Saturday 23 September 2017

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


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.

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.


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.


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'). 


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.


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.

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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Have a good weekend

*the next post on this page will likely appear 6pm EST on Monday.