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


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.


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.


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


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.


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%.

Looking ahead 

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


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.

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.

Supermoon due Feb'19th.
Tuesday will see the closest approach of the moon, until Dec'24th 2026.

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
*the next post on this page will (probably) appear 5pm EST on Tues' Feb'19th.