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August 11, 2020
STOCKS – 700HK, UNP, JPM, UPS
MACRO – SPY, QQQ, COPPER, XLI
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Stocks are rising this morning; on what appears to be around a Russian coronavirus vaccine. Ok. Outside of that, I’m not sure why there is a bid in the market. It started as soon as Asia open and carried into the European trading session.
The markets in Asia, outside of South Korea, have struggled in recent trading as has Europe. So perhaps some of today’s move higher is a reflexive rebound. At least based on the Nasdaq 100 futures, today’s movement hasn’t changed much from the current trend in the overall US market.
S&P 500 (SPY)
Meanwhile, the S&P 500 futures are at their highest level since February. The Futures are technically overbought at this point; it feels to me that we could be setting up a gap and fill day. Meaning we gap higher at the open and then work our way lower the rest of the morning/day to fill that gap.
Copper prices are once again falling, despite all of the Russia vaccine hopes. It is essential because copper prices have struggled to advance beyond $2.86 the last two days after the big break down on Friday. Again, copper is a big part of the risk-on trade.
Additionally, despite a vigorous session in HK, the global Tech trade remains under pressure, with 700 HK unable to mount a strong rebound.
It means that the XLI will need to rise further to keep the rally in the S&P 500 going. It is rising already, and gaping higher to around $78. Has it broken out? Maybe, we will see where it closes.
Union Pacific (UNP)
It means that Union Pacific will need to break out and cross above a severe level of resistance at $189.
It will mean that UPS will need to make more record highs and continue to extend itself.
It means that JPMorgan is going to need to break out and rise above resistance at $105.
Just remember that Tech is 33.8% of the SPY, while financial and industrials combined are 22%. So we are going to need those sectors to continue to see massive daily gains to keep the S&P 500 moving to higher levels if Tech isn’t going to participate.
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