Saturday, 10 December 2016

Weekend update - US monthly indexes

The post election rally continues, with all US equity indexes powering upward. 5 of 6 indexes are regularly breaking new historic highs, only the NYSE comp' is set to follow. Regardless of any sporadic retraces, the broader outlook is strongly bullish into and across much of 2017.


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

sp'500


The Friday close of sp'2259 was a new historic high. Underlying MACD (blue bar histogram) continues to tick upward, and is at the most bullish level since Dec'2014.

Best guess: a brief retrace of 2-3% before year end, but broadly climbing to the 2300s in Jan'2017. The 2500s are now a realistic target by next May/June.

Equity bears have nothing to tout unless the market is back under the key 10MA, which in early Jan'2017 will be around 2170. Indeed, price action <2100 looks unlikely for many... many months.
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Nasdaq comp'


The tech is currently +2.3% for the month, having seen a new historic high of 5450. The 6000s remain a realistic target by late spring 2017. Things only turn bearish with price action <5k, and that is now 9% lower!


Dow


The mighty Dow continues to lead the way higher, currently +3.3%, having seen a new historic high of 19757. The giant psy' level of 20k is clearly within range before the Christmas holiday. Price momentum is the strongest since Dec'2013. Having broken into the 19000s, the next big Fibonacci price target is 26702.


NYSE comp'


The master index is the last of the main indexes yet to break a new historic high (>11254). With a weekly close of 11191, we're only 63pts away.. a mere 1%. That is clearly within range in the immediate term. Once 11300s, the next natural target will be the 12k threshold.


R2K


The second market leader - R2K, is already another 5% higher for the month, having broken a new historic high of 1392. The 1500s are now a valid target by March/April. A few years ago I mentioned 'R2K @ 2K'. That is clearly still a very long way up, but I wonder when I'll start seeing similar talk from some of the others out there in chart land.


Trans


The 'old leader' was the latest index this week to achieve a new historic high... of 9490, barely 5% away from the giant psy' level of 10k. Price momentum is the strongest since Dec'2014. Things only turn bearish if the tranny trades back under the 10MA.. currently in the 8100s.
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Summary

All of the US equity indexes are powering higher, lead by the Dow. Only the NYSE comp' is yet to break a new historic high.

Time Fibonacci offers two possible turns: Feb'2017, or a seemingly far more probable October.

Price Fibonacci offers the next big numbers of sp'3047 and Dow 26702.

Most indexes now have around 10% of downside buffer before any damage is done to the broader upward trend from the Jan/Feb' lows.


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Looking ahead

It will be the last big trading week of the year.

M - US treasury budget
T - import/export prices
W - PPI, retail sales, indust' prod', bus' invent, EIA report.

The FOMC will issue a press release at 2pm, which will detail a rate hike of 25bps to a target range of 0.50-0.75%. Yellen will hold a press conf' around 2.30pm, and that will last around an hour.

T - weekly jobs, CPI, phil' fed, empire state, housing market index,
F - housing starts, *QUAD-OPEX*


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Have a good weekend
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*the next post will appear Monday @ 7pm EST.

Powerfully bullish week

US equity indexes closed broadly higher, sp +13pts @ 2259. The two leaders - Trans/R2K, settled -0.1% and +0.1% respectively. VIX settled -7.0% @ 11.75. Near term outlook offers a retrace, but broadly.. the US market is unquestionably hyper-strong.


sp'daily5



VIX'daily3



Summary

A sixth consecutive net daily gain for the sp'500.

With equity indexes managing to keep pushing higher, the VIX was re-crushed back into the 11s.

For now, there is zero sign that the market is exhausted. Even with the Fed set to raise rates next week - which the market has clearly accepted as 'due', is the market merely going to keep clawing higher all the way into early 2017 without any degree of retrace?

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A week for the bulls

sp'weekly1b


A powerful net weekly gain of 67pts (3.1%). Its notable the upper weekly bollinger is in the 2230s, and the market is clearly on the extended side. Its ironic that many are now resigned to the 2300s, whether by year end.. or more viable.. in January. Further out, the 2400/500s are now consensus for 2017, with Bank of America recently touting a bullish case of the 2700s.

In any case... I think many are starting to settle into a pre-holiday mode... with just 14 trading days left of the year.





Goodnight from London
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*the weekend post will appear Sat' 12pm EST, and will detail the US monthly indexes

Friday, 9 December 2016

The VIX divergence

US equity indexes closed broadly higher, sp +4pts @ 2246. The two leaders - Trans/R2K, settled higher by 0.5% and 1.6% respectively. VIX settled +3.4% @ 12.64. Near term outlook increasingly threatens a retrace, as the VIX appears floored from 11.30. At best, the sp'2170s... where the 50dma will soon be lurking.


sp'daily5



VIX'daily3



Summary

Yesterday saw equities break new historic highs. Today was a mere repeat performance, as 5 of the 6 main indexes I regularly highlight pushed well beyond the twilight zone.

Also like yesterday, there was a clear divergence between equities and the VIX. Whilst few noticed it yesterday, a great many did notice it today.

The VIX is clearly flashing an early warning, and confirming the (obvious) notion that equities are over-extended.

A retrace is due. The irony is that the market could fall a significant 4%, and that would only take us to around the sp'2170s, where the 50dma will be lurking next week. At best, that might equate to VIX 16/17s. Anything above the key 20 threshold looks out of range.

Goodnight from London