"The most bullish thing the market can do is go up."
- Paul Montgomery
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Remember that June 16th issue of The Quotedian titled “The Wall” (click here)? Well, dear fellow market-sufferers, the Nasdaq 100 just climbed to the top of the Wall of Worries:
And what was the wall-builders’ immediate reaction to this new all-time high in the Nasdaq? Exactly! Put two extra-layers of bricks right on top of the wall again, this time in the form of questioning the effectiveness of the US bombing in Iran and a possible rising internal dispute at the fund.
And so it begins continues …
The S&P 500 did not achieve a new ATH, but still put in a formidable 1%+ run yesterday and with less than a percentage point to go, no doubt we will see new highs in due course:
Ever more so as yesterday saw very strong breadth again, with the advance-decline ratio reading 3:1 and nine out of eleven sectors up, for a second consecutive session.
Our internal indicator of stocks hitting new 52-week highs versus those hitting fresh 52-week lows was very one-sided too (S&P 500):
In bond markets, duration got bid as yields sold off after Fed Chair Powell at his semiannual policy testimony had hawkish prepared remarks, but then delivered a more dovish Q&A session.
Though bottom line he insist that the tariff effects will still translate into inflation and he is no rush to lower key police rates. This is in stark contrast to two of his FOMC voting colleagues (Waller and Bowman) who both this week called for a Trump-pleasing July cut.
Guess who is up for (re)election as FOMC Chair and who is not …
A direct ‘victim’ of the Israel-Iran truce and pressure on the FOMC to lower rates is the US Dollar, which is once again on the verge of a major breakdown (Dollar Index - DXY):
As a matter of fact, on the EUR/USD chart you could argue that Euro breakout (Dollar breakdown) has already happened:
Oil, unsurprisingly(?), has completed its two-weeks round trip:
And finally, Gold’s consolidation period seems to be becoming more complex and more prolonged. Maybe sentiment did indeed get a bit overheated:
Time's up, more tomorrow - May the trend be with you!
A year ago we observed and discussed how the relative ratio of Technology stocks (XLK) to the overall market (SPY) was topping out at pretty much the same level it had over two and a half decades ago when the Dotcom bubble burst. Now, that ratio is rapidly approaching that same resistance line again:
Are we in for a mega cup-and-a-handle pattern? Stay tuned …
