Thursday, 18 October 2018

Just another Thursday

US equity indexes closed very significantly lower, sp -40pts (1.6%) at 2768. Nasdaq comp' -2.1% at 7485. The two leaders - Trans/R2K, settled -2.6% and -1.9% respectively. VIX settled +15.3% at 20.06. Near term outlook offers chop into opex, but a marginally lower low (<2710) still appears probable early next week.


sp'daily5



VIX'daily3



Summary

Thursdays do tend to favour the equity bears (for various reasons), and today's weakness was not exactly a surprise. US equities opened moderately lower, saw an early low of 2788, with an initial rally to 2806. Then comments from Draghi and Mnuchin gave the market the excuse, sending prices spiraling lower into the afternoon.

Volatility was naturally higher, with the VIX settling above the key 20 threshold. S/t outlook offers a marginally lower low (<sp'2710), although considering tomorrow is opex - which leans to chop, that is far more viable next Mon/Tuesday.

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Bonus chart: China, monthly


With a Thursday decline of -2.9%, the Shanghai comp' is net lower for October by a rather severe -11.9%, having broken a new multi-year low of 2485. With soft psy'2500 lost, its mostly a case of 'empty air' to the giant 2K threshold. If that occurs.... implications for most China related stocks, not least BABA, JD, TCEHY, and BIDU.
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Wednesday, 17 October 2018

Midweek swings

US equity indexes closed a little mixed, sp -0.7pts at 2809. The two leaders - Trans/R2K, settled -0.6% and -0.4% respectively. VIX settled -1.2% at 17.40. Near term outlook offers sig' weakness to the sp'2750s, which would likely equate to VIX 22/23s.

sp'daily5



VIX'daily3



Summary

US equities opened a little weak, and quickly spiraled down to 2781, before a powerful rebound to 2816. The late afternoon saw a lot of chop, leaning on the weaker side, with the spx settling effectively flat.

Volatility was naturally mixed, opening in the 17s, but then swinging to a high of 19.55, before cooling back, settling fractionally lower in the 17s. The daily candle is a hollow red reversal, which leans s/t bullish.

Thursday will (in theory) lean to sig' equity downside to the sp'2750s, which would likely equate to VIX 22/23s.

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Tuesday, 16 October 2018

Bears getting cooked

US equity indexes closed powerfully higher, sp +59pts (2.1%) at 2809. Nasdaq comp' +2.9% to 7645. The two leaders - Trans/R2K, settled +1.8% and +2.8% respectively. VIX settled -17.3% at 17.62. Near term outlook offers a cooling wave, some sporadic 'spooky news' would help, especially on Thursday.

sp'daily5



VIX'daily3



Summary

US equities opened moderately higher, and relentlessly built gains all the way into the late afternoon. The sp' saw a closing hour high of 2813, which is 113pts (4.2%) above the Thursday low.

With equities powerfully higher, volatility was ground lower for a third day, with the VIX settling in the mid 17s. S/t outlook still offers an equity cooling wave, but its going to take some sporadic spooky news to get anywhere near last weeks low.
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Bonus chart: Germany, monthly


With 11 trading days left of the month, the DAX is currently -3.8% at 11776. This remains a concern.
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Monday, 15 October 2018

Still leaning weak

US equity indexes closed rather mixed, sp -16pts (0.6%) at 2750. Nasdaq comp' -0.9% to 7430. The two leaders - Trans/R2K, settled +0.6% and +0.4% respectively. VIX settled -0.05% at 21.30. Near term outlook offers a marginally lower low to around sp'2700.


sp'daily5



VIX'daily3



Summary

US equities opened little weak, seeing a low of 2749, and then clawing upward to 2775.99 in the 2pm hour.. fractionally breaking above the Friday high. The closing hour saw a distinct reversal, settling moderately lower at 2750.

