ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
I saw a flicker of hope for home builders in the May Housing Market Review. Traders decided to snuff that flicker out very quickly afterward. When I wrote June’s housing market review and described a “struggling flicker,” the iShares US Home Construction ETF (ITB) was once again bouncing off the bottom of 2018’s trading range. … Read more
I saw a flicker of hope for home builders in the last Housing Market Review. Traders decided to snuff that flicker out very quickly afterward. Breakouts transformed into new tops and now the struggling flicker comes from home builder stocks holding support. The short-term path ahead looks like chop at best, especially with the latest … Read more
AT40 = 48.6% of stocks are trading above their respective 40-day moving averages (DMAs) AT200 = 50.7% of stocks are trading above their respective 200DMAs VIX = 16.1 Short-term Trading Call: bearish Commentary The market’s gains the last two days validated my expectation for a relief bounce. I used this bounce to make more bearish … Read more
AT40 = 65.8% of stocks are trading above their respective 40-day moving averages (DMAs) AT200 = 55.5% of stocks are trading above their respective 200DMAs (a 4-month high) VIX = 12.8 Short-term Trading Call: bearish Commentary The stock market is oozing with divergences as a result of global trade wars, especially the escalating spat between … Read more
It is increasingly clear that President Trump and his administration will relentlessly pursue a goal of balanced trade with the rest of the world. Trump sees negative trade balances as an absolute bad, and his fiery political rhetoric highlights that positioning. If my interpretation is correct, then I want to stay net long the U.S. … Read more
When U.S. Treasury Secretary Steve Mnuchin helped send the dollar careening with commentary welcoming a weak dollar, the British pound (FXB) surged enough against the then hapless U.S. dollar to make me speculate on GBP/USD reaching a blow-off top. GBP/USD did indeed pull back from that point, albeit in very choppy fashion, for almost a … Read more
The deconstruction continues in material stocks. The culprit this time around was a poor reading and interpretation of construction spending. Per AP News: “U.S. construction spending dropped 1.7 percent in March, the biggest setback in 11 months, with weakness in a number of sectors including the biggest plunge in home building in nine years. The … Read more
Last June, 2017, Senior Deputy Governor of the Bank of Canada (BoC) Carolyn A. Wilkins stepped onto the stage with a surprisingly bullish message about the Canadian economy. This speech set the stage for the BoC’s rollback of “emergency measure” rate cuts that responded to the past collapse in oil prices. At the time, the … Read more
Two weeks ago I expressed concern about the poor performance of the materials sector. The sector was under-performing the general market which seemed particularly ominous given the generally strong outlook for the economy. At the time, I expressed my hope that another interview with Bill Sandbrook, CEO of U.S. Concrete (USCR), would clear the air … Read more
The Turkish lira is in trouble again. Last week, USD/TRY hit an all-time high amid more dire headlines for the Turkish economy and the monetary policy of the Central Bank of the Republic of Turkey (CBRT). On April 3rd, Bloomberg reported the following issues: 7.4% GDP growth in 2017 is overheating the economy. Turkish companies … Read more