Friday 10 August 2018

Turkish inspired weakness

US equity indexes closed moderately lower, sp -20pts (0.7%) at 2833. The two leaders - Trans/R2K, settled -0.4% and -0.2% respectively. VIX settled +16.8% at 13.16. Near term outlook offers a Mon/Tuesday bounce, but technical necessity of sp'2768 is long overdue.




The implosion of the Turkish Lira riled up the European markets, which naturally infected the US. However, the sp' only opened moderately lower, with an early low of 2831, and then a bounce to 2842. A secondary cooling wave (pressured by the strengthening USD in the DXY 96s) saw a closing hour low of 2825, but then swinging back upward.

VIX jumped, seeing a high of 13.82. With a closing hour mini equity recovery, the VIX cooled, settling +16.8% at 13.16. S/t outlook offers an equity bounce Mon/Tuesday, if only to fill this morning's gap of 2839/53. Further downside to minimum technical necessity of 2768 is long overdue.

Bonus chart: Turkey, Borsa Istanbul 100, daily

The Turkish equity market saw some powerful swings, settling the day -2.3% at 94939, well above the hyper spike low of 88598. More broadly, its been a rough year, having cooled from a Jan' high of 121531. Note the black-fail candle, marking a key multi-month top. Cyclically, due a bearish macd cross early next week, and threatens new lows for the year.

As for Turkish President Erdogan, after Trump announced plans to hike tariffs on Steel and Aluminum, I'm almost surprised he didn't order the banks to close today, but there is always next week for that desperate measure.

yours... bearish capital controls

Extra charts in AH (usually around 7pm EDT) @

Goodnight from London

*the weekend post will appear Sat'12pm EDT, and will detail the US equity indexes.
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