Weekend update - World monthly indexes

It was a broadly bullish month for world equity markets, with net monthly changes ranging from +6.4% (Germany), +3.7% (Russia), +2.1% (USA - Dow), +0.8% (Spain), to -0.8% (UK). Near term outlook threatens a little cooling in October, but broadly, most markets are headed far higher into 2018.


Lets take our regular look at ten of the world equity markets

USA - Dow

The mighty Dow settled higher for the SIXTH consecutive month, +456pts (2.1%) at 22405, with a notable new historic high of 22419. The key 10MA is currently at 21064, and will likely jump to the 21300s at the Oct' 2nd open. Upper monthly bollinger will be in the 23000s from next week.

Best guess: near term cooling, but nothing more than 4-5%, and no bearish monthly closes under the key 10MA. A year end close in the 24000s is just about viable, which would give (hyper bullish) clarity for the next few years.

Equity bears have nothing to tout unless a bearish monthly close (<10MA), which in Oct', will be around 21300, rising to 21600 in Nov', and perhaps the 22000s by year end.
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Germany – DAX

The economic powerhouse of the EU - Germany, saw the DAX settle +773pts (6.4%) to a new historic high of 12828. Price structure of the past 3-4 months was a baby bull flag, with the new high fully confirming it. Further, note how the DAX bounced off the 10MA. Upper bollinger will be offering the 13300/400s in Oct. A year end close in the 14000s seems probable. Core multi-year support of 8k is now some 37% lower.


Japan – Nikkei

The Nikkei saw a month of swings, with an intra low of 19239, but then surging back upward to settle +3.6% at 20356, the highest close since July 2015. First soft target is the June 2015 high of 20952. A break into the 21000s looks a given. The only wild card is neighbouring North Korea. Clearly, there is a threat, but the default outlook has to be that nothing 'nightmarish' will happen.


China – Shanghai comp'

The Chinese market saw a month of moderate chop, settling -0.3% at 3348. There is considerable resistance within the 3400s. Any price action >3500 will offer 4500 by mid 2018. Only bearish if back under 3k, which the communist leadership will vehemently fight against, via the PBOC.


Brazil – Bovespa

With commodities ticking upward, the Brazilian market climbed for a fourth consecutive month, +4.9% at 74293, with a notable new historic high of 76419. Indeed, with the break above the May 2008 high, the door is now open to vastly higher levels. Talk of 100k can begin.


Russia - RTSI

Russian equities climbed for a third month, with the RTSI +3.7% at 1136. The 1200 threshold remains key. Any price action >1200 will offer the 1500/700s in 2018. The Russian market is especially swayed by commodity prices, in particular - oil/nat' gas. On balance, a break >1200 is due in Oct/Nov.


UK – FTSE

The UK market saw a choppy month, settling -0.8% at 7372. There was an intra month break of the 10ma, but the September close maintained the mid term upward trend from Feb'2016. Underlying MACD (green bar histogram) ticked lower for a fourth month, as price momentum continues to cool. The 7k threshold - old resistance... now support, is of paramount importance. So long as 7K holds, 8k by year end is viable, with a grander hyper-bullish target of 10k by end 2018.


France – CAC

After three months of declines, the French equity market finally caught a bounce, settling +4.8% to 5329. Recent price structure of a baby bull flag - with a low around old declining trend/resistance, was confirmed with the best monthly gain since March. Next soft target is the June 2007 high of 6168. Grander upside to challenge the Sept'2000 historic high of 6944 seems due in 2018, and that is currently 30% higher. Only bearish if back under 5k, which seems extremely unlikely.


Spain – IBEX

The Spanish market settled +0.8% to 10381. Price structure across the last five months is a viable baby bull flag, which would be confirmed with a break >11k. A broader push to giant resistance of 12k seem probable in early 2018. Any monthly closes >12k would offer 14k, with secondary target of the Nov'2007 historic high of 16040. Only bearish if <10k.


Australia - AORD

The Australian market was one of the laggards this month, settling -0.5% at 5744. However, this was notably still above above the old declining trend/resistance. First soft upside target is the 6k threshold, and then the Nov'2007 high of 6873, which is 19% to the upside. Only bearish if <5600, which seems unlikely.
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Summary

All ten equity markets are still broadly trending higher from early 2016.

The USA and Germany are leading the way higher, with Russia and China especially lagging.

A number of markets (such as France, Japan, and Germany) had price structure of a baby bull flag, which has been confirmed in September. That could be labelled as month'1, of a new up wave that will likely continue into spring 2018.

Most markets have around 5% of downside buffer before breaking their mid term bullish trends.
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Update on commodities

I rarely get around to posting on commodities, but as its end month, lets take a look...

