Daily Wrap

US equity indexes closed moderately higher, sp +6pts @ 2119. The two leaders – Trans/R2K, settled higher by 0.6% and 0.7% respectively. VIX settled +0.2% @ 14.08. The market has built almost 5% of downside buffer room, ahead of the FOMC/BREXIT.


sp'daily

VIX'daily

Summary

It was just another day of algo-bot upside melt, with a new multi-month high of sp'2120.55, a mere 14pts (0.7%) from the May 2015 high.

VIX remains broadly subdued, ahead of next week's FOMC, when (as most agree), the Fed will once again refrain from raising rates. This time they have excuse number 427 'lousy jobs data', along with excuse number 428 'looming BREXIT vote'.

All things considered, a down wave to at least briefly test the recent key low of sp'2025 looks due. If the market holds above that low, the VIX will not see any sustained action above the key 20 threshold.


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Macro chatter on China, Mr Long and Mr Smith



*the audio is a little off, but its worth sticking with.


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USD still cooling from the weak jobs data

weekly, 3yr

The market continues to believe the fed won't raise rates next week... nor in July (not least if Q2 earnings come in weak). Broadly, the USD remains stuck in a near 10% range since the first hit of the DXY 100 threshold in March 2015. The dollar doomers have nothing to tout unless a break <90.
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Goodnight from London

Daily Wrap

US equities closed moderately mixed, sp +2pts @ 2112 (intra high 2119). The two leaders - Trans/R2K, settled higher by 1.1% and 0.2% respectively. The VIX settled +2.9% @ 14.05. Near term outlook remains extremely borderline, as the market is on the edge of a major bullish breakout.. or the third epic fail since summer 2015.


sp'daily

VIX'daily

Summary

Today provoked a few flash backs to the algo-bot upside melt of 2013.

Equity bulls had a new multi-month high of sp'2119 to tout - a mere 15pts (0.7%) from the May 2015 high. Although it remains notable that most other indexes are still significantly below their historic highs.

Volatility remains bizarrely subdued in the low teens. A move to at least briefly test the key 20 threshold looks highly probable this month, especially around the time of the next FOMC (June 15th), and the BREXIT vote (June 23rd).


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The wave five scenario

First, to be clear, I'm no direct follower of Elliott wave, but I'm well aware of some of the outlooks currently being held. Most notable.. is the following count/theory...

sp'monthly1c

Effectively... if Jan/Feb' saw a C' wave complete.. we're soon to break up and away. Upside price target would be somewhere in the 2300/2500 zone (at min). However, an issue that is usually overlooked is the aspect of time.

If sp >2134 this summer... then at minimum, I would be seeking broader upside into spring 2017. However, based on the fact that wave'1 - March 2009-May 2011, spanned a full two years, if you simply extrapolate that from the recent lows.. that is more suggestive of upside into 2018...a clear 18 months.


Siegel on CNBC...

Talk of Dow 20K has resumed on clown finance TV. The one thing that Prof' Siegel is concerned about is if earnings fail to improve, current equity levels are arguably pricey.
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I would agree there are a truck load of threats to the market right now, but the market will do what it will do. There is no point fighting it, and if June closes broadly in favour of the bulls, then those bears who can't stomach being long should merely go into early hibernation... for a very considerable time.

Goodnight from London

Daily Wrap

US equity indexes closed broadly higher, sp +10pts @ 2109 (intra high 2113). The two leaders - Trans/R2K, settled higher by 0.5% and 1.1% respectively. The VIX settled +1.3% @ 13.65. The situation remains extremely borderline, just like June/July, and Nov/Dec' 2015.


sp'daily

VIX'daily

Summary

So.. a day for the equity bulls, with the sp' coming within 21pts (1.0%) of the May'2015 high of 2134.

We've been here a fair few times in the last year... and most traders should be having a serious case of deja vu... all over again.

I realise some are arguing for the market to remain range bound, but I'm of the mindset that either a bullish breakout will occur this month... or things are going to unravel again.

For the moment, I'm still leaning on the latter, but if we do break above sp'2134, then its a case no more shorts for the remainder of year, and instead... selective 'value' longs.
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I've not forgotten today was June 6'th... marking 72 years since the D-day landings in France.

Ice Cold in Alex (1957).

Many never made it home in the summer of 1944, and it puts the utter nonsense... that is the US equity market into true perspective.

Goodnight from London