Update #60: Yields Up-Rotation to Transports & Small Caps-What’s Next?


THIS WEEK & NEXT…The ECB met and decided to go with 20 Billion a month for open ended period of time.
We saw a continuation of something I brought to light which is the rotation to Transports & Small Caps and high yielding stocks .
We also saw yields scream to the upside as I also said that long duration with low yields is a risky combo and those holding
those instruments got whacked pretty good this week. Next week look for decisions out of the Fed, BOJ, BOE and Brazil.
Obviously the first three are potentially market moving event. I expect an undeserving 1/4 point cut from the Fed and talk about how things are pretty good (which they are) and data dependent looking forward. The Gold & Silver and Bonds all corrected.

STOCK MARKET….I’ll say it again the S&P 2950-3100 range is a sell zone as AAPL, AMZN, Transports & Russell unable to make new highs….as I said we could and did make a run at 3027 all time highs but so far turned down. Sure we could take it out and go toward the upper end of my range but with The Fed meeting and October looming (what if trade talks stall again)…I may not be willing to roll that dice right now. Still in the advance mode but a break under 2940 would confirm potential of steeper decline.
ATT (T) got a major investor involved with lots of ideas and with the current dividend north of 5 % is worth monitoring closely.

BOND MARKET..As I said low yield and duration can be hazardous to your health and this week certainly was (TLT). No calls here for a Bond market collapse but if Europe gets a stimulus package out of Germany…16 trillion in negative yielding debt sound scary.
Looking at ultra short term and short term corporate ETF’s…some short term GNMA’s and maybe some emerging market debt.

US DOLLAR…Fed decision this week could have an effect as well as Oct trade summit but as I have said it is ina range 99-95 and at 97-98 is still safely in that range…at some point traders may look at the leverage in our companies & govt. debt and re-evaluate.

GOLD & SILVER….As I said Gold broke out and ran to 1520-1580 area which I deemed short term sell zone…we have seen GDX & others pull baclk as I expected…without a breakout above 1600 spot…we may shake out more of the Johnny Come Lately crowd.
Support 1500/1450/1400/1360 areas

CRUDE OIL…..Some rebound and falling in crude..as I said range bound but you have to wonder if we get a strong Q4 as the Saudis prepare to take ARAMCO public….watch those high yielding energy stocks,

SOYBEANS….As I told you the lows earlier this year have held and 850 area has been good support…this week talk of China buying
and a potential interim deal send beans flying to the upside…you would think Trump has got to get a bid for those farmers.

ANY QUESTIONS…simply email us @ [email protected]

REMEMBER..Past performance is not necessarily indicative of future results. Ther is substantial risk in options and trading and it is not right for everyone. Consult your clearing firm and broker to discuss your suitability.


Click Here to Leave a Comment Below 0 comments

Leave a Reply: