Breakouts Need Confirmation

Gold: The correction that brought gold down from the multiyear high near $1765.40 on May 18 to about $1694.30 looks to have been completed. It closed the week above the recent downtrend line that came in around $1722. The impulsive nature of the $20 advance in the last two sessions warns of a run at the high. (GLD)

Oil: Despite the unexpected build in US oil stocks and Russia balking at the need to extend the maximum OPEC+ output cuts past June, the price of July light sweet crude oil rose 6.5%, the fifth consecutive weekly increase. Over this advance, it has risen from about $21.20 on April 24 to almost $35.50 at the end of May. The more than 61% rally in the calendar month is a record. The MACDs are trending higher still, but the Slow Stochastic has flatlined and looks to be turning lower. However, the momentum is strong.Look for a reversal pattern before picking a top. (OIL)

US Rates: The 10-year note yield was confined to the previous week's range (~62 bp to 74 bp), and did not close above 70 bp during the holiday-shortened weeks. It closed the month at 65 bp,more or less the middle part of the trading range.Looking at the September futures note, technically higher prices (lower yields) looks like the most likely near-term scenario. The Treasury market is quiet and stable. (SPTL)

S&P 500: The benchmark finished the week on a firm tone, recovering from early weakness to close on the session highs set late in the session. The market seemed to rally after President Trump talked about taking away Hong Kong's special trade privileges and denying visas to Chinese officials. It seemed to be relieved that harsher measures were not taken, and ostensibly the trade deal is still intact, though each passing day seems to make it less likely that China can fulfill its obligations. The S&P 500 continues to press against the upper Bollinger Band, which will start the new week and month near 3058. A close below 3000 would be disappointing and could be a warning that the momentum is faltering. On the upside, the next technical area is 3100-3110. (SPY)

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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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