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WINTER2020-1
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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.
Its-Up-For-Debate
The Bank of Canada has signaled an improvement in the economic environment by reducing the emergency measures it put in place last spring to stabilize..
What a weak week. After a nice roaring rally last week, this was a really poor follow-thru. Not much to cheer about. The US dollar was barely up, but most commodities took it on the chin. While there were pockets of success (broker dealers), the big names are still hovering around the 50-day moving average. It was literally a great Monday followed by a lack of enthusiasm all week.
Canadian markets climbed last week with the driver being the better than expected economic data and the anticipation that another…
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.
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