Friday 19 May 2017

Meanwhile.. in Brazil

US equity indexes closed moderately higher, sp +8pts at 2365 (intra range 2352/75). The two leaders - Trans/R2K, both settled higher by 0.4%. VIX settled -6.0% at 14.66. Near term outlook offers choppy weakness for Friday-opex. The lower gaps of sp'2348 and Nasdaq comp' 5910 remain set to be filled.




It was a day of moderate swings, with the sp' seeing early weakness to 2352, but then battling upward. The sp'500 became stuck at first natural resistance of 2375. Its still possible we'll see a brief pop to around 2382.. before resuming low to fully fill the price gap at 2348.

Volatility remains a little elevated in the teens, and its notable the VIX did print a new multi-week high of 16.30. There is resistance (weekly cycle, not shown) around the 16s. Only a daily close >16 would offer any real threat of the key 20 threshold being seen.

Meanwhile... in Brazil

Those getting overly hysterical at yesterday's US market decline should take some time to consider what a real drop looks like...

Brazil, daily

A net daily decline of -5943 (8.8%), settling at 61597, notably under the 200dma. The Dec'2016 low of 56828 looks vulnerable to being tested. Broadly though, the Brazilian market is still strong, having climbed from 37k in Jan'2016 to 69k in Feb'2017.

Beyond the short term political issues, the grander issue for Brazil are commodity prices. If commodities can climb across the second half of 2017, then the Bovespa should be able to challenge the 2008 historic high of 73920.

Q. Will we ever see such a daily decline in the next US bear market?

Its tough to imagine those at Print central ever allowing it. We know various Fed officials would start issuing threats of QE, with just a 10% correction spanning 3-6 weeks.

I shall end today with a few tracks by Chris Cornell... who will be missed by many.

Seasons is a personal favourite, originally in the indie movie 'Singles', and later in 'Man of Steel'. During many hundreds of rainy afternoon walks, I have listened to that one.

Something lighter...

As ever, extra charts in AH @

Goodnight from London