Tuesday 31 October 2017

Nine of ten

US equity indexes closed rather mixed, sp +2pts at 2575. The two leaders - Trans/R2K, settled -0.4% and +0.9% respectively. VIX settled -3.0% at 10.18. Near term outlook offers soft target of 2560/57, with secondary of 2544/40. Broader price action remains scary strong, with earnings and econ-data both supportive of it.


sp'daily5



VIX'daily3



Summary

US equities opened a little higher, and leaned upward into the mid afternoon. There was a touch of cooling in the closing hour, as the month wrapped up. Volatility was naturally subdued, with the VIX falling into the 9s, but managing a close in the low 10s. Near term outlook offers equity weakness, but a daily VIX close >12.50 looks very difficult.
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Nine of ten

The sp'500 settled higher for a seventh consecutive month, +55pts (2.2%), but perhaps most notable, the ninth monthly gain of the past ten.

sp'monthly


The monthly RSI is now at an incredibly high 81, which exceeds even levels from 2013/14. There is absolutely zero sign of the US equity market maxing out.

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Monday 30 October 2017

Starting weak

US equity indexes closed broadly weak, sp -8pts at 2572. The two leaders - Trans/R2K, settled significantly lower by -1.3% and -1.1% respectively. VIX settled +7.1% at 10.50. Near term outlook offers soft target of 2560/57. Unless last week's low of 2544 is taken out, the 'technical necessity' of 2474/61 remains on hold.


sp'daily5



VIX'daily3



Summary

The week began on a moderately weak note. However, the Nasdaq comp' did break a new historic high, as there is underlying hyper strength within many tech stocks.

Market volatility picked up a little, but remains at historically very low levels. Things only get interesting with a daily close >12.50.

To be clear, s/t bearish (if only moderately), but unless last week's low of sp'2544 is taken out, any hope of the 'technical necessity' of 2474/61 is currently on hold.
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Saturday 28 October 2017

Weekend update - US weekly indexes

It was a mixed week for US equity indexes, with net weekly changes ranging from +1.1% (Nasdaq comp'), +0.2% (sp'500), to -0.5% (NYSE comp'). Near term outlook offers moderate cooling. The year end target of sp'2683 is now a mere 3.9% away.


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

sp'500


The sp'500 settled higher for a seventh consecutive week, +0.2%, with a new historic high of 2582. Underlying MACD (blue bar histogram) ticked higher for a 7th week, and is now on the rather high side. First soft rising support will be 2550 next week.

Best guess: with yet another new historic high, near term outlook is increasingly uncertain. Unless the Wed' low of 2544 is taken out, any hope of a retrace to the Sept'11th gap of 2474/61 is now on hold. On balance, I still expect a cooling wave to occur. Regardless of the short term, the end year target of 2683 is now a mere 3.9% away, and is clearly on track.

Equity bears have nothing to tout unless a bearish monthly close, which for me would constitute an Oct' close under the monthly 10MA (currently at 2426). That number will jump around 35pts to the 2460s as of the Nov'1st open. I do not anticipate any such bearish monthly close before year end.
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Nasdaq comp'


With earnings coming in better than expected (superb in the case of INTC and MSFT), the Nasdaq is powering upward, with a net gain of 1.1%, and a notable new historic high of 6708. The 7000s are clearly within range before year end. The 8000s look very viable in spring 2018. It will be interesting to see how long it takes for some in the mainstream to start talking about the 10k threshold.


Dow


The mighty Dow gained another 105pts (0.4%), with a new historic high of 23485. Cyclically, the Dow is on the very high side. Its ironic that cooling of 1000pts would only take the Dow to the mid 22000s. No price action <22k can be expected for the remainder of the year. A year end close in the 24000s is clearly within range. Talk of 30k in 2018 should have already begun.


NYSE comp'


The master index was the laggard this week, with a net decline of -0.5%. However, the NYSE comp' did break a fractional new historic high of 12443. Things only turn bearish with a break of the 12k threshold, which is now a clear 3% lower.


R2K


The second market leader saw a choppy weak, settling -0.1% at 1508. It could be argued s/t price structure is a castle top, and that this week saw a lower high and lower low. Cyclically, we have a MACD rollover. However, things only turn bearish if <1450, with rising trend in the 1410s next week. No price action <1400 can be expected in the remainder of the year.


