1. Moving the markets

Yesterday’s late recovery rally continued this morning, but suddenly died, as momentum reversed, which sent the major indexes diving into the red. Weakness in tech and financials eclipsed positive moves in the telecom, energy and real estate sectors.

Contributing to the tech sectors downward swing was Micron Technology, which appears to have been a casualty of the US/China trade war after China announced that it was blocking the firm from selling some of its chips in China. It was made clear, however, that this was only on a temporary basis.

The strong US opening was assisted by prior gains in European markets where a last-minute deal on immigration in Germany saved not only Chancellor Merkel’s coalition but also possibly her job.

In the end, volume was low as many traders were absent, and will probably remain so during this Holiday shortened week. Low volume moves can be extreme, but they may not be necessarily a prognosticator of things to come.  That’s why I would not read too much into this week’s activity.

Happy 4^th of July!

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1. Moving the markets

It was weak start to the 3^rd quarter with the major indexes diving right after the opening bell, with the old stand-by, namely escalating trade tension, being the culprit and weighing on sentiment.

Despite this negative influence, a mid-day recovery, on the back of a rally in technology, turned things around and early losses were reversed, and we ended up seeing green numbers at the close.

Despite a positive finish, the trade battles go on, as the European Union (EU) has now threatened to respond with tariffs of $300 billion in US goods after Trump’s warning to slap a 20% tariff on auto imports from the EU.

And the game goes on: Tit for tat until eventually hopefully cooler heads will prevail and establish fair and just deals that everyone can agree to. In the meantime, the markets will remain in roller-coaster mode and react to the latest headline du jour.

On deck, and widely ignored, is the fact that the Fed’s QT program (Quantitative Tightening) will increase to $50 billion/month late in July from its current $30 billion. Makes me wonder how the markets will react, because, at the same time, the EU is fiddling with its reduction in QE (Quantitative Easing)?

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1. Moving the markets

Another slow start followed by a bounce back, which had legs for a change, gave the major indexes a victory session, although a modest one. Whether this was just another dead-cat bounce remains to be seen, but bullish momentum was not overwhelming thereby confirming our Domestic “Sell” signal affecting “broadly diversified international equity ETFs.”

I sold our last holding this morning, and we will not re-enter this arena until our International TTI (section 3) crosses solidly back above its long-term trend line.

All of Europe, except for Great Britain, got spanked and deep red was the preferred color on their stock exchanges. Domestically, the Dow’s troubles with its 200-day M/A continued as it closed the 4^th day below it, which is not a good sign for the bullish crowd.

Scanning across markets, we see that the dollar slipped while Bond yields rose modestly. Foreign exchange markets (FX) showed a mixed picture with the Argentine Peso collapsing to a new low, while the Mexican Peso rallied ahead of elections. Not to be outdone, the Chinese Yuan continued its swan-dive like imitation by slumping for the 11^th straight day.

Regarding domestic markets, we have simply been stuck in a trading range for the first half of this year. Look at this chart of the S&P 500:

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