Bulls are falling-by-the-wayside – at an increasing pace, even as efforts to sustain the 200-Day Moving Average ‘inflection’, are showing ragged signs.
This is notable ahead of a deluge of earnings reports in the week ahead. It’s against a backdrop of firmer rates amidst a sliding Housing sector; and the relapse of Chinese markets, prompting their version of a ‘Plunge Protection Team’ stepping-in to ‘stem the outgoing tide’. I warned about ‘submerging’ markets, and particularly the Shanghai Index spiking and reversing for say two years or so; and while others freak now; China may plunge to a low.
Of course since their Government is trying to minimize the market’s decline, while while ignoring the wealthier-class of Chinese with funds seemingly in a ‘stuck posture’ with both stocks and excessive (often empty) ghost condo’s, or similar; it’s a challenge to envision how their economy troughs out.
That gloomy assessment (their GDP report shows it) may be assisted soon, if the combination compels some accord between President’s Xi and Trump, which is ‘tentatively’ going to occur in Argentina at G20 next month. That in my opinion meant more to the morning’s initial rebound than anything else. Of course we don’t know that they’ll make a deal; we do believe essentials include Trump not causing Xi to lose face, and make it a ‘win-win’ if they do any sort of Agreement. That’s something to focus on next month.
Gunfight at the OK Corral
Basically you have what I’m calling a slugfest between Bulls & Bears; with a slew of markets catching-up to the fact of what’s been evolving for months.
We’ll probably see another leg down for this market, after the shootout runs its course; which next week’s earnings flow may assist. The FANG run-up is history; and I suspect nothing like that ‘momentum surge’ is going to repeat, at least as we saw previously. Sure many of those stocks will ultimately find an attractive support point; but generally not at these levels and not as yet.
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