Astute Strategist Blog


Market Context

Happy Canada Day and 4th of July,

The S&P 500 started the week off at 2951 and then things looked as if the were no bulls in sight, having hit a low of 2913 in a slow yet gradual move lower and then came the rest of the week to settle a modest 10 points lower for the week at 2941. The interesting takeaways on the week, month and the quarter ends are what we notice potentially painting the real picture in the short term.

As mentioned in last weeks blog, the numbers we were watching in the Dow were all missed. For the week, 26,950, the month, 26,770 and finally the quarter, 26,615 and the mighty Dow closed at 26,599. The weakness that has been plaguing the Nasdaq is quite noticeable in FAANG members. Collecting premium via the selling of calls in Apple (AAPL) and Amazon (AMZN) were pathways to greener pastures. Closes above 200 and 1965 would have indicated a confirmed movement to the upside. Apple and Amazon closed the week, month and quarter at 198 and 1893 respectively. Could this be the lead up to the fakeout we mentioned last week? TIme will tell. Until then, even with the agreement between the U.S. and China to get trade talks back on track, for now, we would be hesitant in being buyers on this bounce.

There is an old saying, all that glitters is gold and gold certainly has had time to shine. Imagine just some 10 days ago, gold was trading below $1350/ounce fast forward to this past week and after having hit a high of $1,440 and settling $1,412 for the week, headlines everywhere are saying the return of golds bull run. We, however, are less convinced for the specific reason of where gold closed to end the week, month and quarter. We were looking for a close above $1415 or in a more bullish case $1435, we did not get either and this gives reason to believe that gold is not quite ready for its breakout.

As mentioned there is a bit of reluctance in hitting the buy button as the indexes are yet to confirm breakout signs, FAANG is illustrating temporary weakness and gold seems to be following in kind. One could simply buy bitcoin as it seems to be coming back to life but the markets are a marathon, not a sprint, so for now, patience seems to be the name of this game.