Update #59: Stocks to New Highs Then Fade?
OPTION PROFESSOR WEEKLY MARKET UPDATE SEPTEMBER 6, 2019
OPINIONS & OBSERVATIONS
THIS WEEK/NEXT WEEK Powell spoke and says no recession in view. China spoke and said meeting first week of October. The planet expects 1/4 point cut com Sept 18 and expects some easing out of ECB this week. China doing more stimulus as well….and as for Japan…well they always seem to be easing:):). RECORD IG Debt issuance (150 Billion & Apple doesn’t even need the $$) this week and none expected to be used to actually invest in their businesses. NEGATIVE yielding debt hits 16 trillion after being at 5.7 trillion just last year. Inflation Numbers & Retail Sales Numbers come out this week for China & USA. Berkshire issued RECORD Japanese Bond Sale. France issued RECORD bond sale to boot. Leverage is very high in corporate bonds an duration is being pushed to the limit. WHAT IF….all this stimulus worldwide/trade deal reignites Europe/Asia/USA/Brazil and investors see stocks turn and inflation numbers jump…..they say get me out of these negative yields and low yielding bonds…..who’s going to buy them??
STOCK MARKET….as I’ve said I never liked the new high made without the DJTA & RUT & major stocks confirming. My sell zone is and remains 2950-3100 until it is exceeded and confirmed the aforementioned indices. This week all the stops got run out of town at 2950 and move above 3030 would clean out the rest….when these stops must buy @ panic prices …who’s selling??
BOND MARKET..well the stampede into treasuries that has taken yields down from 3.25% thru 1.50% on the 10 yr. ran out of steam this week….watch the low yields made (1.44%?)….if they get blown out then the move toward decimal pt yields may begin. I told a bond bull…if yields backup to 2%=worried…if up to 2.5% = scared….if up to 3%+= petrified especially long duration. Corporates have investors stretching duration & credit quality=2 big risks if the music changes. Why such a big rush for corporations to sell low yields and long duration is rates are really going a lot lower…are they stupid or are we???
US DOLLAR…in addition to a bit of a turn in treasuries turning down so we also saw the Dollar turn down. Now they must follow thru to have any significant meaning. I gave you my range 99-95 and still well within that range around 98.
GOLD & SILVER..as I’ve said I am a bull on Gold since it broke 1350 but the run to 1520-1580 was a sell zone…so far that is been the deal as GDX & GDXJ have both seen almost 10% corrections ditto SLV. From here…pullbacks to 1450-1400-1375 would be great and a move above 1600 would suggest that the train is back on track. Fed want inflation to come back & deficits are roaring.
CRUDE OIL…another market that is caught in a range …tempting to get those high yielding oil shares but if we can’t break 58-60 you may be glad you didn’t do it…..after the Fed meeting and Q4 may be when we get our clear signal.
SOYBEANS….they continue to fade but I just wonder as we get closer to crop yields and a trade deal if there is not value around the 62% pullback back and the 8.50 area…I’m watching this very closely….murdered in May….no new lows since.
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