Ten of eleven sectors in the S&P fell Thursday. The market has a really risk off tone.
Stocks Drop Despite Nvidia’s Rally, Friday’s Wall Street Journal
It appeared the final high occurred in late March around DJIA 39,750. But the index dipped and rallied to a new high at 40,000. But it was not to last, mood violently reversed dropping the Industrials over 600 points Thursday.
A double top means that a market tried to move higher and failed and then made a second effort, in this case it failed again. This is true as well for the SPX, the NASD, and the NASD 100 (NDX). Thursday was no doubt a 90% down day where 90% of all stocks traded closed lower. This is typically followed by a couple of days of mild rebound. The DJIA was up about 80 points Friday morning.
But not so fast, the NDX has staged a 2,120 point rally today. The NASD has gained 179 points. Such action is referred to as an inside day. The low is higher than Thursday’s low and the high is lower than the previous high. I expect then that we have one more leg up before this final high is formed.
One should be looking at the new bull market in gold and silver. Other than William Devane on television and myself, no one seems to care. Silver popped to $32.69 this past week. It is now pulling back to re-test the $30 breakout level. June gold rose to $2,452. It is testing the breakout level of $2,300.
The world is awash in debt. China’s property developers such as Evergrande and Country Garden either have missed debt payments or are struggling to do so. The USA is spending one trillion dollars it does not have every 100 days. Target’s sales have dropped for four straight quarters. Boeing is burning through billions of cash due to the fallout from recent aircraft problems. Fast food restaurants report falling sales due to higher prices. Endless wars drag on in Gaza and Ukraine as China threatens Taiwan. A current poll shows 60% respondents believe the U.S. is already in recession.
Crude oil remains range bound between $75 and $80. It has bounced to $77.64 today. Unusual prior to summer driving season, gasoline futures have fallen from $2.80 to $2.49. The only analysis to offer is to watch for a break of $75 in crude or a rise above $80.
