Cautious Outlook For US Equities

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

You can view this video and the full video archive on the Dukascopy TV page: http://www.dukascopy.com/tv/en/#193388

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
2:12levels
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
8:32waiting
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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