alice

NFTRH; Market Update

Observances on a mid-summer dog day…

Trump trumpeted Dow 22,000 in a tweet yesterday and that can’t be good karma. The Dow and its 30 stocks is the “stock Market”?

trump tweet

This while more and more sectors diverge negatively, from tech to transports and, it seems, more and more stocks, large and small get hammered on earnings (Apple is today’s darling, where in the recent past it might have been Facebook or Amazon).

In my world, chemical/specialty materials company CBT finally showed why I did not like its chart and disappointed the market. I managed to get out with a slight loss as it partially recovered. Also, watch list item FARO got hammered and confirms that taking a bird in hand and selling at lateral resistance was a good idea. This seems to be a ‘take the bird in hand’ (and limit losses) type of market right now.

In this post continued pressure – and daily breakdowns – are noted in Healthcare.

While we have been watching the prospects for interest rates to rise amid over bullish sentiment in bonds, that is not a timer. In the short-term I am about as neutral as can be on bonds/yields, given this week’s weak showing so far.

Here is the current daily view of the 10yr yield. Filling a gap and finding support at the SMA 50? Maybe. But if more legs get kicked out from under the Dow’s table, there could be a bigger rush into Treasury bonds, which would put down the yield, near-term.

tnx

And then there is the US dollar. I am still waiting for it to bottom and rally. Believe me, it’s no fun having that stance but until proven wrong I still think it is coming. A strong USD would pressure many items, from US stocks to global stocks to commodities and likely, in the short-run, precious metals as well. Now, will Uncle Buck oblige?

I re-took a short against EMs (strictly due to anti-USD correlation) and still hold the Euro short after finally getting out of the pro-Europe trade (for now, at least). As for precious metals, if they take a hit and assuming the risk ‘on’ trades are also taking a hit, I’d expect the damage to either be not as severe or not as long in duration because a) the gold sector is usually counter-cyclical and b) the sector has been gently trending down during the US dollar’s decline and should not be as vulnerable to all that hot air that could be released from the anti-USD asset balloon.

More to come, but these are some observations. If they break the dollar and speculative spirits renew, then as you were. But a setup appears in place for pressure to increase on asset markets in the short-term, and I am wondering if our fearless leader may have signaled it in yesterday’s tweet.