PRESCIENT COMMENTARY

On the heels of Friday’s notable gains, the entire BEGOS Markets’ complex begins the week in the red with all but the Bond and Spoo below today’s respective Neutral Zones; volatility is light-to-moderate. The Gold Update recognizes the yellow metal picking up needed ground (notwithstanding today’s weakness thus far), and that the S&P for a variety of fundamental reasons appears set to move substantively lower. A StateSide power shift to the right may quell any immediate stocks’ downside, however our better sense says the fundamentals will out in the broader term given rising rates, inflation’s steady pace, unsupportive earnings, and spreading geo-political concerns. ‘Tis a fairly light load of incoming metrics this week for the Econ Baro, beginning today with September’s Consumer Credit.

The Bond, Euro and Spoo all are trading at present within their respective Neutral Zones for today; the balance of the BEGOS Markets are above same, and volatility is already moderate-to-robust ahead of October’s StateSide Payrolls for the Econ Baro, with Copper having traded 114% of its EDTR (see Market Ranges). Copper’s trade month-over-month has been quite choppy with a mild upside bias: this make some sense given the red metal being a leading economic indicator that we’ve also the Econ Baro being on the upside throughout. By Copper’s Market Profile, trading resistance (just above the current 3.5160 level) shows at 3.54, with supports at both 3.47 and 3.43. The Dollar had quite a firm session yesterday, the Euro in turn triggering a Short signal by its daily MACD, (see Market Rhythms).

The Bond, Euro, Swiss Franc, Gold and Copper all are at present below today’s Neutral Zones; the other BEGOS Markets are within same, and volatility is mostly moderate. The FOMC voted to raise FedFunds as expected by +0.75%, the upper end of their target range now 4.00%; another +2.00% to 6.00% would place the rate in line with the Fed’s favoured inflation gauge — the Core PCE Index — the annual rate of which is also running at 6.00%. As a rather meager Q3 Earnings Season continues to unfold for the S&P 500 (the median earnings gain being +4.5%), that along with increasing geo-political tensions (RUS/UKR, NKor/SKor, IRN/SAU, CHI/TWN) gives us concern for lower S&P levels in the offing. Today’s busy incoming stream of metrics for the Econ Baro includes October’s ISM(Svc), September’s Trade Deficit and Factory Orders, and Q3’s revision to Productivity and Unit Labor Costs.

Unlike ’round this hour yesterday, seven of the eight BEGOS Markets are at present inside of today’s Neutral Zones, the sole exception being Copper above same; volatility is basically light ahead of the Fed for which a+75bp raise is the expectation; the FedFunds Futures “hint” of a +100bp hike, but we sense +75bp shall be released in the Policy Statement. By Market Trends, linear regression is positive for the Euro, Copper and the Spoo; such trends are negative for the Bond, Swiss Franc, Gold, Silver and Oil: therein however, we see little negativity by the Baby Blues of trend consistency, suggestive of these key markets benefitting from a bit of an inflation bid. Prior to the FedFunds hike come’s October’s ADP Employment report for the Econ Baro.

All eight BEGOS Markets are at present trading above their respective Neutral Zones for today, (thus obviously the Dollar is down); volatility is already moderate-to-robust, which at this hour a day ahead of an FOMC Policy Statement is a bit unusual. For the primary components by Market Values (real-time deviations): the Bond is some 5 points below its smooth valuation line, the Euro a point high, Gold 30 points low, Oil nearly 4 points high, and the Spoo 185 points high. Specific to the S&P, it has registered five consecutive days of being “textbook overbought”; the “live” P/E is 34.5x, and now through the halfway point of Earnings Season, only 58% of constituents have improved their bottom line over Q3 of a year ago. The Econ Baro looks to October’s ISM Index and September’s Construction Spending.

The Euro, Swiss Franc, Silver, Copper and Oil are all at present below their respectful Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility is light-to-moderate. The Gold Update acknowledges the StateSide recession is over (Q1 and Q2 REAL GDP having been negative) given Q3’s positive reading. The Econ Baro is showing a continuing uptrend, which with inflation at a steady pace ought see the Fed raise another 75bp come Wednesday; the Baro closes out the month with October’s Chicago PMI. Gold’s settle on Friday (1648) was the lowest weekly close since pre-COVID during February 2020; with Gold’s weekly parabolic trend remaining Short into an eighth week, the upper 1500s are not out of the question.

