The Mars Market Update — Live Research

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...

US equity markets continue to hold support and threaten to extend gains led primarily by the Nasdaq indices. Global equities fell sharply despite the positive US lead. While we do NOT have confirmation of a top in equities, the fragmented rally warns of potential downside risks. The US$ / DXY reversed higher late last week with bullish reversals but are yet to be confirmed. Potential inflection point here for the US$ decline and in particular the sharp reversal higher in USDJPY. The impact on...

Global equity markets pushed to marginal new highs before fading late in the week. The equity market rally remains fragmented as the DJIA and Russell have yet to confirm the Nasdaq and SPX push to new cycle highs. All eyes were on the PM's as they accelerated higher following the DXY break of key support. While we were looking for an end to the recent PM rally, the strong momentum of this latest rally and associated break in the US$ opens the door to higher prices. From a big picture...

Global equity markets continue to grind higher despite deteriorating economic conditions and global virus outbreaks. The weaker US$ and excess liquidity is helping to support risk assets across the board. However, there is strong evidence to suggest that the recent trend in DXY, commodities and equities should be ending near term. We are alert to evidence of bearish reversals this week as risk assets are likely in the process of topping. The latest global equity market rally is fragmented,...