It was a bearish month for equities, SPX -175pts (4.2%) to 3955, with the Transports -748pts (5.1%) to 13860. WTIC fell by -$9.07 (9.2%) to $89.55. Natgas climbed +$0.90 (10.9%) to $9.13. Copper cooled by -5cents (1.5%) to $3.52. The USD strengthened +289bps to DXY 108.67. The US 10yr yield gained +48bps to 3.15%.
SPX, monthly
Printing 4325, but reversing powerfully lower to settle -175pts (4.2%) to 3955. The August candle is distinctly spiky from the monthly 10MA. Momentum ticked lower. Soft target is the June low of 3636, and then 3200/2900 zone.
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Trans, monthly
The transports saw a high of 15300, but ended the month net lower by -748pts (5.1%). The August candle is spiky from around the 10MA, and bodes bearish for September. Soft target is the July low of 12748, and then 11600/11000 zone.
WTIC, monthly
Oil fell for a third consecutive month. The first monthly settlement under the 10MA since Nov’2021. I’d note that was followed by a lower low, but ending the month back above the 10MA. Momentum threatens to turn negative in early September, but I have to see a short oil trade as a ludicrous idea, as supply/demand remain very tight.
NG, monthly
Natgas broke a new multi-decade high of $10.03, if cooling back to settle in the low $9s. Higher highs… higher lows, still m/t bullish.
Copper, monthly
Copper cooled for a fifth consecutive month, not helped by the weak main market, or the broadly strong dollar. Its difficult to see psy’ $3.00 holding in Sept/Oct. Support 2.25/1.90 zone. If correct, that won’t help FCX, BHP, or GOLD.
USD, monthly
The king of FIAT land climbed for a third consecutive month. Cyclically very high, but there is zero sign of a ceiling/turn. Natural target are the 2002 DXY 120s. Further rate hikes will clearly help, along with societal/economic chaos in Europe this Fall/winter.
US 10yr yield, monthly
The US 10yr yield swung from 2.60% to settle at 3.15%… the highest settlement since Oct’2018. The August candle is bullish engulfing, and leans distinctly bullish for September.
A September settlement >3.25% would be decisive, and offer a 4 handle within October. Psy’ 5.00% would be a natural grander target, if not until early 2023.
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Looking ahead
Thursday will see Weekly jobs, productivity/costs, construction, vehicle sales
Earnings: CPB, HRL, SIG, CIEN, AVGO, LULU
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Final note
Yours truly remains 100% cash. I should be comfortable to be aggressively short from the sp’4100s next week. In theory, the ‘easy points’ will be from current levels to around the June low of 3636. From there… it could get messy, but on balance, I am seeking 3200/2900 by early Nov’. The latter doesn’t require any ‘wild card’ events, merely a continuation of what is… a bear market.
Goodnight from London