The Federal Reserve steadiness sheet totaled $4.17 trillion because the stock market was declining on February 17. On the March 23 lows for the foremost fairness averages the steadiness sheet was rising at $5.25 trillion. On June 8, the steadiness sheet peaked at $7.17 trillion as the foremost averages set cycle highs. On June 29, the steadiness sheet slipped to $7.01 trillion. The growing steadiness sheet clearly was an element that drove the stock market greater.
The Federal Reserve Steadiness Sheet
The stock market has been led by the Nasdaq Composite, which set its all-time intraday excessive of 10,576.75 on July 9. It’s time to e book some earnings as its semiannual dangerous degree at 10,639 ought to restrict the upside.
A technical warning is that the Nasdaq has a 12x3x3 weekly sluggish stochastic studying above 90.00 on a scale of 00.00 to 100.00. This places the Nasdaq beneath a warning I name an inflating parabolic bubble formation.
The each day charts for the opposite main averages present technical warnings.
The Dow Jones Industrial Common reveals an island reversal and is buying and selling under its 200-day easy shifting common at 26,228. There was a price hole greater on June 5 then a price hole decrease on June 11. The cycle excessive was 27,580 on June Eight because the steadiness sheet peaked. Since you’ll be able to draw a circle round this buying and selling vary it’s thought-about an island.
The S&P 500 can be under an island reversal over the identical timeframe because the Dow. Latest power has been stronger for the S&P as its power reached the bottom of the island reversal.
You can not name it a bull market with the Dow Jones Transportation Common and the Russel 2000 each under their 200-day easy shifting averages.
In keeping with the U.S. Bureau of Labor Statistics the Employment-Inhabitants Ratio fell from 61.2% in February to 53.3% in April and is 54.6% on the finish of June. It is a slim restoration for the U.S. financial system.
You can not have a bull marketplace for stocks with a bear marketplace for the massive banks.
The Massive Banks
The large banks have had important good points since their March lows. Nevertheless, they continue to be in bear market territory from their November to January highs. They continue to be in bear market territory. The banks are setting apart growing reserves for losses. Some say there are 100 million loans in forbearance. It is a ticking time bomb for banks.
Following latest stress assessments by the Federal Reserve, JP Morgan (JPM), Bank of America
and Goldman Sachs
will preserve their present dividend however they are going to now not provide share buybacks. Wells Fargo
will lower its third quarter dividend.
Bank of America is slightly below its month-to-month pivot at $23.57 with its quarterly pivot at $25.99 and semiannual and annual dangerous ranges at $40.16 and $40.80.
Citigroup has a month-to-month value degree at $46.73 with a quarterly dangerous degree at $55.16. Semiannual and annual dangerous ranges are $84.68 and $94.40.
JP Morgan is under its month-to-month pivot at $95.27 with its quarterly dangerous degree at $108.85. Semiannual and annual dangerous ranges are $143.59 and $144.69.
Wells Fargo has a month-to-month value degree at $22.03 with its quarterly dangerous degree at $28.65. Semiannual and annual dangerous ranges are $47.12 and $74.27.
The each day chart for the Dow
Each day Chart for the DOW
The each day chart covers the final 52 weeks with each day price bars. The blue line is the 50-day easy shifting common and the inexperienced line is the 200-day easy shifting common.
The Dow had been above a golden cross since March 20, 2019. This sample got here to an finish after the index set its all-time intraday excessive of 29,568.57 on February 12.
On February 24, the Dow gapped under its 50-day easy shifting common. Failure to carry its 200-day SMA on February 26 led to the March 23 low of 18,213.65. The V-shaped backside from this low reached the 50-day SMA on April 27. By June 3, the Dow recaptured its 200-day SMA, which has been a magnet since then.
Notice the island reversal that was confirmed between June 5 and June 11. This promote sign stays in play till the island is penetrated and held, which appears unlikely.
The horizontal line is the month-to-month value degree for July at 24,849.
The weekly chart for the Dow:
Weekly Chart for the DOW
The weekly chart for the Dow is impartial. The index is above its five-week modified shifting common at 25,410. The Dow has been above its 200-week easy shifting common or the reversion to the imply at 24,127 because the week of May 29.
The 12x3x3 weekly sluggish stochastic studying is projected to say no to 68.69 this week down from 72.11 on July 3. Simply earlier than the all-time excessive this studying was above 90.00, which is a warning that I name an inflating parabolic bubble. The bubble popped with the bear market correction to the March 23 low.