Volatility saw a mixed day, settling effectively u/c in the 21s. S/t outlook offers equity cooling of around 2% to 2700, and that will likely equate to VIX 24/27s.
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Bonus chart: China, monthly


The Shanghai comp' saw a Monday decline of -1.5%, and with 12 trading days left of the month, that makes for a current net monthly decline of -9.0%. Ugly... real ugly. Again, I have to wonder that the communist leadership are actually happy to see the capitalistic speculators hurt by lower prices.

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Saturday, 13 October 2018

Weekend update - US equity indexes

It was a powerfully bearish week for US equity indexes, with net weekly declines ranging from -6.4% (Trans), -5.2% (R2K), -4.2% (Dow, NYSE comp'), -4.1% (sp'500), to -3.7% (Nasdaq comp').


Lets take our regular look at six of the main US indexes (weekly candle charts)

sp'500


The spx fell for a third consecutive week, settling -118pts (4.1%) to 2767, with an intra low of 2710. Weekly price momentum has turned outright negative, with a bearish macd cross. Note the lower bollinger at 2701.

Best guess: next week might well open higher, but another s/t rollover will offer a marginally lower low to around 2700. That would make for a more natural key low, with renewed upside into Friday opex. I'd imagine the market makers might seek to pin the spx to around 2800.


Nasdaq comp'


Tech cooled for a second week, settling -3.7% at 7496. Note the pierce of the 50wma, which hasn't been traded under since July 2016. Another rollover early next week would offer the 7200/7000 zone.


Dow


The mighty Dow fell for a third week, settling -1107pts (4.2%) to 25399. Underlying macd (blue bar histogram) will see a bearish cross at next Monday's open, and that does lean to further s/t weakness. Note the lower bollinger, offering next support in the 24100/200s... a clear 1000pts (4%) lower.


NYSE comp'


A third consecutive week lower, settling -4.2% to 12439. The Feb' low of 12048 is just 3.1% lower.


R2K


The R2K fell for the 5th week of 6, settling -85pts (5.2%) at 1546. Underlying macd cycle is at -17.69, the lowest since Sept'2011, when price was around 675.


Trans


The 'old leader' - Trans, was the weakest index/sector this week, with a net weekly decline of a rather severe -717pts (6.4%) to 10489. There are multiple aspects of support all the way to the 9700s. WTIC/fuel prices remain a valid concern, but as seen with Delta Airlines (DAL), so long as the broader economy is growing, higher costs are tolerable, and can be (at least partly) passed onto the consumer.



Summary

All six of the main US indexes were powerfully lower.

The Transports lead the way lower, whilst the Nasdaq was most resilient.

YTD performance:


The Nasdaq comp' remains the leader, +8.6%, with the spx +3.5%, and the Dow +2.5%. The R2K is +0.7%, the Transports -1.2%, and the NYSE comp' -2.9%
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Looking ahead

key earnings: BAC (Mon'), GS, MS, NFLX, UAL, IBM (Tues'), PYPL (Thurs')




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M - Retail sales, Empire State, Busin' invent
T - Indust' prod', housing market index,
W - Housing starts, EIA Pet' report, FOMC mins (2pm)
T - Weekly jobs, phil' fed, leading indicators
F - Existing home sales, *OPEX*
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Final note

Since the Wednesday drop, the usual suspects have crawled out of their holes once again. They are the same people who were calling for financial and economic Armageddon this spring. With the market eventually breaking new historic highs, they scurried away, back into their holes.

If you ask any of them why the market was whacked this week, some might start throwing out the same nonsense... an over-valued market, higher rates are bad for the economy, or that the bull market is simply exhausted after almost a decade.

They sure won't quote to you any econ-data or corporate earnings. No, they won't do that, because the econ-data and corporate earnings continue to come in broadly fine. Neither will they raise the issue of capital flows into the US, or that the USD is still king of FIAT land. Instead, they might start touting an imminent USD collapse, or that Gold will soon hit 2k, 5K, or even higher. I could highlight a fair number of these people, but you should know the names by now.

