It was a bearish month for equities, SPX -81pts (1.8%) to 4507, with the Transports -891pts (5.4%) to 15725. WTIC gained +$1.83 (2.2%) to $83.63. Copper cooled by -19cents (4.6%) to $3.82. The USD strengthened by +201bps to DXY 103.63. The US 10yr yield gained +12bps to 4.09%.
SPX, monthly
The first net monthly decline since February. Monthly momentum ticked upward, but is hinting at a stall. I’d note the RSI… which is already ticking back lower, with a distinct lower low – relative to late 2021.
The SPX settled far above the key 10MA (4197), as the m/t trend IS bullish. For bearish clarity, we need a Sept’ close <4100, which would also be under the daily 200MA.
The monthly candle is a ‘hanging man’, and bodes bearish for September.
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Trans, monthly
The first net monthly decline since May. Momentum is still ticking upward, with another bullish settlement above the key 10MA. Alarm bells if <14500.
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WTIC, monthly
A third net monthly gain for oil, which was more impressive relative to the somewhat shaky main market, and the stronger dollar. The August candle is spiky on the lower side from the key 10MA ($77s), and bodes bullish into the Fall.
The concern to anyone crazy enough to be considering an oil short, should be something geo-political. Even Forbes has an article touting $300 oil.
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Copper, monthly
Copper saw a clear downside reversal from around psy’ $4.00. Monthly momentum remains negative, if only marginally. Natural target is psy’ $3.00.
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USD, monthly
A net August gain of 2.0%, notably settling above the key 10MA for the first time since Nov’2022. Momentum has started to tick back upward, but remains on the moderately negative side. M/t bullish dollar… unless psy’100 is lost.
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US 10yr yield, monthly
The fourth consecutive net monthly gain for the US 10yr yield. A print of 4.362% (monthly candle charts for yields don’t show the intraday highs), the highest since Nov’2007. Price structure of a multi-month bull flag fully confirmed. I’d note momentum has remained positive this summer… if fractionally.
Next upside resistance is the upper monthly bollinger, currently 4.68%. A spike to psy’ 5.00% looks a threat within Sept/Oct, and would be one excuse for equities to spiral.
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Looking ahead
Friday will see Monthly jobs, ISM manu’, construction
Earnings – none.
Event: As Friday is the lead into the Labor day holiday, once the BLS jobs data is out of the way, I’d expect subdued price action on very light vol’.
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Final note
Today was day’26… from the July 27th high of 4607.
Structure offers a wave’2 bounce from 4335, having (perhaps) completed today from 4532… just 3pts above my extrapolation target.
Today counts as day’1 down… of a viable 12, set to complete Monday Sept’18th. Count negated/reset if >4532.
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Yours truly was pleased to see early upside this morning.
I’m content to be 50% short from 4523.
I’ll be inclined to add the rest on any Friday bounce, or next Tuesday.
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I’d like to see the 50dma (4466) taken out within 1-3 days.
Again… even if we only get down to test m/t rising trend (4240 as of Monday Sept’18th), that would still make for a very profitable trade.
I’ll be the first to ditch the crash count.
For now… it IS a valid threat.
Goodnight from London