Saturday 12 November 2016

Weekend update - US monthly indexes

With the uncertainty of a fiercely contested election out of the way, US equities are powering upward. The sp'500 is currently net higher for November by 38pts (1.8%) @ 2164. With the Dow already breaking a new historic high of 18873, other indexes can be expected to follow in the weeks and months ahead.

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


The sp'500 has broadly cooled from an Aug' high of 2193 to last Friday's low of 2083. Election night futures offered an equiv' low of 2032, but Wednesday only saw an early low of 2125 before whipsawing upward to 2182.

Underlying MACD (blue bar histogram) cycle remains fractionally negative, but will surely turn positive.. whether by end month, or at the December open. The key 10MA is currently at 2105, with the market due to settle November well above it. In theory, there is a viable 'easy upside' of 4-6 months. 

Best guess: the 2200s, certainly before year end, even as the fed will raise rates in mid Dec'. The 2300s look out of range until the new year, as the upper bollinger is only offering the 2220s in the near term.

Equity bears now have to see the 2083 low broken before having any degree of audacity to call for anything lower.

Nasdaq comp'

The tech saw a low this week of 5034, and indeed, the giant psy' level of 5K is powerful support. With the mainstream shock at the election of Trump, equity bears had their best chance to break significantly lower... but failed. The current net gain of 0.9% is minor, but its notable that the Nasdaq is only 2% below the Sept' high of 5342. The 6000s remain on the menu in the mid term.


The mighty Dow saw some prints of -800pts in the 17500s overnight Tue/Wed, but there was a massive hyper-rebound, and the Dow has already broken a new historic high of 18873. The 19000s are clearly coming. By default, any price action >19k offers a straight run to the giant psy' level of 20k, certainly no later than April/May 2017.

The 1.618x fib' extrap from the 2009 low is 18974 - equiv' to sp'2138. Dow 19000s will open the window to broader upside to the next key fib' of 26072, whether in 2017 or sometime in 2018.

NYSE comp'

The master index is currently up 1.6% in the 10600s, and notably above the key 10MA. Next stop is the 11k threshold. After that, the May 2015 high of 11254, which is where the upper bollinger is current lurking.


The second market leader - R2K, is racing upward, currently +7.6% for the month. The Friday close of 1282 is a mere 14pts from the 2015 high. The 1300s now look imminent. Underlying price momentum continues to strengthen.


The 'old leader' - Trans, is currently +6.5% for the month, in the 8500s. Underlying MACD cycle has turned positive for the first time since March 2015. Next soft target is the upper bollinger in the 8700s, and then the 9k threshold. Even at the current rate, a new historic high (>9310) still looks a good 3-4 months away.


US equities have seen a choppy down wave from Aug/Sept' come to an end, with an overnight election washout, and subsequent hyper-rebound.

The Dow is leading the charge higher, with the R2K, SP', and Nasdaq comp', set to break new historic highs in the near term.

With the great uncertainty of the election out of the way, all that is left for the market to deal with this year is a fed rate rise. That is arguably already fully priced in.

Best guess: continued upside into year end, and probably stretching all the way into late spring/early summer 2017.

Looking ahead

The first 'normal' week in around a month. Earnings are largely done, and the market will be back to focusing on econ-data and what the maniacs at the fed say.

M - -
T - retail sales, empire state, import/export prices, bus' invent
W - PPI, indust' prod, housing market, EIA report
T - weekly jobs, CPI, housing starts, phil fed'
F - leading indicators.   *OPEX*

*there are 13 scheduled appearances due from the officials at PRINT central. No doubt, some of them will be overtly hinting at the Dec'14th rate increase.

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A powerful week for the equity bulls

US equity indexes closed very mixed, sp -3pts @ 2164. The two leaders - Trans/R2K, settled higher by 0.2% and 2.4% respectively. VIX settled -3.9% @ 14.17. Near term outlook offers cooling to around sp'2144, which should equate to VIX 17s. Broadly, the market looks headed powerfully higher into.. and across 2017.




A day of moderate chop, although there was some notable strength in the R2K, which came to within nearly 1% of breaking the 2015 high of 1296.

VIX hit a high of 16.00 - with sp'2152, but was then ground lower into the close.. as there just isn't any underlying fear. Even the 17s will be a stretch next Monday, if the 50dma (sp'2145/46) is tested.


The gradual choppy cooling from the August high of sp'2193 has decisively ended. We have a key mid term low of 2083. With the Dow already breaking a new historic high in the 18800s, the sp'500.. and other indexes can be expected to follow.

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