Saturday 8 June 2019

Weekend update - US equity indexes

It was a very bullish week for US equity indexes, with net weekly gains ranging from 4.7% (Dow), 4.4% (SPX),+4.1% (NYSE comp', Transports), +3.9% (Nasdaq comp'), to +3.3% (R2K).

Lets take our regular look at six of the main US indexes (monthly candle charts)


From a Monday closing hour low of 2728, the SPX powered back upward, with a net weekly gain of 121pts (4.4%) to 2873. More broadly, keep in mind the outright bearish May settlement. There is plenty of time left within June, to see the current gains fully erode, and settle back under the key 10MA - currently at 2778. Any monthly close >2780 would offer a run to giant psy'3K, with next Fibonacci extension of 3047.

Nasdaq comp'

The Nasdaq gained 289pts (3.9%) to 7742, notably back above the key 10MA. More broadly, price momentum remains outright negative.


The mighty Dow swung from a low of 24680 to 26072, with a net weekly gain of 1169pts (4.7%) to 25983, back above the key monthly 10MA. Its notable that price momentum has been negative since Oct'2018. Note the lower bollinger in the 23400s, some 10% to the downside.

NYSE comp'

The master index gained 501pts (4.1%) to 12765, back above the monthly 10MA. This remains Gundlach's key index, which has some of the most bearish technical divergences of any index. Soft downside target are the 11800/700s.


The second market leader gained 48pts (3.3%) to 1514, but still below the monthly 10MA. Note the lower monthly bollinger at 1390.


The 'old leader' - Transports, gained 402pts (4.1%) to 10140, but notably still under the key monthly 10MA.


All six of the main US equity indexes saw powerful net weekly gains

The Dow lead the way upward, with the R2K lagging.

Four indexes are back above their respective monthly 10MA, with the two exceptions being the R2K and Transports.

YTD price performance:

The Nasdaq comp' continues to lead, currently +16.7% for the year. The SPX is +14.6%, the R2K +12.3%, and the NYSE comp' +12.2%. The Dow is +11.4%, with the Transports lagging, but still higher by a respectable 10.6%.

Looking ahead 

Earnings: LULU (Wed'), AVGO (Thurs').

M -
W - CPI, EIA Pet' report, US T-budget
T - Weekly jobs, import/export prices
F - Retail sales, indust' prod', consumer sent', busi' invent'

Final note

Late Friday it was announced the initial 5% tariff on Mexico by the USA would not proceed, and the market will clearly be inclined to begin next week on a a positive note.

Short term price momentum is at heights not seen since the big turn in Dec'2018. A significant cooling wave will be due regardless of the Monday open. The issue then, does this past Monday's low of 2728 get taken out? Even if that happens, equity bears can't expect anything much below 2675.

July 31st will offer rate cut'1. By definition, the mainstream will see that as a positive (much as they did Sept'2007), even though the reality is that such rate cuts arguably do little of significance to support the economy.

For now, the bearish May settlement stands as important. The fact the Transports and R2K are still broadly weak should be at least a 'mild concern' to those bulls who believe everything is fine again.

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