It was a wild ride last week. Some of the chart damage was pretty severe, while others held up relatively well. I was looking through a bunch of my charts and these are a few that stood out:
First the Good: Utilities. Believe it or not, $XLU made 52-week highs last week before pulling back with everything else Wednesday and Thursday. The relative strength here cannot be ignored, as it too made new highs. Utilities here remain above their 50 and 200 day moving average while providing decent yields. In this environment, what is better than that?
Moving right along, look at Treasuries – WOW. What more can we say? The rally continues. $TLT made new highs last week in an explosive move. As money flowed out of aggressive assets, it seemed like US Treasury Bonds was the only place money wanted to go. I think that it would take a roll over in Bonds for any stock market rally to get going. Prices here are getting a bit parabolic, but that argument could have been made a week ago and a month ago. I have a feeling this one will end in tears. But for the time being, price has certainly paid.
Now for a little bit of the Bad: Gold. It looks like after breaking down last week, $GLD wants to test that $150 level where it originally broke out of in July. We also find the 200 day moving average that could act as some support. Expect volatility to stay, in both directions here, as Gold is going to attract both aggressive and conservative investors. Some might think that Gold is a “safe haven”, and it certainly feels that way sometimes, but last week tells the story. It can be a source of funds as margin calls need to be met:
The Nasdaq100 sold off pretty hard last week after failing to stay above it’s 200 day moving average. This failure at a key level came during a week when risk was taken off the table across the board. A few positives, however, are that 1) $QQQ still managed to close back above those June lows. None of the other major averages were even close to doing that. $SPY $DJIA $TRAN $NYA & $IWM are all well below those June lows. 2) The Nasdaq100 made new 52-week highs relative to the S&P500 and 3) we now have a pivot point to key in on around $57. A break out above that could take this index to new highs, but its got some work to do.
And now for the Bad. This is easy – look at Copper. We’ll use JJC here to keep it simple. After holding up relatevely well this summer, Copper broke down hard and is still in free-fall. So much so, that I had to post an 18-month chart of this one so you can really see the damage done on the chart. This one is not just absolutely bad, but relatively bad as well, as it also made new 52-week lows relative to the stock market. This one is not a good sign for the global economy. We like to watch Copper as a tell for infrustructure demand, and it doesn’t like there’s much out there.
And last, but certainly not least: Financials. New lows across the board for $XLF. New lows relative to the S&P500 (nothing new there) and new lows in price. Not much to say other than, if you’re looking for strength – this ain’t it.
If a miracle rally occurs here in Financials, it would take a close back above $12 where maybe it could spark a short squeeze. I would not bet on it, but then again, when everyone (and I mean everyone) is betting in the same direction, sometimes its worth keeping it on the corner of your screen. Sometimes, these can be the most vicious rallies, face rippers, if you will. Call me when we’re above $12.
Thats my Good, Bad, and Ugly for the week. Things could change quickly so stay tuned…