THE WEEKLY TOP 10
Table of Contents:
1) Don’t party likes it’s 1999.
2 & 2a) Narrow rallies are not healthy rallies (so it IS something to worry about).
3) The dollar has much further to bounce.
4) Higher dollar = more headwinds for several VERY overbought commodities.
4a) Lumber is the most overbought it has EVER been.
5) TSM seeing some cracks...and NVDA is very overbought. Not good for the SMH.
6) Nobody cares, but another lock-down this fall/winter is highly likely.
7) Consumer discretionary stocks are getting quite overbought. Several “staples” look better.
8) We’ll keep saying it: The U.S. cannot let China gain control of Taiwan.
9) How ironic would it be if the stock market fell during the week of the GOP convention?
10) Summary of our current stance.
1) We have become more constructive on the stock market on a longer-term basis, but we do not see a rally above 3,600 by year-end. Also, we remain quite cautious on the shorter-term...and last week’s action merely emboldened that opinion. The stock market has become more expensive, more overbought...and, certain aspects of the stock market remind us of 1999/2000. The upcoming near-term top will see obvious in retrospect, but since too many people are making money right now (on both sides of the street)...nobody will say anything about the emperor.
2 & 2a) The “internals” during last week’s advance in the S&P 500 & Nasdaq we very, very poor. (Don’t listen to those who say that “narrow” rallies are nothing to worry about.)....Whether it be the shrinking number of stocks hitting 52 week highs, the lagging A/D line, the lagging Russell 2000 & S&P 500 equal weight indexes...this situation has only deteriorated. We’d also note that sentiment in the II data shows the spread ...