COMP: 1,965.96 GOLD: $951.60 $USD INDEX: 78.85
S & P 500: 979.26 SILVER: $ 13.87 VIX: 23.09
"Most people only want to hear what they want to hear, while few will act on what they see."- Kevin Haggerty
US MARKETS:
Greetings stock fans. US markets continued their surge into higher ground this past week as the powerful ‘short squeeze’ that caught many leaning in the wrong direction from the SPX880 level continued/s to inflict pain to those whom neglected to heed the message of the tape, as well as sidelined cash entering the fray, whereby those money managers whom found themselves witnessing the action from the ‘outside looking in’, in order to chase performance and not be left behind in the rearview mirror, found themselves putting capital to work in a feverish manner.
As a result, the major indices put in another solid week with the DJIA; COMP and S&P 500 tacking on 4% gains across the board, yet perhaps more importantly, the ability of the Spoo’s to finally go ‘topside’ of our often noted SPX957 level, which figure had proven so formidable in the month of June.
Nonetheless, we posed the following question to readers as well as ourselves last week, “Will the eleventh (11 th) time be a ‘charm”? Well, dear members, our question has been answered quite clearly and authoritatively at that, as the 11 th attempt in the past month or so (since June) to ‘clear the hurdle’ has now become reality where the SPX957 level was taken-out like a ‘hot knife through butter’ as evidenced by the chart below (courtesy of Stockcharts.com):
Based on the action from the chart above, we can certainly declare that, the 11 th attempt was surely a charm, indeed!
So, where does that leave us at present and where to from here?
Since the ‘bear trap/ short squeeze’ was set and sprung just a mere two weeks ago at the 880 level, the tape has powered higher in a sharp, rapid fashion while slicing through any and all potential resistance levels, with ease. While many and ourselves included, would surmise that some kind of ‘pause/consolidation’ would be in order at this point, not to mention, would actually be healthy, Mr. Market has no interest nor concern in what we or market participants believe or desire. Thus, we’ll continue to suspend our beliefs and not impose our thoughts/opinions on the tape, while continuing to heed the message of the market, which at present, is favorable.
In essence, both investors and traders would be wise in taking note of the quote at the beginning/top of this report and giving serious consideration.
GLOBAL MARKETS:
Much like the US, global markets/bourses continue to recover off of their March lows of earlier this year, as well as having been the recipient of an extraordinary/unprecedented amount of liquidity injected into the global financial structure/system. While we’re starting to see some potential headwinds (resistance), and again, we emphasize ‘potential’, in selective areas in Asia, readers may want to take note of the action in Europe (CAC; DAX; FTSE), where it appears that these markets/bourses may be forming inverted H&S (Head-and-shoulders) patterns (bullish), where if such developments do indeed materialize, further traction/mojo into higher ground would result. And, it may just be as fast and sharp as the recent run US investors/traders have witnessed. Keep your eyes peeled!
BONDS:
Not much new to speak of here, as the 10-Yr Treasury continues to trade within our noted range of 3.2%-4%. While many pundits are forecasting much higher rates/yields in the offing for a variety of reasons, we continue to monitor the action and until or unless either end of the spectrum is broken/breached, we remain range bound.
METALS:
Much like equities themselves, both Gold and Silver bullion (physical) continue to display favorable action, where both metals witnessed gains this past week with the ‘yellow metal’ better by 1.5%, while Silver gained 3.4% and continues to outperform it brethren. Of particular note, while bullion itself acts well, the shares of both gold and silver companies appear ready to outperform the physical itself. Keep a watchful eye on this behavior should equities continue their winning ways. As we’ve stated in recent past, we continue to feel as though any and all pullbacks, in either physical or shares, are buying opportunities.
CRUDE OIL:
It was a big week for crude this past week, with black gold pushing into higher territory to the tune of 7%. Although we remain within the noted $55-$70/bpl zone ($68.11), we find ourselves once again rapidly approaching the upper end of the range. Thus, keep an eye on that $70 figure and ‘IF’ crude can go topside, further advance should not come as a surprise. On an aside, we are now approaching hurricane season in the US, therefore, both ‘Natty’ (Natural Gas) as well as crude prices may become a tad more volatile in the days/weeks ahead.
CURRENCIES:
If we haven’t stressed our observations clearly in past missives, please allow us to once again. The action in the $USD remains weak, to put it mildly. This past week, the greenback flirted with our noted potential support level at 78.5 and was able to hold. However, nothing much has changed with our perception that, it is only a matter of time before such level gives way and is violated. We continue to believe that it is NOT a matter of ‘IF’ yet, a matter of ‘WHEN’ such occurrence materializes. Stay tuned!
US Markets:
Short-Term: Positive- Positive Bias- A Bit Extended
Intermediate-Term: Positive- Trend Continues To Improve
Long-Term: Positive- SPX957 Has Now Been ‘Taken-out
Topside’ With Authority!
POTENTIAL INDICES SUPPORT/RESISTANCE:
SUPPORT RESISTANCE
DJIA: 9,000; 8,800; 8,500-700 9,150; 9,455; 9,660
COMP: 1,900; 1,890; 1,825 1,980; 2,000; 2,050
S & P: 950-57; 932; 900-896 985; 1,000-8; 1,045
POTENTIAL SET-UP’S:
LONGS:
ArvinMeritor Inc. (ARM) 5.20; On pullbacks to 4.40-4.50 range
China Precision Steel Inc. (CPSL) 2.72; Back to 2.45 and more aggressively above 2.80
China Architectural Engineering Inc. (CAEI) 1.86; Back to 1.65 and more aggressively above 1.95
Rite Aid Corp. (RAD) 1.34; From here and more aggressively above 1.45
Select Comfort Corp. (SCSS) 1.25; Is extended. On pullbacks to .90-1.10 zone
SHORTS:
It’s been a dangerous venture on the short side in this tape as those whom have found themselves in such position have been inflicted with severe pain. Having said that, we’re going to limit this week’s shorts to an industry that continues to act sluggish, the Online Education industry. Take your pick in the following names as they continue to display unfavorable characteristics. Yet remember, keep your STOPS tight!!
Apollo Group Inc. (APOL) 66.97
Corinthian Colleges Inc. (COCO) 15.96
ITT Educational Services (ESI) 98.16
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