Saturday 7 July 2018

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from 3.1% (R2K), 2.4% (Nasdaq comp'), 1.5% (sp'500), 1.3% (Nyse comp'), 1.2% (Trans), to 0.8% (Dow). Near term outlook offers a touch of cooling, but broader upside across the summer.

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


The sp' saw a significant net weekly gain of 1.5%, the best gain since early May. Seen on a bigger perspective, price structure was a bullish wedge from Jan>May. June saw an initial breakout, and we've just seen some choppy cooling into early July.

Underlying macd (blue bar histogram) cycle notably avoided a bearish cross, as price momentum has remained at least fractionally positive. Another up cycle is due, but that will offer a divergent lower cycle high - relative to January. It will make for a monstrous divergence, and is something that a few chartists have been warning about, since January.

Best guess: a little cooling early next week, but the 2800s look due before end month. I would seek new historic highs in August, as the 2900s look viable before end August. Big target of 2950/3047 looks on track by late summer, and that should act as concrete resistance. From there, I would look for a very sig' retrace.

Nasdaq comp'

The Nasdaq comp' saw a rather powerful net weekly gain of 2.4%, settling at 7688. New historic highs are only another 1.5% higher, which is clearly within range before end month.


The mighty Dow was the laggard this week, gaining just a moderate 0.8% to 24456. The Dow is notably under the key 10MA. Further, the macd cycle turned negative with the July 2nd open. Considering the broader market, I'm inclined to see price momentum turn at least moderately positive in August. New historic highs (>26616) will not be easy though, as trade/tariff concerns remain, which especially weigh on the Dow stocks.

NYSE comp'

The master index saw a net weekly gain of 1.3%, settling at 12664. Further upside to the 13000s appears due into August. New historic highs (>13637) won't be easy, but on balance, I do expect them.


The R2K saw a powerful net weekly gain of 3.1% to 1694. New historic highs (>1708) look due, as early as late next week. The 1800s would arguably sync with the sp' 2950/3047 target zone.


The 'old leader' gained 1.2% to 10473. The transportation stocks have not been fairing well, mostly due to (valid) market concerns about higher WTIC/fuel prices. My outlook for oil is bullish, and it'd not be surprising to see 80+ in August or September. If correct, that will be a major downward pressure on the tranny. That doesn't mean the index can't be net higher, but it will likely be a market laggard.


All six of the main US equity indexes have started July on a positive note

The R2K and Nasdaq are leading the way higher, and both look set for new historic highs within the near term.

The Dow is struggling on trade/tariff concerns, whilst the Transports are under pressure by sustainably higher energy prices.

The outlook for the summer is bullish, as the sp'2950/3047 zone looks very viable by late summer/early autumn.

YTD performance:

The Nasdaq remains the strongest index, currently net higher for the year by 11.4%, the R2K +10.3%, and the sp' +3.2%. The Dow and Nyse comp' are both -1.1%, with the transports lagging at -1.3%.

Looking ahead 

Q2 earnings season will begin, PEP (Tuesday) and a quartet of the financials on Friday 13th: C, JPM, WFC, and PNC.

M - Consumer credit (3pm)
T -
W - PPI, Wholesale trade, EIA Pet'
T -  CPI, Weekly jobs, US T-budget
F - Import/export prices, consumer sentiment. 

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Have a good weekend

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