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I was holding off doing a new post for a while tonight, because we’ve been working on a new page. It isn’t done yet, so I’ll just share a few more charts while I wait for the new page-critter.
First off, the dashed hope of a rocking bear market which ran so fervently early this year has been smothered to death in its crib. Volatility is, once again, a pathetic joke. We’ve got a sub-teens VIX, which doesn’t happen that frequently (I’ve tinted this sad, sad zone for clarity).
Stocks vaulted higher (once again) today, with many indexes at or very near lifetime highs. There certainly may be gasoline left in this most recent rally, but I wanted to point out some important thresholds in emerging markets that could mark a point of exhaustion, since these markets will be hitting their own lead walls of overhead supply.
First, very broadly, there is the emerging markets. I’ve placed a marker showing where SlopeCharts indicates the point of resistance.
The first week of July was really about the upside following through based on the overall rounding bottoming pattern and temporary low setup at the 2693.25 low from the last week of June. The market was able to cement the status of temporary low from June, and had a decent “stick save” on Monday July 2 at the 2698.5 lows before closing at the high of the day around 2726 to cement another higher low.
Fast forward, the market tested the key 2740-area resistance for the 3rd or 4th time time later in the week, and was pretty much destined for the breakout like we expected. If you recall, the 2748 and 2758 prior highs level got blown out of the waters on Friday when the acceleration began since the bull train erased all doubts in the minds of traders. Overall, it was a fairly easy week because we’re definitely back in the aggressive BTFD (“buy the f’in dip”) regime as it worked very well for the majority of the week.
The main takeaway from this week was that the weekly candle was able to wrap up its bullish marching band at the highs and it’s a large bull bar. All the trapped bears and bull chasers are now in a vicious cycle on getting squeezed and rushing back into playing the game of BTFD as long as trending support holds for the immediate short-term play. (more…)
It wasn’t that long ago that I didn’t even pay attention to the bond market. Since 2018 began, however, I have followed it constantly, since I believe a sea-change in bonds (and, thus, interest rates) is the only thing left that’ll break equities. If nuclear war can’t do it, maybe soaring interest rates can.
It’s been dicey lately, since bonds have been so strong, but as I pointed out late last week, we were once again getting terribly close to both the topping pattern and the broken trendline: