It’s a trick question, as every new high is technically a double top for at least a few moments. But, here, we’re talking about the prospects of something more significant.
Like so many before it, the April 11 Death Cross was a head fake, signaling a concerted effort by the administration and their supporters to support markets (after crashing them.) Now, the 50-day SMA is about to cross above the 200-day, signaling a Golden Cross.
At the same time, we can see numerous technical and chart challenges facing the markets – issues which were never resolved, but merely postponed. These challenges suggest a double top isn’t out of the question.
Which one will prevail?
continued for members…
Historically, market manipulators have made good use of the July 4th holiday and 3-day weekends to ramp stocks past overhead resistance. And, there is definitely some here to consider.
For instance, VIX and VX are still bottoming, but there’s a fine line (literally) between a bottom and a breakdown.
Bulls should also be concerned with currencies. EURUSD and DXY have reached our targets. But, a further breakdown by DXY (breakout by EURUSD) would worsen inflation. Also, USDJPY is teasing a breakdown – not helpful for stocks.
Then, there’s CL and RB to consider. A further collapse in DXY could boost CL and RB right back out of their falling triangles, which could further boost interest rates at a time when the market is dependent on lower rates.
And, speaking of lower rates, it’s something that we’ve been charting for a long time. The 10Y is approaching our 4.14% target, and a break below that would open up 3.94% and 3.61% by August and 3.25% by the end of the year – moves that seem unlikely unless stocks are headed South.
On another topic, most members are aware that I’ve been battling colorectal cancer for the past couple of years. I have enjoyed a period of good health, but it has never completely gone away. I will be starting a new regimen of chemotherapy in August, so am taking the opportunity to enjoy an extended vacation with my family during the month of July.
This is something we’ve wanted to do for a while, and now that the youngest member of our clan has graduated college and is still free from the burden of depositing paychecks, the timing is right. I will be watching markets, but will not be able to post every day. My plan is to post weekly unless something major happens during the week.
We’ll get a lot of important data this Thursday, and critical CPI and PPI data around the middle of the month. I’ll try to time my posts around these data. I will also check email only at the end of the day, and will occasionally take a day or two to respond.
For those of you in Europe, please reach out if you’re interested in getting together.
Stay tuned.