Saturday 9 June 2018

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from +2.8% (Dow), +1.7 (NYSE comp'), +1.6% (sp'500), +1.5% (R2K), +1.2% (Nasdaq comp'), to +0.4% (Trans). Short term outlook offers a cooling wave of 2%, but broadly, the m/t offers 5-8% of upside by late summer.

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


A net weekly gain of 44pts (1.6%) to 2779, the highest close since mid March. More broadly, the sp' is net higher for a third consecutive month. Price structure of a bullish triangle has played out. Underlying MACD (blue bar histogram) has seen price momentum level out, with a bearish cross avoided.

Best guess: regardless of any s/t cooling - as is due, broader upside to big target of the 2950/3047 zone. I see the market becoming seriously stuck <3047, and another sig' correction would then be due. A valid excuse would be if US bond yields spike, on the mainstream realisation that US growth is strong, which would lean toward four rate hikes.

Nasdaq comp'

The Nasdaq comp' climbed for the 7th week of 9, +1.2% at 7645, notably breaking a new historic high of 7697. The 8000s are clearly coming this summer.


The mighty Dow saw a very significant net weekly gain of 2.8%, settling at 25316. More broadly, the Dow is managing to avoid any monthly closes under the key 10MA, currently at 24395. Upper bollinger is offering a challenge of a new historic high in the 26600s. Next key Fibonacci extension is 26702. Any price action above it would suggest the sp'500 will eventually follow >3047, although I don't see that viable in the first attempt, and not this year.

NYSE comp'

The master index gained a respectable 1.7% to 12832. More broadly, the NYSE comp' is +2.4%, and is avoiding a bearish macd cross. Upper weekly and monthly bollingers are both offering first resistance/target of the 13300s. New historic highs (>13637) won't be easy, but that does look on the menu by late summer.


The R2K saw a net weekly gain of 1.5% to 1672, with a new historic high of 1679. S/t vulnerable with the main market, but the 1700s are clearly due. The 1800s look similarly valid by late summer.


The 'old leader' - Transports, saw a moderate net weekly gain of 0.4% to 10938, the highest settlement since late January. The tranny is currently net higher for a fourth consecutive month. Considering m/t strength in WTIC, this is especially impressive. Even if oil sees renewed upside to the 75/80 zone by late summer, the transports could be expected to break a new historic high (>11423).


All six of the main US indexes saw net weekly gains.

The Dow is leading the way, with the transports trailing.

The R2K and Nasdaq comp' repeatedly broke new historic highs this week.

YTD price performance:

The Nasdaq is leading the way, currently +10.7%, and the R2K +8.9%. The sp'500 is +3.9%, with the NYSE comp' trailing, but now positive for the year by 0.2%.

Looking ahead

The week ahead will center around the Fed, and what will be the second rate hike of the year.

M -
T - CPI, US T-budget
W - PPI, EIA report

At 2pm, the Fed' will issue a press release. That will detail a rate hike of 25bps to a new target range of 1.75-2.00%. There will be a press conf' with Powell at 2.30pm, and that will likely last a full hour.

T - Weekly jobs, retail sales, import/export prices, bus' invent
F - Empire state, indust' prod', consumer sent'.  *QUAD-OPEX*

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Have a good weekend

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