Weekend Wrap: Friday's Pathetic Finish Prelude To Sell The News Fireworks

Stocks ended the week in a rather disturbing manner, with all the major indices limping home nearly unchanged for the day. That such a disappointment would occur on what's normally an options expiration day (it was), the lack of interest and volatility can be seen as a sign that either a) everybody who is anybody is on vacation, or, b) the market has reached saturation levels and is about to make a short term reversal.

None of the four averages followed at Money Daily closed more than one tenth of one percent from the previous day's finish. Trading was akin to a grandparent's canasta tournament. Nothing was risked. Nothing was lost. Nothing was gained.

Friday's trading can also be seen as an thumbnail sketch for the week. Within narrow ranges, the majors all finished up the week not far from where they had begun. It was simply one of the dullest weeks of trading in recent memory.

As expressed in Thursday's post, "Crossroads," there appears to be a stopping point for everything, especially the Dow Industrials at the level of 25,000- 25,300. The Dow was weakened materially in February, and, despite glowing employment and unemployment figures, plus an expected second quarter GDP estimate of over four percent to be made public this coming week (8:30 am EDT, Friday) the industrial average has yet to re-approach the previous all-time high (26,616.71, January 23, 2018).

With such a well-telegraphed number expected, a 4% GDP for the second quarter is likely already well-baked into most portfolio cakes, thus it may be wise to sit out this particular glowing government data headline release.

That the new high event continues to fade into memory without the Dow making a significant rally attempt tells a great deal about current market conditions. It signals that there is something seriously damaged in the economy, and it's probably not confined to the United States, since the central banks have acted as first-movers and lenders of last resort since 2008-09.

Change is afoot, and with change there are usually winners and a good share of casualties along the way. A major shakeout in the market is long overdue, despite the united forces of central banks forestalling such a watershed event. This has been the overriding theme of the past decade. While it may not end this week or next, it will end, and the result will be a general decline of 30-50 percent in major stock indices.

Otherwise, all the math in the world can be throw out the nearest window.

In the meantime, trade cautiously with an eye on fundamentals, which eventually will guide the way.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95
7/17/18	25,119.89	+55.53	+848.48
7/18/18	25,199.29	+79.40	+927.88
7/19/18	25,064.50	-134.79	+793.09
7/20/18	25,058.12	-6.38	+786.71

At the Close, Friday, July 20, 2018:
Dow Jones Industrial Average: 25,058.12, -6.38 (-0.03%)
NASDAQ: 7,820.20, -5.10 (-0.07%)
S&P 500: 2,801.83, -2.66 (-0.09%)
NYSE Composite: 12,789.91, +3.43 (+0.03%)

For the Week:
Dow: +38.71 (+0.15%)
NASDAQ: -5.78 (-0.07%)
S&P 500: +0.52 (+0.02%)
NYSE Composite: +20.41 (+0.16%)

Crossroads

The best version of the Cream´s Classic ´´Crossroads´´ from the 1968 Album ´´Wheels of Fire´´ even though the video is from the live concert at Winterland.

Simply put, if the Dow cannot close above 25,335.74 (March 9, 2018) the existence of a bear market will be on full display.

Granted, that number is more than 1300 points below the January 23 high of 26,616.71, but the point is this secondary high has yet to be exceeded, despite at least four (probably five) attempts.

Assuredly, the US economy is currently healthy and robust, but so are the warts and wounds, the result of many years of mismanagement. The Fed, working against expansion via its selfish balance sheet reduction scheme and relentless interest rate hikes, adds fuel to the eventual deflationary fire.

Today's nosedive - only the third negative close in 13 trading days this month - may have been nothing more than consolidation (profit taking), but the trading level is suspiciously bearish, considering the failed highs of the past four months.

Keep eyes on the numbers. The have been, and will continue to provide significant market signals.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95
7/17/18	25,119.89	+55.53	+848.48
7/18/18	25,199.29	+79.40	+927.88
7/19/18	25,064.50	-134.79	+793.09

At the Close, Thursday, July 19, 2018:
Dow Jones Industrial Average: 25,064.50, -134.79 (-0.53%)
NASDAQ: 7,825.30, -29.15 (-0.37%)
S&P 500: 2,804.49, -11.13 (-0.40%)
NYSE Composite: 12,786.48, -36.75 (-0.29%)

Dow Rally Continues Through Fifth Straight Session

The beat goes on...

For the month of July, the Dow Industrials have closed to the upside on 10 of the 12 trading sessions (five in a row) and is up nearly 1000 points over that span.

Conventional wisdom would suggest that this kind of winning cannot be sustained over the near term.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95
7/17/18	25,119.89	+55.53	+848.48
7/18/18	25,199.29	+79.40	+927.88

At the Close, Wednesday, July 18, 2018:
Dow Jones Industrial Average: 25,199.29, +79.40 (+0.32%)
NASDAQ: 7,854.44, -0.67 (-0.01%)
S&P 500: 2,815.62, +6.07 (+0.22%)
NYSE Composite: 12,823.23, +44.01 (+0.34%)

Fed Chairman Powell Mastering Greenspan-speak; Some Investors Pleased, Others Confused

Fed Chairman Jerome Powell was grilled today by members of the Senate Banking Committee, and was asked by senator Pat Toomey of Pennsylvania about the flattening (or tightening) of the yield curve.

Toomey expressed his question to the Chairman, thusly:
“Some people are concerned that a flattening curve or inverted curve correlates with economic recession. Here’s my question: does a dramatic change in the shape of the yield curve in any way influence the trajectory you guys [the Fed] are on with respect to normalizing interest rates and the balance sheet?”

Quoting Chairman Powell's answer from the story:

“I think what really matters [about the yield curve] is what the neutral rate of interest is,” Powell said.

“And I think people look at the shape of the curve because they think that there’s a message in longer-run rates — which reflect many things — but that longer-run rates also tell us something, along with other things, about what the longer-run neutral rate is. That’s really, I think, why the slope of the yield curve matters. So I look directly at that.”

Literally, Powell did not answer the question, taking a page from the master of obscurity, mumbling, and ambiguity, former Fed Chairman, Alan Greenspan, who was notorious for answering questions and outlining positions in such an arcane and circuitous manner that it took the likes of William Safire to figure out just what he was saying, and even then, nobody was absolutely certain their analysis was correct.

Powell's rhetoric appeared to be pleasing to stock jockeys on Wall Street, who bid up prices a bit on the day, closing at its best level since June 14 (25,175.31). Perhaps Powell is embarking on a back-to-the-future nomenclature for the Federal Reserve, wherein the general public is to stand in awe of the special powers of the central bank and not question its motives.

That's how it was before and during Greenspan's reign as Chairman and maybe it might not be such a bad thing for the Fed to be less engaging and transparent today.

After all, nobody really understands what the Fed is talking about, including the Fed governors and presidents of the regional Fed banks, so why bother to try to explain it all to ordinary plebes, whose only wishes are to be left alone and offered a reasonable return on their investments?

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95
7/17/18	25,119.89	+55.53	+848.48

At the Close, Tuesday, July 17, 2018:
Dow Jones Industrial Average: 25,119.89, +55.53 (+0.22%)
NASDAQ: 7,855.12, +49.40 (+0.63%)
S&P 500: 2,809.55, +11.12 (+0.40%)
NYSE Composite: 12,779.22, +30.44 (+0.24%)

Summer Trading Is Typically Slow; Precious Metals Hammered Of Late

Low volume and tight ranges on all the indices are telling the obvious. It's summer, many large traders are off to vacation spots, investors are sitting pat, and, despite it being the heart of second quarter earnings season, there simply isn't anything to get truly excited about, either on the bull or the bear side.

The Dow spent the entire session within a 90-point range, never falling more than 40 points from the pervious close, finishing the day with a modest gain. The Dow has finished higher eight of the 10 trading days in July.

There's more action in commodities of late, especially in the precious metals, which have been sliding for the past month after peaking short-term in mid-June. Silver slipped below $15 per ounce last week and has been trading in a tight range between $15.70 and $15.95. It appears that hopes for a rebound in real money have been dashed once again and gold also is trading at a one-year low, $1240 per troy ounce.

The price of crude took a hit today as well, with WTI finishing below $68 per barrel for the first time since June 25. The market is fully saturated and demand is flat, so prices should move down gradually for raw crude as well as gas at the pump.

This is really one of the more disinterested or distracted markets in some time. Likely, it's best to sit and wait for some indicator to signal direction.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95

At the Close, Monday, July 16, 2018:
Dow Jones Industrial Average: 25,064.36, +44.95 (+0.18%)
NASDAQ: 7,805.72, -20.26 (-0.26%)
S&P 500: 2,798.43, -2.88 (-0.10%)
NYSE Composite: 12,748.78, -20.73 (-0.16%)