Saturday 29 February 2020

Weekend update - World equity markets

It was a very mixed month for world equity markets, with net monthly declines ranging from -14.3% (Russia), -10.1% (USA), -9.1% (South Africa), -8.9% (Japan), -8.6% (Australia), -8.4% (Germany, Brazil), -6.0% (India), -3.2% (China), to -0.7% (Hong Kong).


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

USA - Dow


The mighty Dow broke a new historic high of 29568, but settled -2846pts (10.1%) to 25409. The February settlement was far below the 10MA, and made for a bearish monthly settlement. Whilst price saw a new historic high, the technical divergence that stretches back to early 2018 remains the case. So, a new high... but on weaker momentum, and it should be a concern to those bulls still seeking psy'30K.

The monthly candle is of the bearish engulfing type, and is higher suggestive of further downside across March. MACD (green bar histogram) cycle ticked lower, as momentum is now moderately negative. I would note the lower bollinger at 23762, 1647pts (6.5%) lower, which appears due to be hit within March.


Germany – DAX


The economic powerhouse of the EU - Germany, broke a new historic high (if marginal) of 13795, but swung powerfully lower, settling -1091pts (8.4%) to 11890. Momentum is set to turn negative at the March 2nd open. I would note the monstrous technical divergence that stretches back to early 2015. Soft target is the Dec'2018 low of 10279, and then the giant double top of the 8100s.


Japan – Nikkei


Japanese equities declined for a second consecutive month, settling -2062pts (8.9%) to 21142, notably under the 10MA. Momentum has turned negative. The February candle threatens some cooling to at least the lower bollinger in the 19700s. With all schools to be closed for March, there is increasing chatter that the Olympics will be cancelled.


Brazil – Bovespa


Brazilian equities fell for a second month, settling -9589pts (8.4%) to 104171, notably under the 10MA, for the first time since Sept'2018. Momentum is set to turn negative in early March. First support 89/88k.


Russia - RTSI


Russian equities fell for a second month, settling -217pts (14.3%) at 1299. The February candle was notably under the 10MA, with next support of the key 1200 threshold.


India – SENSEX


A second consecutive net monthly decline, settling -2426pts (6.0%) to 38297. We have a break of l/t rising trend from early 2016. Momentum has turned negative. Next support is in the 34000s... some 10% lower. I will just add that India remains my primary concern for the Corona virus. A significant outbreak would be devastating for a country whose populace (largely) lack basic sanitation and clean water.


China – Shanghai comp'


After an extended lunar new year holiday, Chinese equities saw a low of 2685, but settled -96pts (3.2%) at 2880. Despite the reversal candle, it was still a monthly settlement under the key 10MA. Next support is the Jan'2019 low of 2440.


South Africa – Dow


A second month lower, settling -159pts (9.1%) to 1594. We have a break of m/t rising trend, with next support of the Oct'2018 low of 1574, and secondary of key price threshold of the 1440s.


Hong Kong – Hang Seng


A second month lower, settling -182pts (0.7%) at 26129. Note the failed breakout above m/t declining trend in January. Support in March within the 25200s.


Australia – AORD


Australian equities broke a new historic high of 7289, but settled -609pts (8.6%) to 6511. I would note rising trend, which will offer first support of the 5800s in March. Much like the USA and Australian, the February candle is one hell of a powerful bearish engulfing candle, and is not to be dismissed lightly!



Summary

All ten world equity markets settled net lower for February.

Russia and the USA lead the way lower, whilst Hong Kong was very resilient.

Germany, the USA, and Australia, broke new historic highs, but all saw very powerful reversals, to settle with bearish engulfing candles.

All ten world equity markets settled the month under their respective 10MA, and it leans bearish, at least for part of March.
-

Another sunset closer to spring

Looking ahead

Key event: Tuesday March 3rd 'Super Tuesday'
see: https://en.wikipedia.org/wiki/2020_Democratic_Party_presidential_primaries#Primary_and_caucus_calendar 

I expect Sanders to do very well, and that won't please many within the financial world. 

Earnings: 

M - JD, TLRY,
T - TGT, KSS, SE, VEEV, JWN, ROST, HPE, AMBA, URBN
W - DLTR, ANF, CPB, ZM, SPLK, MRVL
T - PLUG, KR, BURL, COST, OKTA, AOBC
F -
-

Econ-data: 

M - PMI/ISM manu', construction
T - Vehicle sales
W - ADP jobs, PMI/ISM serv', EIA Pet', Fed Beige book
T - Weekly jobs, product'/costs, factory orders, Fed' bal' sheet (4.30pm)
F - Monthly jobs, intl' trade, wholesale trade, consumer credit (3.00pm)
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Full moon is March 9th

Final note

February was one of the wildest months we've ever seen for US equities. The monstrous reversal from new historic highs to severe declines, bodes very bearish for March.

