It was a bearish week for US equity indexes, with net weekly declines ranging from -1.9% (Trans), -1.4% (NYSE comp'), -1.2% (Dow), -1.0% (SPX), to -0.8% (Nasdaq comp').
Lets take our regular look at five of the main US indexes
A new historic high of 3337.77, but settling net lower for the week by -34pts (1.0%) to 3295.
A new historic high of 9451, but settling -74pts (0.8%) to 9314.
The mighty Dow saw a net weekly decline of -358pts (1.2%) to 28989.
The master index settled -204pts (1.4%) to 13978.
The old leader - Transports, settled -219pts (1.9%) to 11059.
All five equity indexes saw net weekly declines.
The Transports lead the way lower, with the Nasdaq most resilient.
The SPX and Nasdaq broke new historic highs.
It will be a very busy week, with a truck load of earnings, and a meeting of the monetary masters of Print Central.
M - DHI, ARNC, JNPR, FFIV
T - MMM, PFE, UTX, LMT, AAPL, AMD, SBUX, XLNX, EBAY
W - BA, GE, MA, T, MCD, MPC, GD, ANTM, TSLA, MSFT, FB, PYPL, LRCX, LVS,
T - UPS, KO, VZ, BIIB, AMZN, V, X, WDC, EA, AMGN
F - XOM, CAT, CVX, HON, PSX
M - New home sales, Dallas Fed' manu'
T - Durable goods orders, Case-Shiller HPI, consumer con', Richmond Fed' manu
W - Intl' trade, pending home sales, EIA Pet'
FOMC 2pm announcement, with a Powell press conf' at 2.30pm. No policy change can be expected. It will be interesting to see if any of the mainstream media hacks question Powell on the REPOs or QE.
T - Q4 GDP (2.1% est'), weekly jobs
F - Pers' income/outlays, employment costs, Chicago PMI, consumer sent'
*As Friday is end month, I would expect higher volume.
We're almost through the first month of the year. Earnings are coming in broadly 'reasonable', as the US economy continues to tick along. The equity market is unquestionably being given an extra kick higher by ongoing QE.
There are three key s/t scenarios...
-The Coronavirus spirals out of control, and the market declines by around 10%. The Fed cut rates, and maintain t-bill buying into the summer.
-The fed end t-bill buying end March, and equities washout back to 3000/2900s, filling most (if not all) of the legacy gaps.
-The printing continues, and the market reaches the 3500/600s by mid year. Even if the fed continue to print, its difficult not to see the market eventually breaking lower. A 20% drop (even if briefly) would seriously spook the mainstream, and Trump's probability of reelection would fall... if only a little.
To be crystal clear, whilst yours truly is seeking a washout to the 3000/2900s, I remain m/t bullish. The fed can be expected to cut rates, and print however much is necessary to prevent the paper bubble from completely bursting.
I say it on an increasingly regular basis, but every day just gets a little bit more crazy, in what is... the twilight zone. If I'm right about anything, you know that much is correct.
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Have a good weekend
*the next post on this page will likely appear 5pm EST on Monday.