A bounce is overdue

US equity indexes closed moderately mixed, sp -13pts @ 2097 (intra low 2094). The two leaders - Trans/R2K, settled +0.2% and -1.3% respectively. VIX settled +4.1% @ 19.32. Near term outlook threatens a bounce into Friday, but broadly, a test of the 200dma in the 2080s looks a given by next Wednesday morning.


sp'daily5

VIX'daily3

Summary

Another broadly bearish day. Opening moderately lower, an attempt at an opening reversal, but failing, with the market cooling into the afternoon. A clear spike floor from sp'2094, which made for a lower low, but the VIX did not confirm, seeing a marginally lower high of 19.82.

For the wave counters out there, yes.. you can count 5 waves, and we're unquestionably due a multi-day bounce.

Original upside target of 2150/60 is well out of range. Instead, a move to the 2120/30s, before resumed downside to test the 200dma in the 2080s.
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Stagflation for the UK

UK, monthly, 20yr

The October candle was a little bearish with the spike.. not least a touch under the 7K threshold. The current monthly candle is already starting to look a little ugly. A monthly close under the 10MA in the 6500s looks difficult, but still.. the news in the UK ain't great.

There has been a great deal of chatter in the past few days about how inflation is now expected to hit 4% in 2017. Many further expect some degree of economic drag from the continuing BREXIT process that really hasn't even begun.
 
What are the BoE going to do? Would they dare raise rates to curtail inflation, despite an economy that they themselves deem vulnerable? No. Instead... the BoE will keep printing, keep rates low, and blame the weak pound for rising prices... something that further monetary easing would only worsen.

Great. Just. Great.

Goodnight from London

November starts on a bearish note

US equity indexes closed broadly lower, sp -14pts @ 2111 (intra low 2097). The two leaders - Trans/R2K, settled lower by -0.6% and -1.1% respectively. VIX settled +8.8% @ 18.56. Near term outlook offers a bounce, but broadly, the market looks set to test the 200dma around 2080 before the election.


sp'daily5

VIX'daily3

Summary

Once again the market opened in minor chop mode, and there was simply very few willing to buy, as the election was another day closer.

Indeed, the US election is clearly spooking the vast majority of traders, and regardless of any short term bounces, the market will be highly vulnerable into next week, and probably at least 1 or 2 days after the result becomes clear.

VIX managed a sixth consecutive net daily gain, which was last seen in Aug' 2015. Further upside in the VIX to at least 24/25 seems due.


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The grander issue

Today was indeed pretty good for those in bear land, but there are far bigger issues this election month.

sp'monthly1b

With a new month, the various MAs have adjusted/jumped. The 10MA for the sp'500 is now around the 2100 threshold. By default, a November close <2100 would bode very bearish, not least because it would make for the fourth consecutive net monthly decline, something not seen since Sept'2011.

On balance though, I'm still broadly bullish, as most other world markets are still comfortably pushing upward. Once the election is out of the way, the US market should resume upward.

Ohh, and I'm well aware some of you are borderline hysterically bearish because of the looming Dec'14th rate hike. I happen to think less distorted rates are bullish for the economy and capital markets. Anyone who disagrees... go tell that to someone who is trying to derive a subsistence income from savings.

Goodnight from London

A quiet end to October

US equity indexes closed moderately mixed, sp' u/c @ 2126. The two leaders - Trans/R2K, settled higher by 0.5% and 0.3% respectively. VIX settled +5.4% @ 17.06. Near term outlook still threatens a push to 2155/63, before an election inspired washout <2100.


sp'daily5

VIX'daily3

Summary

It was indeed a rather subdued day to conclude the month. Aside from Friday's 1pm hour of market upset, the equity bears are still failing to show any sustained/significant downside.

Most notable remains the somewhat elevated VIX, which managed a fifth consecutive net daily gain.. which is pretty unusual. A break into the 20s looks probable. If an election inspire washout to the sp'2080/70 zone, the most bullish upside target would be VIX 24/25.
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Update from Mr R.




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The monthly close

sp'monthly3c

The month settled with a blue 'elder impulse' candle. Yet, the setup is not particularly bearish, as we're still comfortably above the key 10MA (2083). To turn broadly bearish, I need to see a November close under the 10MA and to be decisive... see some price action in the 2050s or lower. Right now, the latter still seems unlikely, even with a Trump victory.

Goodnight from London