Bulls trampled bears this week. The market soared globally and locally, and every sector and commodity rocked higher. We are not talking a little bit. It was big. The video this week has a lot of bullish information, if you have time to view it.
I was excited to see the indexes rally this week as my charts were leaning that way last week. I was disappointed in the Nasdaq 100 rally failing all day Friday while other areas of the market pushed up. Utilities, REITS, financials and even energy started to rally. Crude oil is down hard, but the oil co’s rallied on Friday? The only sector to end the week in the red was energy – the un-love continues. We have young solar companies with bigger market caps than XOM. Suncor is near the COVID lows with crude $30 higher.
The US markets were split with a rising Nasdaq 100 and a small move down in the $SPX. Tech stabilized this week and closed up. Lots of the tech charts are consolidating sideways and closed Friday near the top of the consolidation range. Names like NVDA, AAPL, SHOP, WDAY are good examples. After Options Expiration on the previous Friday, this week had three of 5 days up for the Nasdaq. It wasn’t a huge move up, but some big down days were quickly repaired. With the strength of tech, this week could see the rally try to run higher. That would be my bias based on the charts.
It has been 4 weeks since we topped out from the spire to end August.
From the 2nd of Sept, we have been working our way lower. However, the
consolidation is finding support at the start level of the year for the
$SPX. I mentioned it a couple of weeks ago as an area for support. It
seems like its holding.
While the markets were flat to up, we had huge down momentum in the
individual names. Over 500 stocks in my scan were down > 10%. Fiftysome were up 10%. So a lot of heavy lifting was being done by the stability of tech in the indexes.
Commodities got smoked this week on a huge move in the US Dollar. It was a train wreck on that asset class. The commodity related stocks fell HARD. Most commodity related names in gold, copper, silver, oil, rare earth, lithium, timber, steel and coal all dropped. The one positive change was the front month on Natural Gas, up bigly over 30%.
In currencies, it was a-one-way-train! The US dollar soared, which I called the raging teenager trade. It was just sitting in a consolidation range and then exploded higher almost every day for the week. Where did that come from?
Summary: The tech names are consolidating and look ready to run. When the US dollar broke, it crushed all hopes for the commodity buyers. The last three days of the five, the commodity indexes tried to hold their lows. Can they make the turn higher this week?
Let’s jump into the charts. Click on the image below to view the full newsletter in PDF format.
The US markets closed lower with a small drop in the technology names. Energy was broadly up 3% but exploration and production was up 6%. Crude moved up almost 10%. More moves in the ag space occurred with the solid moves in Corn and Soybeans. Materials including industrial metals held up fairly well. Semiconductors held up on the back of a big acquisition bid by Nvidia.
The trend line on the $SPX broke and the Nasdaq 100 continued lower. Small caps were up on the week and to round it all out, the S&P 1500 held its trend line. This mixed picture is weakening. While market drops are rarely easy to trade as volatility picks up, the mixed results this week make it more difficult.
An explanation of how tricky the market is, the indexes were down 1-2%. Stocks up 10% or more outpaced stocks down 10% or more by 8x. For stocks up more than 5%, it was 2.5x more up than down.
Commodities were up on the week, with oil rising 10%. Oil moved up more than $3 and closed at $41.32. Copper moved up along with lithium and the rare earth metals. Steel stocks rose, coal stocks rose, agriculture names had a big week.
In currencies the Yen had a strong week. On the video, I cover off a relationship of Gold and the Yen. Essentially, when the Yen goes higher, I might expect Gold to go higher. We’ll watch for that this week. The relationship has broken down over the past year so I am watching to see if it reasserts itself.
As the market steps lower, the first part of the index waterfall was rather quick. It appears we are starting another drop down with Friday’s move below support. Because Friday was Quadruple Options Expiration, my caution level is high. But the selling did not intensify as we broke lower. I would be very cautious taking aggressive index positions either way. Watch for an upside reversal.
Summary: Ahead of the election, some patience is needed here. But it is a good time to stalk the names you want to own. Watch the charts for bottoming patterns. Some of the big names are off 20%. I did buy some commodity related names. It definitely seems to be a rotation going on from high fliers to cyclical economy stocks so far.
