• July 22, 2019

ELAM: New S & P High, Happy Independence Day - Odessa American: Business

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ELAM: New S & P High, Happy Independence Day

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Posted: Sunday, July 7, 2019 5:00 am

The third year of a Presidential term is usually an up year. So far so good in 2019.

Tom McClellan

Wednesday, July 3, 2019, 10:44 AM CST

Last week we suggested that stock markets are reaching their typical summer peak, doldrums ahead. But we also got our wish. We noted the Russell 2000 small cap index and the Dow Transports had not moved above their respective 200 day Moving Averages MA. Now they have.

The Transports are trading at 10,492.  Taking out the April high at 11,100 would confirm the new high in the Dow Industrials.

The University of Michigan Consumer Sentiment index continues to improve along with the unemployment rate.  Positive sentiment, low unemployment both buoy a strong stock market.

Interest rates remain low world-wide and in fact are negative in some European countries.  Indeed most world stock markets lag the positive action in the US market.

OPEC and Russia claim they are doing a great job supporting the oil price. Perhaps they did not notice the 4.81% drop this Tuesday to $56.25. Prices peaked last October 3 around $75. In the really big picture, oil prices have been falling since the 2008 high of $140. Next support is $50 but I am guessing we are looking at a re-test of the December low of $42.50.

Some 150 energy service companies have declared some form of bankruptcy since 2015. May 2014 was the final high over $100. More oil is now being produced with fewer wells drilled. So great efficiencies are pressing the service sector.

Share prices are still falling for Halliburton HAL and Schlumberger SLB. These are the largest energy service firms. Share prices are below the 200 month moving average for both. So expect even lower prices ahead.

The bull market in gold has gotten ahead of itself. The price peaked June 24 around $1,440. Expect a correction to $1,360-70 over the next few weeks.

That projected low in gold just might coincide with a final low moving average convergence in silver. Silver has not joined the party with a new high as seen in gold. But a positive sign is a narrowing of the moving averages. This is one to watch.

The bear market in natural gas continues. Now trading at $2.24 prices look headed for $2.00.


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