E Market Briefing For Monday, July 23

Ripple effects from the wide-ranging actions, and threatened moves, by China, the EU, Central Bankers (including our Fed, the ECB, the BoJ and increasingly the PBOC), and of course our President, really are barely surfacing with respect to actual market responses; even though it certainly has pundits and analysts agitated.  

This essentially 'benign' response by the S&P has allowed disguising very notable internal corrections that predate current (or forward) action; based on our belief that the S&P topped with its 'unsustainable parabolic thrusts' in late January. That was the core of our belief the forecast 'to the Moon' if Trump won rally (back in 2016) was ending; but would see mostly a series of 'ragged' oscillating moves, not giving up easily, because of the structure of the current market (that includes the ETF and passive-investing mindset that is largely blindly oblivious to what's actually brewing in the backdrop).

We were (and are) concerned about an extended nature of the momentum stocks in particular (FANG and similar expensive stocks, whether or not a modicum of additional gain occurs; based on our 'let the other guy get the last 10%; if there is another 10%); as we believed contrary to the majority, that these would become 'sources of funds' rather than desired buys.  

To a degree, choppy as it has been, almost everything we've outlined last year and this year has proceeded according to Hoyle. During this time the core stocks vacillated; some of the FANG stocks topped as desired (most notably our suggestion after being bearish on AT&T since 40; suggesting a scaling-in approach between 29-31; while concurrent suggesting at least a partial sale of Netflix between 405-420; due to encroaching competition in the future, including from AT&T's own DirecTV Now's growing presence). 

  

Bottom line: the overall Indexes remain 'flattish'; with movement below the surface. S&P resistance came in just as targeted; 2810-20 range. Having preserved these levels is not terribly relevant, as rotational distribution has persisted as outlined; while the market keeps betting on a 'trade resolution' that I of course would like to see; but all the hype makes it tougher to get.  

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Gary Anderson 11 months ago Contributor's comment

I don't see tariffs helping the American people. I don't see the media to blame for Trump's personal troubles. But author is certainl right that China may just want to wait out a weakened Trump. Europe as well.

Gene Inger 11 months ago Author's comment

thanks Gary... I didn't mean to imply tariffs help; in fact with the G-20 removing a provision regarding 'competitive devaluations' in their communique today (I'm sure media will talk about it tomorrow, or should); you have greater risk of trade and tariff issues being joined by a currency war too. I'll touch on this and a single key market impediment at my Seminar here in Chicago tomorrow as I've already shared with our regular subscribers. Let me point out that I have NOT shorted this market once this year or last year; even as expressing concern after we got our 'to the moon' rally on Trump's election. I urged investors to separate political from investment views back then (Nov. 6 2016) and get in the market fully if he won; even if they hated Trump. Now we had the move; time not to be greedy even if it doesn't fall apart. The only two stocks I picked on the buy side at midyear are doing well by the way. Anyway I'm being chatty; working up to the speech tomorow haha...happy Sunday.