1. Moving the markets

An early bump in the tech sector gave way to selling, as the bears took charge of today’s session early on. Increasing coronavirus cases in Florida, Texas and California added to Wall Street’s woes with even the Nasdaq temporarily succumbing to red numbers, albeit at a lesser degree than the other major indexes.

Almost 50 million Americans have now filed for first-time jobless benefits since the beginning of the lockdown, according to ZH. This week, we saw initial claims of 1.314 million, a slightly better number than the 1.375 million expected.  

Taking the starch out of the early bump, and dropping stocks suddenly, was news of the SCOTUS Trump decision that a NY Grand Jury can get access to Trump’s tax returns, prompting ZH to comment:

This sparked instant selling pressure on the market, as it seems investors may have suddenly come to the realization that Biden could win (and Dems take the Senate) sending the S&P into the red…

It seems the market cares about a Trump presidency after all…

In the end, the Nasdaq managed to crawl back into green, despite late news that Joe Biden wants to raise the corporate tax rate to 28%, while the Dow and S&P closed in the red, with the former taking the bigger beating.

I have some business commitments now, so this post will be a short one, but I will update the TTIs and the Spotlight table later this afternoon.

1. Moving the markets

Another roller coaster day saw the major indexes fluctuate wildly with an initial rally being wiped out, which pushed the Dow and S&P 500 briefly in the red. The Nasdaq managed to stay in the green and then ripped to new intra-day highs late in the session, as all indexes joined in the bounce-back.

In the end, the Nasdaq again dominated the scene and produced another superb +1.44% gain, as we have seen all year long. The Dow and the S&P ended up only moderately higher.

Again, yesterday’s question as whether the unabated increases in Covid-19 cases in several states will delay a V-shape recovery continued to be the center of discussion. I believe it will, but another widely overlooked reason surfaced today.

ZH reported that the plunge in consumer credit continued as Americans repaid record amounts of credit card debt:

What we find most surprising, however, is that in this day and age when the Fed has effectively institutionalized moral hazard and where failure is no longer punished as capitalism is now officially dead and zombie existence is rewarded, Americans still care enough about their credit rating to pay down their own debt even as corporations and the country go on a historic debt issuance spree which everyone knows will never be repaid.

So how long until this shocking plunge in consumer spending reverses? The answer is that nobody knows, but until US consumers feel comfortable enough to once again “charge it”, there can be no recovery.

With 70% of the GDP being derived from consumer spending, a “true” organic recovery will not be in the cards until that sentiment changes again.

Regarding the markets, we must rely on the Fed’s expansion of its balance sheet to see further advances. As this chart shows, the flattening out in that very balance sheet has had the markets trading in a tight range since the early June highs.

Be that as it may, gold has been moving relentlessly higher and even its spot price has topped $1,800 for the first time since November of 2011, according to ZH.

Given the ever-increasing money printing efforts, which will lead to an increase of inflation and a decrease of the dollar’s purchasing power, gold should be an essential part in everyone’s portfolio.

1. Moving the markets

An early one-sided rally, dominated by the Nasdaq, lost momentum with all 3 major indexes hitting the skids and closing lower. The Nasdaq held up the best, while the Dow fared the harshest, but all closed at their worst levels of the session.

Saving the day was gold, which not only reclaimed its $1,800 level but also managed to solidly close above it thereby minimizing today’s modest fall of the tech sector. With the Fed’s reckless money printing continuing unabated, it’s only a matter of time before inflation rears its ugly head, while concurrently future monetary interventions may be of questionable value.

As Ron Paul recently wrote, with lending facilities providing to the Federal Reserve the ability to give money directly to businesses and governments, the Fed is now just one step away from implementing Ben Bernanke’s infamous suggestion that, if all else fails, the Fed can drop money from a helicopter. These interventions will not save the economy. Instead, they will make the inevitable crash more painful.

The next crash can bring about the end of the fiat monetary system. The question is not if the current monetary system ends, but when. The only way Congress can avoid the Fed causing another great depression is to begin transitioning to a free-market monetary system by auditing, then ending, the Fed.

While that does not mean the rally won’t continue, other concerns, like rising coronavirus infections, can dampen the buying mood on Wall Street, which was the case today. On the other hand, with the markets having been on a tear lately, a breather was necessary, and Covid-19 provided just such an excuse.

Be that as it may, with equities being totally depended on liquidity created by the Fed, anything is possible and can happen regarding market direction. It’s therefore imperative that you have an exit strategy in place to protect your portfolio from extreme downside risk.

1. Moving the markets

The major indexes greeted the first full week of July with a bang after the 3-day Holiday weekend, during which we were bombarded with news of more outbreaks of the coronavirus everywhere, as well as mass shootings.

None of that mattered this morning, as the bullish theme prevailed right after the opening bell rang with the major indexes pumping higher. A late-session breather was just that and, as we’ve seen quite a bit lately, during the last 30 minutes waves of buying pulled the major indexes out of that temporary lull.

In my advisor practice, I increased our holdings in those areas that run on their own cycles and are not dependent on the TTI signals. However, intra-day, the Domestic TTI briefly broke its long-term trend line to the upside, but could not hold that advance into the close, thereby leaving that indicator still slightly negative.

The early ramp started in the Chinese markets (+7%), followed by Europe with the US also following along, despite increasing doubts about the ability to not only contain the virus outbreak but also the resulting economic fallout.

Right now, the bulls are clearly in charge, with tech remaining the front runner, and we will follow the various trends subject to our trailing sell stops.