Weekend March 9 2019
Stock Markets Roll Over
The small cap Russell 200 is doing the same as the Transports. My conclusion is that we should expect some correction to the rapid stock price rise since late December. And given the high correlation between the two, expect the same for energy prices.
Gold prices have enjoyed a big rally since last August. A correction is taking place there from the high of $1,350. I look for a re-test of $1,300. We are only about ten bucks from that level now.
This Column Last Week March 1, 2019
That prediction is playing out now. Let’s take the stock market first.
The Dow Industrials managed to reach 26,000 but fell short of the October high of 26,600. A divergent non-confirmation occurred in the Transports and Russell 2000. The Transports briefly traded over the 200-day moving average around 10,500 and then quickly fell back, down 1% Thursday. The pattern in the Russell 2000 is very much the same, failing t its 200 day MA at 1,586. The top was recorded March 1, five months after the October 3 high, and then quickly reversed on Monday. The NASD 100 also failed to reach the October highs of 7,700, failing at 7,200.
The FANG stocks also offer clues that a top of some significance has been forming. Amazon has traded sideways forming a lower high October 3. Facebook returned to its October high after falling from 170 to 125 and then back to 170, only to reverse Thursday. Google did not manage to regain its Fall high and also reversed Thursday. Apple is the worst of the lot. AAPL toped at 230, fell to 145 and is failing now at 175. Apple has become a one trick pony attempting to sell a $800 series ten phone amid a sea of cheaper but competent competitors.
Expect a couple of days pop back up and then lower prices into March18-22. Recall that no stock market rally has ever lasted more than ten years and we are literally ten years out from March 9, 2009. October 3, 2018 therefore may be a top of some significance. Markets do not like uncertainty which is the only certain thing from Washington, DC.
The XLE Energy ETF topped at 78,fell to 54and died at its 125 day moving average yesterday. I have bemoaned the plight of the XES Energy Service ETF. It barely reached double digits and also reversed yesterday.
Gold is finding support at 1,287 and rising amid falling stock prices.
Shale producers have drilled many wells spaced too closely together. This has actually lowered overall production as one well steals from the next in the same formation. Banks are predicting higher oil prices; the XLE and XES are not.
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