Monday update - bits and pieces

We are just three weeks into the year, and the bulls look firmly in control. Even an index retracement of 3-4% would do no damage to the strong trend, which now spans 9 weeks, and totals 142pts on the sp'500. The Sp'1500s look easily viable in February/March.

With the market shut, lets look at a few things that I not normally have the time to cover....


Copper, weekly

Copper has been trading in a very narrow range for the past year. A break of that rising support would be very significant, and especially be a warning of trouble for the precious metals. I don't expect such a break though, we'll more likely just bounce again, and if the Bernanke dollars find their way into the US market, I'd expect Copper in the 4s this spring.


WTIC Oil, monthly2, rainbow

Despite the weakening economy, WTIC Oil is holding up, and is now outright bullish on the rainbow chart. All that's missing is a break above that declining wedge in the $105 zone.

The deflationary doomer bears will need to take out $80, and then the June 2012 low of $77, which frankly..just doesn't seem likely anymore.


USD, monthly2 ,rainbow

The USD has moderately broken the rising support/channel from the spring 2011 low. I suppose its possible we might close January with a blue..or even green candle, but the dollar sure has struggled since last summer.

There is nothing particularly bullish here. A break into the USD 78s would be a warning of much lower levels in the spring..along with corresponding much higher equity/commodity prices.


SPY/VIX, weekly

With the VIX in the 12s..and the sp @ 1485, its not surprising to see such an extreme reading in the SPY/VIX ratio chart. We've not seen these levels since early 2007, way back during the hysteria of the property bubble.

Many would say we can't go higher...but hey, the trend IS up, and there is no sign of this levelling out. If there is a minor index retracement in the next week or two, then maybe look for yet another higher low, - a ratio of 9.. or maybe 8s.


Dow, monthly, 20yr

The big Dow'30 index continues to battle higher, and it seems very likely it will test the Oct'2007 high of 14198.

The underlying MACD (green bar histogram) cycle is a bit of a choppy..and even weak mess. There is no clear up cycle right now, despite prices significantly higher  It is remarkable to reflect on the fact that the bears never saw one decent monthly decline last year.


BDI, weekly, 6.5yr

The Baltic Dry Index remains near historic lows. Many of course would merely state its due to an over-supply of ships, and thus prices are very low. Doubtless, this is true to some extent, but still, we are 90% lower than the 2008 commodity bubble peak.

Certainly, who wants to be long shipping companies right now?
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Finally, another thing I rarely get to highlight...
 
US T-bill yields, 10, 20, 30yr

The Bernanke will not be pleased with the chart above. Its nothing serious yet, but if yields break the highs from spring 2012 - which also happen to be the lows of summer 2010, then the Fed' might start to get real twitchy.
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Underlying MACD cycle is unquestionably ticking strongly higher, and it looks like we'll have at least another 2 or 3 months in this up cycle. That would suggest equities won't be breaking significantly lower until April/May - at the earliest.

So, those bears looking for sp'1300/1200s sometime this summer/autumn, should probably keep an eye on this chart, and look for a rollover in bond yields from April onward.
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Well, that's it for today. I hope some of the above was at least 'kinda interesting'.

Back on Tuesday morning

Weekend update - Weekly index cycles

Another week higher for the main indexes, and it solidifies the gains from the New Years Eve snap higher. The SP'500 decisively broke, and closed above the mid-Sept' 2012 high of 1474, and this confirms the earlier breaks seen in the Transports, Rus'2000, and NYSE Comp.


IWM

Another 1.4% higher for the R2K, and my wild consideration that we could see IWM in the 100s this year is certainly becoming less 'crazy talk' with each passing week.

The weekly and monthly R2K charts are 100% bullish, and there is empty air 'to da moon'.


Nasdaq Composite

The tech sector continues to lag, not least due to AAPL - which remains almost 30% below its $701 high. Yet even the Nasdaq is battling higher, and is only 2% away from breaking the Sept'2012 highs.

A retracement could occur all the way down to 3050/25, without breaking the lower channel, and that's a good 4% lower. Bulls will obviously like to see the Nasdaq confirm the breakout as seen in the SP'.


Dow

The mighty Dow is only 12pts away from breaking the Sept' 2012 highs. Even a retracement down to 13100 would not do any damage to the broad upward trend.

