Just another threshold

US equity indexes closed moderately mixed, sp +1pt at 2559. The two leaders - Trans/R2K, both settled lower by -0.3%. VIX settled +4.0% at 10.31. Near term outlook offers an overdue sig' break lower, with primary target of sp'2474/61. More broadly, the 2600s remain a given.


sp'daily5

VIX'daily3

Summary

US equities opened in minor chop mode, but with the Dow soon breaking above the soft psy' threshold of 23k. The mainstream does seem to be increasing focused on each 1000pts higher. This afternoon on CNBC the cheerleaders were tentatively daring to mention 'at the current rate... 25k within six months. There is still no talk of 'hyper bullish', or the notion that this could continue for some years .

Its notable that whilst the Dow and sp'500 broke new highs (if fractional) the two leaders - Trans/R2K, did settle moderately weak. It could be argued they are offering an early warning of trouble. We shall see.

Market volatility remains broadly subdued, although the VIX did manage a close outside of the 9s.
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Happy Anniversary

US equity indexes closed moderately mixed, sp +4pts at 2557. The two leaders - Trans/R2K, settled -0.8% and u/c respectively. VIX settled +3.1% at 9.91. Near term outlook offers a long overdue sig' break lower, with prime target of sp'2474/61. Broadly, the US market is super strong, as the 2600s are clearly a given before year end.


sp'daily5

VIX'daily3

Summary

The week began on a positive note, with a trio of new index historic highs (sp', dow, nasdaq comp'). Price action across the last six days has been tediously narrow range, but still leaning to the upside.

With equity strength, market volatility remains subdued, and despite the VIX closing net higher, that still made for a daily settlement in the 9s.

Near term outlook remains unchanged. A sig' break lower is due. If the bears can't manage the sp'2520s by Thursday, then the 2600s could be sought before end month. 
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The crash of 1987

Today is the 30th anniversary of the Oct'1987 crash. However, it really shouldn't be thought of as a one day event. The market peaked August 25th, and then saw an initial down wave of 8.7% into early September. Price action was choppy, but then leaned back upward into early October.

The Oct 2nd high of sp'328 made for a key lower high, and thus began 12 days of horror. Day 11 was 'crash day', but day 12 did see a lower low, but closed net higher.


sp'daily - 1987

Back in 1987 yours truly was just 14 years of age (yeah, you can do the math on my current age). The previous Friday, the Southern UK was hit with a severe hurricane-strength storm, and its a curious thing that Hurricane Ophelia was nearing the British Isles just last night.

I sure wasn't trading in 1987 (my first trade wasn't until 1990!), but I remember the crash, as I was one of those weird teenagers with a deep interest in finance/economics. The US market soon recovered, but it really wasn't until 1993 that the UK market started to break new highs.


Another 1987?

Will we ever see a one day crash like 1987 again? Well, no, as the NYSE would freeze the market at -7%, -13%, and immediately shut the market on an intraday decline of -20%.

see: https://www.nyse.com/network/article/nyse-increases-resiliancy-during-extreme-volatility

Indeed, something I would look for in the years ahead is for the NYSE to tighten the circuit breaker limits. I see a time when the market will be shut on any daily decline of -5%. Many within the mainstream will of course support such trading restrictions/manipulation. I do not.
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It was an unusual day in the metropolis...

Weird skies in London, due to remains of Hurricane Ophelia

Bullish October sunshine

For more pics on 'yellow sky', see https://twitter.com/search?src=typd&q=yellow%20sky

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Goodnight from London
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Weekend update - US weekly indexes

It was another bullish week for US equity indexes, with net weekly changes ranging from +0.5% (Transports), +0.15% (sp'500), to -0.5% (R2K). Near term outlook offers a cooling wave of 3-4%, but broadly, the US market remains super strong. The year end target of sp'2683 is just about within range.


Lets take our regular look at six of the main US indexes

sp'500

The sp' climbed for a fifth consecutive week, +3.8pts to 2553, with a notable new historic high of 2557. Underlying MACD (blue bar histogram) cycle ticked higher for a fifth week. The key 10MA is currently at 2487, and will be around the 2500 threshold next week. Core rising trend from early 2016 will be around 2450 next week, notably just under primary target of 2474/61.

Best guess: near term cooling of 3-4% to the Sept'11th gap zone of 2474/61. No sustained price action <2460, with another whipsaw upward to the 2600s. The year end target of 2683 is just about within range, but will require a Dec' rate hike, along with WTIC around $54/55s.

Since the Feb'2016 low of 1810, to this Friday's close of 2553, the sp'500 has gained 41% across 21 months. At the current rate, the sp' will be trading around 3500 in summer 2019, with 4000 by spring 2020.

Equity bears have nothing to tout unless a break of rising trend, and a bearish monthly close. For me, that would equate to a monthly settlement under the monthly 10MA, which is currently at 2423 (and rising by around 35pts a month). I do not anticipate such a bearish close before year end.
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Nasdaq comp'

The Nasdaq climbed for a third week, with a net gain of 0.2% to 6605, and a new historic high of 6616. The core trend from early 2016 remains comfortably intact. At the current rate the 7k threshold will be within range by year end. First soft support are the 6400s, with secondary of the 6100/6000 zone. No price action <5900 looks remotely possible within the mid term.


Dow

The mighty Dow saw a fifth consecutive net weekly gain, +0.4% at 22871, with a notable new historic high of 22905. Underlying MACD cycle is on the high side, and there will be threat of cooling to the 22200/000 zone, before the next big push upward. Things would only turn bearish with a break of rising trend, which will be in the 21500s next week. Keep in mind the monthly 10MA is currently at 21375.


NYSE comp'

The master index climbed for a fifth week, settling +0.3% at 12352, with a notable new historic high of 12377. Cooling of around 3% to the 12k threshold would be very natural, and would do no damage to the mid term trend, which was recently adjusted, due to a new historic high.


R2K

The R2K was the laggard this week, unable to break a new historic high, and settling net lower by -0.5% to 1502. Short term bearish to 1450. By late Oct', core rising trend will offer support in the 1420s. Unless that is broken, a year end close in the 1600s will remain a valid target. The grander issue is that 'R2K @ 2K' is on the menu in 2018.


Trans

The 'old leader' - Transports, saw a net weekly gain of 0.5%, and that was despite a Friday decline of -1.0%. The weekly candle was rather spiky, having cooled from a new historic high of 10080. Near term outlook is bearish, with the 9600/500s well within range. No price action under the 9k threshold can be expected before year end.
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Summary

The US equity market remains broadly super strong, with 5 of 6 indexes breaking new historic highs this week.

All US indexes are holding their mid term bullish trends from early 2016.

All US indexes have at least 3-4% of downside buffer before the m/t trends are challenged.
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Looking ahead

In addition to a great many corp' earnings...

M - Empire state manu'
T - Import/export prices, indust' prod', housing market index
W - Housing starts, EIA Pet' report, Fed Beige book
T - Weekly jobs, Phil' fed
F - Existing home sales. *OPEX*

*There are a few fed officials scheduled, most notable is Yellen (Friday lunchtime), and I believe it will garner live coverage on CNBC.
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Have a good weekend
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*the next post on this page will likely appear 6pm EST on Monday.