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October 3, 2020
STOCKS – SLV, USO
Macro – SPY, EWJ, EWU, EWG
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Stocks globally continue to struggle, and the struggles have been ongoing. It marks a turn in market sentiment, which is hard to ignore. Markets tend to move a group, with the ebbs and flow moving from one trading to session to the opening of the next session. Each of the major markets each seems to have a bit of there own tale to tell, but indicate the same sentiment, which appears to be a move to risk-off.
S&P 500 (SPY)
The S&P 500 tends to be the market that most global markets follow, and the weakness since the beginning of September is hard to miss, down over 7%. It is a significant shift in momentum since August when the markets seemingly only went up. But the significant change came when the S&P 500 broke its major uptrend broke, along with a substantial shift in the direction of the relative strength index.
With momentum in the index broken, it suggests the S&P 500 may have further to drop. An open gap around 2,860, is likely to be the target.
Germany (EWG)
We can see the same type of price action that has taken place in Germany, with the DAX rolling over around the middle of September. That index is down about 5% since the middle of September. But more importantly, it has been losing momentum with an RSI trending and diverging from the DAX price action since the beginning of June.
FTSE 100 (EWU)
We have seen a similar type of weakness in the UK FTSE, which has been trending lower since peaking on June 8. Again, we have seen the same measure of momentum on the RSI, with a continued trend lower.
Japan (EWJ)
Asian markets have faired better than those of Europe, and perhaps it is due to the higher growth profiles of their economies and the nature of products they produce. Japan has been one of the few markets to suffer recently. However, the Nikkei shows some recent signs of weakness, as it tests its 50-day moving average and has recently fallen below a trend line that has been in place since the beginning of August.
Oil (USO)
Oil prices have come under pressure, falling by to around $37, dropping nearly 16% since August 26.
Lumber
Meanwhile, lumber prices have sharply in recent weeks as well.
Silver (SLV)
Meanwhile, silver prices have also fallen sharply in recent weeks.
The health of the market at this point seems to appear to directionally be trending lower. The movement around the globe seems to be suggesting a de-risking event taking place. While the drops at this point have been mild to modest, we need to make sure these markets do not begin to suggest a steep decline is coming.
The NASDAQ 100 Analogy continues…
-Mike
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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