Monday, 25 September 2017

The war talk continues

US equity indexes closed somewhat mixed, sp -5pts at 2496. The two leaders - Trans/R2K, both settled +0.1%. VIX settled +6.5% at 10.21. Near term outlook offers the sp'2474/61 zone. Things would get 'real interesting' with a Sept'/Q3 settlement <2471, which really isn't that bold a target.


sp'daily5



VIX'daily3



Summary

US equities opened a touch weak, but then saw a sharp down wave on comments from the NK foreign minister that Trump's weekend comments amounted to a declaration of war. Yet the equity downside was only moderate, with the VIX showing just a little concern in the 11s. Indeed, the R2K broke a new historic high of 1455, reflective of underlying main market strength.

The afternoon saw a minor bounce, but notably settling broadly weak, with VIX managing to settle outside of the 9s. Near term offers the sp'2474/61 gap zone, which will likely equate to VIX 12/13s. To see 14s or higher, will surely need sp'2450 or lower. That does look likely though, and it won't require anything nightmarish happening in east Asia.
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Here in the metropolis... grey horror. In the distant background, the towers clad in flammable Arconic (ARNC) products are finally being stripped. I wonder if I'll get at least party invoiced a few dimes for that via local taxation.

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Saturday, 23 September 2017

Weekend update - US weekly indexes

It was a bullish week for US equity indexes, with net weekly changes ranging from +1.7% (Trans), +1.3% (R2K), +0.1% (sp'500), to -0.3% (Nasdaq comp'). Near term outlook still threatens a 4-5% down wave into October. More broadly, the year end target of sp'2683 remains on track.

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

sp'500


The sp' settled higher for the 4th of the past 5 weeks, breaking a new historic high of 2508.85, but settling +0.1% at 2502. Underlying MACD (blue bar histogram) ticked upward, and is now importantly close to the zero threshold. A failure to keep pushing upward would be especially bearish.

Best guess: near term weakness of 4-5% to around the 2400 threshold in October, with the key 200dma just a little under it. A 'natural washout' would see a hyper spike from the 2390s, whipsawing upward... much like Oct'2014. The year end target of 2683 remains on track.

Equity bears have nothing to tout unless a monthly bearish close. For Sept'29th, that would (arguably) equate to a settlement under the monthly 10MA: <2380, and that rises to around 2400 for the Oct'31st close.
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Nasdaq comp'


It was a somewhat mixed week for the Nasdaq comp', which broke a new historic high of 6477.77, but settled -0.3% to 6426. Underlying MACD cycle remains moderately negative. Next week/end month, rising trend - from early 2016, will be around 6300. Any price action <6300 would be a significant break, and offer further downside to the 6000/5900s. Something to reflect upon... the giant psy' level of 5k is currently a monstrous 22.2% lower.


Dow


The mighty Dow broke a new historic high of 22419, settling +0.4% at 22349. Note the key 10MA, which the Dow has managed to settle above since late April. Rising trend into end Sept' will be around 21300, a clear 1000pts lower. Further, the 21k threshold will offer massive support, which is where the 200dma is also lurking. The giant psy' level of 20k looks secure for the rest of the year.


NYSE comp'


The master index broke a new historic high of 12158, settling +0.6% at 12151. Rising support from early 2016 will be around 11850 into end month, with secondary support of the key threshold in the 11600s. Lower weekly bollinger is at 11500, some 5% lower, which would equate to sp'2400 and Dow 21k.

Special note: the NYSE broke the mid term upward trend in August. However, with a new historic high, I've marginally adjusted/widened the trend.
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R2K


The second market leader - R2K, settled higher for the 4th week of 5, coming within 1pt of the July historic high, settling the week net higher by 1.3% to 1450. Underlying MACD is fractionally negative, but will likely open moderately positive at the Sept'25th open. Its notable that the upper bollinger is at 1455, and will greatly restrain any further upside next week. Clearly, a fractional new historic high is viable next week, however the R2K - along with the rest of the market, will be cyclically and seasonally due a 4-5% down wave into October. Right now, the most bearish target would be cooling back to around 1350, before whipsawing back upward.

Special note: the R2K broke the mid term upward trend in August. If the R2K breaks a new historic high, I will be inclined to adjust the trend (as I have for the NYSE comp'). 


Trans


The 'old leader' - Transports, was the strongest index this week, settling higher for a fifth consecutive week, +1.7% to 9704, just 59pts shy of the July historic high. Underlying MACD cycle has turned positive for the first time since July. Upper bollinger is offering another 1-1.5% to the 9800s. Most recognise that if oil prices rise, that will be a downward pressure (at least of some degree) to the transport stocks. However, even the $60s would still be cheap relative to prices in 2014.
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Summary

A bullish week, with a quartet of new index highs in the sp'500, dow, nasdaq comp', and nyse comp'.

The laggy '2 leaders' - Transports and the R2K, are both on the edge of breaking their respective historic highs from July.

Considering cyclical and seasonal issues, the US market still looks highly vulnerable into October. On balance though, the most bearish outlook is a main market (brief) cooling of 4-5%, but with no bearish monthly closes.

The year end target of sp'2683 remains on track, and will be greatly helped if both the financials and energy sector push upward into year end. Financials will arguably start to price in a Dec' rate hike by early November. Energy stocks just need WTIC to maintain the key $50.00 threshold, with Nat' gas at least >$2.80.
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Looking ahead

A rather packed week of econ-data and fed chatter...

M - -
T - Case-Shiller HPI, new home sales, consumer con', Richmond fed'

Fed chair Yellen is speaking around 12pm at a conf' for 'Prospects for Growth: Reassessing the Fundamentals'. I believe that will garner live coverage on the financial networks.

W - Durable goods orders, pending home sales, EIA Pet' report
T - Weekly jobs, GDP (third est'), Intl' trade,
F - Pers' income/outlays, Chicago PMI, consumer sent'.

*in addition to Yellen on Tuesday, there are a wheel barrow of other fed officials on the loose. Notably, Mester (Tue 9am), and Bullard (Tue' 1pm).

**Friday will be end month and Q3. Expect much higher trading volume and dynamic price action, especially in the late afternoon.
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Friday, 22 September 2017

Another bullish week

US equity indexes closed on a somewhat positive note, sp +1pt at 2502. The two leaders - Trans/R2K, settled higher by 0.4% and 0.5% respectively. VIX settled -0.8% at 9.59. Near term outlook offers sig' downside next week, first soft target remains 2474/61. More broadly, the 2400/2390s... where the 200dma will be lurking in Oct'.


sp'daily5



VIX'daily3



Summary

First, lets be clear, it was a bullish week for the US equity market, as we saw a quartet of new historic highs in the sp'500, Dow, nasdaq comp', and nyse comp'.

As for today, US equities opened a little weak, after overnight 'war chatter' from both Trump and the DPRK. Yet price action remained very subdued, leaning upward into the close. As equity indexes are close to historic highs, market volatility is broadly subdued, with the VIX settling the week in the 9s.

Near term outlook remains unchanged. A 4-5% main market correction is due, to at least test the sp'2400 threshold, with the key 200dma just a little lower.
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Thursday, 21 September 2017

Choppy weakness

US equity indexes closed fractionally mixed, sp -7pts at 2500. The two leaders - Trans/R2K, settled +0.2% and -0.1% respectively. VIX settled -1.1% at 9.67. Outlook still offers a 4-5% main market correction into October. More broadly, the bullish train is set to remain on the tracks into spring 2018.


sp'daily5



VIX'daily3



Summary

US equities opened a little weak, and saw a great deal of minor chop across the day. There was a touch of renewed weakness into the close, as the market feels distinctly tired.. especially with the fed out of the way. Cyclically, price momentum is increasingly swinging back toward the bears. At the current rate, we'll see a bearish MACD cross next Tue/Wed.

