With continued uncertainty in global markets, today two legends in the business sent King World News powerful pieces about the FOMC, turmoil in markets, rescue rally in Shanghai, and a note from Doug Kass.
October 27 (King World News) – Jeff Saut, Chief Investment Strategist at Raymond James: “Having been out of the country for a few weeks, and to a large degree bereft of email access, I was in a huff yesterday trying to catch up on events of the last two and a half weeks. Accordingly, I turned to my eagle-eyed pal Dougie Kass of Seabreeze Partners fame for an update. The first line of yesterday’s blog read, “I’m wondering whether Wall Street’s remarkable sector bifurcation — coupled with the increased volatility we’re seeing in individual stocks and groups — represents a measure of the market’s health (or lack thereof).”
Doug went on to note, “The sharp advance that stocks saw on Thursday and Friday highlights this bifurcation. The TFANGS resumed their leadership, but investors took retail and health-care shares to the woodshed (some retail and health-care stocks were down by as much as 25%).” For those who have no idea what TFANG stands for, it is an acronym with “T” standing for technology and the other letters representing the stock market’s “four horsemen” – Facebook, Amazon, Netflix, and Google.
Doug goes on to write, “This resulted in a lopsided rally. Standard & Poor’s reported that Alphabet (GOOG, GOOGL), Amazon (AMZN) and Microsoft (MSFT) accounted for over half of [last] Friday’s S&P 500 gain. Yes, there are more areas of strength than weakness in the market these days. But I can’t recall when the S&P 500’s two largest sectors (Technology is 20% of the index and Healthcare is 15%) traveled in entirely different directions.”
He concludes, “Although the averages have made huge moves higher, market breadth isn’t very impressive and certainly isn’t following the strength that we’ve seen in large-cap averages like the S&P 500 and Dow 30. The NYSE Composite and S&P SmallCap 600 are lagging and creating short-term momentum divergences. Moreover, the S&P 500 Equal-Weight Index (which is different from the ‘regular’ S&P 500) is continuing to decline toward new lows even as the main indices’ October rally advances. This should be concerning because sustainable advances don’t narrow, they broaden — at least historically.”
Of course, that is what we alluded to in yesterday’s report, but Doug says it much better. His insights also foot with my models that are calling for a trading top this week despite the Stock Trader’s Almanac blog noting that the last four sessions of October and the first four sessions of November are historically strong. Obviously the tale of the market will be told soon, but over the past three months our models have been pretty instructive.”
And here is a quick note from Art Cashin: “Overnight And Overseas – Shanghai closed up a bit on what looked like a late “rescue rally”. Hong Kong was mixed while Japan got socked and India fell. European markets are mixed to marginally lower. U.S. Futures are a bit softer.
Crude remains under pressure and risks breaking below $43, breaking out of range. Gold is mixed and yields are down a smidge.
Consensus – Debate within FOMC makes it to page one of the WSJ. Would love to be a fly on the wall. Watch crude carefully as it risks a breakdown. Traders expect markets to stay thin, and thus, potentially volatile. Stay wary, alert and very, very nimble.” ***The incredible KWN interview with Agnico Eagle CEO, Sean Boyd, has now been released. This is a chance for KWN listeners around the world to hear from one of the top people on the planet in the gold world and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: An Important Update On The Silver Market CLICK HERE.
KWN has also now released the audio interview with the top trends forecaster in the world, Gerald Celente, where he discusses the continued chaos in China, the desperation of Western central planners, what to expect from the gold and silver markets, and what to expect from major markets, CLICK HERE OR ON THE IMAGE BELOW.
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