Saturday 21 March 2020

Weekend update - US equity indexes

It was a severely bearish week for US equity indexes, with net weekly declines ranging from -17.3% (Dow), -15.8% (NYSE comp'), -15.0% (SPX), -13.9% (Transports), to -12.6% (Nasdaq comp').

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


Nasdaq comp'


NYSE comp'



All five US equity indexes saw very severe net weekly declines.

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

YTD price performance:

The Nasdaq comp' is most resilient so far this year, currently -23.3%. The SPX is -28.7%, with the Dow -32.8%. The NYSE comp' is -34.4%, with the Transports -37.3%.

Departing the city of Corona

Looking ahead

There is a fair amount of econ-data due, and the weekly jobs data will merit attention. Consensus is for a net weekly gain in claims of around +787K, vs +281 prior week. However, some (such as Goldman) are expecting as high as 2.25/2.50M.

Clearly, the market will be focused and impacted on further Corona related news headlines, of which there will be literal.... thousands.

Earnings: NKE (Tues'), MU (Wed'), LULU, GME (Thurs'),


M - Chicago Fed' nat' act' index
T - PMI comp' flash, new home sales, Richmond fed manu'
W - Durable good orders, FHFA HPI, EIA Pet'
T - Weekly jobs, Q4 GDP (third print), intl' trade, wholesale invent', Fed' bal' (4.30pm)
F -  Pers' income/outlays, consumer sent'

London - a city collapsing into economic depression

Final note

The bull market from 2009 has decisively concluded, and its something even the mainstream cheerleaders have started to publicly admit. February's monstrous bearish engulfing candle was indeed a warning that March wouldn't go so well.

spx' monthly1b

We have a break of l/t rising trend, as a number of other chartists have highlighted recently. The SPX has already seen a 38% fib' retrace of the gains from 2009. I will merely add that a multi-week bounce is due, but such a bounce is to be seen as such, as the US/global economy collapses into a recession (two quarters of GDP < 0.0%), if not a depression (two quarters of GDP < -10.0%).

The Fed will no doubt be pressured to do more (not least from the US President), which will mean increased printing - to buy corp' bonds, and eventually stocks. Rates are clearly going to be taken negative, if not by Powell, then his eventual successor... the Bullard.

As for Corona, well, you should know the numbers by now... and where we are headed. Ohh, and be careful out there... in the twilight zone!

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