Here we go again … Another crisis of confidence, even as the penultimate geopolitical event unwinds from open hostility to verbal aggression. Russia and Ukraine seem to be moving toward some sort of pact that will bring some peace to that region. So what? That news is so last week anyway.
How about that China, then? Seems it never loses its power to contribute to the constant wall of worry that confronts the market. Heck with that loser. What about the Eurozone? Seems Mr. Draghi is not so optimistic about the near-term economic future of the 18-country bloc. Then again, when are central bank leaders ever truly optimistic? Well, whatever, nothing will change until something changes. How’s that for a pearl of wisdom?
- Between the low VXN and VIX, the lethargic bullish effort, the fact that stocks are overvalued overall, and how little it would take to pull the rug out from underneath the market, the market’s too vulnerable to a pullback to get into new long trades now.
- NAAIM’s managers appear to be waiting for some “oomph” before making further commitments.
- While the Dow and S&P 500 did make new all-time highs last week, there continues to be a fair amount of underlying weakness in the market.
- Specifically, leadership is exceptionally narrow and there are classic divergences cropping up – both of which tend to occur during a topping process.
See where I am going here? The market is funky because the market is in a funk – it just can’t get any respect. And why should it? It dresses up, picks us up in nice car with promises of a swell time, drives up the block, stops, puts the car in reverse, goes backward to the pickup point, and then says get out. The S&P 500 is, once again, below 2000.
- It’s all about weighing the odds, and determining what the market is capable of given this particular scenario.
And what is the market capable of given this particular environment? Not much, I gather, after all, it has no big reason to go forward and the general sentiment is, at best, “wait and see.” In fact, money is flowing out of commodities futures, the mecca of high risk/reward in the market. Along with technology and small caps, commodities are losing steam, which suggests a risk-aversion mindset. Gambling is losing favor among the biggest of the high-rollers.
- Net-wagers across 18 U.S. traded commodities dropped 2.2 percent to 500,421 contracts as of Sept. 16, the lowest since August 2013, CFTC data show.
Yup, the bettors are pulling their bets on what has been a sure thing for some time. Now, gold, oil, and crops are no longer the go-to guys. Prices are dropping and those who bet big on a bullish future are now looking to make a buck on shorting the future.
- A measure of net-long positions across 11 agricultural commodities was at 244,803 contracts, up 3.2 percent from a week earlier, the government data show. Holdings are down 78 percent from this year’s peak in April.
- Hedge funds extended this year’s longest exit from bullish gold bets as slumping prices and investor outflows since June erased $7.16 billion from the value of exchange-traded funds backed by the metal.
- Crude Oil tumbled 38 points to trade at 91.28 while Brent Oil gave up 68 cents and is trading at 97.71 as both oils look for a bottom with lower demand and a drop in implied demand.
So, range-bound we remain. The only difference between now and, say, two weeks ago, is we have higher top and lower ends of the range. The ceilings and floors have changed, but the wall remains as it was – a wall of worry. A wall, by the way, the market is reluctant to climb too quickly.
Trade in the day; invest in your life …
