Saturday 29 September 2018

Weekend update - World equity markets

It was a very mixed month for world equity markets, with net monthly changes ranging from +9.1% (Russia), +5.5% (Japan), +3.5% (China, Brazil), +1.9% (USA), +1.6% (France), -0.1% (Spain), -0.9% (Germany), -1.6% (Australia), to -5.2% (Greece).


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

USA - Dow


The mighty Dow climbed for a third consecutive month, the 5th month of 6, settling +493pts (1.9%) to 26458, having broken a new historic high of 26769. Note the key 10MA at 25068, which is near m/t rising trend from the Feb'2016 low. Underlying macd (green bar histogram) cycle ticked higher for a third month.

The Dow notably broke above the 2.618x Fibonacci extension/extrapolation of 26702. The next key fib' is 34430, 7972pts (30.1%) to the upside, and that is clearly going to take a good 12-18mths to reach.

The equity bears have nothing to tout unless a monthly close under the 10MA and m/t rising trend, which are both rising around 210/220pts a month. By year end, core support will be around 25700/800. 
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Germany – DAX


The economic powerhouse of the EU - Germany, saw a very mixed month. The DAX saw weakness to 11865, but rebounded to settle -0.9% at 12246. The bounce from l/t trend is perhaps the most noteworthy event in world equities this month. Clearly though, price action remains pretty choppy, and still leaning on the weaker side. The German bulls need a monthly close back above the 10MA, currently at 12557. To be decisive, the bulls need a push >13k, which would offer 15/16k by mid 2019.


Japan – Nikkei


The Japanese market climbed for a 4th month, settling +1264pts (5.5%) to 24120, the highest monthly close since Oct'1991. The m/t outlook is bullish, with soft target of 26k, then psy'30k, and ultimately.. the Jan'1990 historic high of 38915.


China – Shanghai comp'


It was a mixed month for Chinese equities, with the Shanghai comp' breaking a multi-year low of 2644, just 6pts above the Jan/Feb'2016 low. There was a distinct rebound into end month, settling +96pts (3.5%) to 2821. Note the 10MA at 3065. A monthly close >3100 will be provisionally bullish. Things turn decisive >3500.


Brazil – Bovespa


The Brazilian market remains pretty choppy, seeing a low of 74274, but settling +2664pts (3.5%) to 79342. The m/t outlook is mixed. Things turn rather bullish >81k, and decisively >88317.


Russia - RTSI


Russian equities swung from a low of 1040, to settle +99pts (9.1%) to 1192. The 1200 threshold remains important. If that can broken and held above, then its open air to at least 1500. Higher oil and nat' gas prices would especially help this market.


France – CAC


The French market remains broadly choppy since Oct'2017, with the CAC settling +86pts (1.6%) to 5443. Things turn very bullish above the May high of 5657.


Spain – IBEX


The Spanish market remains broadly choppy, still leaning on the weaker side. The IBEX settled -10pts (0.1%) to 9389. Things only turn bullish with a break above declining trend, which will be around the psy' 10k threshold in October.


Australia – AORD


Australian equities saw the first net monthly decline since March, with the AORD -102pts (1.6%) to 6325. However, note the spike floor from the 10MA, which leans to renewed upside in October/Q4. Some strength in commodity prices would really help this market into year end.


Greece - Athex


The economic basket-case of the EU -  Greece, saw the Athex fall for the 5th month of 8, settling -37pts (5.2%) to 691, the lowest monthly settlement since March 2017. Its notable that the Athex is -87.1% from the Nov'2007 high. An eventual exit from the Euro remains highly probable, along with a huge sovereign debt write off.
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Summary

Five world markets were net higher, with five net lower.

The US and Japan are leading the way higher, whilst Australia and Greece are lagging.

The German and Chinese markets are offering key m/t floors/turns. If that is the case, it bodes very well for most other world markets into year end, and arguably... across much of 2019.
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Looking ahead

M - PMI/ISM manu', construction
T - Vehicle sales, Powell speaking in Boston
W - ADP jobs, PMI/ISM serv', EIA Pet' report
T - Weekly jobs, factory orders
F - Monthly jobs, intl' trade, consumer credit (3pm)
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*the next post on this page will likely appear 6pm EDT on Monday.

Friday 28 September 2018

A sixth month higher

US equity indexes closed a little mixed, sp -0.02pts at 2913.98. Nasdaq comp' +4pts to 8046. The two leaders - Trans/R2K, settled u/c and +0.3% respectively. Near term outlook offers new historic highs in October, as the giant psy' threshold of sp'3K is within reach.

sp'daily5



VIX'daily3



Summary

It was a day of minor swings in equity land, but that was to be expected, as it was the end of the week, month, and the quarter. Volatility was naturally subdued, with the VIX settling in the low 12s.