Could the market see another wave lower next week? Of course, and weekly support on the Dow is another 4% lower, which would equate to sp'2675/50. Were the market to settle the month below current levels, that would merit alarm bells. However, we've 13 trading days left of October, and a lot can happen between now and then.

To me, the ultimate sell signal will be when the Fed suspend QT and/or cut rates.

Fed rates, with the sp'500, monthly, 20yr.



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As things are, another hike is due in December, regardless of whatever the US President might wish. Powell should be very inclined to resist such wishes, and ignore the criticisms that the fed is 'crazy' or 'out of control'.

In the most recent cycle, the Fed cut rates in Sept'2007. The market maxed out one month later. Every cycle is unique, but I would look to the fed as the (ironic) ultimate sell signal.

Just so there is no misunderstanding, were the fed to suspend QT and/or cut rates, yours truly would call for a grand decline. The most natural target would be a back test of the 2000/2007 double top of the sp'1500s.

As things are, my outlook is that we'll see the Fed raise rates in December, and at least twice more in 2019. If I'm right, those calling for an equity collapse will have to remain in their holes until at least mid 2020.

Yours... trying to stay balanced, whilst most (not least the Cramer) have once again lost their minds

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Have a good weekend
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*the next post on this page will likely appear 5pm EST on Monday.

Friday, 12 October 2018

Choppy gains into the weekend

US equity indexes closed broadly higher, sp +38pts (1.4%) at 2767. Nasdaq comp' +2.3% at 7496. The two leaders - Trans/R2K, settled +0.8% and +0.1% respectively. VIX settled -14.7% at 21.31. Near term outlook offers early Monday upside, but then another rollover.

sp'daily5



VIX'daily3



Summary

US equities opened rather powerfully higher, with the sp' hitting 2775, but that was the high of the day, with the market then swinging lower into the 12pm hour, printing 2729, just 1pt from fully filling the opening gap. The afternoon leaned back upward, with a distinct short squeeze. Whilst the spx settled above the 200dma, the daily candle was a black-fail, which leans s/t bearish.

Volatility melted lower into the weekend, with the VIX swinging from an early afternoon intra high of 26.80, and settling sig' lower in the 21s.

Whilst Monday might open higher, the next s/t rollover could easily result in a marginally lower low, around weekly support of sp'2700/2690.

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Thursday, 11 October 2018

Grander concerns

US equity indexes closed very significantly lower, sp -57pts (2.1%) at 2728. Nasdaq comp' -1.2% at 7329. The two leaders - Trans/R2K, settled -1.4% and -1.9% respectively. Near term outlook offers a bounce, but probably starting from around weekly support of the 2690s. There are grander concerns, not least for the German and Chinese markets.


sp'daily5



VIX'daily3



Summary

It was a day of significant swings in equity land. The spx opened moderately lower to 2767 (2pts above the 200dma), but then whipsawed upward to 2795, only to see swing lower to a 2pm 'horror hour' low of 2710, and settling at 2728.

Volatility opened mixed (pre-market print 24.52), seeing an intra high of 28.84, and settling +8.8% at 24.98. S/t outlook offers (weekly cycle) support of the 2690s, before threat of a very sig' multi-day rally, starting either Friday or next Monday.


Meanwhile....


This sort of talk from the US President isn't going to help inspire broader capital market confidence.

Clown finance TV rightly pointed out the following...


Its notable that Trump has also noted that whilst he doesn't like higher rates, he acknowledges that the savers have been hard hit since 2008. I will merely add that whilst yours truly is no fan of those at Print Central, I will hope that Powell and the other governors just ignore such Presidential complaints... and keep on raising rates into/across 2019.
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Bigger concerns

Whilst I understand most of you will be entirely focused on the US market, I'm trying to also keep in mind the grander picture.. via other world markets. 

Germany, monthly


The DAX is currently -5.8% at 11539. This is seriously ugly, and right now, its my biggest concern for world equities. The break of l/t trend from 2009 is not to be dismissed lightly.


