Trading the Trend

[ducati916]

Just looking at US indices, we can see (far left chart) that the small caps are looking to break above their 200EMA. This bodes well for the market as a whole as issues have plagued the small caps to date.

We always want as broad an advance as possible.

jog on
duc

 

[Chronos-Plutus]

The $VIX:

View attachment 106927

We are still in an elevated VIX environment, but, still look to be heading lower. However on the left hand side of the chart we can see an increased number of areas of support/resistance (in this still elevated) VIX environment. As VIX levels encounter these previous levels, we may see some influence being exerted which will lead to a choppier market. Unless something macro changes, we should simply continue lower, albeit in a choppier manner.

View attachment 106928

In the bigger picture overview we are out of market crash ranges (10% decline range) into the more garden variety declines, say 5% range. Below is the market added.

View attachment 106929

With elections approaching and all that entails, hardly surprising. Also, if the market has an end of August swoon, this is an indication that the Democrats are likely to win the election. Usually (but not always) US elections drive some of the more US centric macro indicators, particularly around the Financials (ironically Financials have better returns under Democrats than Republicans). If this is the case this time round, we might be able to exit/hedge any August swoon and re-enter for the election proper. We'll see.

jog on
duc

I am looking forward to the US Presidential debates:

https://grrrgraphics.com/

 

[Chronos-Plutus]

Here is my electoral map at the moment:

 

[ducati916]

Another interesting phenomenon of the 1990's has returned along with the newer developments in the markets:

Haven't seen the 'Dotcom' phenom. in a while, but it's back now.

jog on
duc

 

[ducati916]

Here is my electoral map at the moment:

View attachment 106931

So who is your pick?

jog on
duc

 

[Chronos-Plutus]

So who is your pick?

jog on
duc

Still too early to call for me. I heard Biden is trying to get out of the presidential debates because he is scared and feels incapable of challenging Trump. Then there is the potential postal vote rigging that will need to be stopped before the election.

I think Trump is in a stronger position than Biden at the moment.

 

[ducati916]

More positive economic data:

Only employment still a negative.

jog on
duc

 

[ducati916]

As to the markets, the opportunities have been myriad: Within the indices, sectors across the board have been making money:

If you are a stock picker via a system:

For many investors, the holy grail of stock picking is the proverbial ten-bagger. A ten-bagger is a stock that multiplies by ten times its original price. Usually, this happens over the span of years, but in the Covid-economy, we've actually seen a number of these ten-baggers play out in the span of months. While most of these examples are in the small-cap space, shares of Wayfair (W), which has a current market cap of $27.5 billion, have rallied from $21.70 on March 19th to its current price of $290.85 now. That's a gain of more than 1,200% in less than five months.

Within the entire Russell 1,000, 257 stocks have at least doubled off their 52-week lows, and in the table below we highlight the 34 stocks that are at least a quarter of the way to the ten-bagger club and have rallied more than 250%. As mentioned above, W tops the list, but Fastly (FSLY), which has barely been public for a year, is just shy of the club with a gain of 992%. Behind FSLY, Livongo Health (LVGO) is up 855%. Given that LVGO just got a takeover offer from Teladoc (TDOC), the 11th best-performing stock on the list, it may only make the ten-bagger club under the banner of the TDOC ticker.

In looking through the list of stocks shown, many of these names come from the Health Care, Technology, and Consumer Discretionary sectors and have been direct beneficiaries of the new Covid-economy. At the same time, six stocks from the Energy sector made the list as well as they recovered from their bombed-out levels after oil prices briefly traded in negative territory earlier this year.

jog on
duc

 

[ducati916]

Real Estate: https://www.riskhedge.com/outplacement/the-great-american-housing-boom-has-begun/RCM

jog on
duc

 

[qldfrog]

Another great market day in the US with real companies gaining, funnily enough,my only red was a gold miner
Read move views agreeing with Mr Le Duc about inflation:
The way money is injected in the market is not inflationary CPI wise as it does not reach people but just inflate assets.will this change and will various feds start backing banks loans towards the commoners like us, via business home and personal loans, this could change the game
Finance sector not a bad play either way?

 

[ducati916]

Market close to all-time-high

With reasonable movement across all major sectors.

The 'stagflation' meme is percolating through the sub-mainstream:

I was going to read the article on Mr Boockvar's site, but it is a subscription. But from the brief synopsis, it isn't that hard to figure out his basic arguments. Both gold & silver are trading as if that thesis were correct.

jog on
duc

 

[Chronos-Plutus]

Market close to all-time-high

View attachment 107007 View attachment 107008

With reasonable movement across all major sectors.

