US equities ended the week on an outright ugly note, the SPX settling -2.8% to 4271, which made for a net weekly decline of -120pts (2.7%). Meanwhile, WTIC settled -$1.72 (1.7%) to $102.07, which made for a net weekly decline of -$4.88 (4.6%).
sp’weekly2
WTIC weekly
Summary
SPX: a third consecutive net weekly decline. This week’s candle is bearish engulfing, and leans distinctly s/t bearish. If 4157 is taken out… then its open air to testing psy’4K. I’d note the 50% fib’ of the wave from March 2020… at 3505, which is a realistic target for June/July.
WTIC: the fifth weekly decline of seven. Bulls can argue price structure is a multi-week bull flag. Bears can argue weekly momentum is prone to turning negative into end month. I’m still inclined to see (a geo-politically inspired) push back upward to challenge the March $130s. Further, I’m open to a multi-decade double top from around the 2008 historic $147s.
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Dear Subscriber
… and that concludes another week at the world’s most entertaining, twisted, and rigged casino. Congratulations to the survivors. Some perspective…
*this morning, Denniger – see:
https://market-ticker.org/akcs-www?post=245710
… who noted a bearish target of 1576… back to the 2007 high. For some years, one of the key scenarios was an eventual back test of the old double top of 2000 and 2007… in the 1500s.
With just five trading days left of April, the SPX is currently -258pts (5.7%) at 4271. I’d note the key 10MA at 4485, which we are due to settle the month under.
Monthly momentum is increasingly negative.
I can NOT emphasise this enough.
EVERY SINGLE multi-hour, multi-day, or multi-week bounce is being restrained by the more powerful monthly cycles.
Natural target for the bears should be the lower monthly bollinger, currently at 3313, and that will be in the 3500s in June.
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The pressure is increasing
The past few days have seen the market start to accept that May 4th will see rate hike’2 of 50bps… but perhaps as much as 75bps. Further, even the mainstream Nomura are talking of multiple 75bps hikes.
Regardless, inflation can be expected to remain high, if not increase into the summer. The fed raising rates to 1.5% or so, isn’t going to do much of anything.
The real problem IS the inflation itself that is denting the US/global consumer. Yes, partly.. that is due to the supply chain crisis, but its clearly also due to the Fed’s QE.
We’re in the early phase of seeing the Fed panic, and the market won’t like that. Now its just a matter of whether the market spirals straight to sp’3500, or sees a more stair step decline into the summer.
In either case… we have some wild months ahead. Once this issue settles down, then the market can start wondering about the mid terms, or perhaps China/Taiwan*
*there is background chatter that China might make a move on Taiwan this weekend, but that still seems far more realistic in early 2023, as Armstrong has also been alluding to.
Mr A >>> https://www.armstrongeconomics.com/blog/
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The weekend
Priority is rest and recovery. Secondary… finish my taxes/accounts for 2021/22. Third… finish off case’2, to send next week. Fourth… more rest.
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 EST @ https://tradingsunset.blogspot.com, and will detail six of the US equity indexes (weekly candle charts).
*I will probably be Twitter light on Saturday, but will take a look ahead to earnings Sunday evening.