Bigger Picture
Globex chaRTroom Link
All systems appear to be on “go” for the Globex open several minutes away. Charts are operational, and there’s an Ascending Triangle left over from Friday afternoon that’s just waiting to resolve. I’ll check-in this evening to update levels… See you there!
CANCELLED — Saturday Review — CANCELLED
The eSignal data manager or password authentication function (or both) are not responding this morning. So, today’s Saturday Review is cancelled. I will record a bigger picture analysis if/when charts are restored.
One item I had planned to explore was this interesting observation by John Hussman:
Presently, Apple is valued at 5.1% of GDP, Amazon at 4.8%, Alphabet (Google) at 4.6%, Facebook at 3.3%, and Netflix at 0.8% of GDP. That’s a total market capitalization of nearly 20% of GDP across 5 stocks. It’s worth remembering that historically, the pre-bubble norm for market capitalization to GDP, adding up every nonfinancial company in the stock market, was only about 60%. At secular lows like 1974 and 1982, the ratio fell to 30% of GDP – for the entire market.
A similar observation could have been made with equal concern at any time during the past many months, regardless of the different percentages. So, the reading doesn’t have much timing value, and it may be greater months from now. Although, I doubt that. As I began noting about FAANGS with the NFLX earnings plunge, and reiterated with the FB and TWTR plunges: Growth expectations and valuations aside, these price reactions are at the very least, raising concerns among so-called “hedge fund hotels” that more attractive pricing may lie ahead.
And the FAANGS market segment losing buying demand at the margins can be magnified to great effect. Which may be happening already. But the death of leadership tends to be the penultimate victim. Outperforming laggards often defines the last upleg before the greater fall. Rotation is not the smoothest gear change — Friday’s reaction to last week’s new recovery highs exemplifies would fit that description.
[Presumably, eSignal’s international customer service and technical support will become available Sunday night to correct the issue in time for the U.S. open. If not, then I’ll initiate an alternative overnight.]
Saturday Review Link
[NOTE THE NEW LINK ADDRESS]
Be sure to join us by 9:30am ET for this weekend’s Saturday Review. After discussing the bigger picture and gaming out strategies for playing next week’s likelier opening setups, we’ll do instant analysis of any stock charts that you request… See you there!
Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Sep Contract (EC, ETF: (FXE, UUP))
Thursday’s drop extended down overnight to gap down Friday. Reacting up into positive territory ranged narrowly sideways. The pattern won’t create a new buy signal until after Monday morning.
Gold Aug Contract (GC, ETF: (GLD))
Extending Thursday’s drop overnight attacked the prior week’s 1215.00 gap open low. Friday’s gap down bounced to fill the gap back up to Thursday’s close, which held as resistance. The lower attraction remains intact.
Silver Sep Contract (SI, ETF: (SLV))
15.40 support was retested again Friday, and held again, although chipping away at support for so long without launching an upleg makes the prior week’s low likely to be tested.
30-year Treasury Sep Contract (US, ETF: (TLT))
Thursday’s retest of Tuesday’s 142-21 low was pierced by several ticks in reaction to Friday’s GDP. The low held, but only to range sideways forming an otherwise inside day. The resemblance to stability is misleading, since the burden of proof at this stage is for a rally to establish itself. The decline’s momentum meanwhile remains intact.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Regardless of its degree, Friday’s slide back down to 68.25 comes too late to invalidate Thursday’s confirmation of Wednesday’s breakout from a multi-session range. At least an eventual third higher close is required, potentially up to 71.75.
Natural Gas Sep Contract (NG, ETF: (UNG, UNL))
Friday’s gap up is too aggressive at this stage to qualify as launching a new upleg. Closing back under 2.75 would target a retest of the lows.
Look ahead: Economic Calendar – for Mon Jul 30, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Monday’s two reports are high-profile, but not reliably influential to price action. That said, the Housing sector data will the first look in several days at what was hinting at a slowdown.
Pending Home Sales Index
10:00 AM ET
Dallas Fed Mfg Survey
10:30 AM ET
3-Month Bill Auction
11:30 AM ET
6-Month Bill Auction
11:30 AM ET
Farm Prices
3:00 PM ET