Trans


The 'old leader' - Trans, settled -0.4% at 9931. The 10k threshold is clear resistance, and for now, the tranny is leaning weak into end month. Cyclically, there is a rollover underway. First soft support are the 9500s, and then the psy' level of 9k. No price action <9k can be expected, with a year end close around 10250.
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Summary

Broader trend remains powerfully bullish, with 4 of the 6 main indexes breaking new historic highs.

The Nasdaq comp' and Dow are leading the way upward, whilst the Trans/R2K are still a little laggy.

Most indexes have around 5-6% of downside buffer before key rising trend - from early 2016, would be challenged.
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Looking ahead

Key tech earnings: Wed: FB, QCOM, Thurs: BABA, AAPL
-

M - Pers' income/outlays
T - Employ' costs, Case-Shiller HPI, Chicago PMI, consumer con'
W - Vehicle sales, ADP jobs, PMI/ISM manu'

The FOMC will issue a press release at 2pm. No change in rates or QT policy can be expected. There will NOT be a press conf.

T - Weekly jobs, product/costs
F - Monthly jobs, intl' trade, PMI/ISM serv', factory orders.

*there are a trio of fed officials due Thurs/Friday, but none seem of any importance. Market is already assured that rates will be raised at the Dec'13th FOMC.

**UK/EU clocks are moved back Oct'29th. USA does not change until Sunday Nov'5th.
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Friday 27 October 2017

A week of swings

US equity indexes closed broadly higher, sp +20pts at 2581. The two leaders - Trans/R2K, settled higher by 0.5% and 0.7% respectively. VIX settled -13.3% at 9.80. Near term outlook offers basic downside to around sp'2560. Things only get interesting with a break of the Wed' low of 2544.


sp'daily5



VIX'daily3



Summary

US equities opened moderately higher, with the sp'500 and Nasdaq comp' breaking new historic highs. The new highs have fully negated the technical breaks seen on Wednesday. Equity bears now need a break of the Wed' low of 2544 to have any renewed hope of a 4-5% cooling wave.

With equities broadly higher, market volatility was ground lower across the day, with the VIX settling in the upper 9s.

Near term outlook offers a basic retrace to around sp'2560 early next week, but things only get interesting with a daily close <2544.
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Special highlight for regular reader Paolo...

Spain, monthly


With Catalonia declaring independence, the Spanish market ended the week on a bearish note, settling the day -1.4% at 10197, currently making for a net monthly decline of -1.8%. The intra-month break <10k was VERY bearish, however there was a rather strong rebound. Current price structure is actually offering a bull flag.

The remaining two trading days of the month will be very important. The 10k threshold - which also happens to be core m/t bullish trend, is clearly critical for the Spanish bulls to hold.

re: Catalan/Spain. For now, its still mostly a lot of talk. Clearly, the Spanish govt' are NOT going to just let Catalan go. They'll send the tanks in... if necessary. 
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Another week comes to a close

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Thursday 26 October 2017

A bounce day

US equity indexes closed moderately higher, sp +3pts at 2560. The two leaders - Trans/R2K, settled higher by 0.9% and 0.3% respectively. VIX settled +0.6% at 11.30. Near term outlook offers renewed downside, with soft target of 2540/37 before the weekend.


sp'daily5



VIX'daily3



Summary

US equities opened moderately higher, and clawed upward into midday, maxing out at sp'2567. There was some minor cooling into the close. Broadly, today could be seen as a bounce day. Despite equities settling higher, the VIX manage to close higher for a fourth consecutive day.

Tomorrow could be real interesting, not least as the market has a wheel barrow of earnings to reflect upon.

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Wednesday 25 October 2017

A break of rising trend

US equity indexes closed broadly weak, sp -11pts at 2557. The two leaders - Trans/R2K, settled lower by -1.6% and -0.5% respectively. VIX settled +0.6% at 11.23. With the break of last week's low of sp'2547, it gives confidence that Monday's high of 2578 was a s/t peak. Primary target remains 2474/61 into early November.


sp'daily5



VIX'daily3



Summary

US equities opened fractionally weak, but with a break of rising trend, the market actually spiralled lower, notably breaking below last Thursday's low of sp'2547. The break of trend and last week's low give confidence that we have a s/t peak of sp'2578. Primary target remains the Sept'11th gap of 2474/61.

With equities on the slide, the VIX built very sig' gains, breaking into the 13s, but cooled back to settled just fractionally higher in the low 11s.