Let’s jump into the charts. Click on the image below to view the full newsletter in PDF format.
The US markets closed lower with another drop in the technology names. This week saw a decline in almost every sector. The materials were marginally positive, avoiding the downward suction. Materials includes fertilizers, chemicals, mining names to list a few. With the solid moves in Corn and Soybeans, the fertilizer names held up. Energy was the worst sector once again. Technology, Communications and Semiconductors were demonstrative of the technology weakness.
The former leaders were hit again. Most of the big names (FANMAG) are
hovering around the 50-day moving average. That’s significantly lower in 7
trading days, but the upside euphoria was also significant leading into the
drop. Tesla was down another 10% trying to bounce off the 50-day. The week
was a little chilling, much like snow showing up on the mountain peaks this
week. As the season changes from summer to fall, it seems the market chill is
upon us.
Commodities were down on the week, with oil falling hard. Oil moved down
toward a support level around $35 to finish at $37.33. The weekly low was
$36.13. If the support at $35-$36 doesn’t hold, $29 would be a next stop
target. Yecch! In currencies the British Pound got smoked for 7 cents in a couple of weeks. The US dollar moved up, and most of the commodity currencies were weaker. That’s not great! The Euro and the Yen traded sideways. Both the European and Japanese stock markets were up this week, in a big contrast to the US drop.
Summary: Tech continues to be sold. My courage to be long is suspended. Ahead of the election, some patience is needed here. But
it is a good time to stalk the names you want to own. Watch the charts for bottoming patterns. Some of the big names are off 20%.
Let’s jump into the charts
The US markets closed higher on the week with the $SPX breaking out and closing at new all-time highs a smidgeon under 3400. Breadth indicators weakened considerably in the face of the new highs on the index as Apple soared to a $2 Trillion market cap.
My bullish optimism is now being tempered with the changes I am seeing in behind the glamour of the lofty index. The Schnell Strength Index is still in the 90’s but it weakened 3% intraday on Friday, an Options Expiration day with a new high for the market. 3% is no big deal, but the last 4 days of this week saw more decliners than
advancers on both exchanges as the market pushed higher. This week, we saw a drop below the trend line for the advance/decline line measured on many different markets. The Nasdaq Composite, the NYSE Composite, the Canadian market, the mid caps, small caps and the S&P 1500. Continue Reading
The US markets closed higher on the week with the SPY ETF breaking out to all time highs. With all of my breadth data, almost everything is positive here. My SSIH indicator drifted lower with the weakness in gold and a few other areas to 95.8 %. I hear all the noise around me about divergences but the price and momentum action continue to say higher.
Last week I mentioned “Bonds made a very important hammer candle this week giving some reasons to be be bullish the banks. The Bank ETF was up on the week nicely. This bond hammer follows last week’s Fed meeting,
so this is a bullish time to look for changes.” Well, this week, bond yields soared. It was a massive change that bodes well for financials. Continue Reading
The US markets closed higher on the week with the IWM small caps ETF joining the party and moving above the June highs. With all of my breadth data, absolutely everything is positive here. My SSIH indicator moderated marginally, still at a blazingly solid 97.6 %. I here all the noise around me about topping but the price and momentum action continue to say higher.
Breadth is currently rock solid. Bonds made a very important hammer candle this week giving some reasons to
be be bullish the banks. The Bank ETF was up on the week nicely. This bond hammer follows last week’s Fed meeting, so this is a bullish time to look for changes.
The US markets closed higher, with a big lift on Friday afternoon. This closed out the day, the week and the month almost at the top of the $SPX bar. Thursday, four of the big cap tech names reported and three of four beat the numbers. The Nasdaq 100 had its highest weekly close, but slightly below the July highs. Let’s not split hairs here. It was a big bullish finish to the month. Continue Reading
The US markets drifted lower, with the leading large-cap tech names selling off and moving below their trend lines. Materials and retail now have the highest SCTR rankings for sectors. Both the Nasdaq and SPX made higher closing highs early in the week. Continue Reading
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