US Markets Close On The Highs- July 31st, 2020

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.

While the Nasdaq composite advance/decline line cracked below the uptrend line, the market rose. That means that more stocks were going down than up, but the big names carried us higher. With negative divergence on the daily charts, and some names starting to come in, that is a little more negative. The number of stocks with big percentage drops have been rising for the last three weeks. Each week, we see a little more weakness, but we make higher closes. Hard to argue with higher closes and the advance/decline line is still intact for the top 1500 stocks.

The bond market yields imploded this week after the Fed meeting. Yields moved
drastically lower, especially in the short durations 1,2,3 and 5-year. With a dropping dollar to finish the month, I would have expected more response from the commodities. Oil has been stuck in a sideways range for 2 months. Industrial metals paused this week, while precious metals exploded. Cash gold traded at an all time high.

The Yen broke through resistance but a big reversal took place on Friday so it finished back inside the rangebound sideways market from the last two years. Japan and Europe had a bad week, and the Japanese car companies dropped precipitously on a higher Yen. I’d look for fireworks around the Yen in August as the chart tension in the Yen, the Nikkei stock market, and export stocks like Japanese autos is very noticable.

Summary: The market keeps working its way higher. While the Nasdaq 100 weekly chart has been consolidating sideways, the $SPX pushed up above the June highs and closed at the top of the month! The first part of this weeks’ video shows the drastic difference in some of the world indexes to the $SPX. Eventually that is a clue that the US market cracks, but the high finish on the $SPX is real.

Let’s jump into the charts