Today will be a "big" day for markets as the Federal Reserve will announce their decision on the new target Federal Funds Rate.
Currently, markets are pricing in a roughly 80% chance of a 25bp cut and a 20% chance of a 50bp cut. This means market participants have assigned 0% odds to rates remaining where they are after today's meeting.
We've been pretty clear over the last few months about where we stand regarding the different asset classes, so there's not much left to do other than wait and see how prices settle by the end of the week.
With that said, here are a few charts we're watching through Friday's close.
On July 23rd the NY Chapter of the CMT Association had the pleasure of hosting Tony Dwyer, Chief Market Strategist at Canaccord Genuity.
Tony provided an interesting perspective to our Technical-oriented group because while he focuses on Macroeconomic and Fundamental data in addition to Technicals, he emphasized that his approach is always data-based, not opinion-based.
He performs Technical Analysis of Fundamental data.
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it's a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now.Buy,Sell, or Do Nothing?
Do you see how stocks and gold can make new highs at the same time? Who said they couldn't? Why does it have to be one or the other? The current market environment is a great reminder of this. Don't forget it.
So? Should we expect Gold and Silver to keep going?
In this Episode of Allstarcharts Weekly, Steve and I discuss the Intermarket Relationships that help identify the next direction for US Interest Rates. These assets include Regional Bank Stocks, Utilities, Real Estate Investment Trusts, Copper, Gold and TIPS among others. Which way are Rates heading next?
We've been watching some of the Energy ETFs we track most of this year for potential mean-reversion opportunities on the long side.
We recently discussed for our Institutional Clients an opportunity in the Small-Cap Energy ETF (PSCE), which rallied 17.50% from its 2018 lows before reversing back to those levels again.
The main issue in Energy remains that there appears to be an attractive mean reversion opportunity at the ETF level, but when we drill down into individual stocks there aren't many clean setups...making it difficult to identify what the main drivers of this move higher would be.
Let's take a look.
For the purpose of this exercise, we're going to look at Oil Services ETF (OIH) because its risk management level is the cleanest of the Energy subsectors.
JC and I are generally on the same page about a lot of things, but this week our brains seem to be very in sync as we're writing about the same topics with a slightly different spin on each subject.
With U.S. Large-cap Indexes breaking out to new all-time highs, many are wondering when, and if, the Small-caps are ever going to catch up. The Dow Jones Industrial Average, S&P500 and Nasdaq100 have all taken out former highs and are currently in uncharted territory. The Mid-caps, Small-caps and Micro-caps, however, are still all well below their 2018 highs.
While we like to pride ourselves in looking at more charts per week than almost anyone on earth, I get a lot of value from regularly speaking to clients and colleagues. Tuesday was one of those days that I found myself on the phone speaking with people around the world. One theme that came up multiple times was the underperformance in Small-cap stocks throughout the late 90s. It's something we've seen before. U.S. Large-cap stocks can do very very well even with small-caps underperforming, like they have since last year.
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it's a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now.Buy,Sell, or Do Nothing?
Financials are a big focus of ours right now. We can make a strong case that this is the most important sector in America. Traditionally, Industrials are the most positively correlated with the S&P500 and Technology is the largest sector by market cap. But we don't have bull markets without bank stocks. That's the way this works.
