Saturday 11 March 2017

Weekend update - US monthly indexes

US equities are broadly strong, as the upward trend from the key low in early 2016 remains comfortably intact. Corp' earnings and econ-data are both coming in 'reasonable', and with the fed set to raise rates 3-4 times this year, the outlook is very bullish. The year end target of sp'2683 remains on track.

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


The sp'500 is currently net higher for a fifth consecutive month. Its notable that since the Feb'2016 low of 1810, having climbed a powerful 31%, we've only seen 3 net monthly declines. We've recently seen some cooling from a new historic high of sp'2400 to 2354. With a weekly close of 2372, the sp' remains just over 1% from recent highs.

Underlying MACD (blue bar histogram) cycle continues to tick upward, and we're now on the high end, although that can remain the case for years. The key 10MA is currently at 2219, and by this summer, will be close to the 2400 threshold.

Best guess: continued upside into late April/May, as the 2500s seem viable before even a basic 5% retrace. The 2600/700s are well within range by year end.

Things only turn bearish with a monthly close under the key 10MA, and by end 2017, that could be as high as 2600.

Nasdaq comp'

The tech remains perhaps the strongest sector/index, with a recent new historic high of 5911. The 6000s are clearly viable in the immediate term. Its notable that this summer, rising trend - from the Feb'2016 low of 4209, will be around the 6000 threshold. Talk of the 7000s should have already begun.


The mighty Dow keeps on pushing, with a recent new historic high of 21169. Note the upper bollinger at 20799, with the key 10MA in the 19100s. By July/August, that will have risen to around 21000. The equity bulls have to keep pushing, as any monthly close under rising trend and the 10MA would threaten a multi-year top. A year end close within the 23/24k zone is very viable.

NYSE comp'

The master index is currently fractionally lower for March, but did recently break a new historic high of 11687. Since the Jan'2016 low of 8937, the NYSE comp' has climbed a powerful 28.7%. The 12000s seem probable this spring, with the 13000s viable by year end. Things only turn bearish with any price action <11k this spring, but that will rise to 12k by late summer/early autumn.


The second market leader - R2K, is currently net lower for March by a somewhat significant -1.5%, but having recently broken a new historic high of 1414. Upper bollinger is at 1413, which is an important aspect of resistance. The key 10MA is rapidly rising, now at 1284.. and by July will be around 1400. At the current rate of ascent, the R2K will settle the year around 1700. Even if everything goes right for the equity/economic bulls, the 'R2K @ 2K' will have to wait until at least 2018.


The 'old leader' - Transports, is currently net lower for March by -1.4%, but (like all other indexes) recently broke a new historic high of 9639. The 10000s look a valid target for late April/May. The key 10MA will be around 9k by June/July. In theory, the tranny could cool a full 10% in early summer, and would still not break the mid term rising trend. As things are, a year end close in the 11000s looks a valid target. However, if energy prices do climb in the latter half of the year, the transports will be held back to some degree.


All US equity indexes remain within broad upward trends, lead by the Nasdaq and Dow.

All US equity indexes are still regularly breaking new historic highs, even in the somewhat laggy Transports.

Most indexes have a clear 5-7% of downside buffer before testing rising trend.. along with the key 10MA.

Equity bears have nothing to tout unless most (if not all) indexes see a monthly close back under their 10MA.

Looking ahead

M - -
W - CPI, retail sales, empire state, bus' invent', housing market indx, EIA Pet' report

The FOMC will issue a press release at 2pm, detailing a highly probable rate hike of 25bps to a new target range of 0.75-1.00%. There will be a press conf' with Yellen around 2.30pm, and that will likely last an hour.

T - housing starts, weekly jobs, phil' fed, EIA Nat' gas report
F - indust' prod', consumer sent', leading indicators. *QUAD-OPEX*

*US clocks jump forward 1hr at 2am March 12th. The UK and wider EU will follow two weeks later on March 26th. So... for a fortnight, there are just 4hrs difference between EST and GMT.

Have a good weekend.

For those with a particular interest in the precious metals, and the related Gold Mining stocks...

For details:

yours... valiantly trying to be balanced.

Econ-data coming in reasonable

US equity indexes ended the week on a moderately positive note, sp +7pts at 2372. The two leaders - Trans/R2K, settled higher by 0.9% and 0.4% respectively. VIX settled -5.2% at 11.66. Near term outlook offers choppy upside into next Wednesday's FOMC, when the fed are set to raise rates by 25bps to a target range of 0.75-1.00%.




US equities opened moderately higher on 'good jobs news is good news', but oil kinda spoilt the party a little, with indexes pinned lower into the late morning. There was another wave higher in the afternoon, but broadly, it wasn't of any significance.

VIX itself was red across the day, seeing a classic case of 'melting lower into the weekend'. A brief foray into the low teens seems viable next Wednesday - as the Fed will raise rates. The key 20 threshold looks out of range until at least late April... when the French will be voting.

The jobs data

Just a short note on today's monthly jobs data from the semi-mysterious organisation that is the BLS. With net Feb' gains of 235k, and a headline jobless rate of 4.7%, the data is still coming in 'reasonable', right? I'd agree, you could argue the U6 employment rate of 63.0% is still a dire level, and one that is indicative of huge underlying problems.

For the moment though... it can be justifiably argued that the data is coming in reasonable, and it has been a fascinating thing to see the market come to accept that it merits another rate hike.

Those calling for a recession within a quarter or two... are frankly... just plain.... wrong.

Something I noticed after the close...

So.. the attempt to have an ETF based on Bitcoin has been rejected by the SEC. Frankly... I'm glad. The very notion of an ETF for a crypto currency seems ludicrous, and is anathema to the core philosophy of Bitcoin itself. No doubt some will be very disappointed, and it will be interesting to see how BTC trades across the weekend.

Goodnight from London

*The weekend post will appear Sat 12pm, and will detail the US monthly indexes.