Financial Markets Newsletter

Divergence Continues

The divergence between long-term Treasury bonds and stocks continues to keep going. The chart below shows how pronounced this divergence has become as the S&P continues to edge higher. Most times, these two will trade in tandem so the bond market is trying to tell us that the economy will remain in slow growth for […]

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Slideways

The S&P 500 continues to hover below its June 8th high (3,234) as the earnings season kicks off and the country struggles with a new wave of coronavirus cases in the southern states. The uptrend from the March low is stretching valuations and continues to be driven by a handful of large-cap technology stocks which […]

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Rebound Madness?

The rebound from the March low continued this week as the large-cap technology stocks power the S&P and NASDAQ higher. As the chart below shows, the indices have become heavily concentrated in just a handful of names as the breadth of the market narrows. More than 95% of tech stocks were above their 50-day averages […]

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Rolling Thunder

The S&P chart below shows that prices have continued to weaken and roll lower after a 4-day island top was created in the first week of June. This type of formation indicates an exhaustion of buying which traps buyers who are forced to liquidate positions at a loss. Prices tried to rally in mid-June but […]

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Chart of the S&P 500 Index

Weak Sauce

Last week we had a break in trend that was significant as it marked what is likely the end of the retracement (or bounce) from the March low. The island top in the chart below is rare in the longer time frames and the exhaustion gap we saw in Friday’s trading session is a sign […]

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SPX - S&P 500 Index

Hero To Zero

Many things went from hero to zero this week as the Fed threw cold water on the prospects for a 2020 recovery and the market rolled over in a fashion that warns of significant downside. Last week, we had good news with a much better than expected jobs report and now the cold reality of […]

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HedgEYE Star Wars

ACT III: A New Hopium

A very significant week as the economy had a huge surprise regarding a comeback on the jobs market (see below) as certain states allowed their economies to re-open for business. There is even an argument that next month will also improve as New York and California have only allowed a modicum of their economies to […]

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S&P 500 Index Chart

Over The Line

The stock market has refused to re-test the March lows which means that the Trillions in central bank stimulus and bailout programs have buoyed the stock and bond markets. In the chart of the S&P 500 index below, we can see that the 61.8% retracement level has been surpassed which raises the odds that the […]

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Jerome Powell

Sweating Bullets

Jerome Powell gave a speech on Wednesday at the Peterson Institute for International Economics that should have been called, “The Fed Is Out of Bullets”. The speech was a bit sad as the Fed is normally optimistic about about their ability to oil the gears of liquidity and lay the foundation for a recovery but […]

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S&P 500 Futures Chart

FOMO-20

We are on week 5 of going sideways in the S&P 500 with the possibility of moving higher next week. As you will see in the bullet points below, there is plenty of bad news out there as corporations suffer a reduction to revenues and possible solvency issues. Let’s look at a short-term chart that […]

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