Market volatility remains broadly subdued, with the VIX spiking to 10.21, but settling in the mid 9s.

Near term outlook remains unchanged, a 4-5% correction into Oct' is due, which should equate to VIX in the upper teens, perhaps briefly testing the key 20 threshold.

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Wednesday, 20 September 2017

Quantitative tightening to begin

US equity indexes closed rather mixed, sp +1pt at 2508. The two leaders - Trans/R2K, settled higher by 1.5% and 0.3% respectively. VIX settled -3.9% at 9.78. Near term outlook offers initial weakness to the 2474/61 gap zone.


sp'daily5



VIX'daily3



Summary

US equities opened in minor chop mode, with the sp'500, dow, and NYSE comp' breaking notable (if fractional) new historic highs. The market saw a moderate downward swing with the Fed press release, but there was a distinct bounce into the close, especially within the Transports.

Market volatility remained broadly subdued, with the VIX notably settling in the 9s, the lowest close since late July.

Outlook into October remains unchanged. A 4-5% main market correction is due, which would take most indexes to near their respective 200dmas. That would likely equate to VIX near the key 20 threshold... if briefly.
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Quantitative tightening to begin


The Fed balance sheet reduction plan - as outlined some months ago, is set to begin in October. Things start slow at just $10bn a month, but after a year, it will total $50bn a month, which will amount to a very significant annual QT of $600bn.

Further, another rate hike is highly probable at the December 13th FOMC. Frankly, the equity/econ bulls should be very pleased with how things are proceeding.
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Autumn in London
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Tuesday, 19 September 2017

Awaiting the Fed

US equity indexes closed fractionally mixed, sp +2pts at 2506. The two leaders - Trans/R2K, both settled -0.1%. VIX settled +0.3% at 10.18. Near term outlook offers a key turn, once the Fed are out of the way. A 4-5% main market correction to the 200dma remains on the menu.


sp'daily5



VIX'daily3



Summary

US equities opened fractionally higher, notably breaking two new historic highs for the Dow and NYSE comp'. With equities still leaning upward, market volatility remained very subdued, with the VIX again dropping into the 9s, but managing to settle fractionally higher in the low 10s.


As for the fed tomorrow...

I sure don't expect a rate hike, and neither does the mainstream. The only uncertainty is whether QT will be announced to begin. The plan was issued some months ago of course, and even if the Fed starts selling T-bonds and MBS back to the market, the amounts are insignificant, at least to begin with.

What will be interesting tomorrow afternoon is the Yellen press conference at 2.30pm. Even if the market initially spikes higher on 'omg, QT has begun!' hysteria, I would see the market at high threat of a sig' reversal, not least with each question that Yellen responds to.
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Quartet of doom: Quakes, terrorism, hurricanes, and fire

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A peaceful end to the day

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Monday, 18 September 2017

Another quartet of highs

US equity indexes closed moderately mixed, sp +3pts at 2503 (intra high 2508) . The two leaders - Trans/R2K, settled -0.3% and +0.6% respectively. VIX settled -0.2% at 10.15. Near term outlook offers chop into the FOMC announcement this Wednesday afternoon. More broadly, a 4-5% down wave is still on the menu.


sp'daily5



VIX'daily3



Summary

US equities opened just a little higher, but it was enough to generate another quartet of index highs in the sp', dow, nyse comp', and the nasdaq comp'. Overall price action is pretty subdued though, and there is little reason to expect any drama between now and Wednesday 1.59pm.

The VIX opened fractionally higher, but almost immediately cooled into the 9s, last seen Aug'8th. A burst to the low teens seems very viable in the latter half of this week. The key 20 threshold is likely out of range until we're in the more 'dubious' month of October.
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No sun for the equity bears

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Saturday, 16 September 2017

Weekend update - US weekly indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from 2.3% (R2K), 1.6% (sp'500, NYSE comp'), to 1.4% (Nasdaq comp'). Near term outlook offers minor chop into the FOMC. A cooling wave of 4-5% into early October is probable. Broadly though, the end year target of sp'2683 remains on track.


