Monday, 10 December 2018

May tainted Monday

US equity indexes closed moderately mixed, sp +4pts (0.2%) at 2637. The two leaders - Trans/R2K, settled -0.8% and -0.3% respectively. VIX settled -2.5% at 22.64. Near term outlook offers a challenge of the Feb' low of sp'2532.


sp'daily5



VIX'daily3



Summary

US equities opened in minor mode, which was a somewhat impressive recovery from overnight lows. However, with May announcing that the Tuesday BREXIT vote would be delayed, the market spiraled lower, taking out the Oct' low of 2603.

May delaying the vote

The 12pm hour saw a distinct ramp, partly helped via an overt cheerleader pump on CNBC, It is the case that the cheerleaders are desperately trying to retain hope. Santolli (seen below) is trying to hold onto the notion that price action is similar to Feb>April.


Hanging onto hope
-
Meanwhile, volatility saw a high of 25.94, and with equities recovering, the VIX settled a little lower in the mid 22s.
-


Bonus chart: Germany, monthly


The DAX is lower for a fifth consecutive month, currently -5.6% at 10622. Psy'10k will offer some support, but more broadly, a run to 8k appears well underway. Bodes badly for rest of the European markets.

--
Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
--
If you value my work, subscribe to my intraday service. 
For details and the latest offers, see: permabeardoomster.com

 

Saturday, 8 December 2018

Weekend update - US equity indexes

It was a powerfully bearish week for US equity indexes, with net weekly declines ranging from -8.0% (Trans), -5.6% (R2K), -4.9% (Nasdaq comp'), -4.6% (sp'500), -4.5% (Dow), to -4.1% (NYSE comp'). Near term outlook threatens another 5/10% downside ahead of the Dec'19th FOMC.


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

sp'500


The spx saw a net weekly decline of -127pts (4.6%) to 2633 (intra low 2621). Note the key monthly 10MA of 2744, some 111pts higher. Underlying macd (blue bar histogram) cycle is lower for a third month, as price momentum is increasingly negative. Note the lower monthly bollinger at 2371, which will likely jump to around 2400 at the Jan'2nd 2019 open.


Nasdaq comp'


The Nasdaq settled -361pts (4.9%) to 6969. Price momentum is at levels last seen in March 2016. First major support is around 6k, and then giant psy' 5k. The latter would be 28.2% below current levels, and 38.5% from the Aug' high of 8133.


Dow


The mighty Dow settled -1149pts (4.5%) to 24388. Note the Oct' low of 24122, which is easily within range for next week. The lower bollinger is notably around 21k.


NYSE comp'


The master index settled -515pts (4.1%) to 11941. The lower monthly bollinger will offer major  support in the 11500s, some 4% lower.


R2K


The R2K imploded by -85pts (5.6%) to 1448, notably breaking the Oct' low. Soft support of the Feb' low of 1436 looks set to fail, with secondary target of the lower bollinger at 1340.


Trans


The 'old leader' is leading the way lower, with a semi-crash fall of -869pts (8.0%) to 9951. Note the lower bollinger around 9k, offering a further 10% downside.



Summary

All six of the US equity indexes saw powerful net weekly declines.

The Transports is leading the way lower, with the NYSE comp' somewhat resilient.

The weekly close offers zero sign of a s/t floor/turn.

The monthly charts offer a further 5/10% downside within the immediate term.

YTD price performance:


The Nasdaq comp' is the remaining index that is net higher for the year, by a fractional 0.9%. The Dow is -1.3% with the spx -1.5%. The R2K is -5.7%, the Transports -6.2%, and the NYSE comp' -6.8%.
--


Looking ahead 

M -
T - PPI, UK Parliament BREXIT vote
W - CPI, EIA Pet', US T-budget
T - Weekly jobs, import/export prices, EIA Nat' gas
F - Retail sales, indust' prod', bus' invent' 
--


Final note

Remember how from 2009 to late 2015, that rate hikes were seen as a bad thing. With the Dec'16th 2015 rate hike, the mainstream opinion then flipped to 'higher rates are bullish'. Things remained fine for a further seven hikes. Since early October the market has abruptly flipped back to the 'higher rates are bad' view. This is disappointing, as the econ-data and earnings are still broadly coming in fine.

From an October high of sp'2940 to 2603, we've seen the fed increasingly attempt to placate the equity market, culminating with Powell touting rates as 'close to the neutral rate'. The novelty of that 'good news' has already worn off.

Powell's Nov'28th speech has directly resulted in breaking the bond market...


We have a clear conclusion of the rally in the 10yr yield that began in July 2016. Psy' 3.00% has failed, and we've already printed 2.82. Technically, its empty air to around 2.25%  Note the macd cycle, we're due a bearish cross by year end, or certainly at the start of 2019. An acceleration to the downside in yields is underway. Lower yields/higher bond prices, are inherently bearish for equities.

There are 7.6 trading days until the Dec'19th FOMC announcement. I'd imagine the fed would stall if we break and hold under the Feb' low of sp'2532. Keep in mind the NYSE comp' and Trans' have already broken under their respective Feb' lows. It bodes for the other indexes to follow.

Other than an actual suspension of QT and/or rate cut, a fed 'stall'/no rate hike this December, would merit as a very serious warning of grander trouble. If the fed do back off, those equity bears seeking a grander retrace to around the sp'1500s, can start to get moderately confident.

With just 14.5 trading days left of the year, keep yourself strapped in, as the wild ride continues, for what is the world's most twisted and rigged casino.
--

If you value my work, subscribe to my intraday service. 
For details and the latest offers, see: permabeardoomster.com


Have a good weekend
--

*the next post on this page will likely appear 5pm EST on Monday.

Friday, 7 December 2018

Ugly end to the week

US equity indexes closed powerfully lower, sp -62pts (2.3%) at 2633. The two leaders - Trans/R2K, settled -3.9% and -2.0% respectively. VIX settled +9.6% at 23.23. Near term outlook offers a challenge of the Feb' low of sp'2532, with secondary target of the 2460s.


sp'daily5



VIX'daily3



Summary

US equities opened in chop mode, as the mainstream tried to run with the 'weak jobs data is Goldilocks for stocks' mantra. That didn't last more than 30 minutes, with the market swinging lower, and then spiraling into the afternoon. The closing hour was ugly, breaking a new intraday low of 2623, just 12pts above the Thursday low.

Volatility opened in the 19s, but then spiked upward to 24.71, settling in the low 23s. Whilst the s/t cyclical setup does threaten a bounce, the daily cycles argue against it. A test of the Feb' low of sp'2532 appears very probable next week. The only issue is whether we see the sp'2400s, which would arguably be enough to spook the Fed to stall the next rate hike.
--

Another day closer to winter solstice
--
Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
--
If you value my work, subscribe to my intraday service. 
For details and the latest offers, see: permabeardoomster.com

 

Thursday, 6 December 2018

Powell broke the bond market

US equity indexes closed moderately mixed, sp -4pts (0.1%) at 2695. Nasdaq comp' +0.4%. The two leaders - Trans/R2K, settled -0.1% and -0.2% respectively. Near term outlook offers early Friday strength, but more broadly, the market will be extremely vulnerable to the 2550/2450 zone ahead of the Dec'19th FOMC.

sp'daily5



VIX'daily3



Summary

US equities opened significantly lower, not helped via the Huawai news. Late morning saw 2621 - notably under the recent 2631 low, whilst the afternoon saw an overdue powerful bounce. There was clearly a short-stop cascade into the close.

Volatility saw a high of 25.94, but with an afternoon equity ramp, settling in the 21s. The daily candle is a hollow red reversal with a hyper spike floor. That does lean s/t bullish, but with big resistance in the 2720/30s. For the record, I do not expect any price action >2800 for the remainder of the year.


Powell broke the bond market

First, I recognise most of you don't care much (if anything) about the bond market. However, it does have huge ramifications for everything, including the equity market.

Powell's speech last Wednesday resulted in an equity pop, with further inspiration via Trump overnight Sunday/Monday. The novelty of both though has already fully worn off, and the market looks extremely vulnerable into year end/early 2019.


US 10yr, month


The US 10yr yield stands at 2.87%. Last week saw a break of the l/t trend from July 2016. We're now sustainably, and decisively under the key psy' threshold of 3.00%. Technically, its open air to around 2.25%.

