Going into the weekend the equity markets are delivering mixed results. Outside of Bonds, Utilities, and Real Estate, the Fed announcement on monetary policy and unwinding its balance sheet had very little effect from a weekly perspective. Today, it appears Geopolitics has re-emerged as a toxic cloud over the broad markets as tensions between North Korea and the US rise. So far, the only projectiles being launched are insults and threats, which I suppose is better than missiles, if this is as bad as it ever gets. From a Machiavellian perspective, both leaders, i.e. Trump and Kim Jong Un, need and use each other to justify the existence of their leadership and extreme handling of the authority bestowed upon them. That’s about all I will or can say. Now on to the markets…
Major US Indices
- SP-500: Outlook remains technically bullish as another record high was reached this week. The benchmark index is beginning to consolidate after last week’s breakout and will most likely close the week in slightly negative territory.
- Nasdaq-100: Technically bullish… made another record high but slipping into consolidation and has taken out support of previous week’s low. Currently down -0.89% for the week.
- Russell-2000: Technical outlook bullish as it prepares to retest high @ 1452.09. Currently up +0.89% for the week.
- DJ-30 Industrials: Still bullish.. new high this week @ 22419.51.
- DJ-20 Transports: Still bullish, but must overcome resistance test @ 9763.66. So far up +1.29% for the week.
- DJ-15 Utilities: While the trend is still up, this could violate channel support and initiate a bearish reversal. Being interest rate sensitive, utilities did not take too kindly to the the Fed’s plans to gradually increase rates towards the end of this year or commencing to unwind its balance sheet next month in October. Down -2.07% for the week.
MAFANG (Microsoft, Apple, Facebook, Amazon, Netflix, Google/Alphabet)
- Microsoft (MSFT): Trend remains bullish while initiating a consolidation pattern. Somewhat disturbing that it failed to hold support @ previous week’s low. Currently down -1.46% for the week.
- Apple (AAPL): Apple has initiated an extremely bearish reversal pattern and made a new 7-week low. Currently down -4.06% for the week.
- Facebook (FB): Trend remains bullish but has entered its 9th week of consolidation and made a new 3-week low. Currently down -0.31% for the week.
- Amazon (AMZN): Amazon has broken its uptrend and has been consolidating for at least 4 weeks now. 930-937 will be a key support level for it to maintain. If not, things could get ugly in a hurry. Currently down -2.24% for the week.
- Netflix (NFLX): Bucking the trend of the market for tech flyers, Netflix has shown investors 4 consecutive weeks of positive performance and a new 8-week high as it prepares to retest resistance @ 191.50. Currently up +3.53% for the week.
- Google/Alphabet (GOOGL): After topping out @ 1008.61 in June-2017, Alphabet has violated its uptrend and been in consolidation mode for the last 7 weeks. It is currently up +1.31% for the week.
- 10-Year Treasury Note (December-2017 Contract): Bonds clearly bearish this week after the Fed’s announcement. Forget about flight to safety. Kim Jong Un and the threat of war is of no concern to the market at all, just preservation from the deflating of an asset bubble long overdue to dissipate. Thus far, down -1.10% for the week.
- 30-Year Treasury Bond (December-2017 Contract): The same could be said for this one too as it has clearly violated channel support.
- US Dollar Index (Cash): Dollar is firming up support but the trend is still down and it will need to breakout from this channel before any bullish calls can be made. Hat tip to the Fed for putting a floor underneath the dollar.
- Japanese Yen Forex (USD/JPY): The Yen has ceded to the Dollar for two straight weeks now. However, it is managing to recover some of its losses as the USD/JPY pulls back -0.35% during today’s trading session, while currently being up +1.48% for the week.
- Euro Forex (EUR/USD): Euro vs US Dollar trend remains bullish, but is consolidating. The situation here is the European economic recovering is gaining momentum while the ECB is very reluctant to even mention the notion of tightening at this stage. It remains cautious. In the US, the economy is humming along and still expanding, albeit with the headwinds of Hurricanes Harvey and Irma or a yet to be delivered tax reduction plan. Meanwhile, the Fed is committed to gradually tightening and has made this clearer than anything, regardless of being short of its targeted rate for inflation. Go scratch your head on that one…
- Gold (December-2017 Contract): Bonds and Utilities were not the only not the only ones impacted by the Fed’s announcement. Gold has initiated a bearish reversal pattern and, by doing so, confirmed 1360 as the latest level of resistance. Currently down -2.32% for the week.
- Copper (December-2017 Contract): The industrial metal is showing signs of indecisiveness and trading within mid-range of its price action. From a positive perspective, it has established a support base and has potential for consolidation. If the prospects for global growth still exists, it can be found in this metal. Currently down -0.48% for the week.
- WTI Crude Oil (November-2017 Contract): Crude is still consolidating as , but has also registered a breakout with a new 9-week high. Currently up +1.32% for the week.
- Natural Gas (October-2017 Contract): NatGas has been consolidating for 8 weeks now and is currently set to close down -2.58% for the week.
- DJ Real Estate Index (DJUSRE): This asset class is also not a big fan of a higher interest rate environment and has responded accordingly with a bearish reversal and new 4-week low. Currently down -1.75% for the week.