The Mars Market Update — Live Research

Primary market trends remain in tact but uncertainty remains. Trump's fiscal negotiation backflip set up a bearish reversal but we didn't get the downside follow through required for a change in trend. The Russell 2000 broke to new cycle highs as expected as the US$ weakened and the risk-on recovery continued. Bonds broke lower as expected but this decline is expected to be short-lived (we remain bullish bonds from a big picture perspective). Commodities rallied across the board as the US$...

Last week, the equity bulls managed to hold important near term lows and rallied impulsively (as tweeted) before correcting lower later in the week. The bulls remain in control as we look for the risk-on environment to continue. Primary bullish trends remain in tact with impulsive equity market rallies, pinned rates, a weakening US$ and corrective commodity declines. Take note of the bullish divergence between the RTY and NQ following Trump's covid announcement - this implies traders are...

Last week, equities continued to stair step lower but rallied strongly to end the week. Unfortunately, the decline has not done enough to confirm a bigger picture change in trend as the decline is not clearly impulsive. The US$ rebounded sharply as expected but is only 3 waves up of equality from the lows so far to potentially complete wave 4. PM's broke sharply lower as warned for what should have been a wave (c) of 4 decline but bulls need to make a stand here. Rates continued to compress in...

The Nasdaq indices led on the way up and now leads on the way down. The small cap Russell would still look best with a marginal new 5th wave high while the DJIA , SPX and NDX may have already topped for this cycle. The recent decline from ATH's is NOT clearly impulsive so we cannot confirm a bigger picture change in trend. The VIX continues to wedge lower in what is likely to be another non-confirmation low as we look for an expansion in volatility. The US$, Bonds and PM's remain range bound...

Last week saw a continuation of the recent decline in US equities coupled with a decline in VIX and VVIX. We DO NOT have any inter-market correlations justifying this decline as volatility declined, global equities remain well bid and the US$ flat. We are paying close attention to the SPX / ES broadening formation rejection but cannot discount the possibility of a marginal new high yet. All indices are testing their respective 50 day sma support but there is no strong evidence (yet) of buyers...

Last week saw a pickup in risk asset volatility as the ES / SPX rejected its broadening formation resistance led by the sharp reversal in Nasdaq indices. We have been warning that parabolic advances often lead to violent reversals when herd momentum is NOT supported by fundamentals. We maintain that the 50 day sma is important trend support across the board and NO major index has violated this support (yet). The question is whether last week's decline was a corrective wave (iv) in a continuing...

Last week saw a continuation of the reflation trade spurred by Powell's Jackson Hole "lower for longer" speech. Equities rallied, the US$ weakened across the board, commodities rallied and rates rose. The US$ weakness is central to this risk-on trend while the SPX / ES accelerated through ATH's - importantly, last week's rally invalidated the prospect of a wave (v) high (with proposed wave (iii) now being the shortest wave) opening the door to a continued rally in global risk assets. Last...

Equity markets continue to extend gains led by the highly concentrated Nasdaq indices. The most heavily concentrated trades remain long Nasdaq, short US$, long commodities and yield curve steepeners - all implying an economic recovery. While we do expect an economic rebound, this is more likely a knee-jerk reaction to re-openings rather than a sustainable economic recovery. The SPX / ES continues to trend higher and test new ATH's with no evidence of a tradable top. We are not fighting this...

If we step back from the day to day price action, we can stay focused on the bigger picture - this is an Ending Wave. The ingredients for an ending wave are in place - debt, deflation / stagflation, demographics, social mood, demand destruction and anti-globalisation. The core drivers of world economic growth that were deteriorating prior to the Covid-19 pandemic have all been exacerbated. The final piece of this puzzle was Joe Public - you can't have a market top without their participation....

Last week saw a continuation of the bullish market trend as the Russell 2000 / RTY led the market higher (as expected). From a big picture perspective, we are still counting the 2020 rally as an ENDING wave 5 of V - hope springs eternal as macro fundamentals continue to deteriorate. This week's focus remains on the US$ - we are looking for a bullish reversal in trend given technical levels and extreme sentiment readings. This will likely be important for risk assets and in particular the...