If that downside target is seen within the next few months, it won't be good for equities. Higher bonds/lower yields, are inherently bearish for equities. Right now, a test of the Feb' low of sp'2532 appears probable, with secondary target of the mid 2400s, where the lower monthly bollinger will be lurking in January.
--


Bonus chart: France, monthly


The CAC is currently -4.5% at 4780. Its a decisive break of l/t trend, and offers far lower levels in 2019. The more bearish could seek 3K. This Saturday will see further protests in Paris and across France, as the populace are increasingly upset about a wide array of issues.

--
Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
--
If you value my work, subscribe to my intraday service. 
For details and the latest offers, see: permabeardoomster.com

 

Tuesday, 4 December 2018

Can't have it both ways

US equity indexes closed powerfully lower,  sp -90pts (3.2%) at 2700. Nasdaq comp' -3.8%. The two leaders - Trans/R2K, both settled -4.4%. VIX settled +26.2% to 20.74. Near term outlook offers downside follow through on Thurs/Friday.


sp'daily5



VIX'daily3



Summary

US equities opened a little weak, but with bond yields falling, and renewed concern about trade, equities spiraled powerfully lower into the mid afternoon. The late afternoon saw a bounce from 2702 to 2730, but then breaking a new intraday low of 2697 in the closing hour.

Volatility opened in the 16s, but then spiked into the upper 21s, and settling in the 20s. S/t outlook offers the sp'2640/30s, which would likely equate to VIX (at least) in the 22/23s.


Can't have it both ways

Last Wednesday saw Fed chair Powell present a carefully scripted speech. It effectively gave the market what it wanted to hear, primarily, the notion of 'close to the neutral rate'. The market had clearly priced in a Dec'19th rate hike, but since early October (for no good reason), its been increasingly annoyed at the idea of further hikes in 2019.

So... Powell's speech helped lift equities last week, but bond yields have naturally weakened, as rate expectations for 2019 have been reduced.

Last week saw the US 10yr break the l/t rising trend from July 2016. This week has seen the psy' threshold of 3.00% decisively broken.


US 10yr yield, monthly


Today, the US 10yr yield settled at 2.91% . The break of l/t trend and psy'3.00% is decisive. Technically.. its open air to around 2.25%.


Further, the broader capital markets are increasingly concerned about an economic slowdown in 2019. The 5yr/2yr yield curve went inverse today, with the 10yr/2yr set to follow.
 
US 10yr/2yr spread, monthly


The 10yr/2yr spread stands at 11bps. Its a key signal from the bond market that we are near, or at the end of the current economic cycle that began in 2009. I will add that in the previous two cycles, equities still broadly rallied for a further 25 months from the initial yield curve inversion. Its something to reflect upon. 

In the short term though, the Fed can't have it both ways. They managed to talk equities up last week on the notion that we're 'close to neutral', but that has resulted in yields cooling. Powell has effectively broken the bond market, at least on a technical/chart basis.

If we do see the 10yr around 2.25% in first half of 2019... it will have monstrous implications for everything, not least the equity market. 

--
Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London

*As Wednesday is CLOSED, the next post on this page will be Thursday, around 5pm EST.
--

If you value my work, subscribe to my intraday service. 
For details and the latest offers, see: permabeardoomster.com

 

Monday, 3 December 2018

Tick of the clock

US equity indexes closed significantly higher, sp +30pts (1.1%) at 2790. Nasdaq comp' +1.5%. The two leaders - Trans/R2K, settled +0.3% and +1.0% respectively. VIX settled -9.0% at 16.44. Near term outlook offers further upside to the sp'2840/50 zone, before cooling into year end.


sp'daily5



VIX'daily3



Summary

US equities began the shortened four day week on a strong note, with the sp' breaking an early high of 2800, but then the sellers appeared. The rest of the day saw a great deal of chop, with the market managing to hold the bulk of the gains. Volatility was naturally weak, settling in the mid 16s.


Tick of the clock

Lets be clear, all Trump and Xi could agree on was to do nothing. We've a 'trade truce', as the US tariff hike on $200bn of Chinese goods - due Jan'1st 2019, has been postponed for 90 days, keeping the existing tariffs at 10%, rather than increasing to 25%.

