Saturday 14 March 2020

Weekend update - US equity indexes

It was an extremely bearish week for US equity indexes, with net weekly declines ranging from -12.1% (NYSE comp'), -11.3% (Trans), -10.4% (Dow), -8.8% (SPX), to -8.2% (Nasdaq comp').

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


The SPX declined for the third week of four, settling -261pts (8.8) to 2711, with an intra low of 2478. MACD (blue bar histogram) cycle is the lowest in at least THIRTY years. Next big support is the Dec'2018 low of 2346.

Nasdaq comp'


NYSE comp'


The 'old leader' - Transports, settled -11.3% to 7939. The intra low of 7253 was notably below the Dec'2018 low. Next support is psy'7K, and then the Jan'2016 low of 6403. Whilst lower oil/fuel prices are especially beneficial for transportation companies, the Corona virus is a grander issue, as it brings a large segment of the airlines and shippers to a halt.


All five US equity indexes were very severely net lower for the week.

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

The Dow, NYSE comp', and Transports have already taken out their respective Dec'2018 low. The SPX and Nasdaq comp' could be expected to follow.

More broadly, all five indexes are trading under their respective monthly 10MA, as the m/t trend is arguably bearish, or in the process of turning bearish. 

YTD price performance:

The Nasdaq comp' is net lower for the year by -12.2%. The SPX is -16.1%, with the Dow -18.8%. The NYSE comp' is -22.0%, with the Transports lagging at -27.2%.

Looking ahead (updated Sunday)

*Wednesday's FOMC has been cancelled, having occurred on Sunday.
Rates were cut by -100bps to 0.00-0.25%
QE T-bonds (at least) $500bn, with MBS (at least) $200bn.

It will no doubt be another wild week for US/global equity/capital markets, with a relentless truck load of Corona related news headlines. 

Econ-data (updated Sunday)

M - Empire state manu'
T - Retail sales, indust' prod', busi' invent', housing market index, JOLTS
W - Housing starts, EIA Pet'
T - Weekly jobs, phil' fed, leading indicators, Fed' balance sheet (4.30pm)
F - Existing home sales, *QUAD-OPEX*

The light of hope

Final note

I will dare cite my weekend post from end February.

February's monstrous bearish engulfing candle was a clear warning that March would likely not be so great. The SPX has printed 2478, already surpassing prime target of the lower monthly bollinger in the mid 2500s. My best guess is that we'll see another wave lower to the Dec'2018 low of 2346, with a subsequent rebound to around 3K.

Every week just gets more crazy, right? I mean, I've been saying this for months, in fact... years. After this week's truly insane equity swings, what 'fun times' are yet to come?

We can't be far from helicopter money. How about a one-off $1000 to every US citizen, on the excuse of Corona? Hell, I could almost support that. Its at least better than just throwing another few trillion at the financials.

What about the US election? I'm hearing chatter that this Sunday's Sanders/Biden debate will be the last big political event of the current Democrat nomination. As things are, it looks like Biden will be the one to face off against Trump. Yet there is Corona, with Trump and Biden both of a particularly vulnerable age, a lot can happen between now and November 3rd.

Life in the twilight zone (or should that be Corona land?) just gets more twisted with each day. Here in the London metropolis, as the masses have started to wake up to the threat of Corona, the panic-buying mayhem is in full effect. Even though I knew what was coming as early as late January, its still pretty unsettling to see the unwashed sheep go crazy for hand sanitizer, toilet tissue, and anything in a sealed can.

Just imagine how insane things will have become by early summer, and even more so... the autumn!

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