October 6, 2019
Weekly Market Outlook
By Keith Schneider
A noteworthy development was that the benchmark small-cap (IWM) index had a death cross and entered a confirmed bear phase from which it was unable to recover.
On the lighter side, markets seem to have found support at August lows, and it might have some bounce left in it before it runs into major overhead resistance.
In fact, the IWM had a short-term reversal pattern known as a bullish engulfing pattern.
Disappointing ISM numbers on U.S. manufacturing along with weak manufacturing numbers from Germany (their automotive sector has stalled) had the market in full retreat until Friday’s U.S. unemployment figures were released.
The numbers were strong enough to keep the unemployment rate at 50-year lows.
However, recent job growth was not that strong, so it’s keeping hopes alive that the Fed will cut yet again.
Unicorn IPO's such a LYFT, UBER, and PTON (Peloton) all got hammered, and they did not have nearly the bounce that the key benchmarks had.
The market is awakening from a long period of delusion predicated on negative interest rates on 15 trillion dollars of sovereign debt.
This week’s highlights are:
The current global economic environment does not seem sustainable longer-term as the unintended consequences of negative rates, and shifting global power are playing out.
One way to play in this scenario is to have the proper process and methods.
One core ingredient to effective trading and risk management is measuring momentum since momentum often precedes price.
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Best Wishes for your trading!