The Summer of Indifference

As I mentioned in a previous post, there doesn't seem to be much of anything that will cause these markets one way or another.  Today was yet another case in point.  Despite weaker than expected private sector job growth during July (71,000 vs. expectation of 91,000), equity markets ended the day much where it started.  The S&P 500 finished the day down 4.17 (-0.37%) to 1,121.64 after being down nearly 19 points early in the session.  Volume remained abysmal at 3.2 billion shares traded on the S&Ps.  The Dow Jones Transportation Average continued its highly volatile ways of late and outperformed the broad averages once again, falling 0.77%.  But much like the DJIA and S&P 500, the Transports did improve throughout the session and managed to close in the upper half of its trading range.  However both the Treasury and currency markets looked up this latest macroeconomic data point with considerably less optimism than their equity counterparts.  Yields fell all along the curve while the U.S. Dollar index continued its march lower with a drop of 0.55% on the day.  Energy-based commodities also got into a selling mood today as crude oil and natural gas futures dropped and closed near their session lows.  Gold, on the other hand, remained resilient throughout the day and finished up about $10/troy ounce to $1,205.20.  This is somewhat significant as this close is above the near term high of $1,203.90 that was seen July 23rd, which had provided a little resistance of late.


While I could rattle off additional statistics and random facts to fill today’s post, I’ve decided to put up a few charts I find interesting and provide a little commentary on each.  Hopefully, you’ll find something in each of them that helps color your thinking in this listless market environment.  It’s been my experience that when markets seem oblivious to the fundamental data (or at the very least conflicted about it) and trading becomes stagnant, reviewing the technical profiles of the various major markets helps to clarify this haze a bit.  And if nothing else, this exercise should at least give you some individual markets to focus on for potential trading opportunities.

Gold

As I alluded to above, gold put in a minor high close today (denoted by the green circle and arrow) that reinforces its recent move higher.  With that said, the intersection of near and longer term trend lines implies that the market is ripe for some sort of significant price move early next week.  As such, I’ll be watching this market very closely to see what actually materializes.  Given the run it’s had, the bearish nature of the longer term momentum indicators, and the approach of near term resistance levels, I suspect that any big move next week will be to the downside.

Crude Oil

Those of you who follow Fundamentally Technical on Twitter (@FundTechBlog) know that I picked up a few shares of the United States Oil Fund ETF today as a way to gain some long exposure to the crude oil futures market.  While my concerns about rising tensions in the Persian Gulf and South China Sea (I will be talking about this latter flash point in a later post), today’s price action was just the kind of trade I wanted to see.  Specifically, I wanted to see crude hold above the $80 level as this was the previous point of resistance in market.  This is exactly what it did.  I my opinion, this leaves the market relatively unhindered for a rally up to the $87 level (little bit of resistance around $83).

Transports

I’d be remiss if I didn’t show at least one chart related to equities tonight.  In truth, I could have used a chart of the S&P 500 or Dow and provided essentially the same picture of each.  Sadly, there’s not much to say.  Prices are again contained within an upward sloping price channel that was, again, held in place by today’s price action.  However, in order for this market move higher (on a technical basis), we need to see a close above the 4,518 level.  The Transports have been dancing just short of this level and seem ripe to do so in the coming week.  With that said, the longer prices stagnate at these levels without breaking through, the more concerned I will become about a pending move lower.

Another week of summer is behind us and, again, we’re nowhere closer to discerning the markets likely trend over the next month.  This is truly a traders market.  I’m still biased to the upside, but am constantly on the lookout for a reason to square my long position.  I thought that today’s jobs report might be the catalyst for markets, but that failed to live up to the hype.  With some much indifference permeating the markets, I cringe at the scale of the moves we may see if/when some conviction returns.  All the more reason to keep your positions closely monitored and highly tradable.  See you Monday!