Weekend May 19, 2019
94% of the world's bicycles are made in China, now they are 25% more expensive. An op ed this weekend reports on the problems of mid west soybean farmers in the US.
Trump lifts metals tariffs on Mexico and Canada but I am guessing the Dems block approval of the new NAFTA before the election.
And the DJIA failed to take out 26,000. A recent article suggests all of this has been a dead cat bounce.
Those who bought thousands of points back now rally the market to recent highs. In that way they unload their purchases at high prices to the late comers.
I would suggest what has happened is distribution since January 2018.
Let's look at that chart again.
Two Year Weekly
The blue arrows at top show resistance this is as far as the buyers seeking to be sellers could push the average. Then it sells off. The far right arrow is a lower high than the previous two. Those distributing stock are running out of buyers. And notice this is confirmed by the much lower PMO at bottom.
Transports
Transports made much lower high on the recent rally. All of this suggests a correction into June. And that may simply be the start of multiple stair steps down ala 2000-2002.
AMZ AMZN records a lower high as well. And notice the low level of PMO here.
FB looks much the same.
And the poor performance of Uber and Lyft suggest waning interest in buying IPOs.
Emerging Markets
Here is another example of markets peaking in January 2018 with distribution taking place since. The high two weeks ago takes on a lore more significance with the failure to rally since.
And as mentioned last week we are now at the typical seasonal high, after May go away. That looks to be the case this year.
TLT Bond Market
The rally in bonds looks overdone. Rates may be near the lows for this run.
Ten Year Yield
Ten year yields have fallen to the 200 week MA but are still above the 2016 low.
if this were the chart of a stock it is getting close to an important long term buy level. Kudlow and Trump are wrong, Powell is right, this has been the first of a correction in long term rising yields. And the reason is fear of default as in Tesla.
Gold has not rallied and continues to disappoint. It is probably headed to the e 200 day MA at 1250. Tom McClellan suggest 1210 based on a break of the head and shoulders top.
Silver
No one is interested in silver. The collapse gathered speed this week. Looks like it is headed back to 14. Silver miner shares are really in the dumps.
Crude oil
rude oil is finding support at its 200 day MA. Attacks on shipping via Iran and Venezuela has helped buoy prices.
The increased tariffs on LNG are keeping natural gas futures at 2.60.
Social Mood
And de Blasio makes 23 Dems now running.. The WSJ interviewed New Yorkers and one suggested announcing April 1 April Fool's Day would have been appropriate as NYC
continues to fall apart.
It is hard to see how one of the 22 are going to overcome Biden's 20+ point lead.
The Dems begin their debates in June and expect the language to be particularly vicious towards Trump, as most have nothing to run on.
Our bottom line is that markets are distributing stock making a 18 month top of some importance. Social mood trends negative.
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