Thursday 28 February 2019

February settles

US equity indexes closed a little weak, sp -7pts (0.3%) at 2784. The Dow and Nasdaq comp', both settled -0.3%. The two leaders - Trans/R2K, settled -0.2% and -0.3% respectively. Four of the six main indexes settled the month m/t bullish.


sp'daily5



VIX'daily3



Summary

US equities opened a little weak, but once again, the bears could only manage moderate declines. Kudlow was wheeled out in early morning, touting trade progress, and the GDP data.The closing hour broke a new intraday low, on the usual 'end month' issues. Volatility was itself very subdued, settling in the upper 14s.


February settles...

sp'monthly3


A second consecutive net monthly gain for the SPX, +80pts (3.0%) to 2784. Note the decisive settlement above the key 10MA, with an outright bullish green Elder candle. For the bulls, normal service has truly resumed, helped by Powell's confirmation that QT will be stopped later this year.
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Wednesday 27 February 2019

QT to be cut to zero

US equity indexes closed a little mixed, sp -1.5pts at 2792. Nasdaq comp' +0.1%. The two leaders - Trans/R2K, settled -0.5% and +0.2% respectively.

sp'daily5



VIX'daily3



Summary

US equities opened a little weak, but the bears could only manage moderate declines to 2775. There was a rally into the early afternoon, with a touch of renewed weakness into the close. Volatility saw the 16s, but then resumed melt mode, and settling -3.1% at 14.70.


QT to be cut to zero

Powell effectively confirmed today, that the balance sheet reduction program, aka Quantitative tightening (QT), will be cut to zero before year end.



The end of QT is over a year ahead of schedule, as initially outlined last Sept/October. A rate cut will then be next, and that will merit as the ultimate equity sell signal... as it was in Sept'2007.

I am open to the more bullish scenario of new index historic highs, before QT ends, and the subsequent rate cut. The Thursday/end month settlement will be very important.
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Another exceptionally warm day in the London metropolis




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Tuesday 26 February 2019

Leaning weak

 US equity indexes closed a little weak, sp -2pts (0.1%) at 2793. The two leaders - Trans/R2K, settled -0.4% and -0.7% respectively. VIX settled +2.1% at 15.17. Near term outlook offers cooling (if choppy) into end month.

sp'daily5



VIX'daily3



Summary

US equities opened a little weak, partly pressured via weakness in Asia/European markets.

Powell appeared before the US Senators...


... and it was an especially tedious few hours. Wednesday's should be less painful, and far more lively, as its chaired by the infamous Maxine Waters. AOC, aka... Alexandria Ocasio-Cortez will no doubt garner mainstream media attention, and it will be interesting to see what she has to say to the CEO of print central. I don't say it entirely free of sarcasm, but might she ask the fed to print $10trn, to help fund her green new deal?
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21c/70f, skipping spring, straight into summer.
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Monday 25 February 2019

New cycle highs

US equity indexes closed a little mixed, sp +3pts (0.1%) at 2796. Nasdaq comp' +0.4%. The two leaders - Trans/R2K, both settled -0.1%. Near term outlook offers early Tuesday weakness.

sp'daily5



VIX'daily3



Summary

US equities opened with new cycle highs, helped via a late Sunday tweet from Trump confirming that the March 1st trade/tariff deadline was cancelled. Indeed... its been outright cancelled, rather that just delayed/extended, as the US President appears confident a trade agreement with the Chinese will be reached.

Volatility was naturally subdued, with the VIX breaking a new cycle low of 13.44, and settling in the
upper 14s.


Bonus chart: China, monthly


With just three trading days left of the month, the Chinese equity market is currently net higher by an extremely powerful 14.6% at 2961. It'd seem giant psy'3K will be tested before end month. Bodes bullish for other world markets into the spring.
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More pre-BREXIT escapees

Sunset, 18c, 64f.... bullish!
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Saturday 23 February 2019

Weekend update - US equity indexes

It was another bullish week for US equity indexes, with net weekly gains ranging from 0.2% (Trans), 0.6% (SPX, Dow), 0.7% (Nasdaq comp', NYSE comp'), to 1.3% (R2K).


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

sp'500


The SPX climbed for a fourth consecutive week, the 8th of 9, settling +17pts (0.6%) to 2792, having broken a new cycle high of 2794. Underlying macd (blue bar histogram) cycle ticked higher for an eighth week, with zero sign of a turn.

Note the upper weekly bollinger at 2873, which is declining 20/25pts a week. In early March, it will be prime resistance within 2820/10s.
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Nasdaq comp'


The Nasdaq climbed for a NINTH consecutive week, +55pts (0.7%) to 7527.


