For Friday, Jul 29, the market forecast is uncertain

We recommend selling leveraged equity positions and holding unleveraged positions.




Technical Comment:

The downward motion today was combined with higher volume, continuing the development of a pattern that precedes further downward prices in the market.  The pattern is not yet fully developed, so the forecast remains “uncertain”.

Subjective Comment:

Today a vote in the US House of Representatives on the debt ceiling was delayed and then later cancelled.  When the delay was announced, market volume picked up and the price fell precipitously.  Prior to the announcement, volume had been light and the market had been up for the day.  In the absence of other economic data the media attention on the debt ceiling appears to be driving market action.  Most likely no deal will be announced until just before or just after the deadline.  Expect market action to be choppy until the political uncertainty is resolved.

Other news today was the weekly publishing of initial jobless claims.  Unemployment is a lagging indicator of the economy, so any improvement would suggest business results have been improving.  With this in mind, initial claims did improve with a drop from 422,000 last week to 398,000 this week.    Additionally, earning results continue to show mixed results with more companies doing well than not.  As discussed in previous forecasts, the increasing growth rate of the US Money Supply is having an inflationary impact and businesses will experience a short boom in activity with the ability to raise their prices.  The money supply impact will eventually lift US Stock Markets, but probably not until after the debt ceiling is resolved.

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