Category: Financial Markets Update

FOR TUESDAY: (5/30) Quiet markets on Monday didn’t tell us much. The Fed’s Williams said three rate hikes in 2017 made sense and balance sheet normalization should begin this year. The pound posted the biggest gain among G-10 currencies, though the bounce wasn’t enough to erase Friday’s plunge when polls showed the coming election may be closer than expected. Oil trades back under $50/bbl as boost in U.S. drilling activity threatens OPEC’s efforts to reduce a global supply glut. On Friday Baker Hughes revealed U.S. explorers added 2 rigs to 722, highest level since April 2015. After the market was unimpressed with accord Thursday to prolong output limits, Saudi Arabia’s Energy Minister Khalid Al-Falih said the strategy is working, global stockpiles will drop faster in 3Q

As Bloomberg notes, despite the longest winning streak for U.S. stocks since February and record highs posted by equities globally, the ongoing bond rally hints at an undercurrent of investor caution. With the fate of the Trump administration’s pro-growth stimulus plans uncertain, the dollar is one of the weakest-performing major currencies this year, even as the Federal Reserve prepares for more rate hikes. Gauging the ability of the global economy to withstand rising borrowing costs will be key for traders.

“The U.S. economy is about as close to the Fed’s dual-mandate goals as we’ve ever been,” Federal Reserve Bank of San Francisco President John Williams said in Singapore on Monday. “With the attainment of our dual-mandate goals close at hand, it’s more important than ever for monetary policy to work toward what I like to call a ‘Goldilocks economy’ -– an economy that doesn’t run too hot or too cold.”

Three-day holidays can be crazy but not enough news to create that. We often can see sideways action as people come back late from the holidays. Still, the first day of the trading week before employment report can be a big-range day.Continue reading

FOR FRIDAY: (5/25) Fridays before 3-day weekends are usually quiet. Usually by 9:30 am everyone who came in is gone. Not sure if GDP will mean much. Markets are open Sunday night and usually until 10:30 am-12:00 pm on Monday so check with your broker. Asian and European trade can be brisk sometimes. Cycles over the weekend do have a high terrorism alert and there might even be some major domestic violence. Be safe with holiday driving particularly this weekend. Continue reading

FOR THURSDAY: (5/25) Will the trade go flat before the long holiday weekend already on Thursday? It will thin but Thursday will be a better day to trade vs. Friday. We have the markets open most of the holiday weekend in electronic trading and have outlined cycles for the weekend. We think stocks will take profits after Thursday’s high and that the dollar will do short-covering from a new low on Thursday, and that will pull gold off after a secondary high on Thursday. Looks like crude will get stuck with sell the fact but we won’t play until OPEC is clear but it looks like a sale Friday-Tuesday of next week.Continue reading

FOR WEDNESDAY: (5/24) We looked closely at cycles this week and not seeing anything to knock stocks down, and the trade is blowing off the latest scandal rumors and is more interested in increasing end of the month profits. Dollar looks lower into Wednesday/Thursday and gold and silver higher and oil looks higher into June 3, and there is enough of a breakout that we can probably buy dips.Continue reading

FOR TUESDAY: (5/23) We looked closely at cycles this week and not seeing anything to knock stocks down, and the trade is blowing off the latest scandal rumors and is more interested in increasing end of the month profits. We can’t be bearish but we are sure where we can get an entry. Dollar looks lower into Wednesday/Thursday and gold and silver higher and oil looks higher into June 3, and there is enough of a breakout that we can probably buy dips.Continue reading

FOR MONDAY: (5/22) We are always nervous about putting out orders over the weekend break given the political circus going on but it does look like stocks are a buy on Sunday if nothing happens.

JUNE E-MINI S & P 500
S&P ANALYSIS FOR MONDAY: (5/22) Support at 2376.50 and 2374. Market did fail at the 78% retracement area of 2388. Next push up projects 2400. Much under 2370 and the market may be doing a congestion triangle. The more bearish pattern would to be that if we do get the 78% retracement, it would set up a huge congestion triangle pattern between 2350-2380. Bears who missed Wednesday’s fall have to remember that funds and cheap money will come to the rescue—because that’s what they do. We feel that chills and spills may be happening from mid-June into October but we usually get complicated topping energy in late May and early June. We did get technical sell signals on Wednesday but that doesn’t mean the market has to go straight down right away again.

Cycles for Monday look particularly friendly so unless NYT or WaPost come up with new scandals, the trade will go back to buying the dips In fact, we looked at cycles for next week closely and probably only next Friday into Memorial Day does the market start looking really vulnerable again so we should look at this as a sucker punch. We had thought about early June as a secondary high. We’re not quite ready to go for new highs but there are some patterns that can be read that way and nothing about this market will surprise us. So I think we have to forget about Wednesday and see what develops on recoveries into next week.

As for the rest of the day, if the market cannot fall much below 2375, then I suspect the market is going to recover higher. Complicated political crosscurrents are going to increase volatility.

There a patterns that would allow 2400 and then a push to 2340 and they are not out of the question.

LONGER TERM: (4/26) Expecting that 2150 is the most likely first downward target into September/October if the market can close below 2300. May not get the sell signal until June.

CYCLES OVERVIEW: Higher Monday; generally lower into May 24.

FOR FRIDAY: (5/19) We‘ve seen enough of these sucker punches to know that we had to be careful–and low and behold, it came and delivered. Next week’s James Comey hearing is certainly setting up as a ‘grab yr popcorn’ moment with Democrats lining up for their 5 minutes of fame to ask the question that ‘proves’ Trump deserves impeachment. However, it appears there is no need for the hearing as Mr. Comey already confirmed – under oath – that “he has not been pressured to close an investigation for political purposes.” Testifying under oath in front of the Senate Judiciary Committee on May 3rd, Comey states that he has not been pressured to close an investigation for political purposes, “not in my experience.”

So where is the truth? The press is selling copy by making up stories with evidence and there is certainly a witch hunt out there and it is not good for the economy or for getting business done and we’re all sick of it. Cycles suggest it will get much worse in July and August so get your popcorn warm ready.

We originally had a dollar high for Friday and gold low and we will assume that will continue. Still, the Times or WaPo will come up with something else to sell more copy and CNN will continue to rant. Will we ever have truth or a government interested in the people rather than battling out in the arena?

Topping action is never easy and you can see what happens when you chase so will tread carefully.

FOR TUESDAY: (5/16) Well, stocks survived a long-range missile test by North Korean over the weekend and just really cared about another false promise from OPEC. We’re not seeing this market run out of steam until the end of the week so we assume that it will go higher. Our cycle work is at odds with technicals this week. We often don’t pay much attention to Mondays as they are often low-volume. We have to see if the minor breakouts on silver and the Euro continue and if not our original work will be on schedule. We expect at least a retrace of Monday’s profits for most of these markets.Continue reading

FOR FRIDAY: (5/12) More reports on Friday and lately Fridays have been friendly but the 29-day cycle is weak by 9-10 am and that may lead to a weekend profit-taking bout. Metals also look lower on Friday and it may be a dull pre-weekend affair.Continue reading

FOR THURSDAY: (5/11) We have a bias toward stocks bouncing on Thursday and would love to buy a pattern completion but still looking for 40 ticks off the highs on NQ and not sure what will create that. The dollar looks higher all week and that doesn’t jive with a 2-day bounce for gold, which isn’t happening either. Luckily the news front is relatively clear compared to past weeks.Continue reading