With capital markets shocked by the BREXIT, US equity indexes saw net weekly declines, ranging from -3.6% (Transports), -1.6% (sp'500, Dow, NYSE comp'), to -1.5% (R2K). The bull maniacs have seen yet another failure to break up and away. Near term outlook offers downside to the 1950/25 zone, and eventually the 1600s.
Lets take our regular look at six of main US indexes
sp'500
The sp'500 closed Thursday at 2113, a mere 1.1% from the May 2015 high. Yet the BREXIT outcome resulted in a very significant Friday gap lower, with the sp' seeing a net weekly decline of -33pts (1.6%) at 2037.
Underlying MACD (blue bar histogram) ticked lower for a third consecutive week, and is set to turn negative - with a bearish cross, at next Monday's open.
Best guess: A break of the critical low of 2025, spiralling lower to the 1950/25 zone, before the July 4th holiday weekend.
The Feb' low of 1810 will be tough to break, but the giant monthly cycles are offering the 1600/1500s by the early autumn.
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Nasdaq comp
The tech' saw a third weekly decline, -1.9% in the low 4700s. Next support is around 4500, which is a clear 4% lower. The 4100s are possible, but that is over 10% lower, and would equate to sp'1850/00.
Dow
The mighty Dow settled -274pts (1.6%) @ 17400. With the strong Friday decline, the Dow saw a bearish MACD cross. First soft target is the 17K threshold, and then 16600/500s. The Aug' 2015 low of 15370 is going to be tough to hit in the current down wave.
NYSE comp'
The master index settled -1.6% in the 10100s. The weekly candle has a very notable spiky top, and is highly suggestive the 10K threshold will be broken into end June. From there, first downside are the 9600/500s, with a grander target of 8K, which is a clear 20% lower.. equiv' to sp'1600s.
R2K
The second market leader - R2K, has followed other indexes, and broken rising trend, settling -1.5% @ 1127. At the current rate of decline, there will be a weekly MACD bearish cross in six trading days - July 5th. Next soft support is the May low of 1085.. almost 4% lower. From there, the 1050/40 zone in first half of July. The giant monthly cycles are offering mid term capitulation in the 800s.
Trans
The 'old leader' - Trans, continues to lead, swinging from 7757, to settle -3.5% in the 7300s. With a severe Friday decline of -4.6%, the weekly MACD cycle has turned negative. A break of 7K looks due, and that will offer a test of the Jan' low of 6403 in July/August. Grander downside is the 5500/5000 zone.
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Summary
A very bearish weekly close for all US equity indexes.
The weekly candles are of the bearish engulfing type, all have spiky tops, which is highly indicative of another failure by the equity bull maniacs to break decisively upward.
Further powerful downside looks highly probable next week, on the order of 3-4%.
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Looking ahead
Another busy week is ahead, not least as the market will still be reeling from the UK vote.
M - intl' trade, PMI serv'
T - GDP (second rev'), corp' profits, case-Schiller HPI, consumer con', Richmond fed
W - pers' income/outlays, pending home sales, EIA report
*Yellen, Carney (BoE), Draghi (ECB), and Tombini (BoB), are having a little central banker get together in Portugal, and that will likely get considerable TV coverage in the morning.
T - weekly jobs, Chicago PMI
*Bullard is appearing in London around 2pm, at a dinner function of the society for business economists.
Thursday is June 30th, and there will be some end month/quarter trading issues. Vol' will likely be higher, and price action will tend to be more dynamic.
F - PMI/ISM manu', construction
The following Monday will be July 4th, when the US market will be closed. Friday trading will tend to be somewhat lighter.. and that will likely favour the equity bulls.
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