The Mars Market Update — Live Research

Perspective - as global liquidity declines, capital flows to the best house on a bad street in a flight to perceived safety. The US capital markets have been the main beneficiary while Emerging markets and higher risk asset classes get liquidated. We are in a world of historically high and growing dollar denominated debt in a stagnating growth environment threatened by ongoing trade wars and geopolitical uncertainty. This is not the start of a great bull market - what we are witnessing is...

Last week equities and rates failed at resistance as expected as the Euro and Aussie$ broke down from their respective triangles. The strong US$ continues to pressure PM's while crude oil rallied from structural support as tweeted during the week. Our base case has been that this rally from the April lows was an ending wave. The SPX stalled at resistance late last week and reversed lower - we were looking for a failed test of the ATH's. One day doesn't make a trend change so we would like to...

Reviewing the markets over the weekend led to one conclusion - risk markets are trading at extremes. Markets are very long US equities while leadership is narrowing and a trade war beckons Markets are very short bonds into strong structural support Markets are very long US$ while the rally is ending Markets are very short PM's at support These are ALL crowded trades that are at risk of reversal. Recently we have been focusing on the Nasdaq as the leading equity market sentiment indicator. We...

The US equity market rallied strongly back to the 61.8% Fib retracement on Thursday seemingly on the back of AAPL's breakout and the Nasdaq's successful retest of its 50 day sma support highlighted last week. The question is whether this rally was a last gasp short squeeze or the start of a broader market rally. We are now at an important market juncture. It is hard to argue with the bullish engulfing days but Friday's close is key to the bigger picture trend. All bearish bets are off at new...

Last week we saw some cracks forming in the bullish narrative with the FAANGs and Russell (leaders) starting to break down. This is more evidence of a topping market. The US$ continues to stall at resistance while the Euro may still be in a small degree 4th wave triangle. Bonds continue to stair step lower as expected but the decline appears incomplete. Gold continues to probe for a tradable low. These are very crowded trades with sentiment extremes and with the FOMC on deck this week we...

Last week, equity markets stalled at resistance as expected but there is little evidence of a change in the bigger picture trend. While earnings continue to provide a positive backdrop for stocks (backward looking), declining liquidity and geopolitical risks (including trade wars) continue to drag on confidence as investors attempt to climb the wall of worry. That probably goes a long way to explaining the triangles we are seeing in the Industrials, Banks and Transports. The US$ appears to be...

Last week, global equities pushed higher with the FAANGS leading the way while Banks and Transports lagged. This week will be important for the bigger picture market structure as the SPX enters our 2800-30 sell zone. Bears want to maintain the inter-market divergence and do NOT want the SPX and Dow to confirm the Nasdaq's push to new ATH's. With earnings reports on deck, it will be important to see how the market reacts - do they see through a strong Q2 fuelled by reduced taxes and increased...

Last week, despite (and perhaps because of) the negativity surrounding the trade wars, the bears dropped the ball. We failed to get the downside follow through we were looking for as the global equity indices closed strongly higher for the week. SPY / DIA / QQQ / IWM all had bullish engulfing candles for the week which calls into question the near term bearish counts. The question is whether this is the start of a new wave higher or a deeper counter-trend rally. As noted last week.... "What we...

Last week we warned of an impending equity market top as we moved tactically bearish. We now have a number of warning signs of a potential market top but we DO NOT yet have price confirmation of a change in trend (decline below the critical February low support). Our primary thesis remains that the bullish macro tailwinds that supported this post-GFC rally are turning into headwinds as liquidity is drainied from the system, global debt is peaking while global growth is slowing. All the while,...