Prices: A Week In A Day

Oil

The price of WTI for October delivery fell. It has been making a series of lower highs, loosely marked by the 200-day moving average, which begins the new week a little above $57. In fact, the October contract tested that moving average in the middle of last week and reversed lower. Follow-through selling and the rising trade tensions saw the selling accelerate ahead of the weekend to reach $53.25, just above the (61.8%) retracement of the rally from August 6 low near $50.50. The RSI (nine-day) has already turned lower, while the MACDs seem about to cross. The Slow Stochastics are lagging. 

US Rates

The US 10-year yield fell for the fourth consecutive week. It last closed above a 2.0% yield on July 31. Ahead of the weekend, it finished at 1.53%. The two basis point decline on the week does not do justice to what happened. The yield had a seven-day high (~1.66%) before falling to almost 1.50% ahead of the weekend on the rising trade tensions. The two-year yield snapped a three-week slide and rose nearly six basis points to 1.53%, and this includes the pre-weekend seven basis point slump. The January 2020 fed funds futures contract implies about 60 bp of easing this year has been discounted. The most likely scenario is two 25 bp cuts. What is at stake with the swings in sentiment is if a third cut will be delivered. The pendulum had been swinging against it before the pre-weekend escalation.  

S&P 500

The S&P 500 fell 2.6% on Friday, giving back the week's gains and more. It fell almost 1.5% on the week to extend the losing streak to four weeks, over which time it has shed about 6%. The S&P 500 has chopped back and forth between roughly 2820 and 2940. It was turned back from the upper end on Thursday before the dramatic sell-off ahead of the weekend when it traded briefly below 2835. A break of the range could signal a test on the 200-day moving average found just above 2800. On the other hand, a convincing downside breakout of the range would suggest a move toward 2700-2720.

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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