Saturday 14 September 2019

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from +5.0% (Trans), +4.9% (R2K), +1.6% (Dow), +1.5% (NYSE comp'), +1.0% (SPX), to +0.9% (Nasdaq comp').

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


The SPX saw a Thursday high of 3020, just 7pts shy of the July historic high, settling net higher for the week by 28pts (1.0%) at 3007. Weekly price momentum ticked higher for a third week, and is set to turn positive at next Monday's open.

I would note the August and June lows of 2822 and 2728 respectively. More broadly, the monthly key 10MA stands at 2838. Equity bears have nothing to tout unless we see a monthly settlement under the August low (to be decisive).

If new historic highs (>3027) are seen, it would offer a challenge of the next Fibonacci extension of 3047. Any price action >3050 would be decisive, and offer far higher levels in 2020/21.

Nasdaq comp'

Tech was the laggard this week, climbing for a third consecutive week, settling +73pts (0.9%) at 8176. Note the July historic high of 8339.


The mighty Dow gained 422pts (1.6%) to 27219. Note the July historic high of 27398.

NYSE comp'

The master index climbed for a third week, settling +190pts (1.5%) to 13124.


The second market leader gained 73pts (4.8%) to 1578, although this was still below the July high of 1599. Things would turn very bullish with a weekly close >1620 (to be decisive).


The 'old leader' - Transports, lead the way higher this week, settling +510pts (5.0%) to 10813. Note the April high of 11148.


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

The Trans and R2K lead the way higher, with the Nasdaq lagging.

More broadly, all six of the indexes are currently above their monthly key 10MA.

YTD price performance:

The Nasdaq comp' continues to lead for the year, currently +23.2%. The SPX is +20.0%, the Transports +17.9%, and the R2K +17.0%. The Dow is +16.7%, with the NYSE comp' lagging, but still higher by a considerable +15.4%.

Looking ahead

Earnings: CBRL (early Tues'), ADBE, FDX, CHWY (Tues' AH), GIS, WGO (early Wed'), DRI (early Thurs').


M - Empire state manu'
T - Indust' production, housing market index
W - Housing starts, EIA Pet' report

*FOMC announcement: 2pm. Rate cut'2 can be expected, -25bps to 1.75/2.00%. Powell will host a press conf' at 2.30pm. The market will be focused on whether Powell states its just 'mid cycle', or a sustained rate cut cycle into 2020. I do not expect any threats of QE, although were I one of the mainstream media hacks, I'd ask Powell '... so.. err... Draghi has spun up the printers, how long until you, or your successor Bullard, do the same?". 

T - Weekly jobs, existing home sales, leading indi'
F - *OPEX*

Final note

This past week saw the ECB cut rates and spin back up the printers. The Fed is clearly going to cut again this coming Wednesday.

The m/t trend in equities is unquestionably bullish, although some indexes remain considerably under their respective historic highs.

The bond market decisively broke in late 2018, and we've seen Gold breakout in June. Those are two indirect signals that all is not entirely well.

The following remains something to stare at... at least for a few minutes...

I would argue the equity bulls need sp>3050, and the US 10yr >2.00%, to have some justification to ignore the m/t price action in bonds and the precious metals. On the flip side, equity bears need to break below the August low of sp'2822 and the recent US 10yr low of 1.44%. Everything in between could be seen as broad chop. 

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