Saturday 10 November 2018

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from +2.8% (Dow), 2.1% (sp'500), +1.7% (NYSE comp'), +1.4% (Trans), +0.7% (Nasdaq comp'), to +0.1% (R2K). Short term outlook offers weakness of 2-3%.

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

The sp' saw a net weekly gain of 2.1%, with an intra high of 2815, and settling at 2781. More broadly, the sp' is currently net higher for November by 2.5%. Note the monthly 10MA at 2755. That remains my personal 'line in the sand', which we settled under in October.

Underlying macd (blue bar histogram) on the monthly cycle continues to tick lower, and is outright negative. Its not impossible for monthly momentum to swing back upward into end year, but its not probable.

If the sp' settles November below the key 10MA, that would give extra credence to the notion of a bearish October settlement. Natural downside target would be the lower monthly bollinger - currently at 2334, and rising 30/40pts a month.

Nasdaq comp'

Tech saw a net weekly gain of a moderate 0.7% to 7406. There is s/t threat of cooling to the 7200/100s ahead of opex. More broadly, note the monthly 10MA at 7489, which we're currently still below. MACD cycle turned negative with the Nov'1st open, as price momentum favours the bears for the first time since Oct'2016. Unless November settles back above the key 10MA, natural target will be the lower bollinger, currently in the 5800s, and likely around 6k in December, which is a powerful 20% lower.


The mighty Dow was the strongest index this week, settling +2.8% at 25989. Note the key monthly 10MA of 25092, which we're almost 4% above. The Dow is comfortably m/t bullish, having settled October 7pts above the 10MA. It is notable though that price momentum is negative, and September made for a lower momentum cycle high.

NYSE comp'

The master index saw a sig' net weekly gain of 1.7% to 12537. Note the key monthly 10MA at 12645. Price momentum remains moderately negative. It is extremely notable that the nyse comp' was the only index (of the six I regularly highlight) that has broken the February low.


The R2K was the laggard this week, gaining a fractional 0.1% to 1549. Note the key monthly 10MA at 1602, which is a clear 3% higher. Price momentum continues to increasingly favour the equity bears. Note the lower bollinger of 1333, rising around 15/20pts a month. Unless November settles above 1610 or so, valid target will be the upper/mid 1300s.


The 'old leader' - Trans, saw a net weekly gain of 1.4% to 10517. Note the key monthly 10MA at 10676. Price momentum is outright negative for a second month. It is the case that weak WTIC/fuel prices are helping to prop the tranny up, especially relative to other indexes/sectors.


All six of the main US equity indexes settled the week net higher. The Dow and sp'500 are leading the bounce upward, with the Nasdaq and R2K lagging.

More broadly, four indexes (Nasdaq comp', NYSE comp', R2K, and Trans) are currently trading under their respective monthly 10MA, whilst the sp'500 and Dow are trading above.

Equity bulls need a November settlement above the key 10MA - in the sp'2750s, to negate the bearish October settlement. As ever, I would keep in mind other indexes for the most balanced perspective.

YTD price performance:

The Nasdaq continues to lead, currently +7.3%, the Dow +5.1%, and the spx +4.0%. The R2K +0.9%, Trans -0.9%, with the NYSE comp' -2.1%.

Looking ahead 

Key earnings: HD, TLRY (Tues'), TCEHY, CSCO, CGC, APRN, M, (Wed'), WMT, NVDA, AMAT, and JWN (Thurs').

M -
T - US T-budget
W - CPI,  *Fed chair Powell speaking in AH with Kaplan on national/global econ' issues
T - Weekly jobs, phil' fed, retail sales, empire state, import/export prices, bus' invent', and the EIA Pet' and Nat' gas reports.
F - Indust' prod'   *OPEX*

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Have a good weekend
*the next post on this page will likely appear 5pm EST on Monday.