US equity indexes closed broadly weak, sp -32pts @ 2127 (intra low
2120). The two leaders - Trans/R2K, both settled lower by -1.9%. VIX settled +17.7% at 17.85. Near
term outlook is for another lurch higher, but with increasingly subdued
chop into early next week.. ahead of the FOMC.
sp'daily5
VIX'daily3
Summary
Things certainly remain a little wild. After two months of micro chop... now we get 3 consecutive days of rather powerful price action.
Short term.. we've a clear double low of sp'2119/20.. with VIX maxing out in the 19/18s.
Each day closer to the FOMC announcement, the market will be more inclined to be subdued. Yet... Thurs/Friday will see a wheel barrow of econ-data, and Friday itself is a quad-opex.. which by definition would likely see increased vol' and price action.
So.. its a bit of a messy picture. Things will get simpler once the FOMC is out of the way. Soon after of course... Q3 earnings.
US equities settled broadly higher, sp +31pts, @ 2159 (intra low 2119). The two leaders - Trans/R2K, both settled higher by 1.3%. VIX settled -13.4% @ 15.16 (opening high 19.12). Near term
outlook threatens further chop, with some cooling to the 2140/30s. Broadly, the 2200s remain due.
sp'daily5
VIX'daily3
Summary
For anyone watching pre-market, there were already a few signs that the equity bears were in trouble. One that stood out to me was seeing pre-market VIX +10%... yet the 2x lev' bullish instrument of TVIX was only +1%.
The opening equity declines sure didn't last long, and we saw a classic opening reversal, with gains building across the day. Considering the severity of the Friday declines, it was surprising to see how the market managed to keep pushing upward... rather than get stuck around natural fib' retraces of 2142 or 50.
Clearly, price action is likely to remain somewhat choppy ahead of next Wednesday's FOMC. Once that is out of the way though, things should resume broadly higher.
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Fed/market chatter from Schiff
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On clown finance TV this lunchtime, Johnson of Piper Jaffray was resolutely holding to a year end target of sp'2350
Frankly... I'm in agreement. The 2300s are well within range, not least as Q3 earnings should at least be 'reasonable'.
As I will keeping say.... things will only turn broadly bearish if we're trading below the monthly 10MA (along with a few other related aspects of support). Right now, unless we see the sp'2050s or lower, equity bears have little to be confident about.
After a very significant Friday decline, US equity indexes are somewhat mixed. Most indexes continue to hold the upward trend that stretches back to the Jan/Feb' lows. Notable exceptions are the Dow and NYSE comp', which are offering a hint that not 'all is well'. The monthly close will (as ever) be important.
Lets take our regular look at six of the main US indexes
sp'500
The sp' saw a new historic high of 2193 in August, and has been struggling to exceed it. There was a clear market break on Friday, with a great many support levels broken. Most important of all, the market settled the week back under the breakout level of 2134.
Underlying MACD (blue bar histogram) cycle has been flirting around the zero threshold for the past few weeks. With the Friday decline, we're back to fractionally negative. It won't take much of a rally to turn it positive though. Its not essential, but equity bulls should be seeking a Sept' close >2140/50.
It is notable that the upper bollinger is currently offering the low 2200s, whilst the lower boll' offers the low 1900s. The key 10MA is 2070, further weakness would see it fall to the low 2060s. A Sept' close in the 2050s would be decisive enough to sound alarm bells.
Nasdaq comp'
The tech' saw a Friday decline of -133pts (2.5%) to 5125. Yet.. it is notable the Nasdaq comp' broke a new historic high this past week of 5287. For now, rising trend from the Feb' low of 4209 is comfortably holding. Things only turn bearish with price action under the 5000/4950 zone.
Dow
The mighty Dow is starting to not look so mighty, as its currently net lower for Sept' by -315pts (1.7%). First support is the 18k threshold, which after the Friday decline, is only 85pts away. If that fails, next support is the 10MA in the 17600s. There is already a slight break of rising trend, as the Dow is struggling to match the relative upside seen in the sp' and Nasdaq. Alarm bells should sound if the June-BREXIT low of 17063 is breached.
NYSE comp'
The master index - much like the Dow, is seeing a fractional break of the upward trend that stretches back to the Feb' low. First support is the 10MA in the 10300/200s, and then the giant psy' level of 10K. Any monthly close (whether Sept, Oct.. or beyond) <10K would bode badly for the broader market.
R2K
The second market leader - R2K, hit 1261 just a few days ago, a mere 35pts (2.9%) from the summer 2015 historic high. The Friday decline has caused some short-term problems. By end month, rising trend will be around 1210. Any price action <1200 would be decisively bearish. It is notable that underlying price momentum remains net positive, which is the most bullish situation since mid 2014.
Trans
The 'old leader' - Transports, traded to 8083 on Thursday, the best level since April. Yet the Friday decline has taken the tranny back under the 8K threshold. Rising trend is currently around 7500... any price action under 7K would be extremely bearish.
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Summary
Most US equity indexes are holding the upward trend from the Jan/Feb' lows
The Dow and NYSE comp' are the first indexes to suggest the broader market might have a problem this autumn.
The Sept' monthly close will be extremely important. A close in the sp'2050s or lower would be an extremely bearish sign for October. Equity bulls should be content with any close >2100, preferably >2140/50. Best guess: the broader US market, along with other world markets, resume higher into late Sept' - as the Fed still seem set to delay raising rates until the Dec' FOMC. That would be short-term bearish for financials, but the rest of the market should comfortably rally into Q3 earnings.
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Fed/market chatter from the Schiff
Usually worth a listen... especially after such a big market move. --
Looking ahead
M - -
T - US T-budget
W - import/export prices, EIA report
T - weekly jobs, PPI, retail sales, phil' fed, empire state, current acc', indust' prod, busi' invent'
F - CPI, consumer sent'. *QUAD-OPEX*
*fed officials Lockhart, Kashkari, and Brainard are speaking on Monday. With the usual 'blackout' period, that will be the last fedspeak until the FOMC announcement of Sept'21st.
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We should have a very interesting and dynamic autumn ahead.
