Right now, the FANG stocks are getting hit. The question is whether there will be follow through. But other sink holes in the market are developing. The Transports got smashed on Thursday and it was only three weeks ago they gave the Dow a Dow theory confirmation when both went to new highs. On Thursday and again Friday the Dow itself hit new all-time highs. You see the trannies going the other way so this is becoming the classic non-confirmation.
Another week, another failed attempt to go down. What happened this time? I almost don’t remember. First, the health care debate was going to be delayed due to Senator John McCain’s operation to remove a blood clot from his brain. We later found out McCain has an aggressive form of brain cancer, and that shocked the nation.
The main U.S. stock market indexes gained between 0.4% and 0.6% on Friday, extending their short-term uptrend, as investors' sentiment remained bullish following recent economic data releases, among others.
It’s been a long season of disappointment for the bears. Chalk up another one. Once again, the Dow came to edge and didn’t jump. Tuesday was the big day. Markets started dropping like a rock on the apparent news of yet another “Russian collusion scandal” involving Trump’s son. You know all about it. But by the time it started turning up news broke the Senate decided to stay in session for the better part of August. Markets turned up and fully recovered.
At her testimony yesterday, Fed Chair Janet Yellen came across as more dovish than expected. The dollar fell sharply as investors were reminded that future rate rises will be rather gradual. Stock markets love low-interest rate levels and for that reason, they were able to rise sharply which lifted the Dow to a new all-time high. Investors also liked the look of the latest Chinese trade figures that were released overnight.
"Dow Theory" refers to a method for analyzing the stock market originally fleshed out by Charles Dow in a series of editorials all the way back in 1900. The theory has been further refined since then, but the basic tenets of Dow Theory form the foundation for much of the technical analysis conducted today.
Here’s the good news, 8,000 jobs were attributed to mining and any jobs in that beaten down arena is welcome. But 37,000 jobs were attributed to health care. Why isn’t that good? Some of you will recall the only reason Obamacare exists is that Fannie Mae and Freddie Mac have been looted to the tune of billions. It is called “Net Worth Sweep.” It was first reported months ago by Jerome Corsi but confirmed several weeks ago by Mnuchin on the Maria Bartiromo show.