The S&P has capped its post-crisis recovery to reach new highs; and in spite of how rapid the climb has seemed, it is not very different from the trajectory off the 2009 crisis lows:
We continue to be basically bullish on U.S. stocks. Technology continues to move ahead, while cyclicals and financials remain challenged; the NASDAQ is acting better than the market as a whole.
Still, U.S. markets are high and can correct at any time; we will probably have to wait until mid-September before the Fed signals more asset purchases.
While U.S. stock markets are doing better than others, we note that we are still long-term bulls on India; we are not alone, since U.S. tech giants continue to make major investments as they seek to crack the Indian consumer market. Besides the slow move to better realize India’s long-term potential which got underway when the BJP took power, India also stands to benefit as global trade ties and supply chains realign under the pressure of the ongoing conflict between the U.S. and China.
We note that Wednesday, August 19 was a Bradley cycle date; Tuesday was a Phi date. These are two of the many cycles monitored by traders, which some believe can indicate changes or confirmations of trends. The near occurrence of two closely watched cycle dates may be significant (and even the skeptical should not underestimate the power of self-fulfilling prophecies; market volatility is a crowd-sourced phenomenon). The two days following a Bradley date can be critical in deciding whether a trend changes or is confirmed. Tactically oriented traders should be aware of these dates and may wish to raise cash ahead of them.
Gold’s current correction from its spike high is normal, and could last for a few weeks. If Fed asset purchases continue (which we anticipate they will), gold should continue to move higher, since real interest rates will be below the inflation rate. The Fed’s indication that negative nominal rates are off the table is part of the reason for gold’s correction.
Thanks for listening; we welcome your calls and questions.
