Saturday 4 May 2019

Weekend update - World equity markets

It was a bullish month for world equity markets, with net monthly changes ranging from +7.2% (Greece), +7.1% (Germany), +5.0% (Japan), +4.4% (France), +4.2% (Russia), +3.6% (Spain), +2.6% (USA), +2.5% (Australia), +1.0% (Brazil), to -0.4% (China).

Lets take our regular look at ten of the world equity markets

USA - Dow

The mighty Dow climbed for a fourth consecutive month, settling +664pts (2.6%) to 26592. Underlying macd (green bar histogram) cycle ticked higher for a third month, with price momentum set to turn positive by late May/early June.

Note the key 10MA at 25525, a clear 1000pts lower. Equity bulls need have no concerns unless a monthly settlement under it. New historic highs (>26951) are very much on the menu within 2-3mths.

Germany – DAX

The economic powerhouse of the EU - Germany, saw the DAX climb for a fourth month, settling +818pts (7.1%) to 12344. This was the first monthly close above the key 10MA since July 2018. The continued strength is especially impressive considering the flat-lining German economy.

Japan – Nikkei

The Japanese market climbed for the third month of four, settling +1052pts (5.0%) to 22258, notably above the key 10MA. Price momentum continues to favour the equity bears, with a major divergence stretching across 2015>2018.

China – Shanghai comp'

The communist market of China was the laggard in April, seeing a new cycle high of 3288, but settling -12pts (0.4%) to 3078. Monthly price momentum still turned outright positive though. A challenge of the 3400s is due within a few months. The China bulls need to see >3500 to have confidence. The real issue is whether the communists at the PBOC want to generate a bubble strong enough to push >3500, or let things broadly churn for another year or two.

Brazil – Bovespa

The Brazilian market settled +938pts (1.0%) to 96353. Price momentum (see black macd line) hasn't been this high since spring 2008, when commodities began to implode.

Russia - RTSI

Russian equities settled +50pts (4.2%) to 1248. The monthly close above the 1200 threshold is pretty bullish, and offers a run to psy'1500 by late summer. Higher energy prices would really help this commodity dependent market.

France – CAC

French equities climbed for a fourth month, with the CAC +235pts (4.4%) to 5586, the highest monthly settlement since Dec'2007.

Spain – IBEX

Spanish equities settled +330pts (3.6%) to 9570. There is a clear break outside of m/t declining trend, and it leans bullish into the summer. Soft target is psy'10k, with secondary of the upper monthly bollinger... within the 10500/600s.

Australia – AORD

Australian equities climbed for a fourth consecutive month, settling +156pts (2.5%) to 6418, just a little shy of the Aug'2018 spike high of 6481. A challenge of the Nov'2007 historic high of 6783 is on the menu within 3-5 months. Higher commodity prices would really help this market/economy.

Greece - Athex

The Greek market climbed for a fourth month, settling +51pts (7.2%) to 773. Broadly though, this remains long term horror. The Athex is still net lower from the Nov'2007 high by 4572pts (85.5%). The infamous Troika sure didn't help this market/economy recover. 


Nine world markets were net higher for April, with one net lower.

Greece and Germany lead the way higher, whilst China was the laggard

All ten world markets are trading above their respective key 10MA.

Looking ahead

It will be a much lighter week, but with some key earnings...

F - JD

M -
T - Consumer credit (3pm)
W - EIA Pet' report
T - Weekly jobs, PPI, wholesale trade
F - CPI, US T-budget

Final note

I believe that a number of recent bullish breakouts in certain individual stocks, are offering an indication for where the US, and most other world markets are headed this summer. I could highlight a fair number, but the following will have to suffice...

Disney, monthly, 20yr

After becoming broadly stuck since Aug'2015, Disney finally broke up and away in April, which now counts as month'1 UP. The stock can be expected to climb for at least another three or four months. Soft target of psy' $150 will surely be exceeded, and its no stretch to seek the $170s by late summer.

If I'm correct about Disney, you can extrapolate to a great deal of other things. I recognise some of you won't accept that admittedly bold assumption. In any case, the US and other world markets (and that includes China) are currently ALL broadly trending upward.

Meanwhile, the wind down of the QT program has begun, and will conclude by end September. From there, yours truly will be looking for rate cut'1. Whilst the market might initially rally on it (as it did in Sept'2007), a key l/t top could then be sought.

The wild card is Trump, whom if he gets his way, would see QE4 initiated before any kind of market implosion. Print Central is no doubt standing by, as even their own research dept' expects the next round to total around $2.5trn. We're in crazy times... which are going to just get ever more crazy.

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Have a good weekend
*the next post on this page will likely appear by 5pm EDT on Monday.