It was a mixed session on Wall Street after the previous day’s strong rise on the dovish outcome of the FOMC meeting. Of the nine sectors, the two best rises were in Consumer Staples and Utilities – the most defensive sectors in the whole market while XLF (financials) were down on the day. This is not what the market needs for a bullish continuation of the trend. The money should be heading into the aggressive areas of the market. As mentioned in my notes yesterday, I anticipate that the S&P will meet heavy overhead resistance above 2700.
One stock that I keep an eye on is Deutsche Bank. Overnight it came off sharply and has broken its uptrend from the recent low but has done all this on really high volume. This is one of my “canaries” so best not to ignore it.
Looking across commodities, I was a bit concerned that there appeared to be a general weakness in agricultural markets. Can commodity investors see further problems on the trade horizon? Gold initially traded higher but eased back towards the close. I am very happy with the move in gold over recent weeks but as mentioned previously, just getting a little bit uneasy now that the price has moved right back up into the big top pattern formed in late 2017/early 2018 which I felt would offer quite a bit of resistance. Perhaps it may surprise even me with its strength. Mind you my mood isn’t improved by the fact that I can’t get my normal figures on what the Commercials are doing because of the shut-down of the US government. Silver closed above $16 for the first time since last August.
Yuan has now been up for seven days straight. Getting overdone but goodness me this is becoming a market that is going to have a bigger and bigger influence on all our analysis.
I have mentioned a number of times recently that if crude can hold above $50 then there is a pretty good chance that it will be able to carve out a base pattern. Now I know it is still trading above $50 but I am just a bit uneasy about whether it is going to be able to actually confirm a base pattern. Might need to keep a close watch here.
Australia was dragged down again yesterday by banks. I thought they looked like they might be able to carry some of the load but as has happened so many times over the past couple of years, the support was just not there. The major miners were boosted further by the strength of the iron ore market following the Brazilian disaster. However, this strength overnight was restricted to the very near months with distant contracts all lower. Perhaps the excitement here is starting to get a little overdone.
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