Saturday 28 April 2018

Weekend update - US equity indexes

It was a marginally bearish week for US equity indexes, with net weekly declines ranging from -0.62% (Dow), -0.50% (R2K), -0.37% (Nasdaq comp'), -0.28% (Trans), -0.10% (NYSE comp'), to -0.01% (sp'500). Near term outlook offers further upside (if choppy) of around 2%, whilst the m/t trend remains bullish.

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


The sp' settled the week effectively flat at 2669. Underlying MACD (blue bar histogram) cycle ticked higher for a third week. At the current rate, we'll see a bullish cross in mid May. Price structure since late January is a triangle, aka.. a bullish wedge/pennant. The broader bullish trend from early 2016 is absolutely still intact.

Best guess: s/t upside to test upper descending trend, which will be in the 2720s next week. Its very possible we'll then swing lower, but not below the April 2nd low of 2553. Original big target of 2950/3047 still looks valid for the summer/early autumn, not least if we see an upside break from the triangle in May/June.

Nasdaq comp'

Tech saw a choppy week, settling moderately lower, -0.37% at 7119. Its notable that despite 'beyond superb' earnings from companies like INTC, MSFT, and AMZN, the Nasdaq still settled net lower. Tech remains the strongest sector/index in the US market.


The mighty Dow was the laggard this week, settling -0.62% at 24311. The Dow saw a break of descending trend last week, but it wasn't remotely decisive. Things really only get bullish >25500.

NYSE comp'

The master index settled -0.1% at 12594. It is notable that the NYSE comp' is trading outside of the descending trend. It does bode rather well for the rest of indexes in May. Alarm bells only if <12k.


The R2K settled -0.5% at 1556. Upper trend/resistance will be around 1600 next week/early May. Any weekly close >1600 will offer new historic highs into early summer.


The 'old leader' - Transports, settled -0.28% at 10549. Only bearish <10k. The more cautious bulls will wait to chase higher, with a weekly close >10750, which is only 2% higher. Keep in mind, higher WTIC/fuel prices will be an increasing concern into the summer, as we saw this past week within the airlines.


All six of the main US indexes saw net weekly declines, if only fractional.

Price structure since late January (in most cases) is a triangle, aka, bullish wedge, and leans to further sig' upside in the summer/autumn.

YTD price performance:

Tech remains the strongest index, net higher for the year to date by 3.13%, whilst the sp'500 is -0.14%. The laggard is now the NYSE comp' at -1.68%. Its notable that the Transports is only -0.59%, which is somewhat impressive when you consider higher WTIC/fuel prices.

Bond yields

This past week saw much attention on the US 10yr bond yield.

We saw a new multi-year high of 3.03%, just 1bp shy of the Dec'2013 high. Its still very possible we'll see some months of chop around 3.00%, before a sustained upward push. Technically, big price cluster magnet is 3.50/3.75, back to levels from early 2011. If you believe the fed will raise rates another three times between now and spring 2019, that zone would be a very realistic target. Higher rates are of course bullish for the financials. 

Looking ahead

Another truck load of earnings. In addition to energy:  AGN, MCD (Mon'), MRK, UAA, AAPL (Tues'), TSLA, SPOT, MA (Wed'), APRN, DWDP (Thurs'), BABA (Fri).


M - Pers' inc/outlays, Chicago PMI, Pending home sales
T - Vehicle sales, PMI/ISM manu', construction
W - ADP jobs, EIA report'

There will be an FOMC announcement at 2pm, no change in policy can be expected. There will NOT be a press conf'.

T - weekly jobs, intl' trade, product/costs, factory orders, PMI/ISM serv'
F - Monthly jobs

*the only fed official scheduled is Dudley on Friday, at some Bloomberg event. Its possible some comments might be made on rate hikes, but the market is assuming a June hike, along with the QT program that continues to develop, toward net sales of $50bn a month.

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Have a good weekend

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