CRB with sp500, monthly, 8yr

Note the June low for the CRB - when WTIC was $42.05, and also just before gold/silver/copper floored. July saw the first monthly gain of the year. August was choppy, leaning weak. September saw a higher low and higher high, settling +1.2% at 183.09, the highest close since March.

The disparity between commodities and equities remains extreme. Even if just some commodities recover to levels from 2014, that would inspire much higher equity prices. There are massively bullish implications for many sectors, especially energy and mining.
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Looking ahead

Q4 will begin with a fair amount of econ-data...

M - PMI/ISM manu', construction
T - Vehicle sales
W - ADP jobs, PMI/ISM serv', EIA Pet' report.
T - Weekly jobs, intl' trade, factory orders
F - Monthly jobs, wholesale trade, consumer credit

*there are a few fed officials on the loose. Notably, Yellen (Wed' 2.15pm), I don't believe that will garner live TV coverage though. Bullard (Wed'), and Dudley on Friday will merit attention.
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A sixth consecutive monthly gain

US equity indexes ended the week/month/Q3 on a positive note, sp +9pts at 2519. The two leaders - Trans/R2K, settled higher by 0.3% and 0.1% respectively. VIX settled -0.4% at 9.51. Near term outlook still offers a minimal tag of 2471/61, but more broadly, the year end target of 2683 is on track.


sp'daily5

VIX'daily3

Summary

US equities opened in fractional chop mode, but soon reverted back to algo-bot upward melt. There was a quintet of index highs: sp, nasdaq comp, nyse comp, r2k, and the trans. The only index that missed out was the Dow, held back by CVX, XOM, MRK, and NKE.

Volatility was itself subdued, breaking a new multi-week low, settling in the mid 9s.
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Bonus chart: sp'monthly3

A sixth consecutive net monthly gain, some 126pts (5%) above the key 10MA. A bearish monthly close (<10MA) seems very unlikely for the remainder of the year. Indeed, the original year end target (as published in January) of 2683 remains on track. To reach target will argaubly require WTIC $55/60 for energy stocks, and one further rate hike to inspire the financials.
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*the weekend post will appear Sat'12pm EST, and will detail the World monthly indexes.

The sunny transports

US equity indexes closed moderately positive, sp +3pts at 2510. The two leaders - Trans/R2K, settled higher by 0.5% and 0.3% respectively. VIX settled -3.2% at 9.55. Near term outlook offers a little weak chop into end month/Q3. With each passing day, even a 4-5% retrace to around the 2400 threshold will be increasingly difficult.


sp'daily5

VIX'daily3

Summary

US equities opened a little weak, but then saw algo-bot upward melt, which continued into the late afternoon. There was a notable trio of new historic highs in the Transports, R2K, and the NYSE comp'.

With equity price action subdued, volatility itself remained low, with the VIX once again settling in the 9s.
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Bonus chart: Transports, daily

The tranny climbed for a seventh consecutive day, and is well above the old trading ceiling. The giant psy' level of 10k is clearly viable in the immediate term. The long term implications of the upside break are profoundly bullish. Same applies to the R2K.
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A very autumnal London

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A quartet of new historic highs

US equity indexes closed broadly higher, sp +10pts at 2507. The two leaders - Trans/R2K, settled higher by 0.6% and 1.9% respectively. VIX settled -2.9% at 9.87. Near term outlook still offers a basic tag of sp'2474/61, but even a moderate 5% cooling wave in October looks increasingly difficult.


sp'daily5

VIX'daily3

Summary

So much for a drop.

US equities opened a little higher, but the gains largely faded by 11am. Yet.. that was all the bears could manage. With mainstream chatter about the 'Trump tax bill', the market broke a quartet of index highs (sp'500, nyse comp', trans, R2K) in the late afternoon. On any basis... it was a very bullish day.

Volatility remains very subdued, with the VIX settling in the upper 9s.

Near term outlook still offers a basic tag of the sp'2474/61 gap zone, but even the 2400 threshold looks increasingly difficult in October, as the Trans and R2K have both broken out of year long trading ranges.

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Chop ahead of a drop

US equity indexes closed moderately mixed, sp +0.2pts at 2496. The two leaders - Trans/R2K, settled higher by 0.7% and 0.3% respectively. VIX settled -0.4% at 10.17. Near term outlook offers the sp'2474/61 gap zone before the weekend.


sp'daily5

VIX'daily3

Summary

US equities opened a little higher, turned fractionally negative by late morning, and then leaned back upward into the afternoon. The closing hour saw a failed attempt to push upward, with the market leaning on the weaker side.

Note the settling black-fail daily candle, its a subtle warning of trouble for Wednesday. Soft target is 2474/61... where the 50dma is lurking.