To be clear, whilst we'll be cyclically inclined to start next week on a positive note, I'd still see Monday as day'8 of a collapse wave, one that can be expected to last 10/12 trading days.

The Fed and other central banks will take action in the coming days/weeks, but such measures will do nothing to re-open the Chinese factories, or cure Corona. Whilst it is impossible to ascertain how big a problem the virus might be, there will clearly be some degree of supply side problems. Further, consumer demand will be hit... at least for a quarter or two.


Ohh, and just one more thing...

There is the matter of the bearish engulfing candle, where the February candle traded above the January high, but settling far... far below the January low.

The February candle is one of the most bearish, if not the most bearish ceiling/turn candles I've ever seen in three decades. The Feb' low of 24681 is below the key Oct' and Aug'2019 lows, and just 1pt above the June 2019 low.

The Dow... closeup!

Further, note the upper spike on the February candle, mirroring the January candle, which was also (overlooked by many) a month that actually settled red!

So, I'd dare suggest you go stare at the above chart for a good few minutes, and ask yourself... if February counts as month one down, when considering the magnitude of the February reversal, just how far down might we go?

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*the next post on this page will likely appear 5pm EDT on Monday

Thursday 27 February 2020

Nearing Broken Arrow

US equity indexes closed very powerfully lower, sp -137pts (4.4%) at 2978. Nasdaq comp' -4.6%. Dow -4.4%. The Transports settled -3.6%. Near term outlook offers further horror into early March.


sp'daily5



VIX'daily3



Summary

US equities opened very significantly lower, and spiraled to sp'3007. The typical turn time of 11am saw a not surprising spike back upward.


Just another flying can of Corona... Boeing?

There was a recovery to 3097, but then powerful downside into the close, breaking a new cycle low. Volatility picked up, with the VIX settling +42.1% at 39.16.
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Nearing broken arrow

With the capital markets increasingly upset, it can't be long until the Federal Reserve declare 'Broken Arrow'.




Whilst further rate cuts and QE can be expected, none of it will help cure Corona.



--
Ohh, and a few polls...



A collective 56.6% of you expect 'helicopter money' before year end.
--


$1000 to every US citizen wouldn't be that surprising.
--

Magnolias are poised

Another day closer to spring

Sunset 5.16pm GMT

Crescent moon and Venus

Full moon will be March 9th
--
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Goodnight from London
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Wednesday 26 February 2020

Helicopter Money

US equity indexes closed very mixed, sp -11pts (0.4%) at 3116. Nasdaq comp' +0.2%. Dow -0.5%. The Transports settled -2.2%.


sp'daily5



VIX'daily3



Summary

US equities open on a positive note, and battled upward to 3182, but the sellers appeared, with the SPX turning moderately lower to 3108.

Volatility saw some swings, a low of 24.76, but then pushing to the mid 29s, and settling -1.0% at 27.56.
-

Whilst the official Chinese case numbers are leveling off, we have growing outbreaks, notably within South Korea, Italy, and Iran.


Map/data: https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6


Helicopter Money

There was overnight news that Hong Kong - among a number of measures, will give HK$10000 to each permanent resident above 18yrs of age. That equates to $1283 or so.




Its not the first time the HK leadership has thrown money at the populace.

If Corona virus sees significant outbreaks within the US, the Fed' are going to respond with further rate cuts and continued QE. Yet, it seems increasingly probable that the US Govt'/Fed' will start issuing helicopter money.

Q. When will the US Govt'/Fed' start issuing block/s of free money to the general population?

Q. How much might the US Govt'/Fed' give people? 


Can we expect 'helicopter money' of $1000 per US Citizen (>18yrs of age) at some point this year?
These are ever more crazy times, and helicopter money has to be expected at some point. Corona would certainly be an excuse.
--

Spring is coming!

A moment of peace

Twilight skies -Venus and the Crescent moon

Next full moon is March 9th
--
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Goodnight from London
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Tuesday 25 February 2020

Failed bounce, renewed horror

US equity indexes closed powerfully lower, sp -97pts (3.0%) at 3128. Nasdaq comp' -2.8%. Dow -3.1%. The Transports settled -4.3%.

sp'daily5



VIX'daily3



Summary

US equities opened on a positive note, but the SPX stalled at 3246, and then spiraled lower into the afternoon.

Meanwhile....


It was another no-mask day for Ms. Yoon of CNBC. Whilst 30% of Chinese SMEs are reportedly back up and running (but probably not at full speed/capacity), that still leaves 70% still closed for business.

The afternoon saw equities under increasing pressure via the bond market, and further Corona headlines.

CNBC naturally wheeled out the Kudlow...


Larry is often a contrarian indicator, and his view that it won't be an 'economic tragedy' should at least somewhat concern you!

