Saturday 22 December 2018

Weekend update - US equity indexes

It was a severely bearish week for US equity indexes, with net weekly declines ranging from -8.4% (Nasdaq comp', R2K) , -7.0% (sp'500), -6.9% (Dow), -6.7% (Trans), to -6.1% (NYSE comp'). The m/t outlook is bearish, with all bounces to be seen as such.

Lets take our regular look at six of the main US indexes


The spx fell for a third consecutive week, the 9th week of 13, settling -183pts (7.0%). Underlying macd (blue bar histogram) cycle is at the lowest level since the height of the financial crisis in Oct'2008.

Price structure is a valid H/S formation, and however you might draw it, the loss of the Feb' low of 2532 has taken out the floor/neck-line. The minimum downside target is the 2300/250 zone.

Considering price action/structure in other world equity markets, and the recent break in the US bond market, a grander target of the sp'1500s appears on the menu in latter half of 2019/early 2020. That target will remain valid so long as no monthly close above the key monthly 10MA.

Nasdaq comp'

The Nasdaq (along with the R2K) lead the way lower this week, with a net weekly decline of a very severe -577pts (8.4%) to 6332. The loss of the Feb' low of 6630 is decisive, and offers downside to giant psy'5K.


The mighty Dow fell for the 9th week of 13, imploding by -1655pts (6.9%) to 22445. The break of the April low is decisive, and offers min' target of 21k, with secondary support of 20400/20000. Grander target for late 2019/early 2020 would be around 14k.

NYSE comp'

The NYSE comp' was the most resilient index this week, but still settling lower by a severe -6.1% to 11036. Next support is around 10K. Its notable that the NYSE was the only index that never made a new historic high in late summer. Instead, a lower high, rolling over, and the first index to break the Feb' lows.


The R2K imploded by a very severe -118pts (8.4%) to 1292. Next support is not until around the 1150s... back to the Nov'2016 'Trump election' breakout. Indeed, the US equity market is set to see the entirety of the Trump gains erased.


The 'old leader' - Trans, fell for a third consecutive week, settling -693pts (6.7%) to 8874. Next support is another 10% lower to around 8k... back to the Nov'2016 election breakout level.


All six US equity indexes saw severe net weekly declines, having fallen for a third consecutive week.

Weekly price momentum is at levels not seen since Oct'2008

YTD price performance:

The Nasdaq comp' is the most resilient, but powerfully lower for the year, -8.3%, The Dow is -9.2%, with the spx -9.6%. The NYSE comp' is -13.8%, the R2K is -15.8%, and the Trans -16.4%.

Looking ahead 

It will be a short 3.5 trading day week. There are just 4.5 trading days left of the year.

M - Christmas Eve: EARLY CLOSING at 1pm EST
T - Christmas Day: CLOSED
W - Case-Shiller HPI, Richmond Fed
T - Weekly jobs, FHFA house price index, new home sales, consumer con', EIA Pet' & NG
F - Intl' trade, pending home sales 

A Santa rally?

The Santa rally period begins next Monday, and stretches to Wed' Jan'3rd.

Final note

I have especially endeavoured to highlight other world markets in recent months, which have been increasingly warning of trouble. I could list the usual ten, but I don't have the time. I'll merely highlight one...

Japan, monthly

The Nikkei is in the early phase of a massive multi-month down wave. It fractionally broke l/t rising trend in October. November saw a weak bounce, and December is now decisively under key price threshold of 21k.

If you believe the world economy will weaken into/across 2019/20, its not a stretch to see the Nikkei being cut in half to key price threshold of 12k. The US indexes could be expected to be similar in style, with the sp'1500s and Dow 14k. How the Fed, and the US President react and deal with that situation, will be truly entertaining to see.

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Have a good weekend

*the next post on this page will likely appear 2pm EST on Monday Dec'24th