Primary target of the Sept'11th gap of 2474/61 looks highly probable, and is technically no different than the July 12th gap. Its just taken considerably longer than expected. The issue will be to keep in mind that the m/t trend remains powerfully bullish, as also reflected in markets across the world.
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Tuesday 24 October 2017

Mostly just chop

US equity indexes closed moderately higher, sp +4pts at 2569. The two leaders - Trans/R2K, settled higher by 0.2% and 0.1% respectively. VIX settled +0.8% at 11.16. The Monday high of sp'2578 is a valid s/t peak, with an overdue cooling wave of 4% still due, before resuming upward into year end.


sp'daily5



VIX'daily3



Summary

US equities opened moderately higher on what are broadly 'fine' earnings. The Dow broke a new historic high, but the broader market saw a day mostly comprised of minor chop, leaning on the positive side.

Market volatility remains subdued, but the VIX held up well relatively to equities, even settling fractionally higher in the low 11s. Daily cyclical pressure threatens a surge into the mid/upper teens in the immediate term.

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Monday 23 October 2017

A mixed start to the week

US equity indexes closed moderately weak, sp -10pts at 2564 (intra high 2578). The two leaders - Trans/R2K, settled lower by -0.3% and -0.8% respectively. VIX settled +11.0% at 11.07. The gap zone of sp'2474/61 remains a technical necessity, but until last Thursday's low of 2547 is taken out, the bears have no right to be confident.


sp'daily5



VIX'daily3



Summary

US equities began the week on a mixed note, with a quartet of index historic highs (if only fractional) in early morning, but increasing weakness in the afternoon.

The daily candle was of the bearish engulfing type - breaking last Friday's high, but settling below the Friday open. This is a rather bearish signal, and could finally mark a s/t top. To be clear though, rising trend from 2488 is still intact, and unless we break last Thursday's low of 2547, I don't think equity bears can be remotely confident that a 4% cooling wave is underway.

Market volatility remains broadly subdued, with the VIX settling the day in the low 11s. First soft target are the mid 12s.

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Saturday 21 October 2017

Weekend update - US weekly indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from 2.0% (Dow), 0.9% (sp'500), to 0.3% (Nasdaq comp'). S/t outlook is bearish, as the market is clearly overbought, and due a cooling wave of around 4%. M/t bullish, with the year end target of sp'2683 only 4.2% higher!


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

sp'500


The sp' climbed for a sixth consecutive week, +22pts (0.9%), settling at a new historic high of 2575. This was the 8th gain of the past 9 weeks. Core support from the Feb'2016 low will be around 2450 next week, just a little below the 'technical necessity' gap zone of 2474/61. Underlying MACD (blue bar histogram) cycle is on the somewhat high side.

Best guess: short term cooling of 4% to the 2470/60s. Ironically, even that degree of downside would likely be enough to spook some of the weaker bulls. Broadly, the market looks strong into year end, with the target of 2683 just about within reach. It will clearly require almost everything to be fine, with a Dec' rate hike of 25bps (to inspire the financials), and WTIC around 54/55 (for energy stocks).

Equity bears have nothing to tout unless an Oct' monthly close under the monthly 10MA, currently at 2426. That number will jump around 35pts to the 2460s from Nov'1st onward, and be near the 2500 threshold across December. I do not anticipate such a bearish monthly close before year end.
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Nasdaq comp'


The tech settled higher for a fourth week, +0.3% at 6629, but with a notable new historic high of 6640. Core rising trend from 2016 will be in the 5780s next week, and the 5900s by year end.


Dow


The mighty Dow is leading the way higher, with a very significant net weekly gain of 456pts (2.0%) to settle the week at a new historic high of 23328. Cyclically, the Dow is on the high side, and there is threat of a brief 4% washout of around 1000pts (4%) to the low 22000s. No price action <21k can be expected. There is monstrous support at the giant psy' level of 20k,


NYSE comp'


The master index climbed for a sixth week, settling +0.6% at a new historic high of 12430. First soft support is the 12k threshold, where first soft rising trend also is. Secondary support is in the 11600s, and that looks out of range for the rest of the year.


R2K


The second market leader - R2K, settled +0.4% at 1509. Underlying MACD cycle is on the very high side, and will be prone to rolling over into end month/early November. First soft support are the 1450s, with secondary (valid until mid Nov'), the 1430s. No price action <1400 can be expected. A year end close in the 1600s is just about technically possible.


