Week 40 Stock Markets Trending

I was out for a few weeks on a well-deserved vacation. I was active in the markets but not posting my research notes. I am back this week to take us through the rest of the year and beyond.

Major Markets

It is not hard to guess that all the major markets are trending perfectly bearish. We have seen this picture several times before and the expectation every time has been that it is time for the markets to rebound. However, each time the markets have tried to rebound, it has failed.

We will need to be patient of course as we know that one of these rebound attempts will succeed. We just do not know which one and when. Keeping an eye on the trends regularly helps us understand if the rebound attempt is working or we are just getting slammed by the bears again. That is why I do this trending analysis. It is essential for deciding on capital deployment.

Meanwhile, for aggressive investors (traders) the current markets are a huge opportunity to make short-term income. In fact, played well, one can generate their entire gains in a short time frame. I will go over that in a separate note where I will discuss options strategies, I use to take advantage of the volatility in the markets.

Sectors

Everything I would expect to see in the above picture. Energy looking good and everything else not so. Although the precious metals SLV, GLD and the gold miners GDX caught my eye. Also, Homebuilders and Metals & Mining looking better than the rest.

Here is the GLD 1-month chart. It is flat over this period. It was rising steadily over the last 2 weeks but then the last 3 days has given up some of the gains.

I also like to see the relative performance of GLD with the Gold Miners GDX. And also, relative performance with SLV. Here is that comparison.

So, GDX and GLD moving quite similar. However, SLV has an outsize performance comparatively.

Global Markets

The picture above tells the story. Everything looking bearish expect for Turkey and Brazil. Both of these have been very choppy. So, not sure if the risk reward is good to do any trades in them.

Summary

It remains a bearish market for now. The markets still seem to be looking for any catalyst that would be reason to reverse the sentiment. So far, that has not been forthcoming from the Fed. All eyes will again be on the economic data coming in next week for any indication that the Fed may consider slowing down their rate increases.

I remain out of the markets in my retirement accounts. And continue to work short-term range bound options trades in my trading account. Goven the volatility in the markets I continue to believe that is the best strategy. So, will stick to it next week as well.