Tech Week Frustration – July 31, 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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