[Chart courtesy of MarketWatch.com]

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.

[Chart courtesy of MarketWatch.com]

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.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

An early 400-point rally in the Dow bit the dust, as the major indexes faded towards the close but managed to end up in the green for the 4^th session in a row.

Driving the initial gains were better than expected employment numbers of 4.8 million new jobs in June created vs. expectations for a 3.7 million rise, but this euphoric reaction may already be decelerating, as renewed surges of the coronavirus are causing shutdowns and subsequent layoffs.

All of this exuberance could be offset by continued initial unemployment claims with the latest print showing 1.427 million new claims in the last week (above the 1.35 million expected). The chart shows that we saw some 6 million of new claims in June, which means, with only 4.8 million new jobs created, the employment numbers show no improvement at all.

But that does not matter, what matters is that the computer algos interpreted today’s numbers as a positive, and up we went.

Nothing seems real anymore, and as Global Macro Monitor reported, Larry Lindsey, the former director of the National Economic Council, came out this morning making a market call of 4,000 for the S&P 500 by the end of next year:

“…I just did some math on what is happening to the money supply…when you have a rapid expansion of the Fed’s balance sheet that the main effect is on asset prices….so I simply do the extrapolation…of what might be expected to happen in stock prices.” – Lawrence Lindsey

Ranted the Macro Monitor:

There you have it, folks, a forecast of the creation of more than $7 trillion of wealth over the next 18 months based, not on productivity gains, innovation, nor economic growth, but by keeping the digital printing press running.

Whether the wealth is real at the end of 2021 will depend on the purchasing power of the dollar, which we suspect will be lower than most currently expect.

At the end of this Holiday shortened week, the equities had their best week in 3 months, and that in the face of mounting Covid-19 comeback concerns, with many states continuing to reduce their business activity.

Despite all that, gold remains one of the best-performing asset classes YTD, but it looks like the Nasdaq just caught up today, while the Dow remains the laggard with -9.50%:

I will post the updated StatSheet this evening and the weekly Cutline report tomorrow.

Have a great 4^th of July!

[Chart courtesy of MarketWatch.com]

1. Moving the markets

Despite overnight weakness in the futures markets, positive momentum got restored on predominantly bad news, and the major indexes finished a volatile session in the green. The exception was the Dow, which hovered around its unchanged line before diving into the red at the close.

The early pump was based on another “positive” vaccine headline this time from Pfizer, which sent US equities soaring, because now the virus problem is resolved. Of course, I am being facetious here, but how else can you react to “medical results by press release,” as ZH put it:

In all 24 subjects who received 2 vaccinations at 10 µg and 30 µg dose levels of BNT162b1, elevation of RBD-binding IgG concentrations was observed after the second injection with respective GMCs of 4,813 and 27,872 units/ml at day 28, seven days after immunization. These concentrations are 8- and 46.3-times the GMC of 602 units/ml in a panel of 38 sera from subjects who had contracted SARS-CoV-2.

Hmm, 24 test subjects? I certainly would not feel comfortable being number 25, would you?

ZH summed up the items of interest, which “contributed” to today’s rally:

• Pennsylvania 4th state to see record jump in COVID-19 cases
• North Carolina reports record jump in COVID-19 cases
• Cali orders 19 counties to close
• Trump does U-turn on masks
• California orders 19 counties including LA to close restaurants dining for 3 weeks
• Apple closes another 30 stores
• Atlanta Airport closes
• California reports another record jump
• Houston ICUS at 102% capacity
• Nevada reports third-highest daily total yet
• NY releases Wednesday numbers
• Arizona reports another record daily case count
• NYC delays return of indoor dining
• Florida reports daily cases for last 24 hours
• Goldman says 40% of US has rolled back economic reopening or put them on hold
• Oxford scientist warns vaccine by end of year far from guaranteed
• Pfizer vaccine headline sends futures higher
• US reported 48k+ new cases yesterday
• Australia locks down 300k in Victoria
• Brazil imposes travel ban as deaths near 60k
• Tokyo reports most cases since state of emergency lifted
• German infection rate below R for 7th day

All of the above drove the markets with the Nasdaq scoring a new record high. The loser for the day was gold due to the prevailing opinion that that risk is back on and who needs protection.

The bond/stock divergence continues full force, prompting ZH to ask the all-important question:

Will this divergence re-couple? And if so, will it be stocks or bonds that are sold?