Greg Schnell

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?

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• 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.

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• By ClearWater Private Wealth
• July 19, 2021

The indexes bounced up and down this week alternating days. Ultimately, we finished on the highs. In the breadth work on the video, I mentioned there was an initiation thrust suggesting renewed enthusiasm on Friday.

The dollar is at a key inflection point. It would appear to me to be trying to roll over lower. That would be my bias, but it has not broken down yet. It is trying to break trend line resistance to the upside. If that stalls and reverses lower, I expect a big resurgence into the commodity related trades. Stay tuned on oil, industrial metals, gold, silver, rare earths, and lithium as examples.

The dollar seems to be a light switch here, with lots of trades pivoting around it currently. It traded in the same range as last week for the most part. A declining dollar seems to help the $SPX stock market rally easily, whereas a rising dollar gives us a slower, more laboring rise.

The big banks start the heavy reporting season this week. The financial charts look ready to turn back higher, so that could be the interesting sector for the week.

Summary: The indexes are continuing to hit new highs. The wobble this week was a small problem, but we bounced back down on the Put/Call ratio as it was hitting a level where most market turns higher start from. Interestingly, we hit the put/call ratio very close to new highs.

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• By Greg Schnell, CMT, MFTA
• July 12, 2021

The markets surged forward all week. The Quad witching date (more info below) marked the low, and we have been racing higher from there. After the SPX made a new 4-week low, scaring most investors, it’s been a run for the roses higher. While breadth is still thin, it is improving. I expect that to continue into what should be a robust reopening against weak comps from a year ago. However, in a linked article, it would appear, it’s not just strength against good comps. It’s very strong data from the few who have reported so far, period. That’s as fundamental as I get investing, as the charts have been shouting that for weeks.

The dollar is at a key inflection point. It would appear to me to be trying to roll over lower. If that happens, I expect a big resurgence into the commodity related trades. While oil has been on the front burner, the oil producers have lagged. FCX pulled back 25% from the highs in May. That’s a lot! I also showed another big picture trade setting up in Gold. There is a complete section of this report discussing the technicals. I could probably find another 10 charts to say why it looks bullish to me, but the bottom line is I want to be very ready with buy orders ready on the best gold names if this is going to happen!

OPEC has us frozen in time for the weekend, but it would appear to me to be very bullish. They are suggesting an increase of 400,000 barrels per day, for each month until December. That wouldn’t handle the shortfall in America, let alone the global inventory declines. I interpret it as bullish. Pardon me if my bias is showing! Even the Whitehouse noticed higher oil prices this week due to squeezing producers to not produce. To my knowledge the Canadian PM hasn’t noticed the rising price.

The dollar seems to be a light switch here, with lots of trades pivoting around it currently. A declining dollar seems to help the $SPX stock market rally easily, whereas a rising dollar gives us a slower, more laboring rise. While not evident each and every day, some charts below highlight what I see going on. You can decide if you agree.

Summary: The indexes are breaking out to new highs, let’s pick our spots. Technology, communications, healthcare, discretionary, industrials, financials, energy all look good. What’s not to like?

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• By ClearWater Private Wealth
• July 5, 2021

The markets pushed higher by Friday. The most important thing to note was that the technology space did pretty well again. XLK and XLY both look better for the first time in a while. A few semiconductor names and some consumer discretionary names are starting to look good. EBAY as an example is breaking out. I like semi’s and software and am now adding consumer discretionary.

Energy continued higher. Five more drilling rigs started working as price moved through $70. The windsock and the slow speed limit in the photo suggest what is happening in the market. Just a little push each week in the prices. Natural Gas had a good week and it continues to look good. I own some of the Natural gas companies in Canada and they are starting to move higher.

The bond yield chart is really important again this week. Bond yields moved lower and the 5-year broke the trend line. The 30-year yield moved down quickly to touch a 10-month trend line.

The US dollar pushed higher and closed at a 5-week high. Bitcoin pushed up near $40000 over the weekend. Perhaps this is the sudden surge to the levels I laid out last week. The Canadian dollar rolled over which is starting to add caution to my stance on oil. Nothing broke down, but I did sell one oil stock as it wasn’t doing anything.
Gold stocks had a poor week. I am not happy with momentum rolling over so close to zero. More in the charts below. With the copper miners and gold miners both having some losses but not big, they are cautionary. Freeport McMoRan had the large volume topping day May 10. It’s been a month and the copper chart is stalling around prior highs and the copper miners have been working marginally lower.

Summary: The bond market appears to want dropping yields / higher prices. The Fed meets this week and that coincides with quadruple options expiration on Friday which could increase volatility and volume. I suggest oil continues to bubble. Natural gas is also a positive here. Financials and industrials are starting to be weaker along with basic materials.

For more information click the link below…

• By ClearWater Private Wealth
• June 14, 2021

The markets pushed higher on Friday. The most important thing to note was that the technology space did pretty well. I continue to like some of the set ups in clean energy as I mentioned last week. It looks like the market might finally get enough momentum to break through prior highs and get rolling here. The real problem is that the momentum has been slow to lift off which is very concerning. Speculative stuff like ARKK and bitcoin haven’t really been able to break out.

