June 14, 2020
Weekly Market Outlook
By Keith Schneider
US Equity Markets reversed course and closed down -5% for the week on average. Risk gauges followed suit and closed in risk off mode. The selloff was largely a reaction to the Feds plans regarding rates heading into in 2022. They were very dovish because the economy will remain weak, The news of low rates for the foreseeable future spooked Mr. Market. Now that is a big change, (low rates =horrific price action) and if it persists is not bullish for stocks. Seems we need some really bad news to get things back in gear. It could also mean we have hit a wall despite the flood of helicopter money from both Capitol Hill and the Fed.
Meanwhile the S&P 500 is trying hold above its 200-day moving average while the Dow Jones (DIA) and Grandpa Russell (IWM) closed under theirs. All four indexes left a nasty gap down and an Island Top. The Russell 2000 index currently only has 27% of its holdings above the 200 DMA while the S&P 500 went from above 60% to only 36% in just a few days. Gold (GLD) and Gold miners (GDX) were green for the week. Considering the Fed is looking to leave rates at such low levels it is no surprise that the yellow relic rallied with more to come.
This week’s highlights are:
So, the big question is will the short-term oversold conditions be enough to cause the market to bounce to new highs and make all the new Robin Hood players look smarter than Warren Buffet? Considering the current state of things…. who knows? Applying logic these days can be dangerous to both your financial and personal health. We are sticking to our quant models and tightening our risk for discretionary trades. For more info about our best performing quant model, click here.
Stay Safe and Best Wishes for your trading
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