Shanghai Comp rallied sharply again overnight- the index continues to base-build / stabilize in oversold territory, however other emerging markets (Turkey, Argentina, South Africa) are still under pressure (currency collapses noted last week)… so its a mixed bag as we say goodbye to summer and start the new week… oil is rallying this morning (+2%), which comes against a stronger dollar (EM weakness)- and this has all triggered flat- to modestly-lower U.S. futures.
On Friday before the holiday weekend, the S&P Smallcap 600 and Russell 2000 closed at all-time highs against light volume- this pushes most U.S. market indices into overbought / extended territory on a short-term basis- thus we continue to look for some profit-taking / consolidation over the short-run.
Shanghai Comp: stronger overnight, but rest of EM still struggling…
Oil: stronger today (+2.0%)- trend remains bullish above $66-68 initial support…
Most emerging markets remain under pressure in a bear trend on the charts…
…and as a result the dollar index remains well supported-
U.S. Small-caps continue to lead the charge- the R2K closed at new all-time (secular) highs again on Friday…
**The global macro trend continues to argue for money flow to rotate toward U.S. markets in our view… the one caveat we see is that most U.S. benchmarks continue to press into overbought / extended territory on the charts, which implies we are likely to see a period of profit taking ahead at some point.
We continue to watch for the following initial support levels this week:
Index Initial Support
Dan Wantrobski, CMT
Director of Research | Technical Strategist
Janney Montgomery Scott, LLC
1717 Arch Street | Philadelphia | PA 19103
O: 215.665.4446 | M: 609.781.8698