Saturday 13 June 2020

Weekend update - US equity indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -8.0% (Transports), -6.1% (NYSE comp'), -5.5% (Dow), -4.8% (SPX), to -2.3% (Nasdaq comp').

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


The SPX swung from a new cycle high of 3233 to 2984, settling -152pts (4.8%) to 3041. Whilst this week's candle is not of the bearish engulfing type (it would have required <3031), it still makes for a powerful weekly reversal. Further cooling to the mid/low 2800s appears probable, although will be more viable in early July.

Nasdaq comp'


NYSE comp'



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

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

The Nasdaq comp' broke a new historic high.

More broadly, the Dow, NYSE comp', and Transports are trading back below their respective monthly 10MA, with the SPX and Nasdaq comp' still holding above.

Looking ahead

The schedule this week is distinctly light.




M - Empire state manu'
T - Retail sales, indust' prod', busi' invent'
W - Housing starts, EIA Pet'
T - Weekly jobs, Phil' fed, leading indi', Fed bal' sheet (4.30pm)
F - Intl' trade, *QUAD-OPEX*

As Friday will be 'Quadruple Witching', expect considerable chop, on somewhat higher volume.

Final note

This week's set of weekly candles are all suggestive next week will break lower lows. However, it will be OPEX, and a June 19th settlement around giant psy'3K could be expected. The mid/low 2800s are prime target, but on balance, I see them as more viable in early July.

A key issue is the monthly/June settlement. Psy'3K is a clear dividing line, but its also where the 200dma and monthly 10MA are lurking. A June settlement under 3K would bode seriously problematic, whilst anything much above 3K, would make for a second consecutive bullish monthly settlement.

As I've been saying for months, if not some years, every day just gets more twisted and bizarre in the twilight zone. Hertz, having filed for bankruptcy, is now trying to do the unthinkable... an equity raise. No doubt, the Robinhood and Wallstreetbets community are eager to 'put new money to work'.

Indeed, if you're skeptical that the US Federal Reserve won't eventually move to negative rates and buy equities, then I suggest you reflect on that Hertz story again.

Yours truly is having to battle pretty damn hard to stay balanced, as the market, economy, and humanity itself, continue to spiral to levels of insanity, almost no one thought possible. Just imagine how things might be this Nov'/December?

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