Saturday 23 November 2019

Weekend update - US equity indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -0.8% (Transports), -0.5% (Dow), -0.4% (NYSE comp'), -0.3% (SPX), to -0.2% (Nasdaq comp').

Lets take our regular look at five of the main US indexes


The sp'500 broke a new historic high of 3127, but settled the week -10pts (0.3%) at 3110. Weekly price momentum continues to strengthen. The s/t setup leans to further downside, at least to the next gap of 3050/36.

Nasdaq comp'

The Nasdaq comp' broke a new historic high of 8589, but settled -20pts (0.2%) at 8519. First soft support is the 50dma in the low 8200s, some 5% lower.


The mighty Dow broke a new historic high of 28090, settling -129pts (0.5%) to 27875. Price momentum is cyclically on the higher side. First support in the 28400/300s.

NYSE comp'

The master index saw a high of 13508, but settled -52pts (0.4%) at 13440. The Jan'2018 high of 13637 is very near.


The 'old leader' - Transports, cooled for a second week, settling -91pts (0.8%) to 10785.


All five US equity indexes settled net lower for the week.

The Transports lead the way lower, with the Nasdaq comp' most resilient.

The SPX, Nasdaq comp', and Dow broke new historic highs.

YTD price performance:

The Nasdaq comp' continues to lead for the year, currently +28.4%. The SPX is +24.1%, with the Dow +19.5%. The NYSE comp' is +18.2%, with the Transports +17.6%.

Looking ahead

It will be Thanksgiving holiday week, with effectively only three and a half days of trading.




M - Fed chair Powell will be speaking (7pm EST).
T - Intl' trade, Case-Shiller HPI, FHFA house price index, new homes sales, consumer con', Rich' fed
W - Durable goods orders, GDP (Q3 second print), Chicago PMI (9.45am), weekly jobs, pers' income/outlays, EIA Pet', Fed Beige book (2pm).

T - CLOSED for Thanksgiving

F - Fed balance sheet (4.30pm).  EARLY CLOSING 1pm EST.

Final note

Do you remember what the mainstream view was this past spring? It was the notion of a 'second half recovery'. What happened to that? Ohh yeah, the econ-data and earnings continued to weaken, with the Fed ending QT, cutting rates, and spinning up the printers.

Now the mainstream view is of 'a manufacturing pick up in 2020'. For now, there is zero reason to believe in that. Freight/shipping data doesn't support that rosy view.

However, that sure doesn't mean I see equities as anything other than mid/long term bullish. The Fed can be expected to start buying T-bonds and Corp' bonds at some point in 2020. That will help to juice the asset prices even more. There is the matter of the overnight REPOs. Maybe that will regularly total $250bn, even $500bn by late 2020. Someone out there has been in distress lately. Who it is.. the fed won't say, at least until late 2021.

To be clear, whilst the s/t equity setup threatens sig' downside, I can't take any of it seriously unless we have a bearish monthly close. Yours truly holds to the monthly 10MA as the line in the sand. Right now, that stands at sp'2929. November is clearly going to settle above that, and I'd imagine December will too.

As for the US/China trade matter, I don't expect 'phase'1' before year end. If correct, it would be the excuse for an equity washout, before rebounding once again.

The UK and US elections

There is also the matter of the UK election - due Dec'12th. If the Conservatives fail to get a clear majority, then an eventual BREXIT bill will likely have a popular vote tagged onto it, and by now, you should know my view on how that will play out.

The USA has its own election of course, and not just the Nov'2020 main event, but the process of selecting the Democrat nominee. There appears a considerable (if subtle) push to see Pete Buttigieg become the challenger to Trump.

Obama has effectively deemed Warren and Sanders as 'too far left'. Biden... no, he will drop out soon enough. Gabbard and Yang remain largely black-listed by the mainstream media, and have no chance. The other candidates don't even merit a mention.

So.... Buttigieg vs Trump. Clearly, Trump will need a non-recessionary economy and a stable/rising equity market to remain in power. In any case, from this side of the Atlantic, it makes for some fascinating popcorn entertainment.

These remain ever more crazy times... in the twilight zone. If you can remain at least semi-level headed, you're ahead of 97% of the rest.

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