It was a bullish month for most equities, SPX +60pts (1.5%) to 4169, the Nasdaq comp’ settled +4pts (0.04%) to 12226, with the Transports -416pts (2.9%) to 14021. WTIC gained +$1.11 (1.5%) to $76.78. Copper cooled by -20cents (5.0%) to $3.89. The USD weakened by -78bps to DXY 101.40. The US 10yr yield fell by -4bps to 3.44%.
SPX, monthly
The fifth net monthly gain of seven, printing a new multi-month high of 4170 in the closing seconds of Friday. Momentum ticked upward, if remaining negative. We settled far above the 10MA of 3978, and thus the m/t trend has to be seen as bullish. That MA will likely adjust to around 4K as of May 1st.
Bulls could look to the upper monthly bollinger, currently 4776.
Bears have nothing to tout unless <4K.
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Nasdaq comp’, monthly
Price action was very tight across April, settling effectively flat. Monthly momentum ticked upward, if remaining negative. Another settlement above the 10MA.
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Trans, monthly
The ‘old leader’ struggled, net lower for a second month. Monthly momentum is flat-lining on the moderately negative side. The Trans settled just above the 10MA.
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WTIC, monthly
Oil printed the $83s, a low of the $73s, and settling in the $76s. The monthly candle is black, which in itself is very unusual. Monthly momentum subtly ticked back upward, if remaining on the very low side.
The major upside threat is geo-political, whilst the downside is via a recession. I’d lean to the former, and see oil and the energy stocks as the very last thing to be short.
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Copper, monthly
Copper cooled for the second month of three. The April candle is arguably bearish engulfing, and leans bearish into the summer. Momentum has started to tick back lower, having stalled just below the key zero threshold. Dr Copper should be a concern to the bulls.
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USD, monthly
The dollar weakened for the sixth month of seven. April broke a new multi-month low of 100.42, the lowest since April 2022. Monthly momentum is increasingly negative, with no sign of a floor/turn.
Clearly, the DXY 100 threshold is very important. Any monthly close <100 would merit alarm bells.
However, whilst many – not least Schiff and Celente, are touting a considerable amount of ‘dollar doom’, the fact is that really isn’t merited unless we take out the 88s, last seen in Feb’2018.
Further, it is unquestionably the case that the UK and mainland European economy is weaker than the USA. I struggle to take seriously anyone touting a weaker dollar relative to most other currencies.
Yes, I accept there is a ‘grand shift’ away from the dollar, with capital headed to Asia, but still, I don’t see a dollar collapse any time soon.
The s/t wild card is the US debt ceiling, but would the US political hacks be that stupid to allow a default… even briefly?
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US 10yr yield, monthly
The US 10yr yield cooled to 3.44%. Monthly momentum ticked lower for a sixth consecutive month, prone to turning negative in May.
Multi-month price structure is still a valid bull flag.
It would be confirmed if >4.10%, or negated if <3.00%.
I’d accept that is a pretty wide range, but the flag is relatively tight.
Unless inflation sees a secondary wave higher, yields are set to break lower, with the Fed to cut rates in H2. I have to again note that such a rate cut would be the ultimate equity sell signal, even though the mainstream cheerleaders and ‘smart guys’ would argue otherwise.
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The US 10yr/2yr spread stands at -60bps. I’d note we’re far above the February low. It remains the case, alarm bells are merited when we see an un-inversion (that holds!), and that appears viable within May.
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Miscell’ things…
Indeed, the war machine is delighted that one of their fiercest critics has been given the boot. I’m fine if you don’t like Tucker (I’m not particularly a fan myself), but his anti military industrial complex view is admirable.
I’d note in the video how AOC is so proud of how ‘deplatforming works’. On this… she is morally contemptible. As an onlooker to the political freakshow, its very depressing to see the ‘liberal/left’ be so closed minded, and want so many silenced.
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*I’ve not even watched this myself yet, and I don’t follow Soloway.
In any case, maybe a few of you might find it interesting.
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The Celente… whose latest issue is titled ‘Death of the dollar’.
On this… I disagree.
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Dear Subscriber
It turned out that Tues/Wed’ was just a cruel tease to the bears, with a rather bizarre Thurs/Friday ramp. Typically, the Mon>Wed’ ahead of the Fed will favour the bulls, so the sp’4200s look a threat, before next opp’ of a swing lower.
Again, considering the past two days of price action, I have to ask myself, what would the reason (other than cyclical factors) be for the market to see a significant (>4%) wave lower to around 4K ? Right now, I can’t think of anything, although my mind is pretty clouded, after getting ground lower across the month.
Ohh, and I’m not particularly annoyed with the market. The market is going to ‘do what it wants’. The control I do have… is how I choose to trade it.
I’ve broken too many personal rules, not least…
Holding options across the weekend… FOUR weekends in fact.
Letting a trade get ‘entrenched’ across multiple weeks.
Not exiting on Tues/Wed’, when the hourly cycle RSI was <30.
I could go on.
In any case… all my gains across Jan>March have been negated.
Its bad… but it could be worse. I could be one of those maniacs who is heavily indebted, using margin, and trading 0DTE options.
I’m one for taking risks, but my life is far simpler with zero debt, cash-only trades, and options with (typically) 5-7 weeks on the clock.
As some might say… ‘I live to fight another day’, and ‘onto the next trade’.
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As ever, feel free to message me via Disqus or email.
Sincerely, have a restful weekend, and goodnight from London
yours… Philip
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The weekend post will appear Sat’12pm EDT @ https://tradingsunset.blogspot.com, and will detail ten of the world equity markets.
re: Twitter. I will endeavour to cover as many of the end month individual stock settlements as I can.