Friday 22 July 2016

A retrace to the breakout zone?

US equities closed moderately weak, sp -7pts @ 2165. The two leaders - Trans/R2K, settled lower by -1.3% and -0.5% respectively. VIX settled +8.2% @ 12.74. Near term outlook offers a retrace to the breakout zone of the sp'2130s, but broadly, price action remains very bullish.


sp'daily5



VIX'daily3



Summary

So, moderate declines, and frankly, nothing for the equity bears to get excited about. Even a move to the sp'2130s next week would merely make for a minor retrace, before the 2200s.

VIX failed to close in the low teens for a sixth consecutive day, which kinda sums up just how strong/confident the US market is. The key 20 threshold looks out of range until at least mid/late September.

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Notable world market - UK, monthly


A July close >7k looks out of range, but by Sept/Oct, it looks viable. A break/hold >7K would be extremely bullish, and bode for broader upside to the 8000s in early 2017. Most other world markets look similarly bullish.


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Regardless of any further cooling tomorrow/early next week, the underlying upward pressure should be clear to almost everyone.

I'm well aware of some out there touting a return to the sp'1800s by the early autumn, yet... how is that going to occur? Even the 'shock' BREXIT result only resulted in a two day decline.. and the second day even saw the VIX close red!

Last Monday's breakout >sp'2134 remains a hugely significant event, and the 2200s look an easy target for Aug/September.

Goodnight from London