[Chart courtesy of MarketWatch.com]

1. Moving the markets

Yesterday was one of those moments, while watching the futures markets, when I had to laugh out loud. The major indexes were creeping higher when suddenly the bottom dropped out with the Down plunging over 500 points in minutes.

Turns out that Trump’s trade advisor Navarro responded during a Fox News interview regarding the China trade deal: “It’s over. Yes.” The fallout was imminent, and it appears that Navarro got a tap on the shoulder and hastily walked his comments back as “having been taken wildly out of context” pushing the futures back up.

Thanks to ZH, here’s a graphic representation of the events:

And the summary:

Navarro dump – US-China trade deal “is over”

Trump pump – US-China trade deal “fully intact”

Kudlow pump – “absolutely, definitely” no second lock-down due to virus

Fauci slump – “disturbing surge” in infections

Fauci pump – “promising” vaccine is imminent

The regular session had bullish undertones helped by US New Homes Sales, which soared in May, but the manufacturing and service sectors disappointed, as Labor weakness continued.

While the broad market continues to linger, the main story is all about the tech sector with Apple and Netflix scoring to new highs, as the Nasdaq notched a new intra-day record.

Despite the re-opening efforts with business trying to play catchup, Covid-19 is still on everyone’s mind, as MarketWatch reports:

Dr. Anthony Fauci, the nation’s top infectious disease expert, warned on Tuesday that the “next couple of weeks are going to be critical” in terms of the addressing a “disturbing surge” in COVID-19 cases across the United States, while also vowing to ramp up, not slow down, testing for the virus, in testimony before Congress on the federal response to the pandemic.

Again, broad markets lagged, which also explains why our Domestic TTI has not crossed back above its long-term trend line into bullish territory but lingers slightly below it.

This indicates that we continue to be stuck in the neutral zone, meaning we’re holding on to our positions until more evidence of either bullishness or bearishness emerges, which will then signal our next cause of action: Buy more or Sell all.  

Read More

[Chart courtesy of MarketWatch.com]

1. Moving the markets

An early choppy ride turned out better than expected, as the bullish theme increased momentum and pushed the major indexes to a green close, with especially the Nasdaq showing a solid gain and scoring a new all-time high.

The Dow added a more modest +0.59% but was able to recapture its 26k milestone marker.

The advance was a mixed bag, however, with relentless optimism over a quick recovery for the economy colliding with an increase of Covid-19 infections in about half of the states and in many other parts of the world. This may turn into an ongoing tug-of-war, but at least for today, dreams of a fast recovery prevailed.

As we know, the actual referee deciding this revival will be the Fed and its supporting policies which, however, are limited in scope as financial author Charles Hugh Smith pointed out:

1. It can’t reverse the unprecedented wealth inequality its policies have pushed to the point of social disintegration and breakdown.

2. It can’t make people take on the risks and heartaches of starting new businesses.

3. It can’t force employers to hire more employees.

4. It can’t make unprofitable businesses profitable.

5. It can’t force people to buy assets at prices that no longer make financial sense.

6. It can’t make insolvent businesses and local governments solvent.

7. It can’t force people who now realize their priority is to save money to spend their cash, even if the Fed forces negative interest rates.

8. It can’t lower the unaffordable cost structure of the entire economy.

9. It can’t de-link all the financial dependencies in the financial system that make it so vulnerable to the first domino falling.

10. It can’t stop people from selling their assets.

After the opening last Friday, we saw a different type of decoupling, as ZH points to in this chart from Bloomberg in that Gold and stocks seem to have gone separate ways.

We’ll have to wait and see if this is just an outlier or a realization that reckless money printing will assist the precious metal, the price of which is now within striking distance of taking out Mays’ multiyear highs.

Read More

[Chart courtesy of MarketWatch.com]

1. Moving the markets

A lack of commitment to push the markets one way or the other was noticeably absent today, as the major indexes vacillated aimlessly around their respective unchanged lines.

Not much was gained or lost, but the Nasdaq closed in the green. Today’s report on unemployment claims showed that 1.508 million more Americans filed for first-time benefits, which was worse than the 1.29 million expected.

This brings the total number of claims, since the lockdowns began, to 46 million with no end in sight, but Bloomberg’s chart shows that downward momentum may have slowed some.

ZH noted:

What is most disturbing is that in the past 13 weeks, more than twice as many Americans have filed for unemployment than jobs gained during the last decade since the Great Recession (22.13 million gained in a decade, 45.714 million lost in 13 weeks)

Finally, it is notable, we have lost 388 jobs for every confirmed US death from COVID-19 (117,717).

This story is far from being over because what happens when the stimulus and bonus checks stop arriving after July 31^st?

Noted Bloomberg:

Earnings dropped in the first quarter by 16%, the biggest decline since 2008, and are poised to fall again in the second quarter because of business disruptions tied to the coronavirus. Yet the S&P 500 has recovered most of its 34% plunge after setting a record in February.

Today’s tight trading range only had a small impact on our Trend Tracking Indexes (TTIs), which you can see in section 3. On deck is tomorrows huge option expirations’ day, the volatility of which will certainly push the indexes around more sharply compared to what we saw today.

Read More