Weekend update'1 - upcoming news/events

With September now almost over, its time to reflect on what is ahead in the remaining 3 months of 2012.


sp'daily3

Summary

The Oct'2011/June 2012 up trend is still holding together very well.

Only with a break below sp'1400 - as at end October, would an initial sign of trouble be apparent.
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With both GDP and the Chicago PMI both warning of a serious risk of a US recession for the now elapsing Q3, and most definitely for Q4, I am going to keep highlighting these two data points in the months to come.

The good thing, and it IS a good thing - even for the doomer bears out there, with QE3 announced, that great unknown is no longer part of the puzzle. We can focus much more on underlying fundamentals and market price action.


Its almost earnings time again

Earnings season is just over a week away, and once again Mr Market is going to have to cope with many companies probably reducing their outlooks for 2013, and highlight their 'serious concerns' about what happens to consumer demand if the US congress does not delay the tax rises/spending cuts.

Right now, I'm assuming his highness, Obama wins a second term. In which case, the republicans - (understandably) sore losers, will refuse to compromise. We only have a post-election 4 week window in which to agree something, and I'm guessing they won't be able to.

The one wild card is if the capital markets get upset at this 'fiscal cliff' terror, and we see a brief - but sharp 15/20% drop late November/early December, and then the US congress quickly rush through an agreement to delay the changes until 2014/15 - much in the style of TARP, September 2008

The market is never one for embracing uncertainty, and we are fast approaching a cliff, which was designed by congress itself. So, its rather ironic that both democrats and republicans are seemingly terrified of what they themselves crafted.
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Later today, the monthly index cycle update!

European 'Sunday night surprise'

One Sunday in the future we're going to get a real big surprise from the European side of the Atlantic. Whether its a Greek exit, one of the other PIIGS, or even the more exciting Germany 'we're leaving', its just a matter of when. Regardless, we're currently seeing a moderate pullback in the Euro.


Euro, daily

Euro, weekly

Summary

With the break above 1.26 a few weeks ago, the Euro has broken the long standing upper descending channel, that goes all the way back to spring 2011, when the Euro was 1.47

We have a few obvious gaps to the downside in the coming days, 1.27 and 1.24. The latter seems unlikely to be hit in the very near term.

What seems clear is that the Euro is a much dirtier piece of paper compared to the Dollar, which is without question still King in fiat land.

Long term Euro trend still appears likely downward, one Sunday night though, it could all change literally overnight. If one of the PIIGS leaves, the Euro would probably be stronger. What is probably one of the ultimate black swans....a German exit. Right now that seems impossible whilst Merkel is in command, but she won't be there forever.
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*across the weekend, the important monthly cycle update. Have a good weekend

Goodnight from London

Daily Index Cycle update

After yesterdays madness, the broader market closed moderately lower today by around 0.5%. Certainly, only part of Thursdays gains were taken back by the bears, and there remain what could still are probably bull flags on many of the indexes.


Dow

NYSE comp

Sp'daily5

Transports

Summary

Today's moderate declines offer some renewed hope that the original 1420 target can still be hit.

Considering the MACD (blue bar histogram) cycle, we are now very low, and 1420 looks a very likely near term floor. It would be surprising if somehow we can punch through the recent important 1397 low, before at least one further up cycle.

The doomer bears need to see an overnight gap through the 1420 level, otherwise, I just can't see it in this cycle.

The one particularly bearish aspect to close the week and month was the transports, with a monthly close below the key 5000 level for the first time since December 2011. The 'old leader' is warning of trouble for October, and this warning is not to be dismissed lightly.

A little more later