After the last two central bank news heavy weeks much of the ‘scary’ news flow may have passed for now. This should lead to a a quieter week on that front and maybe less jerky trading action for the first time in a while. Even though August was slow, headline risk seemed just around the corner each and every day. The tape may well be able to put in a consolidation breather now.
Our upside target on the S&P 500 around 1440 – 1450 has long been reached and anything much above there in the immediate term to us seems dangerous to buy. A 2-5% pullback is what we need to see to feel more comfortable again for long-side equity positions.
The Financials (XLF) for example are up +7.39% for Septermber already…just some food for thought.
The Russell 2000, S&P 500 and the Nasdaq 100 are have all made higher highs than their previous 2012 highs in March/April. Most momentum oscillators too are getting quite overbought, including the McClellan Oscillator. This is but one variable in a series of things we look for before consolidation phases, but it is one worth pointing out.
The VIX meanwhile failed to make a lower low than its August low despite the fact that the S&P 500 is about 3.60% higher since then. Maybe some folks have actually considered buying some protection here at these levels, if only for a while.
High beta stock Apple (AAPL) managed to close the week above the $683 mark and thus outside of previous resistance. Given how overbought the stock is it seems silly here to buy it at these levels. Aggressive trades could even consider this one from the short side, for a trade. But then again, that just about the same as shorting the broader market.
Bond yields for their part, at least the middle of the Treasury curve, had a good week last week and should for now have run to about 1.94%, although not in a straight line.
We have a plethora of trade ideas already setup for our advisory clients this week. Join us if interested.
Have a great week
Serge & Team
