Pre-Market Brief

Good morning. Futures are somewhat lower, sp -15pts, we're set to open at 2090.With the USD -0.6% @ DXY 94.40s, the metals are bouncing, Gold +$10, with Silver +0.8%. Oil is +1.6%, back above the $60 threshold.


sp'60min

Summary

So.. as expected, we're set for a gap lower this morning, although its a little more than I was seeking.

Things really only get bearish with a daily close <2080, and I just don't see that likely today.

Equity bears should be VERY mindful of opening reversal candles in the indexes, with a black-fail candle on the VIX ...... especially in the 14.75/15.00 zone.
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Verizon bid $50 for AoL (Tuesday close $42s), although that only gets AoL back to the level from last December.
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China had a third good night.. +1.6% @ 4401. Any daily closes in the 4600s will confirm that 5K is coming.. as early as June, that would make for a very natural mid-term top.

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Meanwhile, I have my eyes more focused on Gold...

GLD, 15min

A re-short in the 114.50s looks very reasonable... considering the broader price structure, which remains a large H/S formation. Target remains Gold $1000... equiv' to GLD 95.
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Good wishes for Tuesday!
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9.32am.. Opening VIX 14.73... right in target zone.... a black-fail candle.. looks due.


9.50am.. SHORT GLD from 114.30s

China headed for 5K

Whilst US equities started the weak moderately weak, the China market has resumed normal service, after interest rates were lowered for the third time this year. The Shanghai comp' has a viable floor of 4099, and is already back to 4333. Continued upside to the giant 5K threshold looks very probable.


China, daily

China, monthly

Summary

*I continue to think it is useful to keep in mind many of the non-US markets, as everything is connected of course.
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So... a second consecutive daily gain for the SSEC, and there will be clarity on any daily close >4572.

Considering the recent rate of gains, 5K looks viable by late June.

From there.. a natural retrace back to the multi-year breakout zone of 3500 looks probable... and yes.. that is a VERY powerful 30% lower.
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Looking ahead

Tuesday will only see US Treasury budget data.

*Fed official Williams (the T-shirt guy), will be talking in the lunch hour, and Mr Market will again be listening for any talk of int. rates or equity valuations.
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Goodnight from London

Daily Index Cycle update

Equities closed moderately weak, sp -10pts @ 2105. The two leaders - Trans/R2K, settled -0.1% and +0.1% respectively. Near term outlook offers Tuesday weakness to sp'2095/90, before the broader trend reasserts itself. The sp'2130s remain a valid upside target by end week.


sp'daily5

R2K

Trans

Summary

Transports - 'old leader' looks increasingly poised to break to the upside. A daily close in the 8900s would be decisive enough to offer clarity that a challenge for new historic highs in the 9300s is viable in June.
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As for the sp'500.... some moderate weakness to the 2095/90 zone tomorrow... before 2120/30s later this week. The weekly cycle offers the 2140s before end month.
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Mr Riley is back :)


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a little more later...