The Mars Market Update — Live Research

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,...

The Fed-fuelled risk asset melt-up continues. Bears fumbled the ball last week as global equities continued to rotate higher following a corrective decline. We tweeted the corrective decline that led to Friday's push higher across the board. The SPX bear count is now at risk and what stands out since the June highs is the lack of downside follow through and triangles forming in the DJIA, Russell 2000, DAX, Eurostoxx and NKD. Triangles indicate consolidations before a final thrust in the...

Note: the CFTC data was delayed due to the Independence Day holiday. We will update when available. Last week, global equities rebounded sharply from support for what we expect to be wave c of (ii) / (b) retest of the June highs. Early this week, bears need to make a stand and defend major swing highs and reverse the recent rally. Our expectation remains that this will be the final leg of a counter-trend rally before the bear trend resumes. Any push to new cycle highs invalidates our base case...

Global equity markets remain in intermediate downtrends following the early June highs. Despite the negative news cycle, the primary equity indices remain above the June 15 lows and near term 50 day sma support. Our expectation remains that the initial decline was wave (i) / (a) of a larger decline as we look for another leg lower in wave (iii) / (c). Bonds continued to push higher while the US$ reversed its recent decline calling into question the near term structure. PM's continued to push...

Our base case remains that the early June highs marked an important swing high for risk assets. The impulsive decline from the highs is likely wave (a) / (i) of a larger decline - re remain bearish / defensive. Bonds remain bullish but could see an early week corrective decline. We have no confirmed top in Crude Oil and Brent so marginal new highs remain a possibility - if so, it should be an ending wave so we are alert to a bearish reversal. It is important to note the extreme bearish...