Midweek Market Report – Sep 2nd
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Entries by Bob Loukas
Sparkle Time
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Midweek Market Update – Aug 26th
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Sound the Alarm
We saw an amazing capitulation event in equities these past three sessions. It’s clear that market internals were weak, but no one could have foreseen the degree and rapidity of the selloff. The major US indices have already entered into official corrections (-10%), while many world markets are approaching bear market (-20%) territory. And it’s unlikely the declines are over. Friday’s drop was a massive distribution day, with 93% of volume trading lower. With a 1,433 point decline, that was the largest three day DOW decline on record.
The VIX spiked sharply, showing the sort of extreme panic/fear in the market that is typically reserved for the end of Investor and Yearly Cycle declines. If we use the the four-year rally in equities as our guide, this type of sell-off corresponds with markets completing a Cycle Low, after which they should turn higher and rally for 10-20 weeks in a new Cycle.
The First of Many
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Profit Taking Time
If you followed recent posts, you would know I’ve been bullish on gold as it has turned higher within a new Investor Cycle. Being long here has been great and that three day pause last week, to form a bull flag, has resulted in a quick $47 move. So many people were expecting gold to break-down from that flag, which is partly why the rush to cover and/or buy-in was so aggressive. Some caution is needed now, I noticed a lot of the typical retail crowd on social media getting in at these levels and I noticed options premiums explode. Gold has become fairly overbought in the short-term and we’re also due a Daily Cycle Low soon enough.
Market Update – Aug 20th
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Midweek Market Update – Aug 19th
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A Change in Momentum
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Trade Idea – Bond Market Overextended
The Bond market has been hot of late and is showing us a new bullish Weekly Cycle is already in play. Several months of declines and consolidation, along with a more hawkish FED, have many believing that the great bond bull market is very much past its prime. But I wouldn’t count the bond market out yet, not this late in the business Cycle. And in the shorter term, the current action is very bullish.