Cautious Outlook For US Equities

What lies ahead in September for US Equities? Bruno Estier, Independent Market Strategist

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0:00sep tember is wearing me as every September we know that sometimes if we
0:05look for example in 2014 volatility tend to write the morning brunei so we’re in
0:14September now so do you think the US equity market will continue to go higher
0:20well good morning Sally Starr yes we do have good news
0:23let’s see this morning mid cap which is a lot better for the market we see how
0:29your highs and higher lows here on the smoke up and under the cap as well and
0:33the relative strength has been rising during the old summer and it’s now a
0:38little bit poisoning but the momentum is still higher at first sight it looks
0:42good but what’s worrying you
0:44well September is wearing me as a every September we know that sometimes if we
0:50look for example in 2014 volatility tend to rise in September sometimes even
0:56start with audio in August as August has been very quite so far there is some
1:03chance that the ability would be arising if we look at that here we are below the
1:07thirteen percent levels which is a bit complacent that means nobody worrying
1:11about anything and on the other hand if we look in detail what happened in the
1:17last 10 days we had a first initial rise from eleven to fifteen percent and then
1:22the putback but this pullback with current rising momentum could be a
1:27higher lows and that could announce some more trouble later on okay what does
1:33that mean for their SMP 500 well we hope that that means that it would break out
1:38of these very narrowing bollinger bands which has been like a lasting now for
1:45almost all of july and august we see a very narrow training range again just
1:51before labor day we had a kind of a force break up on the downside that’s
1:56relatively corresponding to the seasonal that just before Labor Day doesn’t break
2:01down it’s more after late and we hadn’t even a rebound to what the top of the
2:06training range so here really what we need to to think and and watch is two
2:12two simple levels the first one would be a failure in the coming days to break
2:17above the resistance level which is a 21 92 93 and of course if there is a such a
2:25failure would be watching at the level of 2160 the support of course as this
2:31confirmation that something is going on there are other markets such as the
2:36European equities markets which have been doing quite well it’s been quite
2:39bullish hasn’t it
2:41well yes and he did give a relatively nice bullish signals because it’s
2:46breaking a long-term downtrend line that we see here over more than one year
2:52around the level of thirty 30 and now it’s rising up it comes at the same time
3:00as a relative strength versus the SNP is rising while it was declining so far so
3:05in fact basically if it was declining so far that means that Europe was lagging
3:10the SNP so that could just be a kind of ketchup situation and not lasting very
3:17long and he say the japanese market performing well
3:21japanese is a has been performing as expected in the sense that when it came
3:26close to 100 then there was a worried that too maybe it was too expensive yen
3:34and then the quickly corrected down 296 and at the same time we see that nuclear
3:40rebounded from 17,000 6402 to the 17,000 levels now yesterday was kind of
3:47interesting because it make a new high like a breakout above the previous
3:52resistance 6900 and at the same time the energy balance so it doesn’t go together
3:5911 of coffee is wrong so if there is a rebound because it was kind of a good
4:05move on the inside then probably the yen could be better patient we see here the
4:10oscillator the momentum is also overboard so it’s a situation where a
4:15reversal on this breakup could be with more dramatic the brunei you being a bit
4:22too cautious have how emerging markets going well if
4:26way that’s a good question you know because everything is doing well if we
4:31take some more distance and we go to a weekly chart
4:34what do we see we see indeed since during a very nice rise but this right
4:40now is approaching kosher levels first of all it’s the previous highs of the
4:46area of sep tember year ago
4:49secondly it is also a technical levels of close to this the top of this cloud
4:55and we know they’re usually that could be some resistance of some stalling that
5:00means the market could go from instead of continuing I could go sideways and
5:05put back that’s it for china so that’s why I’m worried and india was your
5:12favorite market is that still doing well
5:14india has been already making a small pose like we mentioned that two weeks
5:20ago and it’s now making a new high as if it wants to continue to go a lot more
5:26higher it is true that it outperformed the S&P that’s the black line which is
5:31rising vs emerging-market here it’s not so clear because it’s flat for now a few
5:37months so that means that’s not the leader anymore it’s just performing as
5:41well as over markets so here again we need to be careful about what would
5:49happen if we go back to below this key resistance level that we have identified
5:54already or four weeks ago and that would come together with some bearish
6:00divergence so that means what could come after is more of a stronger correction
6:06that what I have been so far and during the summer you like Brazil but has it
6:11been overbought now brazen used 22 always like when somebody games happen
6:17it’s usually uh we’re doing any country equity marketing of that country is
6:22doing well and we see that it has been rising on the relative strength is in
6:26peak away nicely vs said the imaging market it’s now also stalling because
6:32it’s also more linked not anymore with a leaping games that more with oil and
6:37here again
6:38we are close to some key resistance that we had not seen since april $DAY of
6:45$MONTH 2015 so with with the momentum starting a little bit too we need to be
6:51careful that it doesn’t go back below 44 and what could be a trigger for bad news
6:56the trigger for venues will be basically in all these market that what’s it is
7:03expected about growth is not realized so how do we measure grove indirectly in
7:09the markets usually when there is more buff expected interest rates are
7:14supposed to rise and that’s why we try to identify already since mid-july
7:19because we noticed these triangles in the interest rates of the 10-year US but
7:24it hasn’t broken up yet
7:27it’s taking its time again it’s stored at the 163 and it’s back down to the
7:33support level of the triangle so much lower yield below 150 would be a kind of
7:39a warning because we notice that when it went down in June the SNP also had a
7:45kind of a sharp correction and here it has been so quiet that it could happen
7:50the same thing and what should the second market be watching out for the
7:55second market is also linked to interest rate we mention oil if there is some
8:02expectation about inflation that means all price good should also go up as well
8:08as the interest rates and here we also have a very nice long term pattern which
8:13core for higher old price but there as well it’s taking its time it still below
8:2051 and the related transversal the SNP is also still below its key resistances
8:27so it’s not yet a good contributor to our bullish SNP so it’s still in the
8:34well Bruno as always such a pleasure to have you here and we look forward to any
8:38come in next time you’re welcome
8:40that’s all for myself and Brunei if you like this segment please give it a like
8:44and comment on our website dukascopy . TV

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