Permabear Doomster

Wednesday, 20 March 2019

The precursor signal

US equity indexes closed rather weak, sp -8pts (0.3%) at 2824. Nasdaq comp' +0.1%. Dow -0.5%. The two leaders - Trans/R2K, settled -1.3% and -0.8% respectively. VIX settled +2.6% at 13.91.

sp'daily5

VIX'daily3

Summary

US equities opened a little weak, not helped by Trump comments in the 12pm hour that tariffs would remain (at least initially) even with a US/China trade deal. The market jumped on the press release from Print Central, but the closing hour wasn't so pretty, with most indexes settling moderately lower. Volatility was relatively subdued, settling in the upper 13s.

The precursor signal

Today's FOMC saw rates held, economic growth downgraded, no more rate hikes for rest of the year, and QT to conclude in September. The end of QT is a precursor signal to an eventual rate cut.

I have endlessly noted how in the previous two grand cycles, the ultimate equity sell signal was a rate cut.

Fed rates & SPX, monthly

Today brought us one step closer to yours truly adding a third dashed red vertical line to the above chart
-

Spring time

Green shoots... everywhere

--
Extra charts in AH (usually around 7pm EDT) @ https://twitter.com/permabear_uk

Goodnight from London
--
If you value my work, subscribe to my intraday service.
For details and the latest offers, see: permabeardoomster.com

Tuesday, 19 March 2019

Latter day weakness

US equity indexes closed on a rather weak note, sp -0.4pts at 2832. Nasdaq comp' +0.1%. Dow -0.1%. The two leaders - Trans/R2K, settled -1.3% and -0.6% respectively.

sp'daily5

VIX'daily3

Summary

It was a day for the bulls, as despite latter day weakness, the SPX broke a new multi-month high of 2852, the highest print since Oct'10th. Volatility remained subdued, with the VIX churning in the 13/12s.

Meanwhile... Trump had a press conf' with Brazilian President Bolsonaro.

I managed to stomach three minutes before having to hit the mute button.

Regarding socialism, whether you are supportive of it or not, any kind of local/central govt' is by definition 'socialism'. Do I have to cite the US welfare system, education, roads, or even the armed services? Those are inherently all socialist structures. Bizarrely, neither Trump... nor many others, can accept that truth.

Ohh, and as for the FOMC on Wednesday. I'll merely note that an end date for QT might well be announced. If not... then it will be even more probable May 1st or June 19th. The conclusion of QT will be the pre-cursor to a rate cut, which is arguably the ultimate sell signal - as it was in Sept'2007.
-

Searching for a ray of light

An eerie glimpse of the nearly full moon

Monday, 18 March 2019

New cycle high

US equity indexes began the week on a positive note, sp +10pts (0.4%) at 2832. The two leaders - Trans/R2K, settled +1.0% and +0.7% respectively. Near term outlook offers a few moderate swings ahead of the FOMC announcement.

sp'daily5

VIX'daily3

Summary

US equities opened a little higher, with the SPX breaking a new cycle high of 2835, with a late morning cooling wave to 2821. The afternoon saw renewed upside, but holding under the high. S/t price structure is a H/S, offering 2805, then 2820, with the 2770s by Thurs'/Friday.

Volatility remained subdued, settling +1.7% at 13.10. A spike to the 15/16s would arguably sync with the sp'2770s.

Bonus chart: China, monthly

With nine trading days left of the month, the Shanghai comp' is higher for a third month, currently +5.3% at 3096. Next resistance is not until the 3400s. That would indirectly bode bullish for the US market into late spring/early summer.
--

One thing is for sure... that is not a 737MAX

Spring is almost here

Full moon is this Wednesday