Dow


The mighty Dow climbed for a NINTH consecutive week, +148pts (0.6%) to 26031. The Oct'2018 historic high of 26951 is just 920pts (3.5%) higher.


NYSE comp'


The master index climbed for the 7th week of 9, +91pts (0.7%) to 12654, the highest settlement since early Oct'2018.


R2K


The R2K climbed for a NINTH consecutive week, settling +20pts (1.3%) to 1590. Note the upper weekly bollinger at 1635, another 3% higher.


Trans


The 'old leader' - Transports, climbed for a fourth consecutive week, the 8th week of 9, settling +25pts (0.2%) to 10593.



Summary

All six equity indexes saw net weekly gains.

The R2K is leading the way upward, with the Transports lagging.

YTD price performance:


The R2K is leading the way, currently net higher for the year by 17.9%. The Transports is +15.5%, with the Nasdaq comp' +13.4%. The Dow and NYSE comp' are both +11.6%, with the SPX +11.4%
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Looking ahead 

There will be a light sprinkling of earnings, some econ-data, and more importantly, two appearances by the CEO of Print central.

M - ETSY, SHAK
T - HD, M, LNG, WW
W - LOW, LB, CHK, SQ, BOX
T - JD, JCP, AMTD
F -
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M - Wholesale trade, Dallas Fed manu'
T - Housing starts, Case-Shiller HPI, FHFA HPI, consumer con', Rich' fed

Powell is due Tuesday morning, for the six monthly report to the US Senate.

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W - Factory orders, pending home sales, EIA Pet' report.

Powell is due Wed' morning, for the six monthly report to the US House fin' services committee, as chaired by Maxine Waters. It will be 'curious' to see what Alexandria Ocasio-Cortez has to say. Perhaps she should ask if the fed would consider QE of $10trn, to help fund the Green New Deal?

US President Trump is scheduled to begin a two day meeting (Hanoi, Vietnam) with North Korean leader Kim Jong Un, and that will no doubt capture huge mainstream attention.
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T - Weekly jobs, GDP Q4 (2.4% est') , Chicago PMI (55.8 est')
F - Vehicle sales, pers' income/outlays (Dec' & Jan'), PMI/ISM manu', consumer sent'

*Thursday is end month, so expect more dynamic price action/volume. 
**Friday is the US deadline for raising tariffs, but it'll very likely be extended.
***The monthly jobs data (due March 1st) is delayed until March 8th.
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Have a good weekend
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*the next post on this page will likely appear 5pm EST on Monday.

Friday 22 February 2019

Climbing into the weekend

US equity indexes ended the week on a broadly positive note, sp +17pts (0.6%) at 2792. Nasdaq comp' +0.9%.  The two leaders - Trans/R2K, settled -0.4% and +0.9% respectively.


sp'daily5



VIX'daily3



Summary

US equities opened moderately higher, helped via Asian and European market strength. The SPX broke a new cycle high of 2794, which was fully confirmed/supported via a new cycle low in the VIX of 13.67. The afternoon saw a little cooling, but then Trump made an appearance with the Chinese VP... resulting in a mini ramp.


As things are, the March 1st scheduled hike in tariffs is almost certainly going to be delayed.
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Climbing into the weekend

A few minutes of serenity... whilst BREXIT is another day closer.
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Thursday 21 February 2019

Typically bearish Thursday

US equity indexes closed moderately mixed, sp -9pts (0.3%) at 2774. Dow and Nasdaq comp' both settled -0.4%. The two leaders - Trans/R2K, settled +0.1% and -0.4% respectively. Near term outlook offers weak chop into the weekend.


sp'daily5



VIX'daily3



Summary

US equities opened weak to 2772, and saw a little recovery into early afternoon. There was a secondary wave lower into the closing hour to 2764, but then a late day mini ramp (for no good reason). Volatility picked up a little, with VIX printing 15.17, and settling +3.1% at 14.46. 


IPOs on the menu


Lyft is set to IPO late March, notably ahead of UBER. If equities take another swing lower, even as small as just 5%, the mainstream are going to be twitching again, and some of the IPOs will be delayed for reasons of 'adverse market conditions'.
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Tuesday 19 February 2019

Supermoon Tuesday

US equity indexes closed a little higher, sp +4pts (0.1%) at 2779. Nasdaq comp' +0.2%.  The two leaders - Trans/R2K, settled +0.5% and +0.3% respectively. VIX settled -0.2% at 14.88. Wed/Thurs' should lean to the equity bears.


sp'daily5



VIX'daily3



Summary

It was a subdued start to the week, with the morning consisting entirely of minor chop. The afternoon did see some distinct algo-bot upward melt, with the spx breaking a new cycle high of 2787.

