Another Up Monday

On Monday, the stock market decided that lower oil prices, due to Ernesto avoiding some of the main oil rigs in the Gulf, were the panacea that would cure the ills of the past few trading days.  Yes, the stock market was up on Monday but not by enough to call it a win for the bulls.  Certainly, news related advances will not be sustained.

We are presuming that this week we will get light trading and today’s volume (NYSE) was just a little more than last Friday.  The volume is generally lower during these late weeks in August but this year’s volume is 10% less than for the same period a year ago.  

Tuesday brings us the August Conference Board consumer confidence figure and after hours the ABC/Washington Post consumer confidence for August.  We expect continued weakness in these numbers and the market probably expects weakness as well.  We’re not thinking that these numbers have much chance of moving the market—but we could be wrong.  The big report is Friday when we see that jobs’ report, we’re trying to be patient with the market this week.

There are a few items to cover this evening.  The first is the rally on Monday.  We did kind of expect a little pop to complete the recent pattern.  The trading of last week seemed to suggest there would be a final new high for this move surpassing the highs we saw two weeks ago.  

We know it’s easy to predict what’s already happened, but it was Monday and Monday’s are supposed to have a little lift to them.  What intrigued us was the pattern was similar across the major indexes we follow.  Monday’s action allowed the SP500 and, later in the day, the Dow to surpass the peaks made a few weeks ago while the NASDAQ indexes, Comp and NDX, did Not follow their lead.  Of course, they could follow suit but they certainly do not have to.  They could just be declaring that the Dow is again showing strength whereas the broader indexes are not following.  So, potentially, the move we saw during the day on Monday is the high to complete the pattern.

Next, we would direct your attention to the True Contrarian’s site where he gives a long term outlook on some of the various markets we follow.  The main item for consumption is his call for the precious metals complex.  He is looking for a dip to around 248 for the HUI which currently sits at 336, that’s close to a 30% drop and he thinks that it will happen this year.  Take a look by clicking on the link to the left.

Third, we continue to watch the Treasury bond rally, a recent steady move that seems to correlate to the Fed’s Pause at their last meeting.  We still like the Treasury bond market and think there is some upside potential as the stock market drops into the end of the year.  There will be some point that we will exit these bonds and get into something else, like precious metals but for now, we wait.

Last, we remind you to take a look at the high water marks we mentioned in our last post to get an idea where the current ceiling for prices is: the April/May highs.  We think they are strong ceilings and will not be broken for a long time.  

Dow Industrials:  11,352.01  +67.96
QQQQ:  38.61
RYVNX:   21.74
RYAIX:  24.15
RYCWX:  41.69
TLT:  87.52
BEGBX:  13.71