A sixth month higher

sp'monthly


A sixth consecutive net monthly gain of 12pts (0.4%), setting at 2913, having broken a new historic high of 2940.
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The sun sets on September/Q3
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Thursday 27 September 2018

Thursday rebound

US equity indexes closed a little mixed, sp +8pts (0.3%) at 2914. The two leaders - Trans/R2K, settled +0.1% and -0.1% respectively. VIX settled -3.7% at 12.41. Near term outlook offers early Friday cooling to sp'2911/05, before (bullish) window dressing into end month/QE.


sp'daily5



VIX'daily3



Summary

After the post rate hike swing lower, US equities opened a little higher, and built broad gains into the afternoon. There was some distinct cooling from an intra high of 2927, with the sp' seeing a net gain of 0.3%. Volatility saw an early high of 12.62 (13.00 pre-market), and then melted lower into the afternoon, settling in the mid 12s.
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Bonus chart: Germany, monthly


With just one trading day left of the month, the DAX is currently +0.6% at 12435, and that is an impressive recovery from an intra month low of 11865. I recognise most of you have ZERO interest in other world markets, but the DAX is a key market, and has indirect implications for other EU markets and the US.
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A sky of contrails and distrails
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Wednesday 26 September 2018

Rate hike number eight

US equity indexes closed moderately weak, sp -9pts (0.3%) at 2905. Nasdaq comp' -0.2% at 7990. The two leaders - Trans/R2K, settled +0.6% and -1.0% respectively. Near term outlook offers early Thursday weakness, but leaning upward into end month/Q3.

sp'daily5



VIX'daily3



Summary

As expected, the Fed raised rates by 25bps to a new target range of 2.00-2.25%. The sp' saw a minor spike upward, only to swing lower, filling the downside gap to 2907. I could almost understand some getting a little excited at the post FOMC cooling, but its really not that unusual for a fed day.

Volatility picked up with the late day equity swing lower, but the VIX still settled in the 12s, indicative of underlying capital market confidence.
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Bonus chart: Germany, monthly


With just two trading days left of the month/Q3, the DAX is currently +0.2% at 12385. This is an impressive turnaround, and does offer hope of renewed upside into year end.
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A fine autumnal day, 70f, sunny
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Tuesday 25 September 2018

Pre-hike chop

US equity indexes closed moderately mixed, sp -3pts (0.1%) at 2915. The two leaders - Trans/R2K, settled -0.5% and +0.2% respectively. VIX settled +1.8% at 12.42. Near term outlook offers new historic highs to the sp'2940/50s.

sp'daily5



VIX'daily3



Summary

It was a day of minor chop in equity land, but that is usually the case ahead of an FOMC announcement, even when the market knows what is coming. Volatility remained subdued, with the VIX churning within the 12/11s.
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Bonus chart: Germany, monthly


With just three trading days left of September, the DAX is currently +0.1% at 12374, and this is a very significant recovery from the intra low of 11865.
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Monday 24 September 2018

Just another retrace

US equity indexes closed on a weak note, sp -10pts (0.3%) at 2919. The two leaders - Trans/R2K, settled -1.4% and -0.4% respectively. VIX settled +4.4% at 12.20. Near term outlook threatens Tuesday weakness, but the month is still on track to settle net higher.


sp'daily5



VIX'daily3



Summary

The week began on a moderately weak note, with the sp' settling moderately lower. Today was just another retrace after Friday's historic high of 2940. Whilst volatility did pick up, the VIX notably remained sub teens.
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A little surprise in AH....


The US now has a new trade deal with South Korea. This was indeed a surprise, and comes as many (yours truly included) are more focused on a US/Canada deal. The ultimate deal - US/China, remains elusive, but I do expect one... probably to be announced in November. 
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A very colourful end to day two of autumn.
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Saturday 22 September 2018

Weekend update - US equity indexes

It was a mixed week for US equity indexes, with net weekly changes ranging from +2.2% (Dow), +1.4% (NYSE comp'), +0.8% (sp'500), -0.3% (Nasdaq comp', Trans), to -0.5% (R2K). Near term outlook offers a little weakness, but broadly higher into year end.


Lets take our regular look at six of the main US indexes

sp'500


The sp' climbed for the 10th week of 12, settling +24pts (0.8%) at 2929, with a new historic high of 2940. A September settlement in the 2900s looks probable. The giant 3K threshold will be technically viable from mid October onward.

The key Fibonacci of 3047 won't be easy to clear, but with the Dow breaking above its direct equivalent of 26702, the sp' could be expected to follow. Any price action >3047 - if by mid November, would offer a year end ramp into the 3200s. The original year end target of 3245 is just about within range.
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Nasdaq comp'


The Nasdaq comp' settled -0.3% at 7986. Underlying macd (blue bar histogram) threatens a bearish cross next week. First big support would be the 7600s, but considering the rest of the market, its difficult to see that.


Dow


The mighty Dow climbed for the 10th week of 12, settling higher by a very significant 588pts (2.2%) to 26743. The new historic high of 26769 was notably above the key Fibonacci of 26702, and it bodes well for the broader market into year end. The next fib' is 34430, which is 7687pts (28.7%) to the upside. I'll just add that the equivalent for the sp'500 is 3956.


NYSE comp'


The master index climbed for the 10th week of 12, settling +1.4% at 13236. New historic highs (>13637) are viable in October. The 14000s look on the menu before year end.


R2K


The R2K was the laggard this week, settling net lower by -0.5% to 1712. Underlying macd has turned negative for the first time since early August. The 1800s are realistic in Nov/Dec.


Trans


The 'old leader' - Transports, saw a net decline of -0.3% to 11532. This minor decline was ironically the biggest since late June. Higher WTIC/gasoline prices are clearly a downward pressure.



Summary

Three indexes were net higher, with three net lower for the week.

The Dow and sp'500 broke new historic highs.

The YTD market leaders of Nasdaq and R2K were the laggards this week.

YTD performance:


The Nasdaq continues to lead the way, currently +15.7%, with the R2K +11.5%, and the sp +9.6%. The Transports is +8.7%, the Dow is +8.2%, with the nyse comp' +3.3%.
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Looking ahead

Key earnings; KBH, NKE (Tues'), CCL (Thurs')

The week will be focused on the Fed, as we're due the third rate hike of the year. How the bond market reacts will be especially important. 

M -
T - Case-Shiller HPI, consumer con', Richmond Fed.
W - New home sales, EIA Pet' report.

FOMC: There will be an announcement at 2pm, that will detail a rate hike of 25bps to a new target range of 2.00-2.25%. Powell will host a press conf' at 2.30pm, and that will likely last an hour.

T - Weekly jobs, Durable goods orders, GDP (Q2, third estimate), intl' trade, pending home sales
F - Pers' income/outlays, Chicago PMI, consumer sent'.
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*the next post on this page will likely appear 5pm EST on Monday.

Thursday 20 September 2018

The mighty Dow follows

US equity indexes closed broadly higher,  sp +22pts (0.8%) at 2930. Dow +251pts (0.9%) to 26657. Nasdaq comp' +1.0% to 8028. The two leaders - Trans/R2K, settled u/c and +1.0% respectively. Near term outlook offers choppy weakness into the Friday quad-opex.


sp'daily5



VIX'daily3



Summary

Suffice to add... new historic highs for the sp' and dow.
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The mighty Dow follows

Some grand perspective.... Dow, monthly


A new historic high of 26697. The next key fib' is 26702 (the sp' equiv' is 3047). Upper bollinger is offering the 27200s in the near term.
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Open day

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Wednesday 19 September 2018

Higher rates are bullish

US equity indexes closed moderately mixed, sp +3pts (0.1%) at 2907. The two leaders - Trans/R2K, settled u/c and -0.4% respectively. VIX settled -8.1% to 11.75. Near term outlook offers Thursday cooling, but likely no lower than around 2895/90.

sp'daily5



VIX'daily3



Summary

US equity indexes were pretty mixed today, with the Dow moderately higher, but with tech leaning somewhat weak. No new historic highs were seen, but they are clearly coming. Volatility was naturally subdued, with the VIX settling in the 11s. S/t outlook offers moderate equity weakness on Thursday, but likely no lower than the sp'2895/90 zone.
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Higher rates are bullish

Yours truly has (vainly) tried for a few years to highlight something which the mainstream have long feared... higher interest rates/bond yields. The fed are clearly set to raise rates next week (+25bps to 2.00-2.25%), and also at the Dec'19th meeting.

Higher rates ARE inherently bullish for the US financials. Indeed, fears that the fed won't hike a third or fourth time this year, have been a drag on the financials since the early spring.

BAC, monthly


Today saw a bull flag provisionally confirmed. A push >33s is due, and that will offer the 38/40 zone, whether by year end (a stretch) or a more viable spring 2019. If I'm right, very bullish sector/main market implications into/across 2019.
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Summer has almost fully faded
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