Saturday 1 April 2017

Weekend update - World monthy indexes

It was a very mixed month for world equity markets, with net monthly changes ranging from +9.5% (Spain), +4.0% (Germany), +0.8% (UK), -0.7% (USA - Dow), to -2.5% (Brazil). The mid term bullish trend from the 2016 lows remain comfortably intact.

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

USA - Dow

The mighty Dow saw the first net monthly decline since October 2016, settling -149pts (0.7%) to 20663. There was a very notable new historic high of 21169. Underlying MACD (green bar histogram) continued to tick higher, and is now at the highest level since May'2011. The key 10MA is in the 19100s, by early late May/early June, it will be around the giant psy' level of 20k.

Best guess: late spring/early summer upside to at least the 21300/500 zone, before a viable 5% retrace, with 20k holding as support. With a further 2-3 fed rate hikes, broader upside to 22750/23250 by year end.

Equity bears have nothing to tout unless a break under 20k, even then, the Nov' low of 17883 is a long way down, and looks out of range for a long time to come.

Germany - DAX

The economic powerhouse of the EU - Germany, climbed for a fourth consecutive month, settling higher by a powerful 478pts (4.0%) to 12312. The April 2015 high of 12390 is due to be broken in April.

Wave structure - from the 2009 low, is a rather clear five waves. Core support is the 8k threshold. If you consider that the next bear market will be on the order of 50%, then DAX 15/16k would be the natural target. Its possible though that 13/14k would suffice before maxing out in late 2017/early 2018. By year end, rising trend will be around 11k, and equity bears have little to tout unless that is broken.

Japan - Nikkei

The BoJ fueled Nikkei cooled by -209pts (1.1%) to 18909. Price action has been very choppy since Dec'2016. Structure could be argued is a bull flag, but would be negated <18k. Next big upside target is the psy' level of 20k, and then the June 2015 high of 20952.

China - Shanghai comp'

Chinese equities settled -19pts (0.6%) to 3222. Price action has been very tight. Its notable that key rising trend is only marginally below current prices. Any break under the 10MA (3100s) would be a real problem, and threaten a summer decline to at least 2800... which is a clear 10% lower. Underlying price pressure is set to turn fractionally positive in April, which would be the first time since Sept'2015. No doubt, the communist leadership will fight like hell - via the PBOC, to maintain rising trend.

Brazil - Bovespa

The Brazilian market struggled in March, settling -1678pts (2.5%) to 64984. It could be argued the low in the 62000s was a back test against old resistance... now support. For bullish confirmation, we will need to see new highs >70k. The May 2008 high of 73920 remains a very realistic target by late summer. Price action in commodities will play a key part in whether the current bullish run continues. Keep in mind that the Brazilian market has climbed 27938pts since Jan'2016.. that is a monstrous gain of 75%.

Russia - RTSI

Much like Brazil, the Russian equity market has struggled due to some weakness in commodity land (esp' oil, nat'gas). The RTSI saw an intra month low of 1044, but battled upward into end month, settling +15pts (1.4%) to 1114. The 1200 threshold remains key. Any price action >1200 will offer the 1500/1700s by year end. 


The UK equity market continues to hold above the giant 7k threshold, settling +59pts (0.8%) to 7322. The monthly candle was a little spiky on the upper side, but the bulls have a clear 4% of downside buffer before the 7k threshold is in danger of being lost. Considering price action/structure in other markets, the 8000s look an easy target, with the 9000s just about in range by year end.

The 'BREXIT' is still another two years away. There will likely be some increasing capital outflows in 2018, and especially in 2019. For now though, the UK market looks strong. When the break does occur though, the UK market will be particularly vulnerable to severe downside.

France - CAC

The French equity market has achieved a provisional breakout of declining trend/resistance that stretches back SEVENTEEN years, settling +263pts (5.4%) to 5122. The April 2015 high of 5283 is on the menu for the spring/early summer.

Clearly, the French Presidential election will be a market mover in April/May, however, the technical breakout is crystal clear. The CAC has a viable challenge to the historic high of 6944.. which is another 35% higher.

Spain - IBEX

The Spanish market soared in March, settling higher by an extremely powerful 907pts (9.5%) to 10462, the best level since Dec'2015. Upper monthly bollinger will offer some resistance in the 10500s in April, but the IBEX looks headed for yet another challenge of the 12k threshold before year end. Any break >12k will offer 15/16k.

Australia - ASX comp'

The Australian market climbed for a second consecutive month, settling +142pts (2.5%) to 5903. The monthly close was decisively above declining trend/resistance that stretches back to 2007. First soft target is the April 2015 high of 5963... which looks set to be taken out within the next week or two.

Like Brazil and Russia, the Australian market is particularly affected by commodity prices. If we do see another up wave in commodities, the ASX has a good opportunity to push for a challenge of the 2007 high of 6873.


All world equity markets remain broadly strong.

European markets are notably outperforming Asia and the USA.

The monthly closes for the French and Australian market are very bullish indeed.

Looking ahead 

M - PMI/ISM manu, construction
T - vehicle sales, intl' trade, factory orders
W - ADP jobs, PMI/ISM serv', EIA Pet' report, FOMC mins
T - weekly jobs, EIA Nat' gas report
F - monthly jobs, wholesale trade, consumer credit

*there are four scheduled appearances from a trio of fed officials, notably Dudley on Monday, primarily dealing with the issues of household borrowing and student debt.

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Have a good weekend

*the next post on this page will likely appear Monday at 7pm EST

Chop into the weekend

US equities closed moderately mixed, sp -5pts at 2362. The two leaders - Trans/R2K, settled -0.4% and +0.2% respectively. VIX settled +7.2% at 12.37. Near term outlook offers a test of resistance at sp'2380/90 early next week. April is offering 'relatively easy' upside to the 2425/50 zone.




The week/month/quarter ended with (naturally) a fair amount of minor chop. The sp'500 saw a trading range of just 8pts. There is big resistance around 2380/90, but with a very secure low of 2322.

Market volatility climbed into the weekend, but we're still only talking about a VIX in the 12s. It is notable that unlike February, March did see (if briefly) the 14s.

.. and thus concludes March.

Something I noticed this evening...

Whomever did the above advert for 'Nutmeg' (a UK financial promoting retail equity investments) was a clear fan of the talking bears that were a thing a few years ago.

'Capital at risk'.   Indeed.

Goodnight from London

*the weekend post will appear Sat'12pm EST, and will detail the World monthly indexes. It remains my most important post of the month.