With equities hovering/at historic highs, volatility remains naturally on the very low side, with the VIX settling in the low 10s. If sp'2474/61, that should equate to VIX 12/13s before the weekend.

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Murky sunset

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The war talk continues

US equity indexes closed somewhat mixed, sp -5pts at 2496. The two leaders - Trans/R2K, both settled +0.1%. VIX settled +6.5% at 10.21. Near term outlook offers the sp'2474/61 zone. Things would get 'real interesting' with a Sept'/Q3 settlement <2471, which really isn't that bold a target.


sp'daily5

VIX'daily3

Summary

US equities opened a touch weak, but then saw a sharp down wave on comments from the NK foreign minister that Trump's weekend comments amounted to a declaration of war. Yet the equity downside was only moderate, with the VIX showing just a little concern in the 11s. Indeed, the R2K broke a new historic high of 1455, reflective of underlying main market strength.

The afternoon saw a minor bounce, but notably settling broadly weak, with VIX managing to settle outside of the 9s. Near term offers the sp'2474/61 gap zone, which will likely equate to VIX 12/13s. To see 14s or higher, will surely need sp'2450 or lower. That does look likely though, and it won't require anything nightmarish happening in east Asia.
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Here in the metropolis... grey horror. In the distant background, the towers clad in flammable Arconic (ARNC) products are finally being stripped. I wonder if I'll get at least party invoiced a few dimes for that via local taxation.

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Weekend update - US weekly indexes

It was a bullish week for US equity indexes, with net weekly changes ranging from +1.7% (Trans), +1.3% (R2K), +0.1% (sp'500), to -0.3% (Nasdaq comp'). Near term outlook still threatens a 4-5% down wave into October. More broadly, the year end target of sp'2683 remains on track.

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

sp'500

The sp' settled higher for the 4th of the past 5 weeks, breaking a new historic high of 2508.85, but settling +0.1% at 2502. Underlying MACD (blue bar histogram) ticked upward, and is now importantly close to the zero threshold. A failure to keep pushing upward would be especially bearish.

Best guess: near term weakness of 4-5% to around the 2400 threshold in October, with the key 200dma just a little under it. A 'natural washout' would see a hyper spike from the 2390s, whipsawing upward... much like Oct'2014. The year end target of 2683 remains on track.

Equity bears have nothing to tout unless a monthly bearish close. For Sept'29th, that would (arguably) equate to a settlement under the monthly 10MA: <2380, and that rises to around 2400 for the Oct'31st close.
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Nasdaq comp'

It was a somewhat mixed week for the Nasdaq comp', which broke a new historic high of 6477.77, but settled -0.3% to 6426. Underlying MACD cycle remains moderately negative. Next week/end month, rising trend - from early 2016, will be around 6300. Any price action <6300 would be a significant break, and offer further downside to the 6000/5900s. Something to reflect upon... the giant psy' level of 5k is currently a monstrous 22.2% lower.


Dow

The mighty Dow broke a new historic high of 22419, settling +0.4% at 22349. Note the key 10MA, which the Dow has managed to settle above since late April. Rising trend into end Sept' will be around 21300, a clear 1000pts lower. Further, the 21k threshold will offer massive support, which is where the 200dma is also lurking. The giant psy' level of 20k looks secure for the rest of the year.


NYSE comp'

The master index broke a new historic high of 12158, settling +0.6% at 12151. Rising support from early 2016 will be around 11850 into end month, with secondary support of the key threshold in the 11600s. Lower weekly bollinger is at 11500, some 5% lower, which would equate to sp'2400 and Dow 21k.

Special note: the NYSE broke the mid term upward trend in August. However, with a new historic high, I've marginally adjusted/widened the trend.
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R2K

The second market leader - R2K, settled higher for the 4th week of 5, coming within 1pt of the July historic high, settling the week net higher by 1.3% to 1450. Underlying MACD is fractionally negative, but will likely open moderately positive at the Sept'25th open. Its notable that the upper bollinger is at 1455, and will greatly restrain any further upside next week. Clearly, a fractional new historic high is viable next week, however the R2K - along with the rest of the market, will be cyclically and seasonally due a 4-5% down wave into October. Right now, the most bearish target would be cooling back to around 1350, before whipsawing back upward.

Special note: the R2K broke the mid term upward trend in August. If the R2K breaks a new historic high, I will be inclined to adjust the trend (as I have for the NYSE comp'). 


Trans

The 'old leader' - Transports, was the strongest index this week, settling higher for a fifth consecutive week, +1.7% to 9704, just 59pts shy of the July historic high. Underlying MACD cycle has turned positive for the first time since July. Upper bollinger is offering another 1-1.5% to the 9800s. Most recognise that if oil prices rise, that will be a downward pressure (at least of some degree) to the transport stocks. However, even the $60s would still be cheap relative to prices in 2014.
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Summary

A bullish week, with a quartet of new index highs in the sp'500, dow, nasdaq comp', and nyse comp'.