The metals triumvirate and Oil are at present trading below today’s Neutral Zones; the other BEGOS Markets are within same, and volatility is again at this time mostly light. The S&P from its 12 September high (4119) to its 13 October low (3495) looks to have completed a Golden Ratio retracement in topping out ’round 3881 on Wednesday: should that mark the end of this counter-trend rally, the severely negative MoneyFlow is suggestive of an S&P move toward the 3550-3350 area, (itself within the overall 3600-3200 support zone), especially with Q3 Earnings Season having not made a dent in the P/E ratio (the futs-adj’d “live” reading now 34.0x). Incoming metrics for the Econ Baro today include September’s Personal Income/Spending, the Fed’s favoured Core PCE Index for inflation, and Q3’s Employment Cost Index.

Today is long-anticipated StateSide Q3 GDP Day: by the rising Econ Baro during the Q3 metrics period, we anticipate REAL GDP to have turned positive, thus “officially” ending the recession, (politically perfect timing for the Democrat Party with the mid-term elections in the balance just 12 days hence; we expect the media/Dem flag-waving to capitalize on this throughout). Ahead of the data, all eight BEGOS Markets are at present within their respective Neutral Zones for today, and volatility is mostly light. Yesterday’s negative pull by MSFT on the S&P’s MoneyFlow was significant, typically suggestive of lower levels near-term for the Index itself. In addition to Q3 GDP, the Econ Baro also looks to September’s Durable Orders.

The Bond, Gold, Silver and Copper all are at present above their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility is light-to-moderate. With 130 S&P 500 constituents having thus far reported for Q3, 57% have improved year-over-year; our “live” P/E (futs-adj’d) is 35.1x and the yield is 1.714%; five-year money is 4.257%. An intriguing Market Rhythm of late is the Yen’s 4-hour Parabolic study: since mid-August it has the best “r-squared” of swing profit consistency per the 405 studies we calculate each night. A day ahead of Q3 GDP — which by the Econ Baro may well be positive — we’ve September’s New Home Sales.

The Bond is the sole BEGOS Market trading at present outside (above) its Neutral Zone for today; the balance of the components are within same, and volatility is light compared to yesterday’s more moderate pace at this time. At Markets Trends, linear regressions have rotated to positive for the Euro, Copper, Oil and the Spoo; those for the balance of the bunch remain negative. The Bond by Market Values is nearly 9 points below its smooth valuation line; price is quite low as well vis-à-vis its Market Magnet. The yield curve remains flat with returns above 4% pretty much across the U.S. securities’ spectrum. Q3 Earnings Season too remains fairly flat with just 52% of reporting constituents having thus far improved, (i.e. 48% have not so done). The “live” P/E of the S&P is 34.7x; price itself is struggling north of 3800 as suggested by the recent references to it being a key “fib” retracement area. The Econ Baro looks to October’s Consumer Confidence.

The BEGOS Markets begin the week finding the Bond at present above its Neutral Zone for today; below same is Oil, and volatility already is firmly moderate. The Gold Update points to price getting a bit of respite within its broader downtrend, but that volume continues to be lacking toward supporting any material upside push. The Spoo’s high thus far this session (3813) satisfies two different Fibonacci measurings; whilst we don’t place a lot of emphasis on fib, ’tis interesting to see it come into play when other analyses are at bay. Too, the Spoo has essentially triple-tested the key 3600 support area; however for the S&P 500 itself, Q3 Earnings Season is thus far sufficiently lacking, the futs-adj’d “live” P/E now 34.7x, a level historically unsustainable in a positive interest rate environment, and thus suggestive the fundamentals will out via lower S&P levels. ‘Tis a quiet day for the Econ Baro ahead of an otherwise relatively busy week.

The Bond, Swiss Franc, Gold, Silver and Oil all are trading at present below today’s Neutral Zones; the other BEGOS Markets are within same, and volatility is light. Specific to the Spoo for today, we see quite a bit of overhead congestion, notably in the Market Profile. By the S&P’s MoneyFlow page, all three period measures suggest lower levels in the near-term offing. Thus far in Q3 Earnings Season, 76 S&P 500 constituents have reported, of which 40 (53%) have improved over Q3 a year ago; thus to this point, Earnings Season is not very robust in terms of bottom line improvement; the “live” P/E of the S&P is 32.6x. The Bond is trading ’round an 11-year low. And Gold has slipped below its September low to 1621. The Econ Baro has concluded its metrics input for this week: again, the recent upside bias suggests we can see a positive Q3 GDP when ’tis reported on 27 October).

All eight BEGOS Markets are at present inside their respective Neutral Zones for today; volatility is light. Per our Market Rhythms page, of the 45 studies available for any one of the BEGOS Markets, Oil has 17 qualified to make the current list: as far back as at least March 2021, Oil’s most consistent rhythm on a purely swing basis is its daily MoneyFlow. Oil’s EDTR (expected daily trading range) is 3.57 points, and along with the Euro is one of the only two components currently with a positive linear regression trend, albeit ’tis weakening, (see Market Trends). By Market Values, Oil (in real-time) is 3.73 points above its smooth valuation line, (not an extreme deviation for Oil). And by Market Magnets, Oil is fairly in line with its Magnet. For the Econ Baro today we’ve October’s Philly Fed Index, plus September’s Existing Home Sales and Leading (lagging) Indicators.

