No Higher Ground Without Solid Ground
Equities came out of the gate with a bad start this morning and never found any “terra firma” thereafter. One might blame it on today’s economic data, but Initial Jobless Claims @ 276k are still at historically low levels despite exceeding consensus estimates @ 266k. There have not been any anomalies in the economic data lately that will give investors any reason to think the Fed might reverse its stance on December being open to a rate increase. We merely have an overbought market that is in the process of correcting. You cannot reach a higher ground without solid ground.
In addition to this, today’s energy report released by the EIA should have left no one surprised. The economic fortunetellers missed the surplus inventories by a long shot and then some: actual was @ 4.2mm/bbl vs. consensus @ 1.1mm. The WTI Crude Oil December-2015 futures contract crashed through key support @ 42.50 and settled with a 41-handle. The market hates surprises.
Lastly, Gold is worthy of mention. It has been rather resilient in this price area and gold bugs and investors both are behaving like they will support the precious metal at these levels regardless of a Fed interest rate hike. Here’s my take on gold:
Central banks have pretty much emptied their clips when it comes to interest rate cuts. The only ammunition they have left in their arsenal is the fabrication of more fiat currency. The next recession battle or financial crisis will be fought with paper bullets and not interest rates.
- Trends: ST = short-term; MT = Intermediate-term; LT = long-term
Well so much for the rally. The bears have now rested control of the market from the bulls as support at the 22-day moving average was violated. The SP-500’s next level of support will be the 2020-2023 level and afterwards 1995-2000. Resistance is at 2060 and then 2085.
By the way, if you’ve been reading our reports regularly, it’s not like you were not forewarned. Stay Hillbent for the Market Direction…
|Daily Chart Technical Analysis|
|New 5-day highs||21||New 5-day lows||277|
|New 52-week highs||19||New 52-week lows||29|
|Bullish reversals||13||Bearish reversals||44|
|% > 20 M.A.||% > 50 M.A.||% > 100 M.A.||% > 200 M.A.|
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