It's Getting Hot in Here

July 24, 2016

Weekly Market Outlook

By Keith Schneider


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All four key US equity indexes posted modest gains with the S&P 500 hitting new all-time highs despite having to digest the monster rally off the June Brexit lows.  The tech laden NASDQ 100 which stalled this year, has staged a nice snapback rally and while still lagging other benchmark indexes is making up lost ground.

US Equity markets seem to be immune to the constant barrage of negative geopolitical news. Sentiment indicators are showing signs that they are in alignment with record breaking heat wave here on planet earth. The Dow had 9-day winning streak which has only occurred seven times since 1980 and is a sign of just how hot US equities are and of trend persistence.

Turkey has seen its stock market plummet post-coup as soon to be “President for Life” is stamping out all political rivals, economic activity and democracy as well.  Turkey is a key NATO member but with events spiraling downward its reliability as a western ally could be in question.  Hello Vladimir! Turkey can forget about EU status if it re-instates the death penalty.

Consistent with geo-political turmoil and uncertainty is that the monthly survey conducted by Bank of America of large fund managers shows that investment managers are still sitting on piles of cash at levels higher than 2008 when Lehman went bankrupt

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Since this works in an inverse fashion, this indicator is bullish for stocks. Amazing since this condition remains so, even after this 20% rally from the Februarys lows.

Gold Miners are up 120% over the past 6 months. They cooled off this week along with Gold and Silver while Semiconductors led the advance, now the leading sector.