Pre-Market Brief

Good morning. US equity futures are moderately higher, sp +4pts, we're set to open at 1907. USD is -0.3% in the DXY 98.50s. Metals are flat. Oil is +1.3%... ahead of the latest EIA report.


sp'60min

Summary

*awaiting ADP jobs data.. and a few other things.
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Overnight futures are somewhat twitchy, not least as Asian/EU markets are broadly weak.

Yesterday certainly gave the mainstream a scare, and it should serve as a reminder that the market is vulnerable to big declines on almost any excuse.

Best guess: today will be messy.... with a lower low (<1897) late today/tomorrow. Friday offers better chance of a sustained rebound, with the sp'1970s viable next week.

With the weekly cycles as they are, I can't get involved until next week, preferably a short from 1970s next Wed/Thursday.

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Update from Mr C.



Considering its now February, Oscar sure is skittish on issuing a broader downside target. I don't see why, as he is now unquestionably selling into each rally.
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Doomer chat, Hunter with Salinas



I highlight it, not because it makes much sense, but because its a fine example of why those obsessed with gold have lost the plot. The notion that gold is going to 'save the world' is beyond crazy.

Gold bugs can talk all they want about bank reserves, but its largely meaningless. Gold is only worth what the market decides... which is generally only marginally higher than production costs.
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Overnight action...

Japan: -3/1% in the 17100s, after financials decline, as Kuroda goes Draghi, threatening 'no limits' to QE/NIRP.

China: latter day recovery, -0.4% @ 2739
Germany: -1.2% @ 9473.... very weak price action
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Have a good Wednesday
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8.16am.. ADP jobs; 205k... not super great... but neither terrible. 

Eyes on the weekly charts

Having seen an effective 50% bounce-retrace (sp'1947) of the 2081/1812 wave, it was a pretty rough day for the US equity market, with the sp -36pts @ 1903. Far more important though is the state of the weekly cycles. From a pure cyclical perspective, the market arguably still needs to churn for another few weeks.


sp'weekly6

Summary

With a very significant net daily decline, the weekly candle has flipped from blue to red.

Underlying MACD (green bar histogram) cycle remains on very low side, and even if the market can battle upward to the sp'1970s, we'll not see a bullish cross until March.

A failure to see the MACD (black line) re-take the zero threshold is something equity bears should be seeking. The biggest declines in any cycle (whether nano 5min, or giant multi-year bear markets), is almost always when we have an initial down wave, a bounce, and then a much stronger secondary wave.
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Bigger picture, still bearish?

The following chart is highly speculative, but the pattern IS clearly similar, and if the analogy is to be used, this is not Jan'2008, we're in the equivalent of July/August.

sp'weekly8f

Every market cycle is unique of course, but in theory, we should break the sp'1812 low by late March.

Something to be on the lookout for are a few names in the oil/gas/mining sector to file for bankruptcy this spring. Industry capitulation is still due.
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Looking ahead

Wednesday will see ADP jobs, PMI/ISM serv' sector, and the latest EIA report.
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*bonus chart*

TLT, monthly2

The January close was a clear bullish break, and we're already in the 129s. Now its a case of whether the Jan'2015 high of $134.80 is broken above. Considering the bearish equity outlook into the spring/summer, TLT in the 140/150s is a viable target before bond prices max out.

Goodnight from London

Daily Index Cycle update

US equity indexes closed significantly lower, sp -36pts @ 1903 (intra low 1897). The two leaders -Trans/R2K, settled lower by -2.9% and -2.3% respectively. Near term outlook offers a moderate bounce, before a brief foray to 1890/80 zone... and then pushing back upward to the 1970s next week.


sp'daily5b

Trans

Summary

Suffice to add, broader market action from late December remains very bearish. Every bounce is being sold into.

Price structure on the Transports is particularly bearish, with a very clear multi-week bear flag. The 50dma remains first key resistance, and by end month that will be around 7100/7200.
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Closing update from Riley



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a little more later..