It would seem likely we'll see the Oct'2007 Dow high of 14198 challenged within the next few months. No doubt, that will please the cheer leaders on clown finance TV, and confirm their belief that the Bernanke 'saved the economy'..if not the entire world (or..even Galaxy?).


NYSE Composite

The master index is holding comfortably above the old resistance/highs. Absolutely bullish. It is somewhat amazing to realise that the NYSE Comp is now 37% higher from the Oct' 2011 lows.


SP'500

The all important sp'500 confidently cleared the sp'1474 high after a few days of trying. The weekly close was very bullish, and the mid-term trend is absolutely suggesting we'll be trading in the sp'1500s in Feb/March.

The bulls have plenty of buffer on the downside. Even a move down to the 1430s does NO damage to the current upward trend. Everything is now outright bullish about the sp'500.


Trans

The break higher in the transports in mid December was indeed the leading warning of a major new wave higher in the broader US markets. The weekly close was exceptionally bullish, and the big 6000 level looks set to be hit in the next month or two.

The underlying MACD (blue bar histogram) cycle is certainly getting a little extended right now. However, even a multi-week pull back down to the low 5400s would do no damage to the mid-term trend. Indeed a back test of the old resistance/highs would be something the bulls should be seeking.


Summary

So, yet another week higher for the main indexes. With the SP' joining the Trans, R2K, and the NYSE Comp, I've seen more than enough now to confirm we are seeing a massive break higher in the entire US equity market.

The Dow and Nasdaq will no doubt see similar breaks higher in the coming weeks, and perhaps then begin a race to catch up to match the much stronger gains seen in the transports and Rus'2000.

As a permabear, I have to say I am keeping in mind the 'free money' (45bn of POMO) the Fed is now creating each month, and if most of that makes its way from the primary (bond) dealers into equities, then this market is just going higher.

Sure we could see a major multi-month wave lower at some point this year, but that will do nothing to negate the primary trend..which is unqustionably higher.


Where is that retracement ?

Since we were brushing up against the old 1474 high - two weeks ago, the big issue is when will the next retracement occur? With the break >1474, and the weekly close of 1485, its still a major unknown.

As things are...if we go no higher..the current Fib' levels are...

I'd have to guess we would take out the recent 1451 low, and thus the issue would be, do we get stuck around 1440 or 1430. The low end of the SPY/ES gap is at 1425..so a very brief floor-spike - washing out the weaker bullish hands, would be kinda understandable.

On any basis I do NOT expect a break below the December sp'1398 low, and indeed, I am now highly confident we'll see sp'1500s in late February or early March.

Indeed, if they can push out the debt ceiling issue until late April/May, then we could easily be trading in the mid 1500s..and be close to challenging the all time high of sp'1576.

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A little video bonus - highlighting the deep political/philosophical divide, particularly the bizarre notion that 'free market capitilism' was to blame for the 2008 financial collapse



Suffice to say, when did we ever really see a western government permit a 'free market' in the last hundred years anyway?

There is no point in hoping this will end well.  It won't. Its going to end....badly. But then...when was any 'end' a good end?
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*I will likely post something on Monday, whilst the market is closed, and his imperial highness is being re-crowned.

Good wishes from land of Her Majesty.

Daily Index Cycle update

The main indexes saw opening weakness again be negated by an afternoon rally. Once again, the Transports and the Rus'2000 closed at historic highs, with the sp' closing next to the upper channel line. Mid-term outlook remains bullish, with sp'1500s seemingly likely in February - even if we see a minor retracement into the sp'1440s.


IWM, daily

sp'daily5

Trans

Summary

Once again another day where we saw some moderate weakness in the morning, but as we moved into the afternoon....the recovery kicked in...and we closed moderately higher.  Its getting somewhat predictable!

The week certainly closed well for the bullish maniacs, and sp'1485 is a level not many were expecting for this January opex.

We still have 8 trading days left of the month, and during that time, we could easily see a retracement down to the sp'1440s, with VIX back in the 16s..perhaps even 17/18.

The mid-term outlook remains unquestionably bullish. The big monthly charts are extremely strong now., lead by the Trans/R2K.

Thats it for today....have a great weekend!

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*next posting will be late Saturday, very likely on the US weekly index charts.

..and don't forget..we're closed Monday!

Goodnight from a snow covered London city.