Tuesday 18 October 2016

Messy start to the week

US equity indexes closed moderately weak, sp -6pts @ 2126. The two leaders - Trans/R2K, settled lower by -0.4% and -0.2% respectively. VIX settled +0.6% @ 16.21. Near term outlook offers upside to 2150, at best.. a challenge to the 2161/63 gap zone. Broadly, the market looks set to see <2100, before the 2170s.




A day comprised almost entirely of minor chop, as the market will be inclined for the 2150/60s, before the next opportunity of taking out last Thursday's low of sp'2114.

VIX is comfortably holding the mid teens, but if sp'2155/65 within a few days, VIX will briefly cool to the 14/13s.. before renewed strength for a push toward the key 20 threshold.

Bonus chart: UK, monthly

The current monthly candle is getting very spiky, and considering the likely direction of the US market before end month, a net monthly decline for the FTSE looks increasingly probable.

Another failure to break and hold the 7000s would bode bearish. Its ironic, considering the BoE have already cut rates and spun up the printers on the premise that the economy will be under some post-BREXIT pressure. Things will turn very bearish on a monthly close under the 10MA, and that will be around 6600 across November.

Goodnight from London