Saturday 20 January 2018

Weekend update - US equity indexes

It was a broadly bullish week for US equity indexes, with net weekly changes ranging from +1.0% (Dow, Nasdaq comp'), +0.9% (sp'500), +0.4% (R2K), to -0.6% (Trans). Mid term outlook remains bullish, with first big target of sp'2950/3047. The year end target of 3245 remains on track.

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


The sp' climbed for a third consecutive week, +24pts (0.9%) to a new historic high of 2810. The weekly upper bollinger is currently at 2797, and rising around 30pts a week. Technically, the 2830s will be viable next week, with the 2900s as early as late February.

Best guess: continued broad upside into the late spring/early summer, with big target of 2950/3047. The market will be extremely prone to stall within this zone, and then see a correction of 5%. Unless there is a geo-political 'shock' this summer, I'd look for the market to then resume upward. The year end target of 3245 is on track.

Equity bears have nothing to tout unless a bearish monthly close. For me, that would equate to a monthly close under the key 10MA, which currently stands at 2538. I do not expect any such bearish monthly close this year.

Nasdaq comp'

Tech is leading the way, with the Nasdaq higher for a third week, +1.0%, breaking a new historic high of 7336. The 8000s are a valid target by late spring, with the 9000s for year end.


The mighty Dow settled higher for a third week, +1.0%, breaking a new historic high of 26153. Note the upper bollinger, currently at 26090, climbing around 350pts a week, with the 26400s on offer next week. The giant psy' 30k threshold is a valid target for year end.

NYSE comp'

The master index settled +0.7%, having broken a new historic high of 13384. The 14000s will be valid by mid/late spring.


The second market leader gained a moderate 0.4%, but with a notable new historic high of 1604. The 1700s will be within range by the summer. More broadly, a year end close in the 1800/900s now looks probable. On balance, 'R2K @ 2K' still appears off the menu until 2019.


The 'old leader' - Transports, struggled this week, settling -0.6%, but did manage a new historic high of 11423. The tranny is cyclically extremely high - much like Dec'2016, but that doesn't mean a sig' down wave is due in the near term.


A bullish week, with all six indexes breaking new historic highs.

The Dow and Nasdaq are leading the way, with the Transports lagging.

All indexes have around 5% of downside buffer before first soft support would be tested.

Equity bears have nothing to tout unless a majority of indexes see a bearish monthly close.

Looking ahead 

As well as a truck load of corp' earnings...
M - -
T - Rich' fed' manu'
W - Existing home sales, EIA Pet' report
T - Weekly jobs, intl' trade, new home sales, leading ind'
F - Durable good orders, Q4 GDP (first est'). Market consensus is seeking 2.9%. A print >3.0% would really help to remind some that annualised growth has distinctly accelerated since late 2016.

*World economic forum annual meeting: Davos, Jan'23-26. That will capture a great deal of media/mainstream attention this week. Interestingly, Trump will be there, due to speak Friday 1pm UK/EU (8am EST).


**The only fed official due is Evans (Tues' evening). After that, the usual blackout period will be in effect, as we have an FOMC the following week.

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Have a good weekend

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