Volatility opened lower, but swung upward with renewed equity upset, the VIX settling +11.3% at 27.85. The rest of the week should be equally... dynamic!
--

Sunshine after the rains

Something dark is coming
--
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Monday 24 February 2020

QE and rate cuts won't cure Corona

US equity indexes closed powerfully lower, sp -111pts (3.3%) at 3225. Nasdaq comp' -3.7%. Dow -3.5%. The Transports settled -3.7%.

sp'daily5



VIX'daily3



Summary

US equities opened very significantly lower, pressured by a number of adverse Corona related headlines. Price action remained weak into the afternoon, seeing a spike floor from 3214, rebounding to 3253, but then leaning lower into the close. 

No mask for Ms. Yoon of CNBC, thats bullish, right?

Volatility naturally spiked, with the VIX settling +46.5% at 25.03. Whilst Tuesday could easily open lower, I'd be mindful of a Tuesday reversal, as high as around 3300, before resuming lower into end month.


QE and rate cuts won't cure Corona

It should be clear, the various central banks, not least the US Fed' will do the only thing they know.... cut rates and print.

Right now, rate cut'4 appears due at the FOMC of March 11th, or a more probable April 29th. Further, ongoing t-bill buying of $60bn a month will likely continue into the summer.

However many hundreds of billions the Fed and others central banks throw at the financial system, it sure won't cure the Corona virus. Whilst the human toll might remain statistically insignificant, a collapse of the global supply chain would merit as a black swan.

Ohh, and whilst the market is focused on Corona, there is the matter of who might become the Democrat nominee. It would seem Sanders will get the most votes, but whether the DNC can stop him... very difficult to say. March 3rd... aka Super Tuesday will merit extra popcorn.

--
Trump appeared after the market close...


Make of that... what you will.

--
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Goodnight from London
--
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Saturday 22 February 2020

Weekend update - US equity indexes

It was a somewhat mixed week for US equity indexes, with net weekly changes ranging from -1.6% (Nasdaq comp'), -1.4% (Dow), -1.2% (SPX), -0.9% (NYSE comp'), to +0.4% (Transports).


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

sp'500


It was a mixed week for the SPX, breaking a new historic high of 3393, but settling -42pts (1.2%) to 3337. Momentum ticked lower, and at the current rate, might turn negative at the March 2nd open. I would note the most recent higher low of 3214. Massive support within 3000/2900s.


Nasdaq comp'


A mixed week for tech, with the Nasdaq printing a new historic high of 9838, but settling -154pts (1.6%) at 9576. This weeks candle is spiky, and leans to at least some degree of further s/t cooling. I would see the old resistance highs within the 8100/8300 zone... as first major support.


Dow


The mighty Dow settled -405pts (1.4%) to 28992. Weekly momentum is set to turn negative next week, and it threatens at least a test of the recent higher low of 28169.


NYSE comp'


The master index settled -121pts (0.9%) to 13975. Weekly momentum is set to turn negative next week, and offers further cooling to test the late Jan' low of 13573.


Trans


The 'old leader' - Transports, managed a net weekly gain of +46pts (0.4%) to 10908. The gains are rather bizarre, considering the ongoing Corona issue, which is a particular problem for the airlines and shippers. I would note the past five weekly candles are all spiky from around 11k, and it does threaten further cooling to the late Jan' low of 10533. Key stocks: CCL, RCL, NCLH, UAL, AAL, DAL



Summary

Four US equity indexes settled net higher, with one net lower.

The Nasdaq lead the way lower, whilst the Transports managed a moderate gain.

The SPX and Nasdaq comp' broke new historic highs.



Looking ahead

Earnings:

M - SHAK, TNDM, PANW, KEYS, INTU, HPE, HTZ, KTOS
T - HD, M , TREE, LL, SPCE, CRM, AMRN, SDC, GWPH, WW, PLNT, EXEL, REAL
W - CHK, LOW, TJX, WEN, PZZA, SQ, ETSY, TDOC, BKNG
T - CRON, BBY, BUD, JCP, AMTD, BYND, BIDU, TTD, OXY, WDAY, DELL, VMW, AMC
F - W, FL, VST, SCCO
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Econ-data: 

M - Chicago Fed' Nat' act', Dallas Fed' manu'
T - Case-Shiller HPI, FHFA HPI, consumer con', Richmond fed' manu'
W - New home sales, EIA Pet'
T - Durable goods orders, GDP Q4 (print 2), weekly jobs, pending home sales, Fed' bal
F - Intl' trade, pers' income/out, wholesale invent', Chicago PMI, consumer sent'

*as Friday is end month, I would expect more dynamic price action on higher volume. 
Further, due to the ongoing Corona issue, a case of 'rats selling into the weekend' could be expected.
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Have a good weekend
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*the next post on this page...  there is nothing scheduled.