Weekend
Robert Shiler examines the cyclically adjusted P/E or CAPE.
The five tech stocks that have dominated NASD trading are rolling over. As they are such an important part of so many indexes, this should herald the usual fall correction.I am not 'looking for more than that. Overall weakness in the stock market in general will likely put a lid on an energy rally which has been gathering steam. Elsewhere interest rates are creeping up.
Stock Market
It has been near 11 months since the SPX tested its 200 day MA. Time to correct to that level once again.
Apple and Google
Apple is already in correction mode as is Google at top.Note the PMO at bottom has rolled over for Apple.
AMZN and Facebook
Amazon is also correcting from its obvious spike high to 1075. And notice it last visited its 200 day MA last November. FB at top is holding up better but likely to join in the correction as well.
Interest Rates
Interest rates took off last November as well.After nearly doubling in by march, rates have corrected sideways into this fall. Notice the MAs are convering prior to another move up. And th rate has broken through the down trend line. Expect rates to advance. I believe the low in interest rates has been seen. TBF and TBT are funds which gain when interest rates rise.
Gold
Gold is another candidate to return to its 200 MA if not lower.
Silver Trust SLV
Silver is also into correction stage. At bottom PMO could fall a longway before a low is seen. Keep in mind this is all a set up for a rally next year in precious metals.
Iron Ore CLF
When CLF takes off the results are spectacular. This is setting up another nice buy for a late fall rally. Let's keep an eye on this one.
Energy
Apache APA
Now that I look at the weekly chart back to February 2016, I was over optimistic that APA cannot go lower. It is just testing the 13 week EMA and every test so far has failed. Until PMO at bottom turns up, the trend here is bearish.
Bullish Percent
Yes this is positive as RISI is over 50%, the indicator hit 50% and PMO is trying to turn up. But if weakness persists in high tech, I suspect that will spread to the energy sector as well.
USO
The downtrend line has contained upward moves in USO since June of 2016. I expect that WTIC will have a hard time getting over $55.
Energy Service XES
Will all those exiting AAPL buy XES and the energy service stocks? Well someone is...but resistance overhead at 18 where three MAs are converging. This looks like a long term low is in place. But as you can tell, I am nervous about a tech correction.
XES Two Hour Chart
On the two hour chart XES has had a great run but PMO is rolling over at bottom. A consolidation may be underway.
Bottom Line
My bottom line this week was expressed in the opening comment. Tech stocks have led the post November 2016 rally and are now correcting. This will likely spread to the rest of the market. So be ready to add various positions in energy service and PMs as our indicators suggest a bottom.
Social Mood
A few months back Peggy Noonan's Weekend WSJ column asked if Trump were sane. That of course netted her a Pulitzer. Now she is cautiously applauding his UN speech but expecting him to revert to pugnacious Twitter form at any moment. It is a bit entertaining to see a US President calling Kim Un Rocket Man but not particularly Presidential But this is much more reassuring than Susan Rice suggesting we need to live with a nuclear North Korea.
Ralph Peters asks do we need to wait for Kim to take out Los Angeles to do something. He went on to suggest that NK could probably not field more than two divisions of men well fed enough to fight for any sustained period. I am wondering if Kim's army is about like Sadam Hussein's army. Each dictator has killed so many around him that were even remotely suspicious, the rest are surely yes men telling him what he wants to hear. The Treasury Secretary has now said anyone dealing with NK will be isolated by the US financial industry.
The popularity of horror movies like IT reflect the US unhappiness with its leaders. Since dealing with Chuck and Nancy, Trump's popularity is up three points. This is not the case for Republicans where evenMcCain has snubbed his best Senate friend Graham over an ACA replacement plan. So we have extreme negative mood not only between Dems and Republicans but within each party as well!
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