Saturday 8 December 2018

Weekend update - US equity indexes

It was a powerfully bearish week for US equity indexes, with net weekly declines ranging from -8.0% (Trans), -5.6% (R2K), -4.9% (Nasdaq comp'), -4.6% (sp'500), -4.5% (Dow), to -4.1% (NYSE comp'). Near term outlook threatens another 5/10% downside ahead of the Dec'19th FOMC.

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


The spx saw a net weekly decline of -127pts (4.6%) to 2633 (intra low 2621). Note the key monthly 10MA of 2744, some 111pts higher. Underlying macd (blue bar histogram) cycle is lower for a third month, as price momentum is increasingly negative. Note the lower monthly bollinger at 2371, which will likely jump to around 2400 at the Jan'2nd 2019 open.

Nasdaq comp'

The Nasdaq settled -361pts (4.9%) to 6969. Price momentum is at levels last seen in March 2016. First major support is around 6k, and then giant psy' 5k. The latter would be 28.2% below current levels, and 38.5% from the Aug' high of 8133.


The mighty Dow settled -1149pts (4.5%) to 24388. Note the Oct' low of 24122, which is easily within range for next week. The lower bollinger is notably around 21k.

NYSE comp'

The master index settled -515pts (4.1%) to 11941. The lower monthly bollinger will offer major  support in the 11500s, some 4% lower.


The R2K imploded by -85pts (5.6%) to 1448, notably breaking the Oct' low. Soft support of the Feb' low of 1436 looks set to fail, with secondary target of the lower bollinger at 1340.


The 'old leader' is leading the way lower, with a semi-crash fall of -869pts (8.0%) to 9951. Note the lower bollinger around 9k, offering a further 10% downside.


All six of the US equity indexes saw powerful net weekly declines.

The Transports is leading the way lower, with the NYSE comp' somewhat resilient.

The weekly close offers zero sign of a s/t floor/turn.

The monthly charts offer a further 5/10% downside within the immediate term.

YTD price performance:

The Nasdaq comp' is the remaining index that is net higher for the year, by a fractional 0.9%. The Dow is -1.3% with the spx -1.5%. The R2K is -5.7%, the Transports -6.2%, and the NYSE comp' -6.8%.

Looking ahead 

M -
T - PPI, UK Parliament BREXIT vote
W - CPI, EIA Pet', US T-budget
T - Weekly jobs, import/export prices, EIA Nat' gas
F - Retail sales, indust' prod', bus' invent' 

Final note

Remember how from 2009 to late 2015, that rate hikes were seen as a bad thing. With the Dec'16th 2015 rate hike, the mainstream opinion then flipped to 'higher rates are bullish'. Things remained fine for a further seven hikes. Since early October the market has abruptly flipped back to the 'higher rates are bad' view. This is disappointing, as the econ-data and earnings are still broadly coming in fine.

From an October high of sp'2940 to 2603, we've seen the fed increasingly attempt to placate the equity market, culminating with Powell touting rates as 'close to the neutral rate'. The novelty of that 'good news' has already worn off.

Powell's Nov'28th speech has directly resulted in breaking the bond market...

We have a clear conclusion of the rally in the 10yr yield that began in July 2016. Psy' 3.00% has failed, and we've already printed 2.82. Technically, its empty air to around 2.25%  Note the macd cycle, we're due a bearish cross by year end, or certainly at the start of 2019. An acceleration to the downside in yields is underway. Lower yields/higher bond prices, are inherently bearish for equities.

There are 7.6 trading days until the Dec'19th FOMC announcement. I'd imagine the fed would stall if we break and hold under the Feb' low of sp'2532. Keep in mind the NYSE comp' and Trans' have already broken under their respective Feb' lows. It bodes for the other indexes to follow.

Other than an actual suspension of QT and/or rate cut, a fed 'stall'/no rate hike this December, would merit as a very serious warning of grander trouble. If the fed do back off, those equity bears seeking a grander retrace to around the sp'1500s, can start to get moderately confident.

With just 14.5 trading days left of the year, keep yourself strapped in, as the wild ride continues, for what is the world's most twisted and rigged casino.

If you value my work, subscribe to my intraday service. 
For details and the latest offers, see:

Have a good weekend

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