Financial Markets Newsletter

Melt-Up? Melt-Down?

Despite the backdrop of a growing risk to global trade and growth, the S&P 500 refused to breakdown this week. Clearly, the severity of the coronavirus in China increased this week and more trouble is surely ahead for China’s trade partners. So, what is holding up this market? The graph above shows the securities held […]

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Made In China

Actually, the question is what can be made in China given the Coronavirus situation? Chinese authorities extended the Lunar holiday for their workers but that comes to an end on Monday. It is possible that factory workers will quit rather than risk contracting the virus. The only thing to analyze here is the number of […]

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Tapping Out

The S&P 500 tapped a line of resistance for the month of January as you can see in the chart below. The 161.8% Fibonacci extension at the top of the chart is essentially an echo of the 2018 High/Low – so the fact that the S&P 500 was rejected at this level (3,321) is of […]

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Wuhan Woes

Everything is on hold now as we may be on the cusp of a global pandemic due to the outbreak of a highly contagious virus (novel coronavirus 2019-nCoV) spreading throughout China. Cases are beginning to pop up across Asia, Europe and now two in the United States. Over 40mm people in 13 cities are under […]

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Warning Signals

Another week of higher prices in stocks in one of the more aggressive moves we have seen since the 2009 low. In the chart below you can see the S&P 500 approaching a long-term trend line which should act as resistance. Also, the yellow arrows highlight the slope of this advance which is the most […]

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Signs of Divergence

The stock market pushed higher into new all-time highs this week but there are technical indicators warning this uptrend is on borrowed time. For one, the sentiment indicators are reading all-time highs in optimism. One of these sentiment indicators, the CNN Fear & Greed Indicator, has been reading “Extreme Greed” for several sessions. These indicators […]

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WAR!

You may have read about the Iranian attack on Friday morning that caused stocks to fall and oil to rise. But the real battle has been between 10YR Treasury bond yields and the S&P 500. In the chart below, you normally want to see the two trend together – as stocks rise, so do interest […]

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December Melt-Up

I hope everyone is having a good holiday season as the S&P continues to push higher into the end of 2019. The best reason I can identify the cause is the chart below. Currently, the Fed is increasing the size of its balance sheet to keep the overnight lending markets liquid for the banks, however, […]

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Overbought Condition

The seasonal price patterns are positive for the next two weeks (Santa Claus rally) but the stock market has achieved an overbought condition as we closed out this week. On the weekly chart below (each bar is one week), I have yellow vertical lines showing overbought conditions according to the relative strength index (RSI) on […]

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