China, monthly


The Shanghai comp' is currently -8.4% at 2583, having decisively broken core support of the Sept' low, and also the Jan'/Feb'2016 low of 2638.

How both of these markets settle the month is arguably very important indeed. Its difficult to see the US market able to see renewed and sustained upside into 2019, if the DAX is imploding toward 8k. Something to consider... for the rest of the month.

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Wednesday, 10 October 2018

Mainstream hysteria

US equity indexes closed powerfully lower, sp -94pts (3.3%) at 2785. Nasdaq comp' settled -4.1% at 7422. The two leaders - Trans/R2K, settled -4.0% and -2.8% respectively. VIX settled +43.9% at 22.96. Near term outlook offers s/t capitulation around the 200dma in the 2760s.

sp'daily5



VIX'daily3



Summary

It was an ugly day in equity land, with the sp' opening moderately lower, and spiralling lower, all the way into the closing hour. Indeed, the closing hour was especially bearish, with the sp'2800 stops being washed out. Volatility naturally soared, with the VIX seeing the 22s, the highest level since early April.


Mainstream hysteria


With the market sig' lower in the afternoon, CNBC brought on the infamous Cramer. He sure has been on a mini crusade lately, slating Fed chair Powell for raising rates. I can kinda understand the concerns, but I see them as based on nothing of substance. The econ-data and corp' earnings are broadly fine. There is little reason to expect any kind of economic downturn into year end/early 2019.

*As I type (5.30pm EST), US equity futures, sp -18pts... 2867, and indeed, the 200dma will likely be tested on Thursday. Tomorrow will be a key day.

**Micron Tech' (MU) was notably resilient today, even turning sig' higher in the early afternoon. So long as the Sept' low of $40.68 holds... no concerns, as the buy back continues.

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Dusk... at 1.05pm EST
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Tuesday, 9 October 2018

Tuesday chop

US equity indexes closed rather mixed, sp -4pts (0.1%) at 2880. The two leaders - Trans/R2K, settled -1.8% and -0.4% respectively. VIX settled +1.6% at 15.95. Near term outlook offers a bounce into the weekend, with key financial earnings on Friday.

sp'daily5



VIX'daily3



Summary

It was a choppy day in equity land, with the sp' opening weak to 2874, but then swinging upward to 2894, and settling fractionally weak at 2880.

Volatility opened in the mid 17s, but then quickly cooled, settling in the upper 15s. The s/t outlook offers equity upside into the weekend. Earnings from a quartet of financials should help!
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Monday, 8 October 2018

Bearish start

US equity indexes closed a little mixed, sp -1pt at 2884. Nasdaq comp' -0.7% at 7735. The two leaders - Trans/R2K, settled u/c and -0.1% respectively. VIX settled +5.9% at 15.69. Near term outlook offers a bounce.


sp'daily5



VIX'daily3



Summary

It was a bearish start to the week, not helped with weak EU/Asian markets. The sp' broke below the Friday low, with the VIX correspondingly breaking above its Friday high. There was yet another latter day recovery from a low of 2862 to settle at 2884. The daily candle is a hollow red reversal, and offers provisional sign of a s/t floor.

Volatility spiked, with the VIX seeing a new multi-month high of 18.38. With equities recovering, the VIX cooled, settling +5.9% at 15.69. Note the black-fail spiky candle, which provisionally marks a s/t peak.
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Bonus charts...

China, monthly


Monday was the first actual trading day of the month for China, and it wasn't a great start, with the Shanghai comp' settling -3.7% to 2716. So long as the Sept' low of 2644 holds, no concerns. However, if that does fail, then it would merit alarm bells, especially if the DAX also unravels...

Germany, monthly


The DAX is a key market, and if the l/t trend from 2009 is decisively broken and settled under... that would merit alarm bells. Technically, any bearish monthly close would offer 8k... which is a long way down.
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