The oil rally this week was big, real big. Oil moved through $67 with almost no real retracement and by the end of the week we were sitting at $69.60 looking to go higher. Hopefully all the oil commentary has had you in the space. Gasoline volumes barely dropped off after the long weekend, suggesting a lot more demand coming. Oil company after oil company, as well as country oil ministers are all warning of a lack of oil in 2022. No one in government wants to hear it, as the governments and individuals all want to go green. The real problem is the public is not ready for big ambitious mining plans to fulfill electrical requirements. Governments have identified oil as the evil villain, providing heat, cooling, mobility, clothing, packaging, security, and manufacturing. For something so needed, oil is the villain in abundance and the villain for the shortfall in Carolina with the Colonial pipeline security issues. We sit with a shortage of electrical energy, while we push electric cars to people. Some Texans are still without power. We are going to be short of liquid energy, due to the lack of drilling. As oil closed a week ago, the number of drilling rigs dropped (by 1 rig) from the week before. Hardly a surge to be worried about. Drilling takes time to pick up, but certainly multi-year highs would have been motivating. Not yet!

Uranium, lithium, and rare earth metals all had strong weeks. It looks like Uranium is finally trending after I had given up hope with all the chopping. Copper and Gold closed down on the week.

The bond yield chart is really important this week. If all the yields start to move lower, that will put pressure on financials, and may reignite the tech trade.

• By ClearWater Private Wealth
• June 7, 2021

The summary charts at the end of the newsletter tell the tale. Global markets were all green. Commodity markets were mostly green. Most growth and cyclical sectors were green. While the market still has some work to do, the broadening backdrop of global markets improving helps. It’s really up to the Nasdaq names to get the $SPX out of its’ month-long frump sideways. We are still where we were for the Fed meeting at the end of April and the April 16th Options Expiration.

This newsletter has a lot of focus on commodities. More than usual as this seems to be one of the big positive areas of the market that has stayed off most people’s radars for years. I’ve been banging the drum for a while, and the moves have been massive, but we have more gas in the tank it would appear.

Greg monologue – In the face of all the bad news for the oil business this week, oil looks set to take on a run to $75. Gasoline demand was higher this weekend, – 7% higher – according to Gasbuddy.com. Whenever someone complains about the high price of gasoline, please mention that it is solely due to the governments’ inaction on opening mines for more metals to create and move electrical energy. Economics 101 – Oil prices are forced up as the governments continue to shame the industry into not replacing reserves. This makes both forms of energy – Liquid and electrical – scarce and forces the price higher. Please ask them to pressure politicians rather than abuse the very source of liquid or electric energy they want to buy.

Almost all commodities were running hard this week. A new closing high for oil, but down on Friday. I continue to hold Gold and oil related trades.

Summary: I am not sure if the broad indexes can rally as the FAMTANG names have not rallied for the most part. FB would be the exception. The market momentum is low right now, and I am looking for a catalyst to move the market higher. We are ½ way to the July earnings period now, so maybe than can be it. The lackluster volume doesn’t echo a momentum change like the ravenous days of early 2021. The commodity trade looks set to reward us with more upside. Start focusing on tech lows as well in case they move.

• By ClearWater Private Wealth
• June 1, 2021

The S&P 500, the Dow and the Nasdaq all closed lower. The Dow was the least damaged, with the Nasdaq underperforming again. The normal breadth indicators finally broke on the Nasdaq. The SSI indicators are still a little weak, as the faster indicators are at 50% or less after dipping sharply and bouncing to close the week. The Nasdaq probably needs to join the party to turn these up.

I am watching financials to see how they behave here. On this market bounce, we really need tech to join the party. Tech, semi’s and discretionary continue to be the weakest areas. The newsletter below shows a number of commonly watched charts hanging on in last gasp territory. Tesla’s down $200 since the slide started. Gulp!

I mentioned last week that I remain concerned about the Nasdaq weakness, but at this point it just seems a strong rotation rather than outright selling. We actually saw more weakness this week as numerous charts pushed lower to start the week. Stock market indexes don’t usually have church spire tops like the lumber chart has this week. But as tech investors continued to get their hands punished by pushing the buy button, it gets harder to remain positive.

Some signals started to show up in utilities, while the high-flying commodities did take a break after last week’s euphoria. Having the Staples sector lead this week, is not that promising either.

Summary: Some weakness started to invade the charts like the short-term SSI indicators were suggesting. This week, I have laid out the strength indicators in way more detail. I have 5 charts that will be part of the regular newsletter now due to the number of requests for more information. As the SSI’s all turned up to end the week, I am buying a few stocks and continue a large position in energy. But I couldn’t be more aware about the potential for downside pressure with the weakness in the McClellan oscillators laid out in the video this week. Tight stops will be key.

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• By ClearWater Private Wealth
• May 17, 2021