The 'stagflation' meme is percolating through the sub-mainstream:

View attachment 107005

I was going to read the article on Mr Boockvar's site, but it is a subscription. But from the brief synopsis, it isn't that hard to figure out his basic arguments. Both gold & silver are trading as if that thesis were correct.

jog on
duc

Food inflation is now evident in the USA.

"Food prices at supermarkets surgedduring the pandemic as tens of millions of Americans lost their jobs.

According to the latest seasonally adjusted data by the Bureau of Economic Analysis (BEA), the virus pandemic has had a tremendous impact on food prices from February to June:

Meat and poultry prices jumped 11%, with beef prices surging 20%. Pork climbed by 8.5%, egg prices increased by 10%, and cereals and fresh vegetables were up more than 4%."

(https://www.zerohedge.com/markets/p...on-unemployment-stays-great-depression-levels)

 

[ducati916]

So the market is nicely placed to break through to new all-time-highs for the weekend:

Both the 20EMA and 50EMA show room at the inn.

Vol. is trending lower through another support point.

Sectors looking pretty good. Most sectors just pulled back marginally. Most are above their 200EMA and can be classified as in a bull market. The only one of note sitting below their 200EMA are the financials. Credit concerns always are an issue with the banks.

Nothing that they haven't reserved for (or at least that's their story). Banks are getting ready to move above their 50EMA and then look at all the blue sky to their 200EMA.

Sentiment:

Sentiment (bullish) is below 25%. Look how often that has been wrong.

jog on
duc

 

[ducati916]

Food inflation is now evident in the USA.

"Food prices at supermarkets surgedduring the pandemic as tens of millions of Americans lost their jobs.

According to the latest seasonally adjusted data by the Bureau of Economic Analysis (BEA), the virus pandemic has had a tremendous impact on food prices from February to June:

Meat and poultry prices jumped 11%, with beef prices surging 20%. Pork climbed by 8.5%, egg prices increased by 10%, and cereals and fresh vegetables were up more than 4%."

(https://www.zerohedge.com/markets/p...on-unemployment-stays-great-depression-levels)

And your point is?

jog on
duc

 

[Chronos-Plutus]

And your point is?

jog on
duc

That stagflation is already here; and the evidence is clear!

 

[ducati916]

That stagflation is already here; and the evidence is clear!

So let us examine the evidence:

The value in March 1971 (before Nixon defaulted in August) was 121.38. It then dropped into 1980. Currently we are sitting at 93.06.

The PPI index rose from 1970 through 1980 increasing production costs. Currently we are near the lows of the last 10 years, thus the purchasing power of the dollar is higher for productive businesses.

Unemployment is an issue today. For that 1970-1980 period, apart from that spike in 1975/1976, not so much.

CPI pretty steady upward path. The issue for business is the spread between PPI (costs) and CPI (selling price). When the spread favours businesses, profits are higher.

Now the US has moved to a more services based economy over the decades. Therefore when unemployment is high, there is no pressure on wage rates, which are the input costs similar to PPI. Add to that the collapse of Trade Unionism and there is even less wage pressure. During the 1970-1980 period COLAs added to the stagflationary pressure through wage hikes and active strong Union action.

Look at history of US hourly rates:

In 10yrs rose $0.45 cents

Next 10yrs saw a rise of $1.50

1980 to 1990 they rose $0.70



The evidence suggests that the US is nowhere near the 'stagflation' of the 1970-1980 period.

jog on
duc

 

[ducati916]

Continuing the inflation or stagflation scenario:

Silver, which until quite recently had avoided confirming the move in gold, started to confirm the move in gold and the inflation scenario. Why? Well on August 2 we had this article come out, which was a Sunday. Monday, silver has a significant move.

https://www.wsj.com/articles/fed-we...tive-rate-moves-to-curb-inflation-11596360600

Which is the likely basis for the sudden big moves in gold and silver. Essentially the commentary on the Fed. is that they will allow inflation to run a little hot, up to 4% before squashing it, rather than targeting it at 2%, to make up for all the sub-2% target rate to date.

To date, that is the underpinning of the move in silver.

jog on
duc

 

[ducati916]

While the broad indices are slightly off, the broader market is doing well:

Small and Medium caps moving nicely. This is healthy for the overall market.

Sectors within S&P500 all moving nicely. Only Tech. having a breather. Paper is having a particularly good day, possibly anticipating all of that printing to come!

jog on
duc

 

[ducati916]

Silver (black line behind bar chart) tracking the other 'safe' currency:

At least those chaps might be earning some interest along with their capital appreciation.

jog on
duc

 

[ducati916]

At the end of this week, the rotation continues. Nothing flashy, just catching up by inches.

As stated a number of times, you want (need) that breadth for a healthy market.

And the last word of the week to Flippe-floppe-flye:

jog on
duc