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Today’s Summary
Monday, August 31st, 2020
Indices: US Stocks were mostly lower in today’s session, with the Dow Jones Industrial Average falling 224 points or 0.78%. The S&P 500 snapped a seven-day winning streak slipping 0.22%. The Nasdaq rose 0.68% to a fresh all-time high. Small-Caps underperformed, with the Russell 2000 dropping 1.04%.
Sectors: Technology led, gaining 0.32%. Energy lagged, falling 2.17%.
Commodities: Crude Oil futures fell 0.84% to $42.61 per barrel. Gold futures inched higher by 0.19% to $1,979 per ounce.
Currencies: The US Dollar Index slipped 0.16% to its lowest level in over 2 years.
Interest Rates: The US 10-year Treasury yield fell to 0.705%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
The difference between confirmation and divergences $XLK pic.twitter.com/8K1ZAZ2HS3
— Steven Strazza (@sstrazza) August 31, 2020
Today’s Chart of the Day was shared on Twitter by Steve Strazza (@sstrazza). Throughout the recovery from the March lows, many have been quick to get bearish at first sight of momentum divergences. A bearish momentum divergence is formed when price and RSI fail to make new highs together. Steve uses this chart of the Tech Sector ETF, $XLK, to emphasize that these are simply potential divergences until they’re confirmed by price closing below the former highs. In February, a potential divergence formed and was later confirmed when price closed below the January highs. A few weeks ago, a similar divergence formed, except this time, price failed to confirm that divergence by continuing higher. Momentum divergences are an incredibly useful tool and they’re always worth being aware of. However, it’s important to be patient and wait for price to confirm a divergence before getting aggressively bearish.
Quote of the Day
“You have to know what you are, and not try to be what you’re not. If you are a day trader, day trade. If you are an investor, then be an investor. It’s like a comedian who gets up onstage and starts singing. What’s he singing for? He’s a comedian.”
– Steven Cohen
Top Links
Historic August Opens Door to Worst Month of The Year – LPL Financial Research
The team at LPL Financial Research examines the outlook for stocks heading into what has historically been a weak month.
Art Cashin on the Short-Term Effects of Stock Splits – The Reformed Broker
Legendary NYSE floor trader, Art Cashin weighs-in on the recent Tesla and Apple stock splits.
The World is Breaking Out – Momentum Monday
In their weekly Momentum Monday video, Howard Lindzon and Ivanhoff highlight some of the strongest stocks, trends, and themes across the markets.
Woah There Horsey – Jotting on Charts
Grant Hawkridge points out a few potential warning signs for stocks.
The Trend is Your Friend – The Weekly Trend
In this podcast, Ian McMillan and David Zarling discuss the most important technical developments to be aware of this week.
Top Tweets
And it’s best summer (June through August) and its best 5 month total return since….ever. https://t.co/NTpCZeQbeD
— Steve Deppe, CMT (@SJD10304) August 31, 2020
Check this out: As of last week, 83% of #stocks in the #SPX were above their 50-day moving average. That isn’t a bad number and it’s one that has been fairly consistent in recent weeks. In fact, the level of participation is consistent with the 2009 recovery roadmap. pic.twitter.com/MPjfq2LePX
— Jurrien Timmer (@TimmerFidelity) August 31, 2020
That's another *checks notes* 40% upside to the 2.618 Fib extension. $QQQ $NDX pic.twitter.com/4jzsIaEKwn
— Ian McMillan, CMT (@the_chart_life) August 31, 2020
$SPX and $VIX have been unusually positively correlated. That has mostly been bad news (red lines) but not always (green lines) pic.twitter.com/BOLE3bHBYK
— ukarlewitz (@ukarlewitz) August 31, 2020
While stocks are "overextended" charts like gold are not. $GLD finding support again last week around $180 and Fibonacci support. Beginning of next leg higher for precious metals? $GOLD pic.twitter.com/Qnl15UixU6
— David Keller, CMT (@DKellerCMT) August 31, 2020
First hurdle cleared. Two more to go. #silver broke above its short-term downtrend line. Here are the next two targets for Dec silver: 1) Aug 18 $28.78 high and 2) Aug 7 $30 high. Silver has been building a launch pad. The rocket takes off when/if $30 is hurdled. pic.twitter.com/UPJFt2dutC
— James Turk (@FGMR) August 31, 2020
The last day of every month is my favorite because i get to publish monthly closes on gold & silver along with various precious metals stocks & indexes with ratio & seasonality charts. 40 year seasonality in silver. We have the wind at our back until late September. $SLV #silver pic.twitter.com/iGIGMttej3
— Edward Gofsky (@EdwardGofsky) August 31, 2020
$DXY momentum could be stabilizing – new lows are being accumulated with quick upside reversals.
Sellers seem unable to maintain control, and the wedge suggests time is running out.
Watching this closely as September begins – could have significant implications for Equities. pic.twitter.com/7sN3rbyFQ2
— Macro Charts (@MacroCharts) August 31, 2020
#Ethereum daily chart trying to break free from recent range. Over $443 and $500 is up next. #crypto pic.twitter.com/zmFkWDc6Vy
— CEO Technician (@CEOTechnician) August 31, 2020
Call it overbought, extended, a bubble, or whatever you like. This is what a rip-roaring bull market looks like. I'm thankful for being a trend follower and for being able to ignore the noise and the bearish narrative. $QQQ #stocks #bullmarket pic.twitter.com/QhlTT5h6he
— Greg Rieben (@gregrieben) August 31, 2020