It was a mixed month for equities, SPX -41pts (1.1%) to 3714, with the Nasdaq comp’ +182pts (1.4%) to 13070. WTIC settled +$3.68 (7.6%) to $52.20. Copper settled +4 cents (1.0%) to $3.56. The USD +68bps to DXY 90.57. The US 10yr yield +18bps to 1.11%.
SPX, monthly
Nasdaq comp’, monthly
WTIC, monthly
Copper, monthly
USD, monthly
US 10yr yield, monthly
Summary
Equities: it turned out to be a rather mixed month, as whilst all the main US equity indexes broke new historic highs, the month didn’t end so great. I would note the SPX monthly 10MA at 3355, as the bulls have 359pts (9.7%) of downside buffer. That MA will of course adjust/jump to the upside at next Monday’s Feb’1st open… probably to near 3400.
My best guess… s/t downside to 3600/3580, and then renewed upside to test 4K in March/April.
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Commodities: oil and copper continue to power upward, helped by the broadly weak dollar, and mainstream hopes of an economic recovery across 2021. WTIC appears set for the $65/66s, with Copper to challenge psy’ $4.00, and then the 2011 hist’ high of $4.65. Things would turn ‘real interesting’ if (or rather when) the USD loses the DXY 88s.
USD: Despite settling moderately higher for the month, the dollar did break a new cycle low of 89.17. I would note the monthly 10MA in the 94s, and that will drop to the 92/91s in February. A break under key price threshold of the 88s, will offer grander downside to 80/78.
Bond prices/yields: Yields climbed for the 4th month of 6, with the 10yr settling at 1.11%. A break above declining trend appears due, which will offer 1.37-1.47%. I do NOT expect a break above psy’ 1.50%, before the fed implement yield curve controls, or something similarly crazy.
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Dear Subscriber (or guest!)
Another week and month has concluded. It was very mixed, with the SPX having printed a new hist’ high, but ending on a pretty ugly note. Whilst this week’s weekly candle bodes for another week or two of weakness, a broader push to 4K remains on track.
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Meanwhile, over at Print Central…
The latest update showed a net weekly change of -$10.0bn vs +$81.0bn prior, taking the balance sheet to $7.405trn.
Whilst this past Wednesday’s FOMC saw no change in policy, we can expect ‘yield curve controls’ this year, not least if the US 10yr bond yield approaches psy’ 1.50%. For the record, I don’t expect any rate hikes until headline CPI is >3.5%.
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The weekend
Last week felt crazy, but this week was just another reminder that every day gets ever more wild in (as I do like to say)… the twilight zone. Can you imagine just how unbelievable things will be by the end of this year?
As for yours truly, there remains so much to do, but I’m beyond exhausted. Another half dozen episode of Clone Wars will be a start…
As ever, feel free to message me via Disqus or email.
Sincerely, have a restful weekend, and goodnight from London
yours… Philip
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The weekend post will appear Sat’12pm EDT @ https://tradingsunset.blogspot.com, and will detail ten of the world equity markets. For those that want perspective… that post will merit checking.