Investing for Survival: Monday Morning Chartology

Monday, August 31, 2015

Monday Morning Chartology

The Morning Call

8/31/15

The Market

Technical

I don’t need to point out that the S&P had an extraordinarily volatile week. However, it ended as it had begun the week---below its 100 and 200 day moving averages and in a short term downtrend. I marked the 1970 level which many technicians are watching as a critical level.

The long Treasury has a rough week, negating a very short term uptrend. However, as I have been discussing, much of the poor pin action has been a function liquidation of Treasuries by the Chinese and emerging market central banks---not the expectation of improving economic activity. Although it clearly presents a dilemma to the Fed because these transactions are effectively a tightening of Fed policy.

GLD was up 1% on Friday, reversing Thursday’s challenge of the lower boundary of its very short term uptrend. The bounce is a positive sign that a bottom may have been made. Given the volatility of late, I am hesitant to get too jiggy about this. But I am now watching for an entry point.

Oil is challenging the upper boundary of its short term downtrend; if it remains there through the close on Tuesday, the trend will re-set to a trading range. Like GLD, it may be trying to make a bottom.

The VIX appears to be telling us that there is a lot more volatility to come; meaning patience. And whether you are a bull or a bear, make our bets small whatever you do.