Saturday 6 July 2019

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from +1.9% (Nasdaq comp'), +1.6% (SPX), +1.2% (Dow, Nasdaq comp'), +0.6% (R2K), to +0.2% (Trans).

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


The SPX climbed for the 4th week of 5, breaking a new historic high of 2995, and settling +48pts (1.6%) to 2990. Monthly price momentum has turned fractionally positive for the first time since Sept'2018. Note the key 10MA at 2793, some 197pts (6.6%) lower. Giant psy'3000 appears probable. Next key Fibonacci is 3047. It will be interesting to see if the latter is exceeded with rate cut'1.

Nasdaq comp'

The Nasdaq lead the way higher this week, settling +155pts (1.9%) to 8161. The intra week high of 8171 was just 5pts shy of the April historic high. Monthly price momentum remains negative, with a bullish macd cross viable August 1st.


The mighty Dow broke a new historic high of 26966, settling +322pts (1.2%) to 26922. Monthly price momentum remains a touch negative.

NYSE comp'

The master index settled +161pts (1.2%) to 13210, the highest level since Sept'2018. Things turn very bullish with a monthly settlement above the Jan'2018 historic high of 13637, the 13700s to be decisive.


The second market leader settled +9pts (0.6%) to 1575. Monthly price momentum remains rather negative.


The old leader - Transports, was the laggard this week, settling +23pts (0.2%) to 10485. Monthly price momentum remains negative, as a bullish cross appears out of range until at least October. If the US/Iran situation turns 'hot', a hyper spike in WTIC/fuel prices would very seriously impact the transports.


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

The Nasdaq is leading the way up, whilst the Transports lagged.

The SPX and the Dow broke new historic highs.

YTD price performance:

The Nasdaq comp' is currently net higher for the year by a powerful 23.0%. The SPX is +19.3%, the R2K +16.8%, and the NYSE comp' +16.1%. The Dow is +15.4%, with the Transports lagging, but still higher by a very respectable 14.3%.

Looking ahead

Earnings: PEP. LEVI (Tues'), BBBY (Wed'), DAL (Thurs').

M - Consumer credit report (3pm)
T -  
W - Wholesale trade, EIA Pet', FOMC mins (2pm)

Powell is due to testify to the US House, fin' serv'. That will begin at 10am, and will likely last 2-3hrs. It can be expected to garner blanket live coverage on the financial networks.

T - Weekly jobs, CPI

Powell is due to testify to the US Senate. That will begin with the same speech as given to the US house on Wednesday. The mainstream will give at least some coverage.


*Powell is also due Tues' morning, at a Boston fed conf' on 'stress testing', but I don't consider the appearance to be of any importance.

**Fed official Bullard is due on Tue' and Wed', and Mr market will be listening for any chatter on rates. I expect Bullard to be the eventual successor to Powell. 

Final note

With a new historic high for two of the six main indexes, I can understand how many of the equity bulls are starting to get very confident again. Further, the mainstream continue to see looming rate cuts as bullish, which really shouldn't be the case.

Whilst next week will be centered around Powell, the following week will see Q2 earnings start to pour in. As things are, I still expect rate cut'1 at the FOMC of July 31st. If you still think lower rates are going to help, you need to go stare at the following for a good hour...

Just another 18 trading days, and I can add another vertical dashed red line to the above chart. That shall be no minor event for yours truly.

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