Good morning. Futures a touch higher, sp +2pts, we're set to open around 1685. Hourly charts are offering upside into the Friday close. Bulls need at least a weekly close >1675, which will set up the 1700s next week.
sp'60min
Summary
So...the bears aren't getting a big gap lower..and with QE today of 3-4bn, the market could even achieve a weekly close in the 1690s.
That would surely seal the fate of the bears for at least a few more weeks.
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*I am long the indexes, and would consider an exit in the mid 1690s later today, although that seems somewhat unlikely.
The market closed Thursday a little lower, but much more important will be how we close the week. Equity bulls should be satisfied with any close above the weekly 10MA of sp'1675. The bears should look to break back under the (still rising) 50 day MA of 1671
sp'weekly8 - bullish outlook
Trans'weekly2
Summary
A down day for the market, but really, its nothing for the equity bears to get overly excited about, not least with the VIX still in the low 14s.
I can only think that the market will soon be entirely focused on the FOMC of next Wednesday, where we will probably see the first reduction in QE, if only 10/15bn. That still leaves a VERY sizable $70bn or so a month, which will continue to be a problem for the bears into spring/summer 2014.
Re: charts. The transports just need to clear the 6600s, and that should open up a straight run to the 7000s. That should equate to sp'1750/75, perhaps by mid/late October.
USD flashing red
I have not been following the currencies that closely lately, but noticed that the USD monthly chart is not looking so bullish.
USD, monthly'2, rainbow.
We certainly do NOT have a break of trend yet, but you can see the underlying weakness in the MACD (green bar histogram) cycle, which is set to go negative in October. Also of note, the monthly bollinger bands are getting very tight. A big move is coming. As ever..the only issue is which way? Right now, I'm guessing up, but that is dependent upon the EU (and Japan) still being perceived as weak.
Arguably, much of what happens in the world financial system is due to market perception, and that sure doesn't have to reflect the reality of the situation. Despite the continued 'dollar doomer' talk*, I still think that the EU and Japanese currencies will fall first.
*Many recognise of course that sooner or later, the global currency system will be 'reset' in some manner.
Looking ahead
There is a fair bit of econ-data to conclude the week, producer prices, business inventories, consumer sentiment, and most importantly...retail sales. If those all come in 'reasonable', the market should be able to hold flat..or moderately climb into the weekend.
*there is sig' QE-pomo of 3-4bn, which will surely help give the market an upside kick.
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*I am long the market (gods help me) from sp'1687, seeking the 1700s next week.
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Two video updates to close the day, the first from Mr Permabull...
You can see the chart line Oscar is talking about, on the Dow, weekly
The doomer bears could justifiably argue it is a back test of broken support. However, you can see an outright bullish green candle at the important 10MA. You could even argue the Dow is offering the top of a RS Other indexes are much stronger though, not least the Nasdaq.
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The second from Walker, who remains even more permabearish than yours truly
The main indexes closed weak, with the sp -5pts @ 1683. The two market leaders - Trans/R2K, saw more significant declines of -1.1% and -0.65% respectively. Near term trend remains broadly bullish, and equity bulls should be seeking any weekly close >1675.
sp'daily5
R2K
Trans
Summary
So..the bears finally managed the first daily equity decline of the month. Yet, considering the rather significant gains already this week, a minor pull back is not exactly unexpected.
Based on the bigger weekly charts, bulls should be able to comfortably sustain any Friday drop to the mid 1670s, but should most definitely be mindful if we break into the 1660s again.
Considering the strength seen in the Nasdaq, and indeed also the two leaders - Trans/R2K, earlier this week, I would be surprised if things unravel from here. The weekly charts simply don't support any bear case in the near term.
As ever, one day at a time, lets see how we close the week!
