The Mars Market Update — Live Research

Last week, the risk-off environment continued as expected with US indices achieving minimum downside targets. This morning the Fed announced another rate cut to 0-0.25% coupled with a minimum $700bn expansion in QE. While we applaud the Fed in providing global liquidity to continue functioning markets, this is not a monetary problem - this is a global health problem that requires global leadership. Given the global economic dislocations now taking place after global growth was already slowing,...

Last week, the US equity markets bounced to retrace 50% of the prior decline before turning lower again despite (and maybe because) of the Fed's emergency rate cut. Global equities continued to decline across the board. Our bearish positioning remains unchanged as we look for wave (iii) / (c) lower. The near term question is whether US equities can hold recent swing lows for a more complex correction higher in wave c of (ii) / (b) (as tweeted)? While the setup is there, it will depend on how...

Last week we got the downside confirmation we were looking for in global risk markets. We have long held that this latest rally was an ending wave C of (B) - a phoney. The market proved out our thesis and fell sharply back through breakout support. Our thesis of extended volatility compression leading to volatility expansion played out as the VIX exploded higher into long term resistance. This last week has validated our positioning and outlook. " Last week saw another failure at marginal new...

Last week saw another failure at marginal new highs as expected in what was likely to be a 5th wave completion. While the decline is not clearly impulsive, there are enough warning signs in place to mark at least an intermediate term top. What we don't know is whether this latest rally completed all of C or wave 3 of an ongoing bull market rally. Either way, we should expect continued downside follow through next week as markets enter a risk-off phase. The US dollar made new cycle highs as...

Last week, global risk assets continued their liquidity fuelled rallies despite mounting pressures on the global economy. The US as the "best house in a bad street" analogy continues with capital seeking a safe haven in US assets. The US$, Treasuries and Equities all outperformed global peers as the equity market rally narrows. MAGA (MSFT, AAPL, GOOGL, AMZN) continue to drive global markets higher while industrials and small caps lag - herding continues unabated. It is important to note that...

The US remains the best house in a bad street as equity markets rebounded sharply to new ATH's. The sequence of higher highs and lows continues unabated for the major indices. Meanwhile, secondary indices such as the Transports and Russell 2000 remain below their respective 2018 highs (dow theory divergence). Global fundamentals continue to deteriorate but this appears to have been more than offset by central bank liquidity. I would rather be a speculator this late in the cycle as technicals,...

This week marks an important inflection point for the markets. Emerging Markets have been leading the indices lower since reversing at our key resistance zone. We have been warning for some time that this rally in risk assets was a potential "B" wave phoney / fake break out and risk insurance for failure was warranted. While we did NOT see the Coronavirus coming, the market structure warned of an impending volatility expansion. Global central banks will attempt to pump prime the markets with...

Markets flipped to risk-off late last week as concerns regarding the Coronavirus spread. We saw near term reversals in US equities, bonds and the Yuan. The market is vulnerable here to a risk-off black swan event. Bears still need confirmation of this potential change in trend. Equity markets continue to struggle at resistance as we look for evidence of a tradable market top. This rally is only in 3 waves from the December 2018 lows. We have momentum divergence at recent highs as the rally...

US equity markets continued to impulse higher into Fib resistance. There are now enough waves in place to potentially wave (v) of C. While we do not yet have strong evidence of a bearish reversal, momentum indicators are deteriorating. This rally is severely stretched so we should be alert to a bearish reversal. This is NOT a time for bullish complacency as risks abound. ES Daily Near term, the ES, YM and NQ all have enough waves in place to complete wave v of (v) of C. While the rally could...