The laggy '2 leaders' - Transports and the R2K, are both on the edge of breaking their respective historic highs from July.

Considering cyclical and seasonal issues, the US market still looks highly vulnerable into October. On balance though, the most bearish outlook is a main market (brief) cooling of 4-5%, but with no bearish monthly closes.

The year end target of sp'2683 remains on track, and will be greatly helped if both the financials and energy sector push upward into year end. Financials will arguably start to price in a Dec' rate hike by early November. Energy stocks just need WTIC to maintain the key $50.00 threshold, with Nat' gas at least >$2.80.
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Looking ahead

A rather packed week of econ-data and fed chatter...

M - -
T - Case-Shiller HPI, new home sales, consumer con', Richmond fed'

Fed chair Yellen is speaking around 12pm at a conf' for 'Prospects for Growth: Reassessing the Fundamentals'. I believe that will garner live coverage on the financial networks.

W - Durable goods orders, pending home sales, EIA Pet' report
T - Weekly jobs, GDP (third est'), Intl' trade,
F - Pers' income/outlays, Chicago PMI, consumer sent'.

*in addition to Yellen on Tuesday, there are a wheel barrow of other fed officials on the loose. Notably, Mester (Tue 9am), and Bullard (Tue' 1pm).

**Friday will be end month and Q3. Expect much higher trading volume and dynamic price action, especially in the late afternoon.
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Another bullish week

US equity indexes closed on a somewhat positive note, sp +1pt at 2502. The two leaders - Trans/R2K, settled higher by 0.4% and 0.5% respectively. VIX settled -0.8% at 9.59. Near term outlook offers sig' downside next week, first soft target remains 2474/61. More broadly, the 2400/2390s... where the 200dma will be lurking in Oct'.


sp'daily5

VIX'daily3

Summary

First, lets be clear, it was a bullish week for the US equity market, as we saw a quartet of new historic highs in the sp'500, Dow, nasdaq comp', and nyse comp'.

As for today, US equities opened a little weak, after overnight 'war chatter' from both Trump and the DPRK. Yet price action remained very subdued, leaning upward into the close. As equity indexes are close to historic highs, market volatility is broadly subdued, with the VIX settling the week in the 9s.

Near term outlook remains unchanged. A 4-5% main market correction is due, to at least test the sp'2400 threshold, with the key 200dma just a little lower.
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London, 1.35pm EST

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Choppy weakness

US equity indexes closed fractionally mixed, sp -7pts at 2500. The two leaders - Trans/R2K, settled +0.2% and -0.1% respectively. VIX settled -1.1% at 9.67. Outlook still offers a 4-5% main market correction into October. More broadly, the bullish train is set to remain on the tracks into spring 2018.


sp'daily5

VIX'daily3

Summary

US equities opened a little weak, and saw a great deal of minor chop across the day. There was a touch of renewed weakness into the close, as the market feels distinctly tired.. especially with the fed out of the way. Cyclically, price momentum is increasingly swinging back toward the bears. At the current rate, we'll see a bearish MACD cross next Tue/Wed.

Market volatility remains broadly subdued, with the VIX spiking to 10.21, but settling in the mid 9s.

Near term outlook remains unchanged, a 4-5% correction into Oct' is due, which should equate to VIX in the upper teens, perhaps briefly testing the key 20 threshold.

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Quantitative tightening to begin

US equity indexes closed rather mixed, sp +1pt at 2508. The two leaders - Trans/R2K, settled higher by 1.5% and 0.3% respectively. VIX settled -3.9% at 9.78. Near term outlook offers initial weakness to the 2474/61 gap zone.


sp'daily5

VIX'daily3

Summary

US equities opened in minor chop mode, with the sp'500, dow, and NYSE comp' breaking notable (if fractional) new historic highs. The market saw a moderate downward swing with the Fed press release, but there was a distinct bounce into the close, especially within the Transports.

Market volatility remained broadly subdued, with the VIX notably settling in the 9s, the lowest close since late July.

Outlook into October remains unchanged. A 4-5% main market correction is due, which would take most indexes to near their respective 200dmas. That would likely equate to VIX near the key 20 threshold... if briefly.
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Quantitative tightening to begin

The Fed balance sheet reduction plan - as outlined some months ago, is set to begin in October. Things start slow at just $10bn a month, but after a year, it will total $50bn a month, which will amount to a very significant annual QT of $600bn.

Further, another rate hike is highly probable at the December 13th FOMC. Frankly, the equity/econ bulls should be very pleased with how things are proceeding.
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Autumn in London

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