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Daily Rap 10-16-2018

The bulls threw themselves a little party, as all the indices gained better than a percent through midday for no particular reason that I could see, other than that stocks had stopped going down and appeared to stabilize.

Higher We Win, Lower You Lose In the afternoon, the rampage higher continued with the indices gaining about 2% as of an hour to go, when I had to leave.

Away from stocks, green paper was both stronger and weaker, but closed flattish. Fixed income was a touch higher, oil was a nonevent despite all the chatter about Saudi Arabia, and the metals were higher early on but lost a tiny bit of ground.

Setting the Stage With the market having taken a decent pounding recently, muscle memory causes folks to chase stocks the minute they seem ready to...more

Last year's posts for Ask Fleck

Q: Well, Bill, it seems like maybe the change you've been discussing for years(!) is upon us. I'm about to find out how well prepared I am, but I thank you for the advice (charter subscriber).

And it would figure this happens a week you are traveling. It's a very strange type of karma.

Best wishes and thanks for being a voice of sanity.

Fleck: I love to hear from charter subscribers. I hope you are set up well.
(posted: 10/15/2018)

Q: Hi Bill,

That last Mr Skins post was very informative. Thanks for that.

Have it changed your views on the medium term outlook of the markets as even the pay to play crowd are beginning to sense danger? Or is it just a piece of info to add to the collection and you are relying on your own technical analysis on getting the time of the inevitable correction.

Fleck: All the data are just pieces to the puzzle. We must remain flexible and alert to market action that might be meaningful and actionable.
(posted: 10/15/2018)

Q: Hello Bill - no questions, just some comments:

To humbly add to Mr. Skin’s observations about monitoring market segments to assess the overall health of the market/economy, I thought the following information may also prove useful in assessing the “health” of the global markets. During May and June 2018, the 50-day moving averages for EWJ (Japan), FXI (China), EZU (Eurozone), EEM (emerging markets – though mostly Chinese stocks), DBA (agriculture) and DBB (base metals) all crossed under their 200 day moving averages and are in strong downtrends. Meanwhile, XBI (biotechnology), SMH (semiconductors) and XLF (financials) are testing the bottoms of year-long sideways patterns, while EWT (Taiwan) just broke down out of a similar sideways channel.

I keep pondering; can the major U.S. markets really support the entire planet? I have to admit, for such a “great” economy that is “destined” for inflation, the destruction of DBA and DBB have left me bewildered. According to those two, we should be in a depression and awaiting a dustbowl in the mid-west; however, they do appear to be bottoming. I also cannot fathom why the financial stocks are doing so poorly in a rising rate environment too; unless the smart money is expecting something the masses have entirely missed (mirroring Mr. Skin’s earlier comments). Several of the energy companies (COP, MRO, CEO, EOG, etc.) also staged “breakouts” in September, but they failed in the current market “correction” despite rising oil prices. All is not well in “newbie-land.” I just hope for all of us, the dollar keeps rolling over, and the gold shorts get squeezed until they hurt, and perhaps someday, sanity returns and logic is actually applicable, not a major hindrance. Until then, thanks to both you and Mr. Skin.

Fleck: FWIW, from what I have seen, agriculture commodities dance to their own drummer, and banks can easily decline in a rising rate environment.
(posted: 10/15/2018)

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