Buzz on the Street: A Volatile Market Welcomed Investors Back From Vacation
A look back at the happenings on Wall Street this week, as seen by Minyanville's Buzz & Banter.
Here is a small sampling of this week's activity in the Buzz.
Monday, September 2, 2013
Markets closed in observation of Labor Day.
Tuesday, September 3, 2013
S&P (INDEXSP:.INX) 1660 (50-day and horizontal resistance) and S&P 1675 (downtrend/lower highs) are resistance to the upside if we see a "gap and go" (if the higher levels hold for the first 30-60 min).
If we "pop and drop," S&P 1640, S&P 1600 and the 200-day at 1560 will come into play through a technical lens.
Gold (NYSEARCA:GLD) has room to $1500 before it collides with the downtrend (technical resistance). Back-of-the-envelope, I figure there's $50 worth of Syria angst in the current spot price.
Why? The specter of geopolitical unrest in the Middle East--aside from it being an unfortunate evolution of social mood--is on the margin constructive for both gold and crude.
Deflation is the other side of that trade, which makes both risky investments. See both sides--or should I say, see all sides--as we edge back into the world's wildest reality show.
Click to enlarge
IWM Train Tracks
There are possible Train Tracks on the 10-minute iShares Russell 2000 Index (NYSEARCA:IWM) following this morning’s short-term breakout.
See a 10-min IWM chart below.
This week ties to the beginning of the Gann Panic Window counting from the August 2 S&P 500 high. Of course, that same count was derailed in early July on the countdown from the May 22 high.
It is worth keeping in mind that on the clock from the August 25, 1987 high to that year's October 14 through October 19 crash, that early October saw the largest one-day Dow Jones Industrial Average (INDEXDJX:DJI) gain to that point in history.
Most players at that time assumed another pullback low had been installed.
Click to enlarge
Negative Real Rates Coming Soon?
I continue to believe that the Fed will either not taper this month or taper very little to show the market procedurally just how they would step away from bond buying. Gold and silver (NYSEARCA:SLV) may be of the same opinion, given their uptrend and strong outperformance as of late. As bond yields have spiked in the face of lackluster inflation expectations, the market automatically assumed that a postive real rate environment was here to stay, ignoring the very real underperformance of Homebuilders (NYSEARCA:XHB) all year, which has not been a vote of confidence for housing going forward.
With markets wobbly due to Syria, Oil, and Summers (SOS), the Fed likely will not risk the wealth effect. The yield spike this year remains a risk that stocks can act to with a lag in a very ugly way, and it remains to be seen when the after effects may be felt. That means the Fed probably can't step away that quickly, which in turn likely keeps the previous metals bid alive. If indeed the yield spike has been too extreme, a reversal could just as easily happen.
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