Author: ClearWater Private Wealth

Last week, we had bullish breakouts around the world. We also had agriculture trying to break out. This week, literally every breakout was rejected. Commodities were bludgeoned. Steel and copper broke their uptrends. Crude fell below support. Commodity countries are rolling over as a group. Some declines were more subtle than others as the damage in Asia was large again. Japan traded at 2021 lows. South Korea broke down. The breakouts in Europe reversed. The NYSE market composite breakout failed. The emerging market ETF broke down to new lows for 2021, whereas the $SPX is up 19%. The semiconductor breakout of two weeks ago failed. Currencies around the world fell below the 65-week moving average, while the US dollar soared higher.

I think one of the most important things kicking up right now is the dollar. Why is it breaking out? I don’t know, but the rest of the world is worried about something and moving to the dollar.

The Commodities chart ($CRB) included in this newsletter points to an area of resistance and it coincided with a breakout in the dollar. This should not be ignored.

The newsletter is titled ‘charting the pain’ but the indexes barely moved. Below the index surface, it was a complete smackdown, much like last weeks. Almost 1000 stocks in North America had declines of more than 5%, whereas 140 had up moves of 5 %. It was the same ratio for the major moves over 10%. It’s hard to make money or even stay flat when the riptide is emptying the account. The indexes didn’t budge, but the selling was broad.

What really concerns me are the Bullish Percent charts and the percentage of stocks above the 200 DMA charts. These current levels are associated with big multi month moves down after the indicators weaken, and we haven’t even started the decline. Much like the glaciers in the picture, the big indexes are still up there, but the majority of the stocks are moving lower.

The McClellan Summation indexes are telling us we have big declines coming.

Summary: Commodities seem so oversold already, that they are due for a bounce. But the technical damage is done to the charts. Ignoring a downturn in commodities is rarely a good idea. The number of strong groups continues to dwindle. For me, this is a full retreat. It is a very frustrating market to analyze to have such weakness underneath, but the indexes making new highs. This is how major tops are formed.

The video covers a lot more information, and I expect a big increase in the swings as downtrend typically have wider price moves both up and down.

To continue reading click the link below….

• By ClearWater Private Wealth
• August 23, 2021

A busy week for earnings, but a very humble week for the indexes. They were down marginally on the week, with the Nasdaq 100 leading the big three lower. The nice part this week was the resource stocks, like metals and US energy did better. Financials were up marginally on the week after the Fed announced . . . the same story as the last three meetings that they see inflation as transitory.

Gold miners, industrial metal miners, uranium names, steel companies all had a robust week. Tech (other than AMZN) didn’t fall hard, it just never got out of bed this week.

One thing that changed was the direction of the dollar. The dollar had broken out to new highs over the range of the prior three weeks during the week of July 19th and broke the one-year longer-term downtrend line. This week, the dollar had some bearish moves going on, helping commodities generally. The dollar quickly reversed all of the strength we had seen and made new one-month lows. The PPO is just above zero in positive territory and the cycle lines suggest a big move up is ahead for the dollar. The real question is whether the big trend defined by the cycle is still on, or if the dollar is going to continue going lower this week.

Oil companies are out of sync with crude oil right now. They must be listening to Jim Cramer who called a top in oil as it plummeted to $65. Now crude is back with a $74 handle. President Biden and Dr. Fauci are both suggesting they might have to implement some new mask mandates, but no one is talking about shutting anything down. I am struggling with why oil should be lower.

I did put two charts in the newsletter about China. It’s early, but news is changing there. Will this impact global trade?

Summary: Gold’s been on a decline from the highs exactly one year ago this week. Gold started to bounce. The miners and commodity-based industries look like they are turning up. Is this another rotation away from tech and into the interest sensitive trades? It’s still important to be cautious with capital and the SSI’s are not racing higher. Much like mom with the two fawns, sometimes it’s better to sit down and do nothing. Maybe some commodity related trades?

To continue reading click the link below…

• By ClearWater Private Wealth
• August 3, 2021

The markets sudden bounce at the 50 DMA on the SPX was more than I expected, and it was a big bounce, which surprised me. Technology names literally soared. SNAP was up 30%, Moderna up 22%. ROKU up 18% to be close to a breakout. The large cap names ripped higher. I have the charts of Alphabet and Facebook in the newsletter. They looked like they were part of the blue origin capsule, rocketing higher.

A few commodities had big bullish pushes. Natural Gas broke a 15-year downtrend and Lumber bounced after being chain-sawed 29% last week. Lithium and rare earths migrated higher, but it is a disparate group with some of the names not participating at all.

The dollar has some bullish signals going on, weighing on commodities generally. The dollar broke out to new highs over the range of the last three weeks and broke the longer-term downtrend line. The PPO has moved into positive territory and the cycle lines suggest a big move ahead for the dollar. I’ll cover more on this on the monthly conference call.

Here are the details:

Dwight and I will host the August Conference Call on July 29th. Click on the link to join at 5 PM EDT, Thursday. Password = energy

An abundance of oil names will report this week. We continue to have oil inventory data coming in shorter than expectations, but the oil names haven’t responded. We’ll see if the big test of support for crude oil down to $65 was enough and now we pump the next leg higher.

Summary: Technology names dominated the tape this week. Consumer discretionary also did well. It is the period to be lining up for the second half surge in retail. With a huge number of companies reporting this week, we’ll see what is going on and the optimism for the 3rd quarter should still be there. The noise in the trading room this week won’t be about the Seattle Kraken hockey draft, it will be the Federal Reserve meeting.

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• By ClearWater Private Wealth
• July 26, 2021

The initiation thrust of July 9th, turned out to be a dud. The market sold off Thursday and Friday. While the percentage down was relatively small, the damage under the indexes was very obvious. After JPM reported on Tuesday, not much positive happened. We migrated lower and even the large caps started to be sold.

The dollar is at a key inflection point. It has not broken out yet, but it is definitely impacting the commodity trade broadly. I covered commodities on the video, but not as much in this newsletter. The commodities look challenged at best, and as I look at rest of the market crumbling, I just want to turtle away and protect capital. For those interested, three sectors have rising PPO’s on the daily charts. Utilities, Consumer Staples and Real Estate. All the rest gave sell signals in the last few weeks. The SPX gave a PPO sell signal on Friday as well. With negative divergences everywhere, hunkering down for a few weeks looks like the course of action.

The dollar didn’t go anywhere it hasn’t been in the past few weeks, but it closed at the top of the price range, rising from the bottom of last week’s price bar.

The big banks couldn’t find buyers showing up for work on their earnings results. I locked in some profits on tech and some energy. I continue to be amazed at the selling in energy stocks, but I really don’t need to ride them all the way down. I’ll just buy them when they turn back up. For now, holding cash appears prudent.

Summary: The SPX index had new closing highs on Monday and new intraday highs Tuesday and Wednesday. Outside the big index, selling was abundant. The Nasdaq 100 60-minute chart finally broke its’ uptrend. Commodities look questionable, and with so many sectors giving PPO sell signals, it looks like a good time to roll away from this rally based on my indicators.

To continue reading click the link below…

• By ClearWater Private Wealth
• July 19, 2021