This week….. - A hitherto unknown bank in #Portugal, Banco Espirito Santo, caused the stock markets to roil this past week. By Friday, however, the market determined that things were not as bad as it seemed and the market rose. European stock markets were hit hard and their short term trends have turned negative. So is this just another little shot across the bow making a lot of noise and signifying nothing? The bull market may be long in the tooth but until it breaks the bull remains. A break under 1,950 for the S&P 500 could suggest a small correction but a break under 1,860 and especially under 1,800 could signal the end of the bull market. The market is a long way from the latter. The negative divergences continue but they are just a warning sign not a sign that a top is in. - If the stock markets pulled back bonds rallied following the #Euro zone banking problems. A treasury bond issue of $61 billion of notes and bonds was snapped up. But there remains numerous negative warning signs for the US #economy. And it is somewhat disconcerting to learn that the Fed has purchased some 80% of Treasury bond issues in 2014. That has helped keep bond prices in a bull market thus far. - #Gold, #silver and the gold stocks were up again this past week as they responded positively to the troubles in Banco Espirito Santo. Bullish sentiment is rising but is not yet in the danger zone. The commercial COT has fallen sharply over the past couple of weeks offset by a sharp rise in the large speculators #COT. That is discussed. On the surface the switch in the COT appears negative. Gold needs to take out 1,370 to suggest higher prices. A break under $1,315 would be negative. - The #US$ went nowhere this past week and neither did the Euro despite the travails of Banco Espirito Santo. - #Energy prices fell again as things calmed in Libya and there appeared to be no threat to the important port of #Basra and the Basra oil fields in the south of Iraq. On Sunday a news story came out that there was fierce fighting at #Tripoli airport in Libya. So Libya might once again be roiled and help push oil prices back to the upside. The energy stocks appeared to break their recent bull channels.
Posted on: Mon, 14 Jul 2014 12:15:30 +0000
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