It’s Up For Debate- October 23rd, 2020

Another meager week. Feels like we are on the road to nowhere. Barely a ripple on the Nasdaq between the 5 closes. Flat water. The Advance/decline data are positive for the week. My Schnell Strength Index fell back below 75 adding caution. I have one chart that keeps track of wide differences in my momentum data. It is giving a signal like the March lows! So be open to the upside. With
the second COVID wave accelerating, is the market going to price in a second shutdown or just a massive prevention plan of masks and distancing? It is up for debate as to which way we break.

One week was a pause, but I certainly didn’t want to see more weakness this week. It wasn’t much, and we didn’t have big down days (Monday was 1%). But you can’t go up without momentum either. Big tech reports this week. Thursday night is the elephant on the agenda with AAPL, AMZN, GOOGL, and FB. MSFT is Tuesday night.

Financials were up a little, but yields were up big. Banks and brokers are
both trying to work higher. I spent a little time on yields on the video, but
they were up bigly.

Industrials pulled back, and the rails broke the uptrend. The last three of
those rail chart trend breaks coincided with multi month weakness, so I’m
choking on that chart. Oil names rallied 3% even though crude moved down on the week. As we hunt for the secondary low in oil stocks, I’ve broken that strategy out in detail this week. It’s up for debate if they are ready to go.

Summary: With the pullback on my strength indicators, it adds caution. The dropping US dollar may continue to help commodities. I was nice to see $USD continue lower. Another down week on the dollar could really give commodities a lift as charts like Copper, Steel, EEM, URA, XOP are set up. Not so much in gold, but in the other names. The equity activity this week was as muted as at this ferry ramp. Nothing exciting on a dead end road.

Let’s jump into the charts. Click below to view the full PDF.