Tight As Can Be

spx

The S&P 500 Index has traded in a 1.54% range this month.  Since 1928 that is the second tightest range for the month of August.  In August of 1995 the index traded in a 1.22% range.   As we’ve mentioned before, something’s gotta give. 

Hat tip Ryan Detrick

Banks Are On Fire

wfc

The financial sector, especially the banks, have been on fire since the Fed meeting.  The prospect of a more aggressive interest rate policy has sparked a powerful two day rally.  One of our favorites is Wells Fargo.  The stock is up over 5% from last week’s low and is set up well for more upside.  We are long the stock in most managed accounts and will be adding on weakness.  More here from thestreet.com:  https://www.thestreet.com/story/13688084/1/wells-fargo-is-in-breakout-mode-here-s-how-to-trade-it-now.html

Tesla Is In Trouble

tsla

Shares of Tesla have broken below key support this week.  We expect more downside as this breakdown develops.  An additional drop of 12% from current levels appears likely.  We are not in the stock at this time but would consider it a buy near $185.00.  More from thestreet.com:  https://www.thestreet.com/story/13689487/1/how-low-will-tesla-go.html

Gold

Certainly looks like Gold is headed to 1300 (support).  Should bounce there or near there.  But will 1300 hold?

Screen Shot 2016-08-30 at 12.37.09 PM

USO

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Deutsche Bank Is Bullish Gold

Based on a theory from Deutsche Bank analysts, gold should be trading around $1,700 an ounce.  Here’s their chart:

MW-EU930_dbgold_20160830052102_NS

Key bit from MarketWatch.com:   Based on a theory from Deutsche Bank analysts, gold should be trading around $1,700 an ounce.

“Let us be clear; we are not saying that gold will trade up to $1,700/oz in the near term, but when viewed against the aggregated balance sheet of the ‘big four’ global central banks (the Fed, ECB, BoJ and PBOC), the argument can be made if we view gold as a currency, the metal is worth closer to $1,700/oz, versus the spot price of $1,326/oz,” Michael Hsueh and Grant Sporre told clients.

They explain that central-bank balance sheets have expanded by 300% since the start of 2005, while aboveground stocks of gold have risen by 19% in tonnage terms or around 200% in value terms.

“If we were to assume that the value of gold should appreciate to keep the overall value of the big four aggregate balance sheet equivalent to that of the value of the aboveground gold stocks, then gold should be trading closer to $1,700/oz,” the analysts said in a note Friday.

The Disconnect, Dallas Fed Edition

Key bit from Zerohedge.com:   Having jumped miraculously from -18 to -1.3 in July, August’s Dallas Fed plunged back to -6.2 – contracting for the 20th month in a row. The worse than expected headline data came despite a rise in new orders as the number of employees, average workweek, and capex all plunged into contraction. Hope also tumbled from 18.4 to 7.0 with inventories and new orders expected to slow.

Despite the surge in oil prices, the Dallas economy continues to contract…

20160829_dfed_0

Wall Street Is Insane

From Josh Brown:  “Consider the following insane things that we believe on Wall Street, that make no sense whatsoever in the real world”:

1. Falling gas and home heating prices are a bad thing

2. Layoffs are great news, the more the better

3. Billionaires from Greenwich, CT can understand the customers of JC Penney, Olive Garden, K-Mart and Sears

4. A company is plagued by the fact that it holds over $100 billion in cash

5. Some companies have to earn a specific profit – to the penny – every quarter but others shouldn’t dare even think about profits

Great stuff from thereformedbroker.com.  The rest of the list is here:  http://thereformedbroker.com/2016/08/29/ten-insane-things-we-believe-on-wall-street-2/

Hedge Funds Are Holding Huge Long Positions

Key bit:  The chart below shows the Goldman sentiment Indicator, which ranks net futures positioning versus the past 12 months. Readings below 10 or above 90 indicate extreme positions that are significant in predicting future returns. With the current 90 print, “predicted future returns” are sharply negative.

gs sentiment_0

More here from Zerohedge.com:  http://www.zerohedge.com/news/2016-08-28/hedge-funds-are-now-all

What If Only Tax Payers Voted

From Zerohedge.com: If “pay-to-play” is good enough for Hillary’s State Department, then why not the nation?

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