90 days from Dec'1st takes us to Fri' March 1st. The clock IS ticking... and that means the trade uncertainty will continue well into 2019. The equity/capital markets will not like such uncertainty, and it bodes for another sig' wave lower, probably under the Oct' low of sp'2603.

If we do find our way into the sp'2500s, that will be high motivation for the US President to come to a mid/long term agreement with the communists. 



--

Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
--
If you value my work, subscribe to my intraday service. 
For details and the latest offers, see: permabeardoomster.com

Saturday, 1 December 2018

Weekend update - World equity markets

It was a very mixed month for world equity markets, with net monthly changes ranging from +2.4% (Brazil), +2.1% (Spain), +2.0% (Japan), +1.7% (USA), u/c (Russia), -0.6% (China), -1.6% (Greece), -1.7% (Germany), -1.8% (France), to -2.8% (Australia).


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

USA - Dow


The mighty Dow saw a net monthly gain of 422pts (1.7%) to 25538. Note the key 10MA at 25047, which the Dow is managing to hold above. Underlying macd (green bar histogram) cycle ticked lower for a second month, as price momentum currently favours the equity bears.

For confidence, the bulls need to break above the Oct' historic high of 26951, which is 1413pts (5.5%) to the upside. Such a historic high would fully clarify that recent price action was merely a multi-month retrace much like 2015/16. Things would arguably only turn bearish with a monthly settlement under the key 10MA.

US economic data continues to come in broadly fine. Q3 GDP is 3.5%, whilst Friday saw the Chicago PMI jumping to 66.4... far above the recessionary threshold of 50.0. Housing data isn't pretty, but that doesn't negate what is indeed a 'broadly fine' picture.

The Fed are clearly set to raise rates 25bps to a new target range of 2.25-2.50% this Dec'19th. Further hikes in 2019 will not be easy, especially if the EU is imploding. It remains the case that the ultimate equity sell signal would be the suspension of QT and/or a rate cut. For now.... there is zero sign of that happening, which by default... leans bullish US equities.
--


Germany – DAX


The German market fell for a fourth consecutive month, the 8th month lower of 11, settling -1.7% to 11257. The decisive break of l/t trend seen in September remains a major problem, and threatens broader downside to 8k in 2019. Things only turn bullish with a monthly settlement back above the key 10MA, currently at 12217.

NIRP via the ECB continues to be a destructive factor for the German financials. Deutsche Bank remains a ticking time bomb, having broken a new historic low of $9.10 on Friday.

Q3 GDP printed -0.3%. If Q4 also prints negative (data due in January) then Germany will officially be in recession. As goes Germany... so the rest of the EU. 
--


Japan – Nikkei


The Nikkei settled +2.0% to 22351. Underlying macd ticked lower for a second month. Further, the l/t trend from 2012 is fractionally broken. Things would turn very bearish with any sustained price action <21k.


China – Shanghai comp'


The Chinese market remains m/t bearish, lower for the 4th month of 6, settling -0.6% to 2588. The Chinese economy has all manner of problems, not least one of consumer debt. A trade agreement with the US would certainly help swing this market back upward.


Brazil – Bovespa


The Brazilian market climbed for a third consecutive month, breaking a new historic high of 90245, settling +2.4% to 89504. The market has been clearly inspired with the recent presidential election of Bolsonaro. Technically, monstrous psy' 100k is on the menu for 2019. A rebound in commodity prices (esp' oil and nat' gas) would help.


Russia - RTSI


The Russian market remains broadly stuck, and settled November effectively u/c at 1126. Things only turn bullish with a break and hold above the 1200 threshold, which would then offer basic target of 1500. A rebound in energy prices would really help the Russian economy/market. 


France – CAC


French equities cooled for the 3rd month of 4, settling -1.8% to 5003. Psy' 5K was traded under, with an intra low of 4894. Note l/t rising trend, which was effectively tested. For now, no clear sign of a floor/turn.


Spain – IBEX


Spanish equities were surprisingly strong, settling +2.1% to 9077. Note the l/t support/trend, which was tested in October. Things would turn bullish with a monthly close above the 10MA, which will be in the 9400s into year end.