No one BEGOS Market is at present trading above its respective Neutral Zone for today; below same are the Bond, Euro, Swiss Franc, Gold and Silver, and volatility is light-to-moderate.  In anticipate of the S&P’s contra-trend rally reaching the Upper 3700s, yesterday’s high was 3762; at this moment, ‘twould be a lower open for the S&P later today.  With Silver having come off in recent trading days, the sole component with a positive linear regression trend is Oil (See Market Trends), albeit both price and the “Baby Blues” of trend consistency are fading.  By Market Values, none of the five primary BEGOS Markets are far from their smooth valuation lines.  The Spoo has touched Market Profile resistance at 3770 (high 3774) and has since pulled back (now 3732).  September’s Housing Starts/Permits come due for the Econ Baro. Then late in the session we’ve the Fed’s “Tan Tome”.

Both Silver and the Spoo are at present above today’s Neutral Zones; the other BEGOS Markets are within same, and volatility is again light. The S&P again had a substantive bounce off the top of its 3600-3200 support zone: prior to this, we’ve pointed out that a run toward the upper 3800s would seem reasonable, and today’s Spoo high thus far is 3765. By its Market Profile, the Spoo shows pricing congestion at 3770 and more so at 3795. At Market Values, the Spoo has closed much of its distance from being below the smooth valuation line: in real-time, price (3741) is just -58 points under the 3799 line. And at Market Trends, the Spoo’s “Baby Blues” of trend consistency are rising such that the downtrend is becoming less so. Fundamentally however, the “live” P/E of the S&P at 34.2x remains excessively high in this newly positive interest rate environment. For the Econ Baro today we’ve October’s NAHB Housing Index, plus September’s IndProd/CapUtil.

“Bounce” is the watchword for the BEGOS Markets in beginning their week: at present, all eight are to the upside, seven of which (ex-the Euro) are above their respective Neutral Zones for today. Volatility is light. The Gold Update reminds us that Gold’s weekly parabolic trend remains Short and that the daily version, too, has now flipped to Short. As well, we graphically depict the stance of the S&P 500 vis-à-vis its broad-based regression channel and P/E relative to its mean: by both constructs, the S&P remains excessively high; still, by Market Values, the Spoo is (in real-time) 181 points below its smooth valuation line. Friday’s array of eight Q3 earnings for Banks found four to have improved and four to have worsened. The Econ Baro starts a moderate flow of metrics for the week with October’s NY State Empire Index which is still expected to be negative.

Only the Swiss Franc is trading at present outside (above) its Neutral Zone for today; the other BEGOS Markets are within same, and volatility is light-to-moderate. Putting yesterday’s Spoo inflation-induced whipsaw in perspective, (to which the FinMedia referred as “historic”), the range between the low and high on a points basis ranked 14th vastest so far this century: we thus seen this before and we shall yet again. As we’ve herein put forth of late, the S&P 500 already was “textbook oversold” indeed to an extreme reading prior to yesterday’s rally, which we continue to maintain is contra-trend within the broader down move. In real-time, the Spoo (3689) is still 134 points below its smooth valuation line (see Market Values) and a run to the upper 3700s makes technical sense; however with respect to earnings, the “live” P/E of the S&P is 33.6x; top-tier banks are now in their reporting window today and Monday. For the Econ Baro, due are October’s UofM Sentiment Survey, September’s Retail Sales and Ex/Im Prices, and August’s Business Inventories.

The Bond is the only BEGOS Market trading at present outside of (below) its Neutral Range; volatility is light ahead of retail inflation data.  The S&P 500 has returned to a “textbook oversold” condition we deem as extreme: clearly by Market Trends the key linear regression trend of the Spoo continues as firmly negative, however the Index itself typically gets a bounce from such oversold condition; as to “how much bounce”, by the Spoo’s Market Profile, the key overhead apices are at present 3653, 3770 and 3795. Regardless, earnings valuation for the S&P remains very high given the positive interest rate environment:  the “live” P/E (futs-adj’d) is 32.2x and the yield 1.826% whereas that for the Five-Year T-Note’s 4.112%.  For the Econ Baro, in addition to the September’s CPI, we’ve also the month’s Treasury Budget.

