the current rate of decline, there will be a bearish cross in around 3 weeks. The Feb' low of 943 is a long way down... and looks out of range until Aug/Sept'.


The 'old leader', is leading the way lower, settling -2.2% @ 7589. Key resistance remains around 8K. Underlying MACD cycle ticked lower for an eighth consecutive week, with the tranny set to see a bearish cross at next Monday's open. First key downside target is the Jan' low of 6403, and that is a very significant 15% to the downside.


A broadly bearish week for US equities.

It is notable there is a clear divergent lower MACD cycle high - as had been expected, with all US indexes set for a bearish cross on the bigger weekly cycles within 1-3 weeks. By definition, that is suggestive of a near term VERY significant drop.. on the order of Aug'2015, or Jan'2016.

As many recognise, a very big move is coming. Either bulls are going to hold things together.. and push higher into July, or the bears are going to break back into the sp'1900s.

With 9 trading days left of June, the monthly close will likely determine how we broadly trade for the rest of the year.

Looking ahead

An exceptionally important week is ahead

M - -
T - Yellen - testimony to the US Senate
W - EIA report, existing home sales, Yellen - testimony to the US congress
T - weekly jobs, PMI manu', leading indicators, New home sales

**The UK referendum to remain... or leave the EU**

The polls close Thursday @ 10pm BST (5pm EST). The result will likely become clear during the Friday US trading session, but quite possibly AFTER the EU/UK markets close on Friday at 4.30pm BST (11.30am EST)

F - Durable Goods Orders, consumer sent'.

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Have a good weekend

*The next post on this page will be Monday @ 7pm EST

A second week for the bears

US equities ended the week moderately mixed, sp -6pts @ 2071 (intra low 2062). The two leaders - Trans/R2K, settled +0.6% and -0.3% respectively. VIX settled +0.2% @ 19.41. Near term outlook offers initial Monday upside to around 2090, but then a test of the critical 2025 low at some point next week.




Friday saw weakness across the day, but it was nothing of significance.. as reflected in the VIX that closed just fractionally higher.

A move to around sp'2090 is viable next Monday, and that would likely see the VIX cool to the 18/17s.

However, with the BREXIT vote ahead, equities are likely to see broad and increasing downward pressure, with VIX set for the 25/30 zone, viable before the polls close on Thursday (5pm EST).


Market chatter from the Schiff


A second consecutive net weekly decline, with a lower high.. and a lower low. A notable quad-opex settlement under the key 10MA (2075). Next key support on the bigger weekly cycle is the 50ma (2024). Any daily close in the 2010s or lower, will offer a fast decline to the lower bollinger band.. which will be around 1920/00 into early July.

Goodnight from London

*the weekend post will appear Sat' 12pm EST, and will detail the US weekly indexes