Trans


The 'old leader' - Transports, settled higher for a second week, +0.4% at 9972.The 10k threshold does offer some resistance. The tranny could cool by 5% to the 9400s and it would do nothing to negate the recent historic high. Broadly bullish, with a likely year end close >10250.
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Summary

A bullish week for US equities, with 4 of the 6 indexes breaking new historic highs. The Trans/R2K are notably still a little laggy.

All US indexes have downside buffer of 4-5% before their core rising trends - from early 2016, would be tested.

Cyclically, there is near term threat of a cooling wave, but nothing more than 5%, before a likely whipsaw back upward into year end.
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Looking ahead

It will likely be the busiest week left of this year, with a truck load of corp' earnings.



M - -
T - Richmond Fed'
W - Durable goods, FHFA house price ind', new home sales, EIA Pet'
T - Weekly jobs, pending home sales, intl' trade

F - GDP (Q3, first estimate), market is seeking growth of 2.5%, somewhat lower than Q2 (3.1%), arguably on the justification of 'adverse hurricanes'. Other data: consumer sent'.

*the only fed official on the loose is Kashkari (Thursday), but it will be of no relevance, not least as it is during the usual 8 day blackout period ahead of the next FOMC of Nov'1st.
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Friday 20 October 2017

Opex gains

US equity indexes closed moderately higher, sp +13pts at 2575. The two leaders - Trans/R2K, settled higher by 0.9% and 0.5% respectively. VIX settled -0.8% at 9.97. With a new historic high of sp'2575, the year end target of 2683 has come within 4.2% of being hit, with 48 trading days left of the year (scary thought?).


sp'daily5



VIX'daily3



Summary

US equities opened moderately higher, and it was enough to generate the usual quartet of index highs (sp, dow, nas' comp', nyse comp'. With a new historic high of 2575.44, the equity bears are back to square one. Clearly, the market remains overdue a cooling wave, but until we take out yesterday morning's low of 2547, the bears can't have any confidence.

With equities breaking new highs, volatility was naturally subdued, with the VIX settling the week in the upper 9s. A burst to the mid teens remains highly probable, and looks viable next Wed/Thursday.
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As for 2683: sp'monthly6b


Today's close brings my year end target within just 4.2%. Even to me, its pretty incredible to see, as we've two full months left of the year. You know we're currently headed for 3k by mid 2018, right?
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Just another bullish week
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*the weekend post will appear Sat'12pm, and will detail the US weekly indexes.
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Thursday 19 October 2017

A break lower

US equity indexes closed fractionally mixed, sp +0.8pts at 2562. The two leaders - Trans/R2K, settled lower by -0.1% and -0.2% respectively. VIX setttled -0.2% at 10.05. Near term outlook offers soft target of 2540/37, that would be negated on any new historic high >2564.11.


sp'daily5



VIX'daily3



Summary

US equities opened moderately lower, with an early floor of sp'2547. There was a choppy recovery that took the market fractionally higher into the close. Its notable that 4 of the 6 main indexes did settle fractionally lower.

Market volatility remains broadly subdued, with the VIX seeing a cash market high of 11.10 (pre-market high was 11.77), but then cooling all the way back to around the 10.00 threshold.

To be clear, unless we break a new historic high >sp'2564.11, we have a valid s/t high, with initial soft target of 2540/37. More broadly, primary target is the Sept'11th gap zone of 2474/61.
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Wednesday 18 October 2017

Another quartet of highs

US equity indexes closed moderately mixed, sp +1.9pts at 2561. The two leaders - Trans/R2K, settled higher by 0.8% and 0.5% respectively. VIX settled -2.3% at 10.07. Near term outlook offers a sig' break lower, with first soft target of 2540/37. Its time for the equity bears to make an appearance.


sp'daily5



VIX'daily3



Summary

US equities opened fractionally higher, and it was enough to generate yet another quartet of new historic highs in the sp', dow, nasdaq comp', and nyse comp'. Price action was a little twitchy though, especially within some of the tech stocks.

Market volatility remains very subdued, with the VIX briefly falling into the 9s today, but settling in the 10s.

Near term outlook offers a long overdue cooling wave. First soft target is sp'2540/37, which should equate to VIX 12s. Even then, that is not something the equity bears should get excited about right? 
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Here in the metropolis...

A misty autumnal evening
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