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Market Remains Mixed, Oil Extends on Breakout, GLD and SLV Up Upswings, Bonds Surge (Premium)

Doing the Splits

The stock market does not get any more mixed than it did on Thursday. The S&P 500 SPDR closed with a .50% gain, the S&P SmallCap 600 SPDR closed with a 1.6% loss and the Nasdaq 100 ETF advanced 1%. This was not a value-growth split, but rather a large-small split. Small-cap growth (IJT) and small-cap value (IJS) were both down over 1%. Overall, the split market seems to weigh on small-caps more than large-caps. SPY and QQQ still have upward trajectories in place since February, but IWM is largely range bound.

The stock market does not get any more mixed than it did on Thursday. The S&P 500 SPDR closed with a .50% gain, the S&P SmallCap 600 SPDR closed with a 1.6% loss and the Nasdaq 100 ETF advanced 1%. This was not a value-growth split, but rather a large-small split. Small-cap growth (IJT) and small-cap value (IJS) were both down over 1%. Overall, the split market seems to weigh on small-caps more than large-caps. SPY and QQQ still have upward trajectories in place since February, but IWM is largely range bound.

Interested in seasonality? See this article/video [1] covering the best/worst six months and the individual months with performance metrics and equity curves.

Oil Extends on Breakout

The big line chart shows spot crude breaking out to multi-year highs with a big move that really started in late March. Crude is up over 20% since late March and up over 10% the last three weeks. The big line chart shows crude breaking the 2019-2020 resistance zone. The bar chart in the upper left shows a cup-with-handle breakout. This is a bullish continuation pattern and the breakout targets a move to the upper 70s. Typically, the height of the cup (67-57=10) is added to the breakout zone for a target (67+10=77). Take targets with a grain of salt and focus more on price action for clues.

Gold Recovers After Outsized Decline

The Gold SPDR (GLD) took a big hit last week, but rebounded this week and held its rebound. The chart in the upper left shows a widening series of lower highs and lower lows since the August 2020 peak. Gold is all over the place. The bar chart shows a double bottom in March and breakout in April. This breakout started the current upswing and this upswing remains my focus. The blue lines show a rising channel to define this advance. This channel, last week’s low and the 200-day combine to mark support in the 172-174 area. I will stay bullish on bullion as long as it can hold 172 on a closing basis. A break below this level would reverse the upswing and put a lower high in play on the long-term chart (upper¬† left). The bulls have the edge right now with the Heikin-Ashi Candle chart showing a pennant. A break above 178 would be short-term bullish. Keep in mind that this is a very short-term pattern/setup.

Silver Forms Flag Near Triangle Trendline

The Silver ETF (SLV) is highly correlated with GLD and will most likely move in the same direction, just with more volatility. Personally, I think lower volatility makes it easier to chart GLD. SLV still has a big triangle working on the long-term chart (upper left). This is a big bullish continuation pattern and a breakout would target a move to the upper 30s. As with GLD, I am focused on the upswing that began in late March and support is set at 25. Short-term, SLV surged from late March to mid May and then consolidated with a falling flag or pennant. I see a flag on the bar chart and a pennant on the Heikin-Ashi Candles. Either way, this looks like a short-term bullish continuation pattern and a break above 26.3 would signal a continuation higher.  

TLT Surges above Prior High

The 20+ Yr Treasury Bond ETF (TLT) surged 3.28% the last five days and this was the biggest 5-day advance since mid June. The outsized advance in mid June 2020 led to a short pullback (3 days) and then further gains into early August. Also notice that RSI broke its bear range and hit its highest level since August. The bounce in TLT is strong and argues for further gains, but is still considered a counter-trend bounce. All five indicators in the Trend Composite remain on bearish signals. This move could retrace 33-50% of the Aug-Mar decline and reach the falling 200-day SMA (see line chart upper left).

Dollar Stalls Near January Lows

The Dollar fell to its January lows and stalled the last three weeks. A stall or even a slight rise after a sharp decline is considered a rest within the bigger downtrend (think bear flag). The green zone marks support, but I am hesitant to mark support levels because the downtrend is the dominant force at work and support is not expected to hold. Note that the Dollar is negatively correlated with the S&P 500, which means they tend to move in opposite directions.

Thanks for tuning in and have a great day!