At present, all eight BEGOS Markets are within their respective Neutral Zones for today, and volatility is again light-to-moderate.  The S&P 500 continues to test the top of its 3600-3200 support zone, albeit by our MoneyFlow page, the leading characteristic of the Flow is negative across all three period measures.  However, the Index remains “textbook oversold” through the past 16 consecutive trading days such that another contra-trend bounce wouldn’t be untoward within the broader downtrend.  Indeed by the Spoo’s Market Values, price (in real-time at 3613) is 238 points below its smooth valuation line.  By that measure for the other four primary BEGOS Markets, both the Euro and Gold are fairly in line with valuation, whilst the Bond is nearly 5 points low and Oil 5 points high.  The Econ Baro looks to September’s PPI.

Silver, Copper, Oil and the Spoo all are at present below their respective Neutral Zones for today; none of the other BEGOS Markets are above same, and volatility is light-to-moderate. The stance of the Spoo at this writing would see the S&P open later today at a new low for the year as the Index flirts with the top of its 3600-3200 support zone; (again, fundamental support by earnings is more in line with the mid-2500s). For the Spoo, dominant overhead Market Profile resistance shows in the 3650-3653 apex area. The precious metals continue to recede following a price pop a week ago upon Gold’s daily parabolic having flipped to Long; however, the broader-based weekly measure remains Short such that the upper 1500s remain in play by the typical historical follow-through of such parabolic Short trends. Amongst the five primary BEGOS Markets, the strongest correlation is that which is positive between the Euro and the Spoo.

Gold, Silver and Oil are at present trading below their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility is light; (of note, today is a quasi-StateSide holiday, the stock market to be open but the physical Bond market closed; however, all the BEGOS Markets are trading their full 23-hour session). The Gold Update points to price having regained the 1700s, (albeit ’tis now below same), but that the yellow metal really needs portfolio buying commitment to support any sustainable upside move toward where Gold actually is valued (3936 as of Friday vs. price then of 1702). Oil, as boosted by the OPEC+ production cut, is (in real-time at 92.41) nearly 8 points above its smooth valuation line (see Market Values); and by Market Trends, Oil’s linear regression has rotated to positive, the only other like component being Silver, such trend however weaking. No Econ Baro data is due until Wednesday.

As is not unusual for StateSide Payrolls day, all eight BEGOS Markets are trading at present within their Neutral Zones, and volatility is light. The direction to which the S&P 500 resolves itself post-payrolls ought be indicative of whether or not the contra-trend bounce is complete; (obviously by fundamentals, the S&P remains severely expensive). For better than a month, the five primary BEGOS Markets all have essentially been in positive correlation with one another in directional opposition to the Dollar; thus at Market Values, there are no overly extreme deviations from valuation at present: in real-time the Bond shows as 4 points low, the Euro as 1 point high, Gold as 46 points high, Oil as 4 points high, and the Spoo as 134 points low. By Market Trends, the case remains that all the components (save for Silver) are in negative regression trends. In addition to September’s Payrolls data, the Econ Baro looks to August’s Wholesale Inventories and Consumer Credit.

The Swiss Franc, Gold and Copper are at present all above today’s respective Neutral Zones; none of the other BEGOS Markets are below same, and volatility is light. Following a firm start to the week, the S&P500 staved off much of what looked to be a material return to selling yesterday. For the fib follower, a Golden Ratio (61.8%) retracement would be completed at 3915 (Spoo 3928) such by that construct there’d still be another +100 points in the offing for the S&P, the textbook technical for which is now just mildly oversold. Obviously by fundamentals, the Index remains extremely high, the “live” P/E now 34.0x and yield 1.730% versus the U.S. Five-Year Note yield of 3.959%. Thus our sense is the S&P 3600-3200 support zone has further testing to go. By Market Values, the Spoo has recovered much of its recent “undervaluation”, now (in real-time) just 92 points below its smooth valuation line.

Copper is the sole BEGOS Market at present above its Neutral Zone for today; below same are the Swiss Franc and Silver, and volatility is mostly light. Following two days of nearly completely underwinding its extreme oversold condition, the S&P competed a minor Golden Ratio retracement (38.2%) and in turn is set (at the moment) to open lower. With US Debt paying almost 4% and the S&P’s P/E still very high at 35.0x, we sense the 3600-3200 zone shall continue to be tested; again should the P/E’s mean be revisited, we’d see price substantially lower still in the mid-2000s. Q3 Earnings Season is underway and material improvement (doubtful we sense) is needed to keep the S&P aloft up here. The Econ Baro awaits September’s ADP Employment data and ISM(SVC) Index, plus August’s Trade Deficit.

Yesterday’s rally for the BEGOS Markets is continuing thus far, with every component higher and (save for the Bond) trading about above their respective Neutral Zones for today; volatility is mostly moderate. However, yesterday’s -9% decline in S&P constituent TSLA (which alone is 2.3% of the entire Index) had a significantly negative impact on the S&P’s MoneyFlow. The precious metals continue to gain some ground: specific to Gold (at present 1718) the 1744 level is a Golden Ratio retracement price for which to watch; beyond that to flip the weekly parabolic trend from Short to Long requires a move (for this week) above 1806. The Spoo has worked off some of its undervaluation: by Market Values (in real-time) price (3742) is 161 points below the smooth valuation line. For the Econ Baro we’ve August’s Factory Orders.

Q4 commences for the BEGOS Markets with the Bond, Silver and Oil all at present trading above their respective Neutral Zones for today; the other components are within same, and volatility is light-to-moderate as this most volatile month annually for the S&P 500 begins. The Gold Update “officially” beaches our 2254 forecast high for this year, and credits our 3600 target for the S&P being reached. Whilst Gold’s weekly parabolic Short trend remains suggestive of the upper 1500s trading, the daily parabolics flipped to Long per this session’s open, suggesting there being a move toward the mid-1700s: thus we’ve technical conflict between these two key Gold rhythms. ‘Tis a fairly busy week for the Econ Baro beginning with September’s ISM(Mfg) Index and August’s Construction Spending. And Q3 Earnings Season gets underway, the “live” P/E of the S&P finishing the quarter at 32.4x.

The final day of Q3 commences with the Bond, Gold and Silver all at present above their Neutral Zones for today; none are below same, and volatility is notably subdued versus recent days at this hour. Whilst September has been an expectedly volatility month, October across the past 50 years ranks as most volatile, its average tracing between high and low spanning 9.0%; (we’ll make further mention of such in tomorrow’s 672nd consecutive Saturday edition of The Gold Update). Specific to the yellow metal, it is getting a bit of a boost this week, as are all the BEGOS Markets with the exception of the Spoo. The “live” P/E of the S&P is 32.3x with a yield of 1.8% even as the U.S. debt market across its essentially flat yield curve is paying nearly 4% to maturity. Price-wise, the S&P has yet to “officially” tap the 3600 level, which with October in the wings we continue to anticipate it most certainly will. The Econ Baro awaits metrics including September’s Chi PMI, plus August’s Personal Income/Spending and the Fed’s favoured inflation gauge of Core PCE.

Back on the skids are the BEGOS Markets, all eight at present trading below their respective Neutral Zones for today; volatility is again moderate. The S&P 500 remains in an extreme “textbook oversold” condition, albeit the MoneyFlow for yesterday’s rally was not thoroughly substantive for the S&P’s +2.0% rise. Still by Market Values in real-time, the Spoo is 251 points below its smooth valuation line. And by Market Profiles, with the Spoo currently 3683, we show trading support at 3669, with notable overhead resistance at 3710, 3780, and then the 3870-3890 band. At Market Trends, both the Swiss Franc and Silver remain the two components in positive, albeit weakening, uptrends. Due for the Econ Baro is the final read for Q3 GDP.

Yesterday’s failed S&P relief rally looks lower still at this point, the Spoo suggesting a – 0.7% drop were the S&P to open at this instant. Except for the Swiss Franc at present in its Neutral Zone, the seven other BEGOS Markets all are below same, and volatility is moderate. Whilst the broad trend of the S&P is down, the Index is extremely “textbook oversold”. In real-time, the Spoo by Market Values is 315 points below its smooth valuation line; and by our MoneyFlow page all three measures (weekly, monthly, quarterly) show the Flow differential to the Index as positive, which should lead to a bounce as real fear as yet to appear. The Econ Baro looks to August’s Pending Home Sales.

In a complete role reversal, all eight BEGOS Markets are higher, indeed all at present above their respective Neutral Zones for today. Of note (and as detailed in the current edition of The Gold Update) the S&P had become significantly oversold such that this bounce is normal within the overall downtrend: 3600 has yet to be tested, and with the “live” P/E of the S&P at 33.1x in this rising interest rate environment, the 3600-3200 remains ripe for said test. Per the Market Values page, in real-time the Spoo shows at 248 points below its smooth valuation line, Oil as 9 points low, Gold as 45 points low, the Euro as spot on its valuation line, and the Bond as nearly 6 points low. For the Econ Baro we’ve Sep’s Consumer Confidence, plus Aug’s Durable Orders and New Home Sales.

The selling continues as all eight BEGOS Markets start the week in red; however only mildly down at present (within their Neutral Zones) are the Euro, Gold and the Spoo; volatility already is moderate-to-robust. The Gold Update suggests the precious metals have a bit further to slip; of note, Silver’s daily Parabolics (as listed on the Market Rhythm’s page) confirmed flipping to Short effective today’s open; at Market Trends, that for Silver still is positive, (as is the Swiss Franc’s), but the balance of the bunch remain in negative trends. The Econ Baro begins its fairly busy week of incoming metrics tomorrow.

Save for the Bond, the other seven BEGOS Markets components are in the red, at present the Euro, Swiss Franc, Copper and Oil trading below their respective Neutral Zones for today. The S&P’s glide toward 3600 remains intact, (now from 3758 just 158 points further south; and specific to the Spoo, its “EDTR” per Market Ranges is 90 points such that S&P 3600 can arrive sooner than later). That noted, the S&P is still mildly “textbook oversold”, and in real-time the Spoo itself is 248 points below its smooth valuation line (see Market Values). That noted, by our Moneyflow page, the is little fear be it by the weekly, monthly or quarterly measures. By Market Profiles, the nearest overhead notable Spoo resistor is at 3780, above which is a thicker patch from 3870-3891. And by Market trends, only the Swiss Franc and Silver are sporting linear regression uptrends. In the midst of all this, Gold is having quite a narrow week, as we’ll note in tomorrow’s 671st edition of The Gold Update.

Post-Fed we’ve the Euro, Gold and Silver all trading at present below today’s Neutral Zones; none of the other BEGOS Markets are above same, and volatility is mostly moderate. The S&P’s glide down toward its 3600-3200 support zone continues to play out, albeit by Market Values (in real-time) the Spoo shows as 233 points “low” vis-à-vis its smooth valuation line; too, the S&P is mildly “textbook oversold” such that up moves within the broader down move (as is the norm) are to be expected. Yesterday, Gold made a marginal new low (1661) for this year, the technical vacuum suggesting the high-1500s shall be tested. The Gold/Silver ratio remains historically high at 86x, (the century-to-date mean being 67x). Five-year U.S. “riskless” debt is yielding 3.7% vs. the S&P’s “riskfull” 1.7%; the “live” P/E of the S&P is 33.8x versus its lifetime mean of 22.4x. The Econ Baro completes its week today, incoming metrics including Q2’s Current Account and August’s Leading (i.e. “lagging”) Indicators.

Ahead of the Fed we’ve both the Euro and Spoo trading at present below their respective Neutral Zones for today; above same are the Bond, Gold, Silver and Oil, and volatility is mostly moderate, indicative of a bit more overall nervousness than usual ahead of a monetary policy statement. The Dollar Index is back above 110, (its recent high is 110.785 with 111 quite reasonable on today’s FedFunds rise). Gold has been girding itself rather than succumbing to lower levels as is technically suggested in The Gold Update: ’tis a vast distance between moving sub-1600 versus the current fundamental valuation of 3985. Just as Gold has hesitated in its near-term down move, so has Silver hesitated in its near-term up move. Too, all five primary BEGOS Markets have been positively correlated with one another in recent days, such relationship likely undoing to an extent post-Fed. For the Econ Baro we’ve August’s Exiting Home Sales.

Follow yesterday’s nervousness across the BEGOS Markets, all but Silver are within their Neutral Zones at present; the white metal is below same; volatility is light. By the Market Values page, going ’round the horn in real-time for the primary components finds the Bond nearly 5 points below its smooth valuation line, the Euro as 2.6 points “high”, Gold as 41 points “low”, Oil as some 2 points “low”, and the Spoo as 106 points “low”. At Market Trends, the linear regression trends for the Euro, Swiss Franc and Silver all have rotated to positive, the balance of the bunch remaining negative. Specific to the Spoo by its Market Profile, 3950 is its most dominantly-traded price of the past two weeks; we thus view that level as a key resistor. Incoming metrics for today’s Econ Baro are August’s Housing Starts/Permits.

‘Tis red across the board for all eight BEGOS Markets components, the only one not below its Neutral Zone at present being the Bond; volatility is moderate. The Gold Update cites price having recorded a new low (1662) for the year, falling as well through a series of prior key lows: technically Gold can break below 1600, even as fundamentally by currency debasement ’tis worth 4000. The S&P continues to be pressured by the higher Dollar, unsupportive earnings (“live” P/E 35.1x) and yield (1.676%) half that of the U.S. debt market; to the extent the 3600-3200 support zone holds ought be dependent upon those factors becoming less adversarial. Still by Market Values, the Spoo (in real-time) shows as 180 points “low”. By Market Rhythms — highlighted for the Spoo on its page (S&P 500 under BEGOS Markets — is its Daily MACD. Due for the Econ Baro is September’s NAHB Index.

Both the Swiss Franc and Silver are trading below their Neutral Zones for today; Oil is above same, and the BEGOS Markets’ volatility is mostly moderate. Currencies’ contract volume is rolling from September into December, whilst that for Oil from October into November. Gold’s provisional flip of its weekly parabolic Long trend to Short has indeed brought a new low price (1669) for this year. More on that in tomorrow’s edition of The Gold Update. By Market Trends, they remain negative for all eight of the BEGOS components. Specific to the Spoo’s Market Profile, the most dominantly-traded price of the past 10 trading days is 3950; remaining in the balance is the test of the 3600-3200 support zone. The “live” P/E of the S&P 500 is 35.1x and the yield 1.663%; by comparison, the yield on the Five-Year T-Note is 3.674%. Rounding out the Econ Baro’s busy week is September’s UofM Sentiment Survey.

