June ends on a very positive note

US equity indexes closed significantly higher for a third consecutive day, sp +28pts @ 2098. The two leaders - Trans/R2K, settled higher by 1.0% and 1.8% respectively. VIX settled lower for a fourth consecutive day, -6.1% @ 15.63. Near term outlook threatens the 2103/13 gap zone, before renewed downside to the 2040/30s.


sp'daily5

VIX'daily3

Summary

So, June concludes with three consecutive days of significant upside, with the sp'500 swinging 107pts (5.4%), and the VIX imploding from the 26s to the 15s.

Frankly, its truly bizarre.. considering that nothing has changed since Monday afternoon. A bounce was due.. but not of this size.

Of particular note today, was the Bank of England's Carney, who threatened a rate cut and renewed QE, to help protect the UK economy/market from the BREXIT result.

It is indeed the case that the central bankers can't even cope with a 5-10% market decline, without issuing more threats of monetary easing. It is a sign of weakness.... not strength.

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Notable highlights for the sp'500, Transports, and UK FTSE

sp'monthly1b

A net monthly gain of just 1.9pts (0.1%) @ 2098, but a full 67pts above the key 10MA. Certainly, it sure isn't a bearish monthly close, but neither is it any more bullish than the previous two months of moderate chop.


Trans, monthly

Not all US indexes ended the month net higher, with the 'old leader' - Transports, closing lower for a third consecutive month, and a touch below the 10MA. Those equity bulls who believe the US and broader world equity market is set to break up and away, should be seeking a July/Aug' close >8k.


UK - FTSE, monthly

With Carney issuing threats, the UK market soared into the June close, settling +4.4% @ 6504 - the highest monthly close since Aug'2015. The June candle is the most bullish since Oct'1998, where the FTSE then climbed for a further six months.

Those equity bears holding to the view of broader weakness this summer - and into the autumn, really need to spend a good hour or two staring at the above chart. 

Finally, it is highly notable that at tomorrow's July open, the underlying MACD (green bar histogram) is set to turn positive for the first time since May 2014, and neither is that something the bears should dismiss lightly.

Goodnight from London

Awaiting the monthly close

US equities closed significantly higher for a second consecutive day, sp +34pts @ 2070 (intra high 2073). The two leaders - Trans/R2K, both settled higher by 2.2%. VIX settled lower by -11.2% @ 16.64. Near term outlook offers renewed cooling into end month to the 2050/40s.. with <2K next week.


sp'daily5

VIX'daily3

Summary

So, a second day for the equity bull maniacs, many of whom are now touting new historic highs - much as they were last Thursday afternoon.

A bounce was expected, although even I was surprised to see the 2060s this morning.. and the 2070s this afternoon. It was pretty incredible to see the VIX 16s... a full 10pts lower than Monday.

Is everything fine now? Was the BREXIT vote just overblown out of proportion?

No. Hell no.

Other EU states are going to vote to leave. The EU is going to fragment. Perhaps there will remain a core in 4-5 years, but there is no doubt Spain and many others are going to want to leave.


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June set to conclude

sp'monthly1b

As things are, we look set for a net monthly decline (<2096), but it does look likely that the bull maniacs will manage a fourth consecutive close above the key 10MA.

A June close in the 2050/40s won't give any clarity to either bulls or bears. Even if there is renewed downside in the first half of July to sp'1980/20s, then it will again be a case of whether the July close is under 2K.

Goodnight from London

Its just a bounce

US equity indexes closed significantly higher, sp +35pts @ 2036. The two leaders - Trans/R2K, settled higher by 2.2% and 1.6% respectively. VIX settled lower by a rather severe -21.4% @ 18.75. Near term outlook offers the sp'2040/50 zone - with VIX 17s, before another strong reversal lower.


sp'daily5

VIX'daily3

Summary

So... yesterday saw a double floor of sp'1991, confirmed with today's net gains. Considering the decline from 2113-1991 took only two days, the bounce should (in theory) be no more than that.

Yesterday's VIX decline remains notable, relative to the very significant equity declines. It would seem, even if renewed downside to the sp'1950s.. VIX will max out no higher than 28/32.


The monthly close

With just two trading days left of June, my attention is increasingly on how equities, and many other asset classes will settle the month...

sp'monthly1b

As ever, I think the equity bears should be seeking a close under the key 10MA - which currently sits as 2025. Clearly, that is well within range. A Thursday/June settlement under the giant psy' level of 2K would be a real bonus, considering we closed last Thursday at 2113.

As for tomorrow, the bounce should have exhausted itself, and we should close at least marginally lower. It will be interesting to see how many of the bull maniacs decide to sell into month end, and ahead of the July 4th holiday break.

Goodnight from London