Bullish Stock News Culminating for 2019; Fed Meeting (Late-July) Should Usher in Aug./Sept. ’19 Danger Period. Sell the News?
07/10/19 Weekly Re-Lay Alert – What Else is Left? – “With respect to interest rates and interest rate futures (Bonds & Notes), the market has been given about all the positive news it can handle. Since early-Nov. ’18, Bonds & Notes have rallied – bottoming before the final rate hike of mid-Dec. ’19 and well before there was talk of holding rates steady or ultimately lowering them.
In other words, the markets anticipated unforeseen (opposite) moves months before fundamentals ever justified or validated that action…
Today, Jerome Powell left the clear impression that an interest rate cut is still very likely this month… and that others could follow. How did Bonds & Notes respond? With a yawn. So, what else is left to propel them higher?
On a related basis, equity markets have also rallied throughout 2019 – partially on the heels of this lower-interest-rate mentality (along with other bullish factors). Today’s news is about as good as could be expected from a lower-interest-rate perspective. Of course, there is always the double-edged sword for equities…
If the Fed is wanting to lower interest rates to ‘help cushion the effects of possible future adverse shocks to the economy’, what does that say for stocks?
However, much as the pendulum of sentiment swung so far into the ‘higher and higher interest rates in 2019’ camp in late-2018/early-2019, it is now appearing to swing too far into the ‘lower and lower interest rates in 2019’ camp. Since the markets have already reacted to (or anticipated) those extreme expectations, what happens if they shift to a more neutral stance?
Stock Indices are currently mixed with the primary indexes bumping up against recent highs as the Russell 2000 and DJTA show continued signs of reversing lower. The Transports did almost exactly what was expected last week, spiking up to the weekly 21 High MAC but failing to turn the weekly trend up. That was expected to be followed by a drop to/below 10,200 this week, a pivotal level of intermediate support.
They are in the process of fulfilling that as both the daily & weekly 21 MACs are flattening and could turn down this week. A daily close below 10,082 is needed to confirm a secondary top and project a drop back to its June 3 low. From a cycle perspective, an initial low is most likely around July 15 – 17, the latest phase of a 19 – 22 day high-low-low-low-(low) Cycle Progression.
Of the DJIA, S+P 500 & Nasdaq 100, only the Nasdaq has turned its intra-month trend up. The other two remain in a ~2-week period of congestion.”
Stocks mixed as Transports prepare for secondary top, a likely precursor to primary indexes turning lower as they near Aug. ‘19 bearish cycles. 40-Year Cycle & 4-Year Cycle project increasing trouble in/around Aug. ‘19… with a Aug. ’15-style sell-off becoming increasingly more likely! What would Aug. ’19 sell-off mean for 4Q ‘19?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.