Permabear Doomster: May 2019

Friday, 31 May 2019

A bearish May settlement

US equity indexes ended May on a significantly weak note, sp -36pts (1.3%) at 2752. Nasdaq comp' -1.5%. Dow -1.4%. The two leaders - Trans/R2K, settled -1.9% and -1.3% respectively.

sp'daily5

VIX'daily3

Summary

Thursday evening saw some Trump inspired drama (not surprisingly) via Twitter...

That was an outright shock to the mainstream, with US/world capital markets swinging lower.

US equities opened significantly weak, with a morning low of sp'2750.. a full 204pts below the May 1st high. Indeed... most will have already forgotten the start of the month saw a new historic high. The afternoon saw considerable price chop, with the closing hour breaking (if fractionally) a new cycle low.

Volatility picked up, but the VIX only saw a high 19.72, and settling +8.1% at 18.71. Today certainly didn't see any panic, but some can be expected this summer.

A bearish May settlement

SPX, monthly'3

The sp'500 was net lower for May by -193pts (6.6%) to 2752. This was notably under the key 10MA, with a settling red Elder candle, the first since Dec'2018. Underlying macd (green bar histogram) cycle is ticking back lower, as price momentum remains negative, and is increasingly favouring the bears. Soft target is the lower monthly bollinger, currently at 2519.
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A moment of peace, before Trump arrives next Monday

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Extra charts in AH (usually around 7pm EDT) @ https://twitter.com/permabear_uk

Goodnight from London
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Thursday, 30 May 2019

I see many endings

US equity indexes closed a little mixed, spx +5pts (0.2%) at 2788. Nasdaq comp' +0.3%. The two leaders - Trans/R2K, settled -0.04% and -0.3% respectively.

sp'daily5

VIX'daily3

Summary

US equities opened on a positive note, with the SPX pushing to 2799. The gains were shaky though, with cooling into midday. The afternoon saw some chop, with the closing hour leaning a little higher.

Volatility churned, with the VIX melting just a little lower, settling -3.3% at 17.30. S/t setup offers early Friday upside, but that sure won't negate what has been a pretty bearish month.

I see many endings laid before us. Some good. Most bad.

The original movie was something that traumatised many a child of the 1980s. This latest Netflix series looks pretty good. Mmmmmmmmmm.

The following AAPL chart should scare the hell out of the equity bulls...

That is one fiercely bearish engulfing candle. Technically, the downside target has to be $125, and I'd accept that could be deemed 'crazy talk'. Whilst Apple is not the be-all of the US equity market, it is a key component, and arguably reflective of the broader US/global consumer economy.
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Ray of light for the bulls

The UK from the ISS.

Wednesday, 29 May 2019

Unable to hold key support

US equity indexes closed broadly lower, sp -19pts (0.7%) at 2783. Dow -0.9%. The two leaders - Trans/R2K, settled -0.8% and -0.9% respectively. The remaining two days of the month will offer increasing chop, leaning on the weaker side.

sp'daily5

VIX'daily3

Summary

US equities opened on a moderately weak note, and spiraled to significant declines into early afternoon, with the SPX unable to hold the 200dma. The afternoon saw considerable chop, with the SPX settling back above the 200dma. Whilst the mainstream touted the closing hour mini recovery, the bigger picture is increasingly ugly.

Volatility picked up, with the VIX settling +2.3% to 17.90. However, its notable the VIX is still far below the May 9th high of 23.38, back when the spx floored from 2836.

The s/t cyclical setup leans to the equity bulls (not least via a black VIX candle), but Thursday will inherently favour the bears. On balance, expect a lot of chop, leaning on the weaker side into end month.
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ISS crossing the western coast of South America

Not the best of summer days in the UK

Looking westward across Eastern Europe.

For a live feed, see 'Earth Views' @ NASA TV via Youtube
LIVE ISS tracker/map @ https://www.n2yo.com/
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Extra charts in AH (usually around 7pm EDT) @ https://twitter.com/permabear_uk

Goodnight from London
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Tuesday, 28 May 2019

Another day closer

US equity indexes closed on a broadly weak note, sp -23pts (0.8%) at 2802. Nasdaq comp' -0.4%. Dow -0.9%. The two leaders - Trans/R2K, settled -1.3% and -0.7% respectively. Near term outlook offers Wednesday chop, and then an 'interesting' Thursday.

sp'daily5

VIX'daily3

Summary

US equities began the short week on a moderately positive note, partly helped by most other world markets. The opening gains were shaky though, with most indexes turning fractionally lower, before renewed upside into the afternoon. The late afternoon saw things broadly unravel (lead by the Transports), settling -0.8% at sp'2802, as last Friday's black candle played out.

Volatility picked up, with the VIX settling +10.4% at 17.50. The s/t setup favours Wednesday chop, whilst Thursday will be prime time for the equity bears. The bigger issue is how the month will settle, and right now, 3 or 4 of the main 6 indexes that I regularly highlight, are on track for a bearish monthly settlement.

Another day closer

We're another day closer to the end of QT, and a rate cut, the latter of which will merit as a seriously bearish equity sell signal. More near term though, we're another day closer to the Trump aerial fleet's arrival to patrol the London skies...

*Jump to t+9mins.
The US President is due for a state visit June 3-5th. June 6th will see Trump in France for D-day anniversary events.
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A fine place for an Osprey to land

Saturday, 25 May 2019

Weekend update - US equity indexes

It was another bearish week for US equity indexes, with net weekly declines ranging from -3.4% (Transports), -2.3% (Nasdaq comp'), -1.4% (R2K), -1.2% (SPX), -0.7% (Dow), to -0.6% (NYSE comp'.

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

sp'500

The SPX fell for a third consecutive week, seeing a net weekly decline of -33pts (1.2%) to 2826, with a Thursday low of 2805. Underlying macd (blue bar histogram) cycle is set to turn negative at next week's Tuesday open, and threatens further cooling to the 200dma in the 2770s.

Nasdaq comp'

The Nasdaq fell for a third week, settling -179pts (2.3%) to 7637. MACD cycle will turn negative with next week's Tuesday open. Such a bearish cross is a serious problem to the m/t equity bulls, and it leans toward weakness into end month/early June.

Dow

The mighty Dow fell for a fifth consecutive week, settling -178pts (0.7%) to 25585. Note the macd cycle, which settled the week with a bearish cross. It leans bearish into end month. Alarm bells if the March/May double floor in the 25200s is taken out.

NYSE comp'

The master index cooled for a third week, settling -76pts (0.6%) to 12581. MACD cycle is set to turn negative with next Tuesday's open. Gundlach will no doubt remain focused on this index.

R2K

The second market leader cooled for a third week, settling -21pts (1.4%) to 1514. Weekly price momentum is set to turn negative next week. Note this week's low of 1493 was 1pt below the March low.

Trans

The 'old leader' - Transports, lead the way lower this week, settling -354pts (3.4%) to 10137. MACD cycle set to see a bearish cross with next Tuesday's open. Support 10000/9800 zone.
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Summary

All six of the main US equity indexes settled net lower for the week.

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

YTD price performance:

The Nasdaq comp' continues to lead, currently +15.1% for the year. The SPX is +12.7%, the R2K +12.3%, and the NYSE comp' +10.6%. The Transports is +10.5%, with the Dow lagging, but still higher by a respectable +9.7%.
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Looking ahead

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

Earnings:

M - -
T - NIO, MOMO
W - ANF, BZUN, PANW
T - UBER, DG, DLTR, COST, ULTA, VMW,
F - BIG

Econ-data:

M - CLOSED
T - Case-Shiller HPI, FHFA HPI, consumer con'.
W - Richmond Fed'
T - Q2 GDP (print 2), weekly jobs, pending home sales, EIA Pet' & NG reports
F - Pers' income/outlays, Chicago PMI, consumer sent'

*As Friday will be end month, expect some price chop on higher volume.
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Final note

The past few weeks haven't been great for equities, with a number of indexes looking likely to settle the month (under my criteria of the monthly 10MA) outright bearish.

Yours truly wants to see the Fed cut rates to have real confidence that the market is close to a key mid/long term top. Even when we do see a rate cut though, the key issue will then be how low will equities be permitted to fall, until Print Central initiate QE4?

Most now accept the printers will be spun up again. The Fed's own research dept' (some years ago) noted it would likely print $2.0-2.5trn under just a moderate recession. These are crazy times, and things are only going to get ever more crazier.

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Have a good weekend
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*the next post on this page will likely appear 5pm EDT on Tuesday, May 28th.

Friday, 24 May 2019

Into the long weekend

US equity indexes mostly ended the week on a slightly positive note, spx +4pts (0.1%) at 2826. Nasdaq comp' +0.1%. Dow +0.4%. The two leaders - Trans/R2K, settled -0.3% and +0.8% respectively.

sp'daily5

VIX'daily3

Summary

US equities opened moderately higher. The gains to 2841 were shaky though, with the SPX cooling back to fractionally negative to 2820 in late morning. The afternoon saw another wave higher to 2833, before a touch of cooling into the long weekend. Volatility was naturally subdued, with the VIX melted lower, settling -6.3% at 15.85.
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I will continue to highlight anyone and anything I see as worthy. Whilst Josh Brown sure does annoy me at times, the following does merit viewing...

Indeed, across the long term, such exponential equity growth is the case. Or would you rather a nice US Govt' bond. Even better, how about a neg' yield one from Germany or Japan?

yours.. bullish compounding, and bearish statistical decay.
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Finally...

Last night SpaceX launched the first batch of 60 satellites that will form the Starlink global internet.

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Yours truly was naturally watching the live feed via Youtube at 4am. A look outside, and I saw an engine burst/flash from the second stage as it flew over London. Regardless of what you might think of Musk and Tesla, SpaceX continues to produce superb and inspirational work. Maximum bullish SpaceX to the Moon, Mars... and beyond.
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Another arrival to the land of geo-political chaos.

A welcome end to the week

Thursday, 23 May 2019

Typical Thursday

US equity indexes closed significantly lower, sp -34pts (1.2%) at 2822. Nasdaq comp' -1.6%. The two leaders - Trans/R2K, settled -1.6% and -2.0% respectively. Near term outlook favours the bulls into the long weekend.

sp'daily5

VIX'daily3

Summary

Thursdays do tend to favour the equity bears, and with the mainstream increasingly concerned about almost everything, the market opened broadly weak, and spiraled to very significant declines into the afternoon.

There are the concerns about trade of course. Even BREXIT is being highlighted again, as UK PM May looks set to resign soon. Then there is the grander issue of global econ-cooling. The US/Iran issue isn't really that new (I could go back to the 1950s), but the mainstream are certainly giving it some attention.

The afternoon saw further equity weakness, with a closing hour ramp from a new intraday low of 2805, to settle at 2822.

Volatility was naturally higher, with the VIX peaking to 18.05, and settling +14.6% at 16.92. The s/t cyclical setup will favour a moderate equity bounce. The fact we have a long three day holiday break will lean to subdued price action, and that will favour the bulls.
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Fly me... to the moon

Another fine summer's day

Wednesday, 22 May 2019

Where are the shorts now?

US equity indexes closed on a weak note, sp -8pts (0.3%) at 2856. Nasdaq comp' -0.4%. The two leaders - Trans/R2K, settled -1.7% and -0.9% respectively. Near term outlook offers further moderate swings across the remainder of the week.

sp'daily5

VIX'daily3

Summary

US equities opened moderately weak, saw an afternoon low of 2851, and settling just a little weak. Volatility saw a high of 15.44, but melted back lower, settling -1.3% at 14.75.

Where are the shorts now?

After a decade long climb from sp'666 to 2954, it really shouldn't be surprising that short interest is at levels last seen in 2006.

Much like when VIX is in the low teens, there is really only one direction this can go from here.

Yours, awaiting the end of QT, and rate cut'1.
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Arriving in the land of BREXIT chaos

A good example of a sun dog (there was a corresponding one, off to the left).

A fine summer's evening

Tuesday, 21 May 2019

I don't envy the guy

US equity indexes closed broadly higher, sp +24pts (0.8%) at 2864. Nasdaq comp' +1.1%. Dow +0.8%. The two leaders - Trans/R2K, settled +0.5% and +1.3% respectively.

sp'daily5

VIX'daily3

Summary

US equities opened moderately higher, and built broad gains into the mid afternoon. Unlike recent days, the late afternoon didn't see any cooling of note.

Volatility was naturally in cooling mode, with the VIX settling -8.3% at 14.95. The s/t cyclical outlook offers a mixed Wednesday, a bearish Thursday, and a subdued Friday, the latter of which will favour the bulls ahead of the three day break.
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I don't envy the guy

Last evening, Powell delivered a keynote speech "Mapping the Financial Frontier: What does the next decade hold?".

The next decade? How about even predicting the next GDP print?

Powell is in a monetary box, but then... so was Yellen and the Bernanke. QT is set to conclude in September, and rate cut'1 can be expected as early as the FOMC of Oct'30th.

Trump will no doubt put the blame for eventual economic weakness with an associated equity market drop on Print Central. Many of you might think I'd smile at that. No, and I don't envy Powell. Life in Powell land is going to become more pressured with each passing month. No doubt Bullard - aka, the Bane of the equity bears, is on standby to take over.

The BREXIT debacle continues...

As expected, the UK Govt' is moving towards some kind of parliamentary deal between the main parties, and one which will offer a second referendum/confirmatory vote for such a deal.

Let me be clear, the UK populace would arguably vote 53/47 AGAINST any such deal, and thus vote to remain within the EU.

Yours... correctly called the original BREXIT vote, the Trump victory, and sure as hell knows which way the UK will vote in any subsequent BREXIT related vote.
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Extra charts in AH (usually around 7pm EDT) @ https://twitter.com/permabear_uk

Goodnight from London... still part of the EU.
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If you value my work, subscribe to my intraday service.
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