The Bond, Oil, Silver and Gold all are at present below today’s respective Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is again light-to-moderate ahead of a cavalcade of incoming Econ Baro metrics. As mused in The Gold Update, the weekly parabolic trend has provisionally flipped from Long to Short, suggestive that the year-to-date low (1678) shall be breached. For the S&P, just as we saw “fear” in the MoneyFlow on Tuesday, yesterday’s wee gain nonetheless had more than supportive inflow, indicative that the dip buyers are active; however we continue to anticipate the year’s low (3637) going lower still. The Econ Baro’s load today includes September’s NY State Empire and Philly Fed Indices, August’s Retail Sales, Ex/Im Prices, and IndProd/Cap/Util, plus July’s Business Inventories.

Both the Bond and Oil are trading at present below their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility is light-to-moderate. Yesterday’s -4.3% S&P decline was complemented by an even deeper drop per the MoneyFlow, evidence that we’re finally seeing some fear in the stock market; (as oft herein posted, the S&P 3600-3200 support zone seems a reasonable target). Whilst a notably high reading for August’s Core CPI is credited for the selling, the real negative catalyst for the S&P remains its constituents’ ongoing lack of earnings support: even as through yesterday’s settle (3933) as adjusted for today’s futures level (at this instant pointing to an opening at 3939), the “live” P/E of the S&P is an excessively high 34.5x (versus the lifetime mean of 22.4x). August’s inflation at the wholesale level comes into the Econ Baro today per the PPI.

The Swiss Franc is the sole BEGOS Market trading at present outside (above) its Neutral Zone for today; volatility is light-to-moderate. Silver reached the anticipated 19s, indeed trading briefly above 20 yesterday. The S&P has unwound its “textbook oversold” stance, and yesterday’s fourth consecutive up day had better MoneyFlow support than during the prior three. However, the vapid earnings for the index now find the “live” P/E at 38.3x along with a yield (1.573%) at less than half that of the U.S. debt market. Our sense remains that the S&P has yet to make its final low for this year (thus far 3637) with the test of the 3600-3200 support zone still in the wings. For the Econ Baro’s busy week, today brings August’s CPI and Treasury Budget.

The BEGOS Markets begin the week with the Euro, Swiss Franc, Silver and Copper all at present above their respective Neutral Zones for today; none of the other components are below same, and volatility is moderate. The Gold Update cites (by Market Trends) the “Baby Blues” for both Gold and Silver having commenced an upside curl, these two metals having also had their daily parabolics flip from Short to Long. More broadly however, the linear regression trends (also by Market Trends) remain negative for all eight components. The S&P 500 is still a bit “textbook oversold”, albeit the rally of the past three days has not been fully MoneyFlow supported, the broader price trend continuing to remain down. Whilst no data is due today for the Econ Baro, the balance of the week looks to 16 incoming metrics.

Save for the Bond and the Spoo, both of which at present are inside of their respective Neutral Zones for today, the balance of the BEGOS Markets are above same, and volatility is essentially moderate except for the Swiss Franc having already traded 130% of its EDTR (see Market Ranges); of note the ECB has raised their three key interest rates each by +0.75%. The Spoo (for which the cac volume is rolling from September into December) has cleared both Market Profile hurdles (in December pricing 3947 and 4006), the S&P Index itself remaining “textbook oversold”. Fundmentally however, the year’s low (3637) looks ripe for the taking within the context of the broader downtrend toward testing the 3600-3200 support zone. At Market Trends, upwards curls in the “Baby Blues” for the Euro, Gold and Silver are appearing more pronounced. The Econ Baro concludes its rather uneventful week with July’s Wholesale Inventories.

Silver, Copper and Oil all are trading at present above today’s Neutral Zones; none of the other BEGOS Markets are below same, and volatility again is mostly moderate. In real-time, the “Baby Blues” (see Market Trends) for both Gold and Silver are turning the corner to the upside: should their respective Blues levels reach above the -80% axes, it suggests still higher price levels ahead; and as did Silver’s daily Parabolics already flip from Short to Long, so too are those for Gold provisionally (confirmation would come at today’s settle). The Spoo is higher as the S&P looks to unwind a still mildly “textbook oversold” condition within the broader downtrend: by Market Profiles, Spoo 3987 is the most dominantly-traded price of the past two weeks. Late in the session the Econ Baro looks to July’s Consumer Credit.