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

sp'500


The sp' settled higher for the third week of the past four, +38pts (1.6%) to a new historic high of 2500.23. Underlying MACD (blue bar histogram) cycle ticked up, and will be close to the key zero threshold next week, ahead of the FOMC. Seasonally, the setup favours a swing lower, and a failure to keep pushing upward from the zero threshold would be especially bearish.

Best guess: minor chop ahead of the FOMC, then a sig' swing lower, stretching into early October. A 5% down wave would see the 200dma tested (currently 2375). Considering 'everything', the market should see a swing back upward into end Oct', avoiding a bearish monthly close. The year end target of 2683 looks a stretch, but its still just about possible.

Equity bears have little to tout unless a sustained break <2400, with some daily closes under the 200dma. For a bearish monthly Sept'29 close, the bears need <2380, and that rises to around 2400 for Oct'31st.
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Nasdaq comp'


The Nasdaq saw a net weekly gain of 1.4%, breaking a new historic high of 6464. Soft rising trend will be around 6270 next week. Core trend from early 2016 is still a considerable way lower, currently in the 5600s, and by end Oct' near 5800. There are multiple aspects of support within the 6000/5900 zone. Any price action <5900 seems very unlikely for the remainder of the year. Its notable that some cooling into October would take 7k out of range until at least early 2018.


Dow


The mighty Dow climbed 470pts (2.2%), breaking a new historic high of 22275, just a touch under the upper bollinger. Underlying MACD is set to turn positive next week, with the key 10MA offering support around 22k. In early October, key rising trend - from early 2016, will be in the 21300s. Key psy' levels are 21k and 20k. No sustained price action <21k is expected.


NYSE comp'


The 'master index' climbed 1.6%, breaking a new historic high of 12080. Underlying MACD is set to turn positive next week. A failure to keep pushing upward would be rather bearish, and offer a 5% down wave to around the lower bollinger in the 11500s. That would notably break the mid term trend from early 2016. Things would turn decisively bearish with a Sept' or Oct' close <11500, which would be under the key monthly 10MA.


R2K


The R2K was the leader this week, +2.3% to 1431, just 21pts shy of the July historic high. Underlying MACD is set to be near the zero threshold next week, as price momentum is swinging back to the equity bulls.

Its important to note that the R2K was the first - and so far only index, to decisively break the mid term upward trend from early 2016. Any new historic high would negate the break, and offer the 1500s within a few months. For a bearish Sept' close, the bears only need to settle the R2K <1380, which isn't that far down. That 'break threshold' will climb to around 1400 for the Oct'31st close.


Trans


The 'old leader' - Trans, climbed for a fourth consecutive week, +1.7% to 9546, just 2.2% shy of the July historic high. Like other indexes, underlying MACD is set to be near the zero threshold next week. In theory, the tranny could climb for another 3-5 weeks. However, seasonally, the setup favours the equity bears. First big support is the 9k threshold. Things would only turn bearish with any price action <8800.
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Summary

A very bullish week for all six of the main indexes, with a quartet of historic highs in the sp'500, dow, nasdaq comp', and nyse comp'.

The Trans and R2K continue to lag, although both are only 2% from breaking their July historic highs.

The R2K remains the one index that decisively broke the mid term upward trend - from early 2016, but that issue would be negated with a new historic high.

Five indexes (R2K being the exception) have around 5% of downside buffer before doing any real damage to the mid term trend.
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Looking ahead

M - Housing market index
T - Housing starts, import/export prices
W - Existing home sales, EIA Pet' report.

The FOMC announcement will be at 2pm. No rate hike is expected. Its also unlikely that QT (quantitative tightening) will begin until at least December. There will be a Yellen press conf' at 2.30pm, and that will likely last an hour.