Australia – AORD


The Australian market was the laggard, lower for a third consecutive month, settling -2.8% to 5749. There really isn't any solid support until the 5500/400 zone. A rebound in commodity prices would really help this market.


Greece - Athex


The Greek market fell for a fourth consecutive month, settling -1.6% to 630, the lowest close since Jan'2017. This remains a grade 'A' example of an economic/societal basket case, which remains on life support, as maintained by the infamous troika.
--


Summary

Four markets were net higher, one unchanged, with five net lower.

Brazil is leading the way upward, breaking a new historic high, whilst the Australian market was the laggard.

As a collective, world equities are very mixed. It is the case that many markets still haven't recovered to 2000/2007 levels. The US economy/market is still the strongest in the world. The key German economy/market is broken, which has bearish implications for the rest of the EU into/across 2019.

No doubt, the central banks  - inc' the US fed, would cut rates and spool up the printers, if they see high probability of a global recession.
--


Looking ahead 

It will be a shortened four day trading week, with just 18.5 trading days left of the year.

The market will clearly be swayed by how the G20 concludes on Saturday. Those expecting some kind of positive US/China trade announcement will likely be disappointed.

M - PMI/ISM manu', construction
T - Vehicle sales

--
W - CLOSED, in observance for the national day of mourning for George H. W Bush

Most, if not all of the following data announcements will be shifted to Thursday: ADP jobs, product/costs, PMI/ISM serv', EIA Pet' report, Fed Beige book (2pm)

Fed chair Powell was due to speak to the House, and that will also now be shifted to Thursday, if not further out.
--

T - Weekly jobs, intl' trade, factory orders, OPEC meeting
F - Monthly jobs, consumer sent', wholesale trade
--

If you value my work, subscribe to my intraday service.

For details and latest offers: permabeardoomster.com


Have a good weekend
--

*the next post on this page will likely appear by 5pm EST on Monday.

Friday, 30 November 2018

Ending November positive

US equity indexes settled the week/month on a positive note, sp +22pts (0.8%) at 2760. Nasdaq comp' +0.8%. Dow +0.7%. The two leaders - Trans/R2K, settled +1.3% and +0.5% respectively. VIX settled -3.8% to 18.07.


sp'daily5



VIX'daily3



Summary

US equities opened in minor chop mode, and then made a push upward into/across the afternoon. The closing hour saw some further swings, seeing a micro spike in the final minutes. With equity strength, volatility melted lower, settling in the low 18s.
--


sp'monthly


The spx saw a net monthly gain of 48pts (1.8%). That cancels out the October bearish settlement, and the s/t outlook has to flip to bullish. Even if the Oct' low of 2603 is eventually broken under in Dec' or January, it can no longer be expected to be anything sustained. Today's Chicago PMI of 66.4 was a reminder that the US train is still on the tracks.
--


--
Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
--
If you value my work, subscribe to me.
For details/offers: permabeardoomster.com

 

Thursday, 29 November 2018

Hard landing into end month?

US equity indexes closed on the weaker side, sp -6pts (0.2%) at 2737. The two leaders - Trans/R2K, settled -0.8% and -0.3% respectively. VIX settled +1.6% at 18.79. Near term outlook offers a cooling wave into the weekend/monthly settlement.


sp'daily5



VIX'daily3



Summary

US equities opened weak, with a late morning low of 2722, and then clawed back upward, even turning net positive in late afternoon. The closing hour saw a moderate cooling wave. Volatility saw a morning high of 20.48, but then melted back lower, settling in the upper 18s.


Hard landing into end month?

Tomorrow is the monthly settlement of course, and it has to be asked if we might end on a very bearish note. The G20 'leaders summit' will begin, and will threaten sporadic news headlines across the day.

Virgin Atlantic, descending into LHR
The equity bears should be content with any settlement under the monthly 10MA, currently at 2750.  Considering the s/t cyclical setup, that does still look probable, and will give extra credence to the original notion of the October bearish close. 
--

The first sunshine in NINE days
--
Extra charts in AH (usually around 7pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
--
If you value my work, subscribe to me.
For details/offers: permabeardoomster.com