Wall Street’s main indexes hovered near record highs on Tuesday despite weakness in technology stocks, with the S&P 500 heading for a seventh straight month of gains as fears ebbed over near-term policy tightening by the Federal Reserve.

The S&P 500 was down slightly for the day, but had a solid month  in August, which is typically a weak month for stocks. The S&P 500 was up 2.9% in August, the seventh  straight month of gains at just below all-time highs.

The Canadian TSX index closed down 12.03 points to 20,582.94 after setting a record of 20.703.89 in earlier trading. Just like the S&P 500, the TSX ended August by notching a seventh straight month of gains for the longest streak in more than four years.

Zoom was a big loser today, down over 16% after it posted its first billion-dollar revenue quarter but signaled a faster-than-expected easing in demand for its video-conferencing service after a pandemic-driven boom. We can see at the bottom of the chart, based on Relative Strength (RSI), it now in oversold territory, so we should see at least a temporary bottom soon.

US 10-year bonds declined slightly, meaning yield up slightly.

Gold was up 5.90, as it continues to move above its downtrend channel. Needs to break above 1835 to really have a chance at a new bull run.

Lumber has had a wild ride, rising ~280% in 6.5 months, then giving back ~75% of those gains in a little over 3 months.

Stay tuned!

The S&P 500 index set another new record high today.

Trading volume has exploded since the pandemic lockdowns and government handouts, and the explosion on volumes is being driven by retail investors.  Note the rise in 2020, and then already in 2021, with only half the year in the books, volume is on pace to be 126% higher than 2020.

Clearly, not all investors are trying to beat the market. According to S&P Dow Jones Indices,  at the end of 2008 during the financial crisis, there was just $915 billion worth of assets indexed to the S&P 500. As passive investing has become increasingly popular, assets indexed to the S&P nearly sextupled (+493%) to $5.4 trillion in 2020.

A warning signal? While the S&P 500 keeps making new highs, the number of individual stocks hitting new highs each day has been decreasing recently. The following chart shows that only 48.7% of S&P 500 stocks are trading above their 50-day moving average, down from the record high of 93% in mid April. So while the S&P 500 (gray shaded area) sets new records, less than half of the stock in that index are following that trend.

When we get this combination, it’s tends to suggest that we are closer to a top than a bottom, and that some form of sell-off is likely in the near future.

The Canadian TSX hit a new high yesterday, just down slightly today.

The $US made a new rally high today.

With $US strength, most other currencies are struggling, and the $CAD is no exception. After being the strongest major currency in the world the past year, the Loonie just fell below near-term support.

While stocks have kept rising on expectations of the economy growing post pandemic, the bond market is seeing things a little differently. Bonds have been rising, meaning yields dropping, telling us that the much bigger bond market is expecting slower growth than the equity markets are expecting.

The price of oil took a hit, based on $US strength and concerns after OPEC+ cancelled talks with no resolution.

Full update on all sectors in Sunday’s issue of  the Trend Letter. 

Stay tuned!

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The US Federal Reserve officials signaled that the pace of the U.S. economic recovery from the pandemic is bringing forward their expectations for how quickly they will reduce policy support.

Chair Jerome Powell told a press conference Wednesday that officials had begun a discussion about scaling back bond purchases after releasing forecasts that show they anticipate two interest-rate increases by the end of 2023, projecting a faster-than-anticipated pace of tightening

“The economy has clearly made progress,” Powell said, noting that policy makers had debated how far the economy has traveled toward their threshold for scaling back US$120 billion in monthly bond purchases. “While reaching the standard substantial further progress is still a ways off, participants expect that progress will continue,” he said.

“You can think of this meeting as the talking-about-talking-about meeting, if you like,” he added in Fed speak.

With the expectation of rate hikes, the bond market dropped pushing yields higher.

Stocks dropped, with the S&P 500 down 22.89 points or .54%

The Canadian TSX was flat today

$US was flat for the day

$CAD continued its decline on $US strength.

Gold took it on the chin, down $45.00, mainly due to $US strength.

Stay tuned!

To subscribe, see below for some great Special Offers on all our services.

 Trend Letter:
Since start-up in 2002 Trend Letter has provided investors with a great track record, giving exceptionally accurate information about where the markets are going, and it has explained in clear, concise language the reasons why. Using unique and comprehensive tools, Trend Letter gives investors a true edge in understanding current market conditions and shows investors how to generate and retain wealth in today’s climate of extreme market volatility.