T - Weekly jobs, Phil' fed, FHFA house price indx', leading indi'
F - -

*In addition to Yellen on Wednesday, there will be 3 fed officials on the loose on Friday, notably - George and Kaplan, at a conf' discussing global oil supply/demand.
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Friday, 15 September 2017

A bullish week

US equity indexes ended the week on a fractionally positive note, sp +4pts at 2500. The two leaders - Trans/R2K, settled higher by 0.4% and 0.5% respectively. VIX settled -2.6% at 10.17. Near term outlook offers micro chop into the FOMC, with a subsequent 4-5% swing lower into October. Broadly though, the US market remains powerfully strong.


 sp'daily5



VIX'daily3



Summary

US equities opened in micro chop mode, but with a minor wave upward, the US market broke new historic highs in a quartet of indexes: sp'500, dow, NYSE comp', Nasdaq comp'. On any basis, that is an especially bullish end to the week.

Market volatility naturally remained very subdued, with the VIX settling lower for a fifth consecutive day, but (almost surprisingly) not falling into the 9s.

Near term outlook offers further equity price chop into next week's fed meeting. A 4-5% down wave into October remains on the menu, but that won't be enough to cause any problems to the mid/long term bullish trend.
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... and the week comes to a close.

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*the weekend post will appear Sat'12pm, and will detail the US weekly indexes.
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Thursday, 14 September 2017

Chop chop

US equity indexes closed fractionally weak, sp -2pts at 2495. The two leaders - Trans/R2K, settled lower by -0.1% and -0.2% respectively. VIX settled -0.6% at 10.44. Near term outlook offers a great deal of minor chop into the FOMC of Sept'20th. From there, prime opportunity of a 4-5% down wave, before broad upside, all the way into spring 2018.


sp'daily5



VIX'daily3



Summary

US equities opened in micro chop mode, and stayed that way across the day. It was notable that the sp'500 and Dow did break new historic highs. That makes three indexes so far this month, the third being the NYSE comp'.

With equities effectively in churn mode, the VIX remained very subdued, settling lower for a fourth day in the 10s.

Near term outlook offers a great deal of micro chop all the way into next Wednesday afternoon's FOMC announcement. Once that is out of the way, the equity bears will have the best opportunity of seeing some sustained/significant downside into October... but right now, no more than 4-5%.. to the 200dma.
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An autumnal evening in the metropolis

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Wednesday, 13 September 2017

Mainstream lunacy

US equity indexes closed fractionally mixed, sp +1.9pts at 2498. The two leaders - Trans/R2K, settled -0.1% and +0.2% respectively. VIX settled -0.8% at 10.50. Near term outlook offers weak chop, but nothing <sp'2474 until after quad-opex is out of the way.


sp'daily5



VIX'daily3



Summary

US equities opened a little weak, but quickly slipped into micro chop mode (trading range 6.23pts), clawing to fractional new historic highs into the close. Market volatility was naturally very subdued, with the VIX stuck in the mid 10s.

There remains an open gap (orange zone) of sp'2474/61, which is going to have be filled at some point. The only issue is whether that is before... or after the 2500s. Right now, sp'2474 would likely equate to VIX no higher than the 12/13s. The key 20 threshold looks probable, but not until early October.

Keep in mind, we have an FOMC announcement next Wednesday afternoon. No rate hike can be expected, and that will surely be a downward pressure for the financials, which have been broadly stuck since the spring. 
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Mainstream lunacy

The day began with the infamous Cramer talking about how recent storm destruction in Texas and Florida was a 'net positive for GDP'.


I'd imagine he never reads anything from here...

http://market-ticker.org/akcs-www?post=232354

Whether you like Denniger or not, the article is soundly based. Cramer, and far worse... Paul Krugman, are both academically insane. I'd like to see either of them tell any of the 'real people' in Texas or Florida, that such destruction is a net positive for the broader economy.

Certainly, some construction companies will profit from the huge amount of repair work to be done, but for the broader economy, its bizarre that anyone could deem the event 'a net positive for the economy'. Ohh, and if Q3/Q4 GDP comes in weak, its probably safe to assume those SAME people will blame the 'Harvey' and 'Irma' storms for weaker growth.
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