Pre-Market Brief

Good morning, and welcome to Q4. Futures are a touch higher, sp +3pts, we're set to open at 1684. Most notable early action is in the precious metals, which are seeing rather severe falls, Gold -$30, and Silver -76 cents (3.7%).


sp'60min

Summary

Despite the US Govt' seeing a limited (and no doubt) temporary shutdown, the market is indeed not crashing, and the likely opening gains are indeed somewhat ironic.

I'm not yet aware of why the metals are getting smashed, but then, the mid-term trend is still to the downside, and I'm looking for a good 30% lower on Gold, and 50/60% off Silver. Those are crazy bold targets I realise, but I'm pretty confident on them, before the next grand multi-year wave higher.

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Equity bulls should be seeking a break into the 1690s..and a daily positive close, would probably help to start a new multi-week up wave.

8.50am.. Gold now -$32..which really does seem odd...but anyway... the miners are naturally significantly lower.. GDX -2.7%...and in danger of breaking the key $24 level. If that goes..target is $22s.


9.03am.. Gold low so far...-$41..


9.22am... Perhaps the biggest story of the day...one no one else mentioned yet...

USD/DXY..broken the 80 threshold...in the 79.80s. First target are the 77s, thats a good 3% decline.

September was a clear break of the trend from 2011, the obvious now is whether the 70s will hold across the next year or two.

Does the Fed want to kill the dollar, and help to kick up asset prices that way?


9.41am... a lot of the reversal candles from yesterday are being confirmed...see stocks like F, UAL.

The Trans/R2K are breaking higher...

The sp' is trying to break out of the recent down trend (bull flag?).

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Time for another quarter

Q3 comes to an end, with the main indexes continuing their broad climb from the key lows of Nov/June 2012, and Oct'2011. Indeed, sp'1074 now seems such a long way down. Which comes first...sp'2000..or 1000? Considering ongoing QE of $1trn per year, I have to assume its the latter.... urghhhh.


sp'monthly

Trans'monthly

Summary

So...we're 75% of the way through 2013 (what a thought!), and the market is currently around 20% higher for the year.

I continue to read around so many great chartists/blogs, a fair few of which are looking for much lower equity levels this Oct/November, but really, I just can't see it occurring.

QE continues, and once this US Govt' shutdown (and the subsequent debt ceiling) issues are out of the way, there is very little reason why the market won't be able to resume..if not even accelerate the upward trend into spring 2014. If that sounds hyper-bullish...its because it is.


Bears still waiting

Despite the post FOMC price action being moderately weak, the monthly charts most certainly closed the month pretty bullish. The monthly rainbow chart closed with a blue candle on the sp'500, and that's the third one out of the past four months.

sp'monthly3b

The monthly blue candle closing is kinda interesting, but still, doomer bears need RED...blue is just not good enough! Further, it remains important to recognise the support that the monthly 10MA offers, which at the Oct'1 open..will likely jump to around 1610.


Looking ahead

There is ISM manu' and construction data tomorrow, although clearly, Mr Market will be more focused on what is happening on Capitol Hill.

*there is sig' QE-pomo this Tuesday of around $3bn
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The bears have been smashed around by the bulls for the past two years..and we're around 60% higher since then. Yes, there are serious macro-econ problems out there, but for now..things look 'contained'. I wish I could believe otherwise.
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Video  - from Bloomberg


Every cycle is unique of course, but if you add 12% onto the current sp'1680, that gives 1880. My year end target if 'everything holds together, with continuing QE' is the 1850/1950 zone. I'm certainly not touting sp'2000s until the spring, but for the bulls out there, the sp'1800s would be more than sufficient, and be a net yearly gain of around 30%.


Gold/Oil update - from Walker



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Goodnight from London

Daily Index Cycle update

The main indexes closed lower, but certainly not 'significantly', with the sp -10pts @ 1681. Near term trend remains moderately bearish, but once the current down cycle completes, equity bears had better find the exit door...fast! VIX reflected the slight market concern.


sp'daily5

R2K

Trans

Summary

..and the third quarter comes to an end.

The sp'500 has declined for 7 of the past 8 trading days, and I do understand why some are getting a little excited - if not arrogantly confident, of a major..if not severe downside wave in the coming month or two.

Yet..I just don't see it. I don't see the bears as having had any significant downside power in the past few months. Its taken the bears 8 days to break the market 50pts lower from the FOMC spike high of 1729. If you take the pre-FOMC spike, bears have managed a drop of just over 1%.

When you also consider the two market leaders - Trans/R2K, both of which closed today with reversal candles, I'm very concerned the market is viable to a VERY significant snap higher..with major multi-week up wave starting..at any point this week.

Yes, there is uncertainty with the looming US Govt' shutdown, but in the scheme of things, its simply not a very important issue.


Video update from Mr Permabull


a little more later...