A Classic Bull Market With Skeletons In The Closet

From the private collection of Arnold Lieberman-Art Dealer, Santa Fe, NM

This week, I am coming to you from a little town in Mexico called La Penita.

The market is coming to you from hints by North Korea that they are willing to discuss a nuclear arms agreement.

But that’s not all.

The market also sees a plan for rolling back more bank regulations.

Trump is getting pressure from the Republicans on trade tariffs.

The skeletons though, closeted for now, havent disappeared.

As mentioned over the weekend, “A pattern that has emerged, considering we have a President who makes all of his thoughts known, is trading those thoughts, and then evening up before (if ever) thoughts turn to actions.”

With Mnuchin claiming that Canada could be exempt from the Tariffs, one assumes he speaks for Trump.

With that and the threat of peace in NK, the market firmed again.

As we know though, Trump could change his mind on Tariffs, NK or anything for that matter.

So, we must prepare for skeletons.

How?

Today, the Russell 2000 (IWM) went into an unconfirmed Bullish Phase.

One possibility is that IWM confirms. It still has to clear 156.

Another possibility is that is does not confirm. Trouble, especially back under 154.

Transportation (IYT) and Retail (XRT) are still in warning phases.

It is possible they will catch up. If not, also possible they both break down further and take the steam out of IWM.

NASDAQ 100, could fail 167.50-168. If it does, as the market leader, another skeleton. If holds and clears 170, Marilyn Monroe.

Even more indicative of beauty or the beast within, the interest rates and US dollar scenario.

UUP, the US Dollar ETF, failed the long-term monthly support. Further weakness should be noted. Especially, since the metals and other commodities seem ripe for takeoff.

The interest rates did not do much. However, the Fed has signaled the need to raise some more.

That puts the market back to watching a weaker dollar and higher rates. Orderly for now, yet should that change, prepare for a shift to gold and away from equities.