An eighth consecutive daily decline

US equity indexes closed moderately mixed, sp -9pts @ 2088 (intra low 2085). The two leaders - Trans/R2K, settled +0.3% and -0.5% respectively. VIX settled +14.3% @ 22.08. Near term outlook threatens a 'monthly jobs' bounce to around 2115, but regardless, broader price action will remain weak into next Tue/Wed.


sp'daily5

VIX'daily3

Summary

First.... so much for the bounce. There is still a threat of a brief move higher tomorrow - with the jobs data, but broadly, price action is set to remain weak into next week's election.
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US equities opened a little higher, yet again though... another failure, with the market breaking a new cycle low in the afternoon of sp'2085 - with VIX confirming, with a new high of 22.57.

Most notable, today was the eighth consecutive net daily decline for the sp'500, which was the most bearish run since Oct'2008.

Today saw the eighth consecutive net daily gain in the VIX, which is the most bullish run in a decade... perhaps ever. VIX 25s look a pretty easy target... with a viable brief spike around 30 next Tues/Wed.

Once the election result becomes clear, regardless of who wins, equities should resume higher, with the VIX broadly cooling into end month.
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Energy prices continue to fall

WTIC oil, weekly

A net Thurs' decline of -$0.68 (1.5%), settling @ $44.66. Next support is the Sept' low of $43.06, and then the Aug' low of $39.19. The latter looks out of range unless we see some daily closes of sp'2050 or lower, which doesn't seem likely.

Goodnight from London

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