In the weekend version of my newsletter, Beyond the Fundamentals Now (BTFNow.com), I try to focus on issues that most people are not focusing on...and look at the mainstream issues from a unique angle. In the full premium edition of "The Weekly Top 10" that we send out to subscribers on the weekends, we provide three versions (a "Table of Contents", a "Short Version" and a "Long Version"). This allows people to read as much...or as little...as they'd like to about each point.) Click here to subscribe...and get the kind of insights that have allowed me to make countless money-making calls at key turning points in many different stocks, ETF's, markets and asset classes for more than a decade.
THE WEEKLY TOP 10
Table of Contents:
1) The Fed must be joking.....The pundits can’t have it both ways.
2) The Fed frequently tries to hide the real reasons for their actions.
3) Most credit spreads remain benign…but not all stress indicators are subdued.
4) Having said all this, a break above 3030 on the S&P will be VERY bullish.
5) However, investors still need to remain nimble…as the Fed’s “insurance” record is quite uneven.
6) Banks act poorly after positive earnings (again), BUT Goldman is breaking out.
7) Gold looks great longer-term, but it's very overbought and very over-owned.
7a) A move below $1,400, however, should provide another buying opportunity.
8) The European banks are starting to roll-over again. What are the key levels to watch?
9) Facebook just raised the odds dramatically that they face some substantial regulation.
10) Crude oil…could China have a big impact on the commodity over the next 18 months?
10a) “Symmetrical triangle” pattern for WTI, but $50 (support) & $67 (resistance) are the more important levels.
11) Summary of my current stance.
1) Let’s begin this week’s edition with some editorial comments. First, is the Fed kidding??? Williams says one thing…then a spokesperson and Rosengren walk it back.hen a spokesperson walks it back....The same question could be asked of many/most pundits. How can the bond market be "right"...and the stock market be "solid"? Answer: They can't.....To see more details...and see the key chart I'm watching...click here to subscribe to my newsletter (Beyond the Fundamentals Now).
2) Speaking of the Fed, we have great respect for Chairman Powell & the entire Fed. However, they frequently don’t tell us the real reason for some of the actions that they take. They seem to be doing this once again right now...which raises the question: what does the Fed know that the rest of us don’t know?
3) Most credit spreads remain relatively tight, but there are definitely some signs of stress in the system...including a renewed rise in the Citi Marco Risk Index. This is something we saw in early May…back in October…and in January of 2018. Click here for more details (and the related chart) in the full edition of my newsletter that subscribers receive each weekend.
4) Having said all this, the S&P stands just 1.2% below its all-time highs. If it can finally break meaningfully above its old record (after BADLY falling to do just that a couple of other times over the past 18 months), we'll have to turn much more constructive on the U.S. stock market. (For more details..including the critical levels to watch, click here to subscribe to my newsletter.).
5) However, investors are going to have to stay nimble. The problem is that the Fed has an uneven record when engaging in “insurance” rate cuts. It worked very well in 1995, but it failed miserably in 2007. (For more details...and the important support level to key an eye on, check out the full edition of my newsletter.)
6) Once again, the banks were unable to rally in the face of positive earnings. However, Goldman Sachs (GS) has broken out nicely and its chart looks great on a long-term technical basis. Click here to subscribe to my newsletter...to see the chart on GS and find out why it should pull-back a bit before it resumes its upward trajectory.
7) Gold has made a VERY important breakout. HOWEVER, it has become quite overbought and over-owned, so I believe investors should look to buy it on weakness...and not chase it...over the near-term. To see the three key charts I'm looking at for gold...and to learn what levels I'm watching to add positions...click here to subscribe to my newsletter (Beyond the Fundamentals Now).
8) The action in the European banks is still a big concern for us. They were actually mentioned positively in Barron's this weekend, but the STOXX Europe Banks Index is starting to roll over again. If it breaks below its "double-bottom" low, it's going to be very negative for the group......You can find more details...and several charts on this issue...in the subscribers version of Beyond the Fundamentals Now...(BTFNow.com).
9) By launching their cryptocurrency product at this time, Facebook (FB) has greatly raised the odds that Congress will apply some serious regulations to the company. This is something they could have avoided (at least until the next recession).
10) There are several issues facing WTI crude oil right now...on both sides of the bull/bear ledger. One item we think we believe investors should consider on the bearish side of things...is the potential that China will push prices much lower (something they do have the power to do) as a weapon in the trade war....I'm not predicting this, but I DO think it's something to consider.
10a) On the technical side of things, WTI remains stuck in a "symmetrical triangle" pattern, but its recent lows/highs are the more important support/resistance levels to watch. Click here for charts on WTI and those important levels in the full (subscriber version) of "Beyond the Fundamentals Now" (BTFNow.com).
11) Summary of my current view…There are issues on both sides of the bull/bear ledger right now, however the only real issue on the bullish side is the Fed. That might be enough ("don't fight the Fed"), but history shows us that their "insurance" rate cuts do not always work (think 2007).....Having said this, if the S&P can finally break "meaningfully" above its old highs, I will become much more constructive on on the market's potential going forward....In other words, the stock market still stands at a critical juncture.
Enjoy the rest of the weekend!!!
Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
275 Grove St. Suite 2-400
Newton, MA 02466
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