Is Grandpa for Real

June 30, 2019

Weekly Market Outlook

By Keith Schneider


The performance of the US Equities markets was a mixed bag as the Dow, NASDQ 100, and the S&P 500 closed down on the week. Meanwhile the IWM which has been lagging since the fall of 2018 came alive Friday, rallying +1.6% and closed in an unconfirmed bullish phase.

The G20 meeting in Japan culminated in a meeting with President Trump and President Xi agreeing to talk more, keeping current tariffs in place but not escalating them any further, or what could be considered a timeout.

In a surprise moment, Trump agreed to ease some trade sanctions on China’s premier telecommunications  company, Huawei Technologies Co, LTD and then jetted off to an historic visit to meet with Kim  in the Korean Demilitarized Zone.

The decision to lift a trading embargo with Huawei could spark a rally in Semis and Tech and spread to the rest of the market as it is at the forefront of the trade war.

The chatter on the web regarding the market impact of the G20 meeting and Trumps meeting with Xi is very mixed. One thing is clear, there is still a trade war underway with tariffs ongoing. Agreeing to chat is not a solution but it’s a lot  better than not talking, so it’s likely that we have a grind higher assuming talks continue. Not to be a wet blanket, but it’s possible that markets were hoping for more and respond poorly.

Once again, in this environment price action is the best arbiter as we are in uncharted waters. Short term price action using the Opening Range is one of the best ways to stay flexible when large market gaps occur and markets are running on pure emotion.

This is also a perfect example of understanding how markets operate. It’s  the actual response of the markets relative to consensus expectations to news that inform us as to the true underlying trend.

(for more info about trading gaps and the opening range)

This week’s highlights are:

  • Risk Gauges remain neutral
  • Volume patterns remain neutral
  • US long bonds (TLT) have a short- term momentum divergence
  • Emerging Markets moved back to a bull phase
  • Both Transportation (IYT) and the Russell 2000 (IWM), woke up on Thursday and by Friday both closed in unconfirmed bull phases
  • The Modern family (cyclicals) improved across the board with Semis (Sister Semis) leading with the strongest TSI (trend strength indicator) while brick and mortar retail is bringing up the rear still in a bear phase

For this week's video click below.

Best Wishes for your trading!

Keith Schneider

CEO – MarketGauge.com

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