Last week: "Hm. Mixed signals here with stocks maintaining strength while safe havens soar. I'd still rather see stocks move a bit higher, but think we might see selling into that strength. Keep in mind that moves outside weekly Bollinger bands even for USA stock indexes are rare. SPY has been outside its weekly band for 3 weeks but slowing; DIA has already dropped back inside. Ideal move is stock trading high in this 7/29-8/5 window with accompanying sentiment extremes reached 2 weeks ago, then some mild pullback as safe havens test highs or higher, then we'll see. With even perma-bull Tom Lee worried about August perhaps not much damage. NDX in particular looks fantastic and ready to test all time highs."
Some right some not with general take on market correct but timing idea off. Stocks started the week higher only to see selling, quickly followed by a shakeout and 8/2 stock pullback low. Comments during the week to hold stocks above the VIX AugP and XIV YP (made on 8/1), and to watch SPY Q3R1 / AugP support, QQQ 2HR1 support, DIA AugP, and NYA AugP (made on 8/2) which all held near exact, were bang on.
Stocks set up for higher. It would be nice to see the ideal target zones mentioned just below, although whether or not this is this week or later I do not know. Simply stated bullish until we see INDU YR1 as I really think we will see that trade.
USA mains - look very healthy here and poised for higher. Ideal target zones SPX Q3R2 / 2HR1 combo, INDU YR1, NDX anything above 4816, RUT Q3R2 / 2HR1 / YR1 cluster.
Safe havens - TLT and GLD below monthly pivots acting as resistance look like they should drop further to test support, say Q3P on TLT and GLD at least AugS1 and maybe its Q3P too.
Global & other - EEM and India via PIN both moving well. EEM holding its YP has support since clearing it for the first time this year on on 7/14; then recently tested and held its YP in convincing fashion on 8/3. Oil has bounced a bit to relieve daily RSI oversold condition, but CL1 still under its 1HP so it would look much better to get and stay above that. For now, still below all pivots.
I did a long term chart comparison of TYX and NDX here. If NDX blasts through its highs and holds above, then I think that will add to boost in TYX. If we see a fade after a weak tag of 2816, then bond yields maybe still stuck.
Otherwise, we will likely see USA main index daily charts reach RSI overbought soon.
Valuation & fundamentals
Constructive - remember in late stages of bull markets valuation gets frothy and usual rules will not apply. 1998-2000 it was dot.coms and sure plenty of people called it insanity but the best strategy was to play the rally as long as you could then get OUT. Now in 2016 we are seeing global central banker / income inequality insanity and my take on the best strategy is the same. This currently applies to both bonds AND stocks.
Lots of sentiment froth has been reached in the last few weeks, although the stall from 7/14 or so (outside tech) to 8/2 low was enough to fizzle some measures. Daily Put-call is back on the higher side as we head into options expiration. But the next time we see extremes across the board, especially if we are near the ideal USA main index target zones mentioned above, would help turn that into a top.
I thought the 7/29-8/6 window was a strong one, and as it turned into a pesky stock 7/29-8/1 high quickly followed by 8/2 key pullback low. Maybe the importance of this 8/2 area will be in the safe havens key lower high in TLT and double top in GLD. We'll see.
Remaining dates for August:
8/12-13 bonds & gold
8/23-24 bonds & gold
8/29-9/1 all mkts