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Desloges CFA is a professional investment consultant/ blogger/ trader
with over 25 years of experience working on the buy and sell-side. I
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worked at Pensions Funds, International Banks and Dealers. More...
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Insight July 29 Technical Charts Potpourri I think that we must realize that the US Dollar direction will drive markets going forward Super-Hot July Market Election Handicapping This rally has pushed the DJIA well above any of the rosiest scenarios for an election, which has historically, been a vote of confidence for the incumbent presidential party. Over The Past 50 Years An Earnings Recession Of This Magnitude Has Never Failed To Trigger A Bear Market Over the past half-century, we have never seen a decline in earnings of this magnitude without at least a 20% fall in stock prices A Real Opportunity For The Rising Rates Crowd? 2-Year Treasury Yields are testing the point of their post-Brexit breakdown; re-taking that level may actually give rates some upward momentum. What are the Implications of a Weaker Yuan? If it plays out like it has over the past several years then a weak yuan will exert a gravitational pull on a lot of different assets and it would most likely lead to lower oil prices, higher credit spreads, lower inflation expectations, and continued outperformance of counter-cyclical stocks and US stocks. July 28 SP500 Financials HVol: Volatility Enter Complacency Zone? HVol on SP500 Financial Sector (SRFI) finally peaked on July 5 and tumbled to reach a level not seen since April 2015 and below the previous reversal levels SP TSX60 Index (XIU ETF): Still at the Resistance Zone? But the most interesting technical factor is that we are testing for a third time the Monthly Resistance of a previous Major Breakdown Trendline (that started back since March 2009) Social media sentiment offers clues to stock performances, study suggests "There appears to exist a strong positive relationship between the daily time-series of aggregated tweet sentiments and their corresponding security returns." Vice Tightens Further On Historic Stock Market Range What does the S&P 500′s 2nd tightest 2-week trading range ever have in store for stocks? What The FOMC Has To Keep Repeating Matters, Not What It Changes It has been 49 months since the PCE deflator was at or below 2% Zero Percent Mortgages Debut Setting up the Next Stage for this Stock Market Bull We believe that lending standards for mortgages and personal loans will be lowered significantly in the months and years to come, setting up the bedrock for the next stock market bubble. Tale of Two Economies: Industrial vs. Consumer Is the economy strong or weak? The safe answer is – both. July 27 SPY ETF/Apple Shares: Good Earnings but Not Good Enough? So Apple Earnings were finally very Good News but Bulls still face a challenge for a Real Weekly Breakout above the $104.40 ish zone... The Energy Sector (XLE): At the Support Zone? Now, the XLE ETF is back testing the Support Trendline of that Rising wedge. Stock Rally Needs Decline In Earnings To Slow If you were told corporate earnings were on track to decline for five or six consecutive quarters, you would not guess the S&P 500 would be breaking out to new highs (as it did earlier this month). The Very Good News Buried in Apple’s Dismal Results Apple had a bad quarter. It seems as if it's about to have a few very good ones Fed to Stand Pat, but Statement may be More Constructive In today's statement, the FOMC's leadership will recognize that the economy appears to have gathered momentum as Q2 drew to a close. Drop the Big Mac, Pick Up an iPhone to Divine Dollar’s Direction Investors accustomed to using the price of a Big Mac to tell whether a currency is cheap or expensive may have to reboot their thinking. July 26 Nasdaq 100 Index ETF QQQ: Outperforming SPY? What strikes me the most, is that the relative volatility (ratio of Nasdaq 100 Volatility Index over the SP500 Volatility Index) is almost at its highest since June 24. Canadian Corporate Bonds ETF XCB: Back at the Support Zone? But the most interesting factor is that we are now back testing the Major Resistance Trendline from that huge falling wedge pattern that is so critical for Bulls to hold. Breakouts Reflect Shift In Markets Even if the S&P 500’s breakout above 2,134 holds, some “give back” or even a retest of prior resistance may be needed to bring in additional “waiting for a pullback” buyers. Investors Are Relying On ‘Dangerous Rationalizations That Have Never Held True In The Past’ Still, history shows that the Fed has never been able to prevent the sort of bust that necessarily follows this sort of boom in financial assets unsupported by fundamentals. Hot July Markets & Late-Summer/Autumn Buying Opportunities Gains of this magnitude for July, however, have frequently been followed by a late-summer or autumn selloff and better buying opportunities than now. About Everything | Warning: Earnings Smaller Than They Appear There’s been a lot of hoopla so far this year about corporate America’s growing use of “pro forma” accounting—or its growing aversion to U.S. generally accepted accounting principles (GAAP), depending on how you think of it. July 25 US Dollar Index: At Major Crossroads? We are getting near the Major Resistance Trendline that started back since December 2 2015 Fina cial Sector (XLF) : Weekly Tentative Breakout? n Bulls still have a lot of work to do as the Financials are the only sector were we did not have either a new high or a breakout Cdn Utilities Sector ETF XUT: Near Breakout? And more surprising, the Canadian Utilities Index (XUT) is out performing Canadian long bonds (iShares Core Canadian Long Term Bond Index ETF (XLB)) since June 21 2016. Speculative Extremes and Historically-Informed Optimism Every market cycle in history has drawn valuations to levels that have offered disciplined investors far higher return prospects than are available at present Are Stocks Coiling For Another Big Move? The S&P Mid-Cap Index is trading in the tightest 8-day range in over 20 years; is a big move imminent? Will the FOMC Halt the Dollar's Advance? The US Dollar Index rose to its highest level in four months to approach the 61.8% retracement objective of the slide since last December's peak just shy of 100.60 Signs of Excessive Bullish Sentiment This big rush into SPY says investors have suddenly become exceedingly interested in being invested in SPY lately, and whenever the crowd rushes in like this, it is a sign of excessive bullish sen timent. The Bond Market Riddle Is Not A Riddle The UST market, among other bond classes, as it goes only lower (in yield) tells us that the economy is getting worse (which is what we actually find here and all over the world). July 21 SP500 and the Yen: Follow the Yen my Dear? But the most interesting technical factor is usually when we have the correlation between the Mighty SP500 and the Yen getting near 1, then we are at risk of tiny corrections in the SP500. Technology Sector ETF (XLK): Breakout? As most of us were expecting the Financial Sector to Breakout, it was a surprise that finally it was the Technology Sector ETF XLK. Fund Managers' Current Asset Allocation - July Remarkably, allocations to cash are now even higher than in February, and fund managers are now underweight equities for the first time in 4 years
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