US Stock Market
After a whipsaw on Tuesday the market made a hard move down yesterday. Amid degrading indicators like bond spreads and sentiment, the Dow and S&P 500 declined over the last 3 days from all time highs.
Our parameters between normal and abnormal are very tight. Let’s check up on them.
A snapshot of current daily technicals…
GLD held last week’s ‘tentative’ key support and now it is just plain KEY support. Next resistance level is just over head.
First let’s update the charts we showed yesterday, with the short-term support parameters.
SPX is below the tolerance point, but this is in-day. The headline indexes are getting the biggest hit.
The metals and gold stock sector have reversed upward and unfortunately I don’t have time to check to see what – if anything, news-wise – might be behind it. I have a commitment shortly.
Last week we reviewed some degrading indicators giving warnings on the US stock market in an update. The market went on to be okay. This weekend NFTRH 320 had caution signals aplenty, especially in the sentiment segment. And all along we have had the fading junk-quality bond spreads as a negative divergence.
You may have noticed old friend SIMO back in the Roth IRA per NFTRH 319. That was me in essence jumping the gun just a bit on its chart. Silicon…
In light of the dynamics in play in the interest rate market, one might want to watch a sector that favors rising interest rates (the Banks, given ZIRP at the Fed’s discount window) vs. rising yields out along the curve. Even though the curve is dropping, if we assume that banks are funded near 0% their lending out across the curve would have a profit motive.
We began the week with an update that noted the week’s economic calendar and in particular, the ISM (which came in at a still-strong 58.7% PMI) and today’s November Employment report (+321,000). Some economy watchers had expected a catch up move in November after a weaker than expected October and that is exactly what we got.
A snapshot of current daily technicals…
GLD dropped below and shot back above support. Key objective: Get above 120 and make a higher high to October.
So the Swiss gold vote caused a sizable ruckus in gold and silver overnight. This morning there is a nearly as sizable recovery in the metals.
The Swiss vote is an important hype component to get behind us and a positive reversal today would be notable, given the already over bearish sentiment profile (cue Citi’s Willem Buiter with a hysterical rant against gold leading in to the Swiss vote).
We have a developing potential for a stock market upside blow off on the table for reasons explained previously. With this update I want to present the indicators that argue to the contrary and ask us to manage risk. I cannot predict which way the chips will fall (no pun intended) but I can continue to put up indicators for guidance.
Per the simple measurement of this chart and others like it we have used, we find WTI crude oil at target this morning.
Let’s remember that targets are not stop signs, they are objectives based on pattern measurements.
Returning to our short-term management charts (60 minute charts, only for those managing the short-term) here are the updated views of GDX and GDXJ. Both items have stuck to the…
A snapshot of current daily technicals…
GLD is at the first resistance level that began at the equivalent of 1180 for gold (currently 1196). This resistance area was the long-term breakdown platform. It is very important to maintaining the bear or giving the bull some breathing room.