Be sure to check out my recent interview with Blake Young on the state of the market and how he's up in 2025 compared to the 13% shank for the NASDAQ 100. |
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Good afternoon: |
I'm heading to the Orioles game soon with my daughter… but wanted to send you a few notes ahead of Monday's busy trading week. |
We have a full slate of earnings reports, and the ongoing Trade War continues to escalate. |
But there are a handful of charts you need to see right away … |
Let's dive in. |
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No. 1: The S&P 500 Hits Its Death Cross |
The 50-day SMA (simple moving average) has dropped under its 200-day SMA. |
That's bearish. |
The last time this happened was in March or April 2022. |
Following that crossover, the S&P encountered several significant issues. First, we had the largest hedge fund selloff in 15 years in June 2022. Then, by October, we had the GILT Crisis in England. |
After that, the Federal Reserve opened swap lines to Europe, and the Silicon Valley Bank implosion occurred in March 2023. |
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Something is likely to break … but only then will the Federal Reserve offer support. |
Along the way, however, look for markets to occasionally move out of oversold conditions, mixed with short squeezes and wild swings linked to Fed policy and trade policy headlines. This is a good time to pay attention to what Brandon Chapman is discussing with his Ghost Prints … |
No. 2: Bear Market Warning… |
These are the charts that make me a bit crazy. It's a Goldman Sachs chart tracking bear markets back to the 1800s. |
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Please be careful when using a chart like this. The Federal Reserve didn't exist until 1913… and policy actions are MUCH different in today's environment. It will all come down to what breaks… and when the Fed has to step in… |
No. 3: Goldman Predicts Buying Ahead… |
Commodity Trading Advisors are expected to buy in the coming weeks. Goldman explored a few different scenarios, and buying happens in every condition. If the market does break above its 20-day moving average, look for some short-term momentum to carry us through the weeks ahead. |
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No. 4: The World Against America… |
International investors have soured on U.S. stocks. Money continues to flow where there is ample fiscal expansion. But the trade war has altered optimism about U.S. equities for now. But here's the thing… |
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Pay very close attention to monetary policy. If the Fed does engage in another round of QE, it will provide liftoff to U.S. equity prices. When that happens, look for money to flow back into the United States… |
No. 5: Oil Prices Recover… What Gives? |
Now, here's an interesting twist. The weakness in the U.S. dollar is propelling commodity prices. Even though we're seeing reports that U.S. oil prices are likely heading lower… |
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The MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETNs (OILU), which I use to measure momentum in oil stocks in the upstream part of the supply chain, are STILL 22% under their 20-day moving average. |
And APA Corp. (APA), which I like to trade around oil prices… is about 11% under its 20-day moving average. I won't chase any of this… |
No. 6: Don't Try to Short This |
I've heard many people claim that the "Top is In" for gold prices. And every time that they say it… I've bought more gold. The momentum across the board isn't just here in the United States. It's global right now. |
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The Money Flow Index (MFI) reading on the VanEck Gold Miners ETF (GDX) is just 52, so while price momentum is strong, the volume isn't overwhelming. Keep a close eye on the DAILY MACD of the GDX. And wait until we see a negative crossover before trying to take a multiple-day shot at gold. It's just too strong right now. |
No. 7: The Headlines Will Drive Everything… |
Finally, this environment is all about trade. The chart below from Bloomberg Finance tells us that trade policy uncertainty is now pushing us into BROADER market uncertainty. We've surpassed a lot of questions on trade from the first Trump administration. It will require significant policy changes to appease this market. |
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I will continue to argue that investors MUST pay attention to what Trump is talking about on social media and what insiders are doing in these markets. Two weeks ago, Trump went on Truth Social to tell investors and traders to buy. But insiders at the executive level showcased that day the strongest levels of buying since… December. |
That was important - because we did get a short-term pop. |
This isn't over… It will continue to be volatile… so stay active as a trader. |
Here's how. |
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I'll be back on Monday at 8:45 ET for our next episode of TheoLive: Market Masters… |
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Join me… |
Stay positive, |
Garrett Baldwin |
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