The swings continue

US equity indexes closed significantly higher, sp +43pts (1.7%) at 2656. The two leaders - Trans/R2K, settled higher by +1.1% and +1.9% respectively. VIX settled -6.0% at 20.47. Near term outlook threatens another wave lower, but the 200dma (sp'2595) looks secure.


sp'daily5

VIX'daily3

Summary

The powerful equity swings continue, with today seeing equities open sig' higher. The market climbed to 2662 in the 11am hour, then briefly fell to 2635 on another sporadic Cohen-related news headline. There was a fair amount of chop in the afternoon, but the market did manage a new intraday high of 2665, before some moderate cooling.

Meanwhile, it was a day of moderate chop for the VIX, seeing an opening reversal, but then melting lower in the afternoon. Its notable that despite significant net equity gains, the VIX still managed a close above the key 20 threshold. 

Near term outlook offers another cooling wave, perhaps as low as around the sp'2600 threshold. However, unless VIX can break >26, with sp' seeing a close under the 200dma, the broader outlook still leans to the bulls. Earnings are set to start pouring in, and those will be a reminder that the US economy is far from recession.

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Failed gains

US equity indexes closed a little mixed, and significantly below their highs, sp +8pts (0.3%) at 2613 (intra high 2653). The two leaders - Trans/R2K, settled -0.3% and +0.1% respectively. VIX settled +1.3% at 21.77. Near term outlook offers Tuesday weakness.


sp'daily5

VIX'daily3

Summary

US equities began the week with a significant bounce from the Friday close of sp'2604, climbing to an early afternoon high of 2653. However, there was then a rollover, and things increasingly spiralled lower, not helped by news of an FBI raid on the office of Trump Lawyer Cohen.

The daily candle is of the black-fail type, with a clear spiky top, indicative of a failed rally/bullish exhaustion. It bodes bearish for at least part of Tuesday. The ultimate issue is whether the market will fail to hold the 200dma (sp'2594).

Volatility saw a mixed day, and with late day equity weakness, the VIX settled a little higher in the 21s.Things only get interesting if >26s, which would offer the 29/30 zone.


Bears running out of time

Earnings are set to start pouring in. Certain stocks - such as CAT, have price structure of a giant bullish pennant. Today's settling black-fail candle though is an immediate concern for Tuesday. CAT hasn't seen any daily closes under the 200dma ($135s) since March 2016.

CAT, daily

Any price action in CAT above the 50dma (currently $153s) would be decisive, and offer new historic highs this summer. That is clearly the most bullish 'rainbows and unicorns' outlook, but price structure IS a bullish pennant.

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Weekend update - US equity indexes

It was a bearish week for US equity indexes, with net weekly declines ranging from -2.4% (Trans), -2.1% (Nasdaq comp'), -1.4% (sp'500), -1.0% (R2K), -0.8% (NYSE comp'), to -0.7% (Dow). Near term outlook offers another 5% lower, before resuming upward into early summer.


Lets take our regular look at six of the main US indexes (monthly charts)

sp'500

The sp' saw a net weekly decline of -36pts (1.4%) to 2604. More broadly, the sp' is lower for a third consecutive month, currently 10pts under the key 10MA. Underlying MACD (blue bar histogram) on the giant monthly chart is ticking lower for a third month, and will be due a bearish cross in May, unless the market can settle April well above current levels.
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Nasdaq comp'

The Nasdaq settled lower for the third week of four, -2.1% at 6915. The tech' is currently lower for a third consecutive month, but still above the key 10MA. A bearish macd cross will be a threat at the May 1st open, unless April settles higher than current levels.


Dow

The Dow was the most resilient index this week, settling -0.7% at 23932. The Dow is the only index that has broken the Feb' low (if fractionally and briefly). Like most other indexes, the Dow is currently lower for a third month. A bearish macd cross will be due in May/June. Note the 20MA in the 21800s.


NYSE comp'

The master index settled the week -0.8% at 12349, and like other indexes, is currently lower for a third month.


R2K

The second market leader - R2K, settled lower for a third week of four, -1.0% at 1513. Keep in mind the Feb' low of 1436, which is still a considerable 5.1% lower. A bearish MACD cross is viable in the immediate term.


Trans

The 'old leader' - Trans, was hit pretty hard this week, settling -2.4% at 10146.A bearish macd cross is due in May/June.
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Summary

All six of the US indexes saw net weekly declines, lead lower by the Transports (2.4%), whilst the Dow (0.7%) held up relatively well.

The Dow is so far the only index to break below the Feb' low.

Further weakness of around 5% does seem very probable, and is most likely next week, ahead of the first batch of key earnings.

For now, I still see the Jan' high as some kind of intermediate top. Considering the econ-data and earnings, a renewed push to the sp'2950/3047 zone still seems probable in the months ahead.
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YTD price performance

Its been a mixed year so far, with the sp' having swung from a new historic high of 2872 to currently net lower by -2.6%. The Nasdaq is holding up best, currently +0.2%, whilst the Trans is -4.4%.
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Looking ahead

The first big earnings for Q1 are set to appear, with the financials of C, JPM, and WFC.

M -
T - PPI
W - CPI, EIA, FOMC mins, T-budget
T - Weekly jobs, import/export prices
F - Consumer sent.

*there are a handful of fed officials on the loose, notably Rosengren and Bullard on Friday. However, I believe the market will be far more focused on further tariff news, presidential tweets, and earnings.
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Have a good weekend
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*the next post on this page will likely appear 6pm EST on Monday.