Both Copper and Oil are at present below their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility is mostly moderate. Silver’s daily Parabolics (as featured in the current Market Rhythms list) have confirmed a flip to Long, suggestive of a run to at least the 19s (live price = 17.905); at Market Trends, Silver’s “Baby Blues” are well-below their -80% axis: however with price appearing a bit more stable, their move above the -80% axis would add further anticipation for higher price levels. Of note, the amount of money requisite to move the S&P one point is the thinnest it has been since last 02 December. The Econ Baro awaits July’s Trade Deficit, and the Fed’s Tan Tome comes due late in the session.

The two-day session continues (given yesterday’s StateSide holiday): only the Bond now is below its Neutral Zone, whilst above same are Silver, Copper, Oil and the Spoo; volatility as anticipated has expanded to moderate-to-robust; both the Bond and Copper have exceed 100% of this session’s EDTR tracings (see Market Ranges). By Market Profiles the Spoo’s most dominant apices across the past two weeks are 3987 and 4140 which we view as resistance within the anticipated broader down move toward 3600. The yield on the S&P 500 is 1.652% whereas on the 5-year T-Note ‘tis 3.298%. Due for the Econ Baro is August’s ISM Services Index.

Day One of a two-day session (for settle Tuesday given the StateSide holiday) begins with the Bond and Currencies slipping below their respective Neutral Zones, whilst above same are both Copper and Oil; volatility already is pushing toward moderate such that by this time tomorrow we anticipate ’twill be robust for some of the BEGOS Markets. The Gold Update cites price falling into a still deeper sleep, “conventional wisdom” pointing to “Dollar strength”: today the Dollar Index is above 110 for the first time since June 2002; (more broadly it is 33% below its all-time high of 165). At Market Trends, that for Oil is provisionally rotating to negative. August’s weaker Payrolls data and July’s Factory Orders have put a pull-back into the Econ Baro, (as presently updated for today’s Spoo pricing).

The Euro, Gold, Silver and Oil are trading at present above their Neutral Zones for today; none of the other BEGOS Markets are below same, and volatility is mostly light ahead of August’s Payrolls data. The S&P 500, whilst having developed a near-term “textbook oversold” stance, nonetheless seems bent on retesting the year’s low (3637, 17 June) even as price is currently 3967; as regularly herein noted, the broad S&P support area is 3600-3200, and given the normal seasonal negativity of September (as detailed in the current edition of the Gold Update), 3600 is rationally within the realm. Of course fundamentally, sub-3000 gets due consideration given the unsubstantial level of S&P 500 earnings especially in this rising interest rate environment. Due as well for the Econ Baro today are July’s Factory Orders.

The Euro, Gold, Silver, Copper and the Spoo all are at present trading beneath their respective Neutral Zones for today; none of the other BEGOS Markets are above same, and volatility is mostly moderate. September begins, and despite resumption of the S&P’s correction, our S&P MoneyFlow page still lacks indication of selling “fear”, and indeed the 63-day (one quarter) version suggests a loftier S&P level; of course, the historically high P/E (“live” now 35.1x) fundamentally calls for lower price levels still: at this instant with the S&P set to open down at 3934 (vs. yesterday’s 3955 settle), the key test of the 3600-3200 support area is appearing more likely; recall the 17 June low was 3637, and by Market Trends the Spoo’s is firmly negative. Among today’s metrics for the Econ Baro come August’s ISM(Mfg) Index and July’s Construction Spending.

Copper and the Spoo are the two BEGOS Markets at present above today’s Neutral Zones; the balance of the bunch are within same, and volatility is light. By Market Trends, only Oil and Copper are in linear regression uptrends: however the “Baby Blues” for the latter continue to drop as the uptrend’s consistency fades. However for the Bond, that measure (in real-time -92%) is worth watching for a move above the -80% level, after which higher prices by rule continue to ensue. For the Spoo by its Market Profile, the 4026-4060 zone appears near-term resistive; the S&P itself is building in a bit of “textbook oversold” aspect, and there is still a lack of any real fear per our S&P MoneyFlow page. Back on the Econ Baro’s calendar after a two-month “retooling” absence is the ADP Employment data for August, as is the month’s Chicago PMI.

The BEGOS Markets are comparatively quiet relative to the last couple of trading days: Gold at present is the only component outside (below) its Neutral Zone; volatility is light-to-moderate. At Market Values, the Spoo (which had been some 400 points “high”) is now back at the level of its smooth valuation line, as is Oil which had recently been some 13 points “low”; still showing somewhat extreme is the Euro as 2 points “low”. At Market Trends, the Spoo’s linear regression trend has rotated to negative, the “Baby Blues” now below their 0% axis for the first time since 08 July. And in what should be (by consensus expectations) a net-negative week for the Econ Baro, the parade of 13 incoming metrics begins today with August’s Consumer Confidence.