US equity indexes closed moderately mixed, sp -6pts at 2342 (intra low
2334). The two leaders - Trans/R2K, settled -0.6% and u/c respectively.
VIX settled -1.6% at 14.42. Near term outlook offers another moderate wave higher to the
sp'2350/60s. Broadly, a push to new historic highs in the 2400s now
looks out of range until early May.
sp'daily5
VIX'daily3
Summary
US equities opened moderately weak, partly weighed by a (moderate) earnings miss from GS, but more so, the news of a UK election. An opening reversal failed to hold in early morning, with another wave lower to sp'2334. From there, a rather standard (if choppy) latter day recovery.
Volatility was itself choppy, and with a moderate equity recovery in the afternoon, even turned negative into the close.
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Meanwhile, in the land of yours truly...
PM/Conservative leader May has called for an election. I feel inclined to reference Palpatine...
Seriously, its a very shrewd political move. The main opposition party 'Labour' (the UK version of the democrats), is deeply fractured, and are trailing in the polls by around 20pts.
May* is seizing the opportunity to greatly increase her parliamentary majority, and safely 'bank' a further five years of power to summer 2022. Unlike the French elections, there is near zero doubt on the outcome of the June 8th UK election.
Naturally - even though the result is clear, the UK equity/capital market will be somewhat clouded until the election is out of the way.
A brief look at the UK equity market....
FTSE 100, monthly, 20yr
Last year's break above 7k was massively decisive.That is now core support, and should hold into the June election. If you backwards extrapolate, you have to start from 10k before the next major decline can begin, and that is clearly not viable any time before late spring 2018.
If you believe that, you should also recognise there are indirect implications for the US market.
Goodnight from London
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*I'm not suggesting May is on the level of a Sith Lord, but her voting pattern across the last decade is pretty dark sided.
US equities closed broadly higher, sp +20pts at 2349. The two leaders -
Trans/R2K, settled higher by 1.3% and 1.2% respectively. VIX settled -8.1% at 14.66. Near term
outlook offers further upside to the sp'2350/60s. A break above big
resistance of 2380/90 looks out of range for at least another 8 trading
days.
sp'daily5
VIX'daily3
Summary
The week began on a broadly positive note, with the sp' clawing away from last Friday's close of sp'2328. With each day we hold above it, that makes for an increasingly secure 'marginally higher low'.. from the March 27th low of 2322. No break above big resistance of 2380/90 can be expected until late next week.. if not early May.
Volatility naturally cooled, and we already have VIX back in the 14s. As things are, its difficult to see VIX 12s this side of opex.. and more so... ahead of the French election. Note the MACD (blue bar histogram) cycle, on the extremely high side, and will be inclined to tick lower all the way into early May.
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Mainstream concerns
Trump policy: Yes.. that is an issue, not least with the healthcare bill failing.
USD strength: the capital market would only have an issue if a fast move to DXY 120s.
Geo-pol: the only wild card would be something nuclear, in which case... the market is the least of your concerns
Yields: recent cooling is cyclically natural. The bond market doesn't 'know something' that equities don't.
Q1 earnings: will come in reasonable.
Frankly, those who were whining about missing out on much of the Trump rally, are getting an opportunity to jump aboard, before a move into the sp'2400s.. and eventually the 2600/700s.
It was a bearish week for US equities, with net weekly declines ranging from -1.0% (Dow), -1.1% (sp'500, NYSE comp'), to -2.5% (Trans). Near term outlook will be largely dependent on whether there is any 'spooky' geo-political news - not least from North Korea. Otherwise, the mid term bullish trend should reassert itself into end month.
Lets take our regular look at six of the main US indexes
sp'500
The sp' saw a net weekly decline of -26pts (1.1%), to 2328. Having seen a Monday opening high of 2366, there was a distinct case of the 'rats selling into the long weekend', with the sp' settling at the low of the week. Underlying MACD (blue bar histogram) ticked lower for a sixth consecutive week, and is now moderately below the zero threshold.
Its notable that the sp' could fall to 2250 next week, and that would still not break the mid term rising trend, that extends back to the Feb'2016 low of 1810. By early June, that aspect of key support will have risen to around 2300.
Best guess: the mid term trend will resume, with a push to new historic highs in the 2400s, whether late April or early May. The year end target of 2683 remains on track, but will arguably need the 2500s by September.
Equity bears have nothing to tout unless a break under the monthly 10MA, which is currently in the 2240s, and rising by around 25pts a month.
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Nasdaq comp'
Even the strongest sector of the market - tech, has been weakening, with the Nasdaq comp' declining for a second consecutive week, -1.2% to 5805. This was the first close below the 10MA since Nov'2016. Its notable that core rising trend is all the way down around 5300. Near term, there is 3% of open air to first soft rising trend. On balance, the 6000s still look due by early May.
Dow
The mighty Dow cooled into the long weekend, settling net lower for the week by -202pts (1.0%) at 20453. First big support is the giant psy' level of 20k. Its notable that the lower bollinger will be in the 19300s next week, and frankly, that looks well out of range. Price structure since the Feb' high of 21169, is arguably just a bull flag. Equity bulls will need to see a few daily closes >20800 to have provisional confirmation.
NYSE comp'
The master index cooled for a second week, net lower by -1.1% to 11324. Price structure since the Feb' high of 11687 is a big bull flag, market bulls will need to see the 11500s to provisionally confirm. Core rising trend/support will be in the 11100s next week, which is around 2% lower.
R2K
The second market leader - R2K, settled lower for a second week, -1.4% at 1345. There are multiple aspects of support within the 1330/15 zone. Those equity bears who believe the market is already maxed out, should be seeking a decisive break under more important support of the 1300/1280 zone. Any weekly/monthly closes <1280 would indeed merit alarm bells. On balance though, along with the main market, the R2K should resume upward. First soft target is the recent historic high of 1414, where the upper weekly bollinger is lurking.
Trans
The 'old leader' - Transports, settled lower by a very significant -2.5% to 8874. Underlying MACD ticked lower for an eighteenth consecutive week, and we're at levels not seen since Feb'2016. Its further notable that the tranny has now settled under the key 10MA for six consecutive weeks. Equity bulls should be seeking price action back >9300 to have renewed hope of 10k by late summer.
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Summary
All US indexes remain relatively close to historic highs.
Price structure since late Feb/early March could be argued is a bull flag.
The two leaders - Trans/R2K, are now cyclically on the very low side, and will be highly inclined to claw back upward into end April.
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Looking ahead
M - Empire state, housing market index,
T - Housing starts, indust' prod'
W - EIA Pet' report, Fed Beige book
T - Weekly jobs, phil' fed, leading indicators
F - Existing home sales, *OPEX*
There is a quintet of fed officials on the loose, but none of them seem particularly important.
**Very few expect rates to be raised at the FOMC of May 3rd. June 14th is the next important fed meeting. The financials will clearly need another rate hike this summer to remain broadly bullish, from the Nov'2016 breakout.
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Economic/geo-political chatter, Hunter with Armstrong
Highly recommended. Mr A' remains one of my most favoured to follow.
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CNBC - futures now, with the Schiff
Its much of the same from Schiff, long term bullish gold/miners, and very bearish for just about everything else. I do like how Schiff will fight against the cheerleaders of clown finance TV. Its worth watching for that alone!
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Have a good Easter break
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*the next post on this page will likely appear next Monday at 7pm EST