A weekly publication covering global bonds, currencies, equities, commodities, & precious metals. Over the 20 years Trend Letter has been published, it has achieved an incredible average return of 65% on its closed trades.

Timer Digest says: “Trend Letter has been a Timer Digest top performer in our Bond and Gold categories, along with competitive performance for the intermediate-term Stock category.”

Technical Trader:
Trend Technical Trader (TTT) is a premier trading service, designed to profit in both up and down markets. Included is our proprietary Gold Technical Indicator (GTI).

TTT had another excellent year in 2020 averaging +27.3% per closed trade with an average holding time of 9.5 weeks, or +149% annualized overall.

Over the past 5 years TTT’s closed trades have averaged +40% annualized.

Trend Disruptors:
Disruptive technology trends will propel our future and the reality is that no industry will go untouched by this digital transformation. At the root of this transformation is the blurring of boundaries between the physical and virtual worlds. As digital business integrates these worlds through emerging and strategic technologies, entirely new business models are created.

Trend Disruptors is a service for investors seeking to invest in advanced, often unproven technology stocks on the cheap, with the objective to sell them when masses finally catch on. Covering Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), 5G, Quantum Computing & many more.

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The markets had a lot to contend with today. Inflation in April accelerated at its fastest pace in more than 12 years as the US economic recovery kicked into gear and energy prices jumped higher, the Labor Department reported Wednesday.

The Consumer Price Index, which measures a basket of goods as well as energy and housing costs, rose 4.2% from a year earlier. A Dow Jones survey had expected a 3.6% increase. The month-to-month gain was 0.8%, against the expected 0.2%.

Also on the minds of investors is the troublesome situation with the Colonial Pipeline, where a ransomware attack forced one of the US’s largest oil transporters to shut down, exposing vulnerabilities in America’s infrastructure and sparking gas panic buying across the southeast. The result of the shutdown is 70% of gas stations in North Carolina are out of gas.

Then there is the worst escalation of armed conflict between Israel and Palestine.

The combination of all these issues sent Wall Street running for the exits, with the S&P 500 seeing its biggest one-day drop since February. The S&P 500 was down 89.06 points, or 2.14%.

The Nasdaq was hit harder, down 357.75 points, or 2.67%.

The hardest hit US market was the Russell 2000, down 3.25%.

The Canadian TSX index  on the other hand was only down .45%.

Gold also sold off today, down 13.30 or .72%.

While we do not believe at this time that this is the top for this 12-year bull market,  it could be a turning point, where we see a significant pull back or correction. Understand that this massive bull market WILL end, they all do. Be sure you have a plan in place to protect your wealth in the event of a serious market correction. If you need assistance, our Trend Technical Trader service was originally designed as a hedging service, to actually make money on market declines.

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 Trend Letter:
Since start-up in 2002 Trend Letter has provided investors with a great track record, giving exceptionally accurate information about where the markets are going, and it has explained in clear, concise language the reasons why. Using unique and comprehensive tools, Trend Letter gives investors a true edge in understanding current market conditions and shows investors how to generate and retain wealth in today’s climate of extreme market volatility.

A weekly publication covering global bonds, currencies, equities, commodities, & precious metals. Over the 20 years Trend Letter has been published, it has achieved an incredible average return of 65% on its closed trades.

Timer Digest says: “Trend Letter has been a Timer Digest top performer in our Bond and Gold categories, along with competitive performance for the intermediate-term Stock category.”

Technical Trader:
Trend Technical Trader (TTT) is a premier trading service, designed to profit in both up and down markets. Included is our proprietary Gold Technical Indicator (GTI).

TTT had another excellent year in 2020 averaging +27.3% per closed trade with an average holding time of 9.5 weeks, or +149% annualized overall.

Over the past 5 years TTT’s closed trades have averaged +40% annualized.

Trend Disruptors:
Disruptive technology trends will propel our future and the reality is that no industry will go untouched by this digital transformation. At the root of this transformation is the blurring of boundaries between the physical and virtual worlds. As digital business integrates these worlds through emerging and strategic technologies, entirely new business models are created.

Trend Disruptors is a service for investors seeking to invest in advanced, often unproven technology stocks on the cheap, with the objective to sell them when masses finally catch on. Covering Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), 5G, Quantum Computing & many more.

Trend Disruptors has realized average annualized gains of 178% over its 3 years of service.

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