Volatility opened to 16.15, but immediately started to cool. The afternoon saw the VIX break a new multi-month low in the mid 14s... confirming the equity strength.


Another ten year anniversary

Its been a full decade since Rick Santelli went on his tea party rant...



Perhaps the most surprising thing since that time is that NBC/CNBC haven't kicked Santelli off the network. I can only assume they want at least one 'token opposition' to play against.

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Another day closer to spring
The supermoon
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Saturday 16 February 2019

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from 4.2% (R2K), 3.8% (Trans), +3.1% (Dow), +2.5% (SPX, NYSE comp'), to +2.4% (Nasdaq comp').


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

sp'500


The SPX climbed for a third consecutive week, the 7th week of 8, settling +67pts (2.5%) to 2775. MACD (blue bar histogram) cycle continues to tick higher, as weekly price momentum increasingly favours the bulls. Note the upper weekly bollinger at 2892, and which is falling by around 45/50pts a week. From Feb'25th onward, it will offer prime resistance around 2800. The SPX has climbed 429pts (18.3%) since the late December low of 2346.


Nasdaq comp'


The Nasdaq comp' climbed for an eighth consecutive week, settling +174pts (2.4%) to 7472. Note upper bollinger at 7820, and that will offer major resistance in the 7600s into end month.


Dow


The mighty Dow climbed for an eighth consecutive week, settling +776pts (3.1%) to 25883. The Oct'2018 historic high of 26951 is a mere 4.1% to the upside.


NYSE comp'


The master index climbed for the 6th week of 8, settling +311pts (2.5%) to 12603.


R2K


The R2K climbed for an eighth consecutive week, settling +62pts (4.2%) to 1569.


Trans


The 'old leader' - Trans, climbed for the 7th week of 8, settling +390pts (3.8%) to 10567. Next major resistance is around 11k, where the upper bollinger will be in around two weeks.



Summary

All six of the main US equity indexes saw very significant net weekly gains.

The R2K and Trans lead the way higher, whilst the NYSE comp' and Nasdaq comp' lagged.

YTD price performance:


The R2K is leading the way higher, currently net higher for the year by 16.4%. The Transports are +15.2%, the Nasdaq comp' +12.6%, and the Dow +11.0%. The NYSE comp' is +10.8%, with the SPX lagging at 10.7%.
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Looking ahead 

It will be a short four day trading week, with a light sprinkling of earnings...

M: RIG, CLR
T: WMT, DVN,
W: CVS, BHC, ALB,
T: ROKU, BIDU, NEM, DBX
F: AN

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M - CLOSED
T - housing market index
W - FOMC mins (2pm)
T - weekly jobs, durable goods orders, phil' fed, existing home sales, leading indi', EIA Pet' & NG

F - German Q4 GDP (second print) Flash print 0.0%. Its very possible (if not probable) the refined number will be negative for a second consecutive quarter, and deem the economic powerhouse of the EU, as officially in recession.
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Rates, yields, and inversions

US equities have seen a monstrously powerful ramp from the late Dec' low. Its partly cyclical of course, along with the mainstream having been 'inspired' by threats from Print Central to cut/adjust QT. We are seeing increasing chatter from the cheerleaders, that the next rate change will be a cut.



It remains the case that the ultimate equity sell signal will (ironically) be a rate cut. Clearly, a cut/suspension of QT would be a pre-cursor. Whilst the global econ-data and corp' earnings are increasingly weak, until we see such a rate cut, there is still threat of new historic highs. Even a sig' retrace of 5-7% into the next FOMC of March 20th won't negate that.



Whilst equities are back to 'everything is fine again' mode, the bond market sure doesn't reflect that, with the US 10yr yield at 2.66%. Natural/prime target of 2.25% remains on track. If yields do continue to broadly cool into/across the spring, equities should see some degree of retrace.

Ohh, and a yield curve inversion of the 10s/2s is still on the menu...


The US 10yr/2yr spread stands at just 14bps. It won't take much to generate an inversion, and it will be fascinating to see how the mainstream react to such a signal.
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Supermoon due Feb'19th.
Tuesday will see the closest approach of the moon, until Dec'24th 2026.
https://astronomynow.com/2019/02/15/dont-miss-the-largest-supermoon-of-2019-on-19-february/

A few stray closing thoughts... what will the financial markets and global economy be like then? Interest rates? WTIC/commodity prices? Will most of the central banks have been taken over by govt'?  The USD, will it still be king of FIAT land? Will Tesla have a charging station on the moon?
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Enjoy the three day break
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*the next post on this page will (probably) appear 5pm EST on Tues' Feb'19th.