Broad Market Outlook
We had some big news last week that packed more talk then action. We had the 10 Year Treasury retest its prior all time high and retest levels we have not scene since 2007. Making this the 3rd major attempt at this level over the last 16 years.
If we were to pretend this was a stock chart, this would be one we would be salivating to buy through the breakout area in time. As a result of this mortgage rates followed suit, hitting the highest levels that we have also not seen since the Dot Com bubble was in the recent rear view.
Now even with the 10 year treasury and 30 year mortgages hitting new all time highs. FED chairman Jermone Powell said he was prepared to continue to raise rates until they are confident that inflation is falling in line with there 2% benchmark.
In the short term, all things point to higher rates before the real fade lower can begin. We need those blow off top type moves before we should expect to see any dramatic drops in rates.
The other key news this past week was NVDA reporting earnings. That for the time being has become the darling of Wall Street, given its impressive run up this year.
Yet with all of the good news already backed into the stock, such as a 100% increase in revenue, it seems the stock has gotten a bit ahead of itself. Along with this monthly doji at highs, this seems to be the time to ring the register instead of trying to pile in at the end of the move.
We have another few weeks of the dog days of summer as August tends to rarely favor increases in equity prices. But once we get past labor day and most return to the office, we should have a solid end of year market on our hands as the market continues to do what's needed to retest all time highs.
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Sensitive - sectors that have moderate correlations to overall market conditions.
Cyclical - sectors that are more sensitive overall market conditions.
Defensive - sectors that tend to outperforming during sub par market conditions.
Big Picture Set Up's
HSIC has been battling it out in a very tight range recently with buyers and sellers at a stand still. If the buyers can take control a support buy back entry up through 77.50 vs 76 could be one to keep on the radar.
UFPI has been bull flagging near all time highs all summer with a clear seller at the 104 area and buyers stepping in and support the stock around 98. It will most likely still need some time to set up further but one to keep on the radar.
VRSK continues to bull flag near all time highs as it puts in higher pivot lows with each attempt at the 238 area. Now it might be a bit extended and need more time to set up but if it is ready to go sooner then later, keeping the risk tight vs 234 could make sense.
One could make the case that WING is bear flagging near support and that would be true, a break down below 160 could be a solid short. However it seems there is a seller at 170 and if the buyers could break said seller it could be a nice support buy back set up.
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