SPX Daily neutral with a bullish bias. Recommended ratio: 55% SPX, 45% Cash. *June Housing Starts came in lower than May (1.591M) at 1.559M and under the consensus estimate of 1.58M, implying that the housing market is starting to cool off as new home buyers appear to be increasingly fearful of a "technical" recession this year. June Building Permits came in fractionally lower than in May (1.695M) at 1.685M and over the consensus estimate of 1.65M, though not as significant of a reduction from the prior month this too is indicative of a housing market cool down in the second half of 2022. Both numbers can still be revised up or down but as it stands now, the demand cool down in the housing market is mildly bullish because it shows that the Fed's hawkish monetary policy is having its intended effect on markets. More clarity will be provided regarding whether or not this points to a recession when the July Jobs report (Employment Situation) is released at 830am (EST) on 08/05/22. Q2 earnings season has gotten off to a bullish start with banks (BOA, Citi) and certain pharmaceutical (J&J) and consumer retail (Hasbro) companies beating estimates but forecasts for the second half of the year remain cloudy. The Senate is scheduled to vote on the CHIPS for America Act today and, with some potential modifications, is expected to pass it by this week or next (if you used the Pelosi indicator congratulations on this one). Russia has apparently been seen restarting gas flows from Russia to Germany (after "scheduled maintenance") via the Nord Stream pipeline but at a reduced capacity; Russia claims that delays in repairs of a turbine sent to Canada are reasons for a 40% cut in capacity but German officials are saying that the turbine is just a replacement part that was supposed to be installed in September. Cryptos, Equities, Oil, Treasuries and the Euro are up today while DXY, VIX and Agriculture are down and Gold is relatively flat. In other news, on Bloomberg TV today, SEC Chair Gary Gensler once again floated the idea of banning payment for order flow and made mention of rampant noncompliance in the crypto industry that will be of chief importance to the SEC in the coming months.* Price is currently testing the 50 MA + lower trendline of the descending channel from August 2021 as resistance at $3938 minor resistance; additionally, Price closed above the uptrend line from 06/16 (~$3900) which currently gives PA a bullish tilt. Volume remains Moderate and after today's green close has favored buyers in seven of the last ten sessions; this is bullish. Parabolic SAR flips bearish at $3721, this margin is neutral at the moment. RSI is currently trending up at 55 as it technically tests 53 resistance; the next resistance is at 68. Stochastic remains bullish and is currently testing 76 resistance with no signs of peak formation, the next resistance after that is max top. MACD remains bullish and is currently trending up at -21 as it approaches a retest of -11 resistance (last time it retest -11 was 06/08); additionally, MACD is on the verge of reestablishing support at the uptrend line from March 2020 (~-35). ADX is currently trending down at 17 as Price is pushing higher, this is mildly bullish at the moment; if ADX is able to bounce here as Price continues higher, this would be bullish. If Price is able to break above $3938 resistance and turn it to support (it's already breaking above the 50 MA), the next likely target is a retest of $4175 resistance. However, if Price is rejected here then it will likely retest $3707 minor support before potentially heading lower to $3500 minor support. Mental Stop Loss: (one close below) $3906.
Comment:
GDPNow Q3 GDP estimate from Atlanta Fed is now -1.6%, down from -1.5% in the previous estimate (07/15)