The Mars Market Update — Live Research

Last week saw a continuation of the bear market trend with no evidence of a tradable low. The market will need to turn higher early this week to maintain bullish near term momentum divergence. What we have from a big picture perspective: a potentially completed 5 wave rally from the 2009 and 2016 lows momentum divergence at new ATH's on a weekly and daily basis consistent with a final 5th wave rally (ending wave) an impulsive 5 wave decline into previous triangle area support signalling a...

Last week we warned that any rally in the US equity indices off 50 week sma support was likely to be corrective (a-b-c) as the bigger picture trend remains down. The question is whether last week's rally was ALL of wave 2/B or merely the first leg of a larger corrective rally. Importantly, the weekly 50 sma support continues to hold for the SPX, Dow and Nasdaq indices while the Russell has clearly broken down. Importantly, both the US dollar and bonds continue to hold near term support and...

Note: I will be visiting family this week so while I will be contactable, my responses may be delayed. Last week we got the US equity break we had been looking for with follow through declines tagging initial 200 day sma downside targets, then breaking lower to test our secondary 50 week sma targets highlighted in late week tweets. While the consensus was looking higher for equities we correctly faded the herd. We remain bearish equities. What if we are right and equity markets potentially...

The global risk market themes of short bonds and long equities held last week - these are the most overcrowded and leveraged one-sided trades we have seen in recent times. While we are not fighting these trends (having been on the right side of the short bond idea) I am alert to a sudden reversal.  Chasing one-sided crowded trades is fraught with danger - my preference is to fade the herd but I will remain disciplined in awaiting evidence of a turn. This is not a time for complacency! Last...

Last week saw the Dow finally confirm the SPX, Nasdaq and Russell 2000 push to new ATH's. Bonds continued lower for a hard test of our 116 key support for the TLT with yields testing major resistance. The DXY continued its corrective decline while commodities like Crude Oil and Copper rallied unexpectedly. Key themes to take note of this week include the FOMC and its impact on rates and the potentially escalating US/China trade dispute and its impact on risk. Are we setting up a period of...

Global risk assets are at a tipping point as US bonds approach important structural support. A combination of strong US economic growth, higher energy costs, increasing Treasury issuance and quantitative tightening all provide a fundamental backdrop to the rising rates story. From a technical perspective, we are fast approaching a make or break point for US bond markets - the cost and availability of global capital. Strategically from a bigger picture perspective, we remain bearish Bonds and...

Last week, we warned that US equity markets were forming potential ending wave patterns and the high beta indices reversed sharply lower. As we have been warning, investors have been moving down the risk curve as rates rise and liquidity declines - the fractures started in Emerging Market currencies and equities, pushed through to commodities, and are now slowly engulfing European and Asian equities. The US as stated previously is the best house on a bad street but the trend is ending. The...

Last week we saw a continuation of the 4th wave triangle thrusts we have been monitoring. Importantly, global equities did not participate in this latest rally as Emerging markets faltered and European equities were dragged down by its banking sector. There has been a lot of speculation that we are at the start of a new bull market trend - there is little evidence to support this assertion. Despite the expected latest push to new ATH's in the SPX, Nasdaq and Russell, I remain of the view that...

The summer grind continues as bullish triangles led the risk markets higher with no signs of a tradable top. The US$ started its corrective decline as expected which supported Emerging Markets and commodities across the board. Markets are poorly positioned for a near term US$ decline so we should expect a continuation of these near term trends over the next week. Remember, this US$ decline is likely to be corrective that leads ultimately to a much stronger dollar and resumption of risk-off...