Leaders of the group are getting scarce

Leaders of the group are getting scarce

25 August 2020 from Carlsquare

Once again, it is the tech sector that is driving the stock market upwards in the US. The divergence between different stocks and markets are again on the rise. One should not forget that it is summer hibernation in the United States right now. This means both that the big traders are on a much-needed holiday after an exceptionally strong spring. It also means that the US congress is on vacation, so the new support packages that were well waited for are now delayed until after the vacations. In the short perspective it is instead focus on the annual Fed conference in Jackson Hole where Fed chief Jerome Powell will speak on Thursday morning, at 9.10 am, US Eastern Time.

In the past, Jackson Hole was the highlight of all those who followed the central bank's policy. Ben Bernanke tried to tone it down and he did not even attend all the events, like Janet Yellen after him.

Powell is expected to give hints about what support policy the Fed will provide in the future and perhaps even mention interest rates. However, we have low expectations that he will deliver some news more than what was stated in the latest protocol, namely that the United States is going through a difficult time right now.

If one look at world stock markets, it is still the United States that dominates:

Sweden’s OMXS30 and Germany’s DAX has performed relatively well, at least compared to Russia’s RTS and the French CAC with great domestic problems.

OMXS30 is consolidating under a falling momentum:

The same is valid for DAX:

The US S&P 500 index is stuck right above an all-time-high making up a strong resistance. Nevertheless, the index is still in a strong upwards pointing trend with EMA9 as well as MA20 pointing in the right direction. Negative divergence between the index and the MACD is somewhat worrisome.

However, Nasdaq is performing strong and managed to set a new all-time-high on Friday. Note also how the negative trend for MACD has been broken:

Bull & Bear-Certificates

 Symbol ISINIndex reference instrumentFactorTypeCur.BidAsk 
BULL APPLE X10 VON5
DE000VE38708 Apple Inc. 10.00 Long SEK 0.001 -
BULL APPLE X10 VON4
DE000VE3EQ97 Apple Inc. 10.00 Long SEK 0.001 -
BULL APPLE X10 VON1
DE000VF533C5 Apple Inc. 10.00 Long SEK 0.006 0.015
BULL APPLE X10 VON10
DE000VP2RC04 Apple Inc. 10.00 Long SEK 0.174 0.178
BULL APPLE X10 VON11
DE000VP3MTV0 Apple Inc. 10.00 Long SEK 0.138 0.142
BULL APPLE X10 VON12
DE000VP3NQ50 Apple Inc. 10.00 Long SEK 0.068 0.072
BULL APPLE X10 VON13
DE000VP5UD88 Apple Inc. 10.00 Long SEK 0.012 0.02
BULL APPLE X10 VON15
DE000VP9V6U9 Apple Inc. 10.00 Long SEK 0.352 0.356
BULL APPLE X10 VON14
DE000VP9VHN0 Apple Inc. 10.00 Long SEK 0.704 0.712
BULL APPLE X10 VON18
DE000VV11SJ7 Apple Inc. 10.00 Long SEK 2.83 2.87
BULL APPLE X10 VON19
DE000VV19AU5 Apple Inc. 10.00 Long SEK 7.51 7.60
BULL APPLE X10 VON20
DE000VV2K3W0 Apple Inc. 10.00 Long SEK 21.75 21.99
BULL APPLE X10 VON21
DE000VV3R221 Apple Inc. 10.00 Long SEK 51.93 52.50
BULL APPLE X10 VON17
DE000VX8WXW8 Apple Inc. 10.00 Long SEK 1.40 1.42
BULL WTI X10 VON33
DE000VP29J53 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON41
DE000VQ9Q060 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON53
DE000VV34D70 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.14 0.144
BULL WTI X10 VON46
DE000VX5RHK2 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON47
DE000VX8WXZ1 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.002 -
BULL WTI X10 VON48
DE000VX8XQQ2 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.012 0.02

The FAANG shares are the big winners.

The very idea of an index is that you can smear the development of many shares into a common indicator that is easier to follow. The S&P 500 has been the broadest index, which also corresponds to the largest market value in a global comparison, and therefore acts as a proxy for us. The S&P 500 is simply a leader and all our analysis are therefore based on this index.

But what do one do when five companies grow to mega size and completely take over? Apple will soon stand alone for seven percent of the entire S&P 500 index, in terms of market value. However, the FAANG is not adequate anymore. Among the large companies Facebook, Apple, Amazon, Alphabet and Microsoft are the driving forces. Soon, Tesla will also be introduced among the S&P 500-companies…so at that time, a new and more correct abbreviation will be FAAAMT.

Note that Apple, Alphabet, Facebook och Microsoft are trading at P/E-tal around 30x plus, meaning that 30 years plus net profits are discounted. Given that Covid-19 has hit the world, and for example, Apple has not come up with any new products that have revolutionized the market in recent years, one must be aware that the air can quickly leave this market. We see it rather as a liquidity-driven case. There is too much liquidity in the market due to the central banks printing money. Some of these have been allocated to the stock market, but instead of investing into sectors if working in headwinds, the money goes to companies that are relatively unaffected by the global crisis. To find guidance on the future, these companies must be closely monitored in the coming weeks.

The Facebook share is consolidating right below of its all-time-high. The share has also started to gain momentum illustrated by MACD:

Bull & Bear-Certificates

 Symbol ISINIndex reference instrumentFactorTypeCur.BidAsk 
BULL APPLE X10 VON5
DE000VE38708 Apple Inc. 10.00 Long SEK 0.001 -
BULL APPLE X10 VON4
DE000VE3EQ97 Apple Inc. 10.00 Long SEK 0.001 -
BULL APPLE X10 VON1
DE000VF533C5 Apple Inc. 10.00 Long SEK 0.006 0.015
BULL APPLE X10 VON10
DE000VP2RC04 Apple Inc. 10.00 Long SEK 0.174 0.178
BULL APPLE X10 VON11
DE000VP3MTV0 Apple Inc. 10.00 Long SEK 0.138 0.142
BULL APPLE X10 VON12
DE000VP3NQ50 Apple Inc. 10.00 Long SEK 0.068 0.072
BULL APPLE X10 VON13
DE000VP5UD88 Apple Inc. 10.00 Long SEK 0.012 0.02
BULL APPLE X10 VON15
DE000VP9V6U9 Apple Inc. 10.00 Long SEK 0.352 0.356
BULL APPLE X10 VON14
DE000VP9VHN0 Apple Inc. 10.00 Long SEK 0.704 0.712
BULL APPLE X10 VON18
DE000VV11SJ7 Apple Inc. 10.00 Long SEK 2.83 2.87
BULL APPLE X10 VON19
DE000VV19AU5 Apple Inc. 10.00 Long SEK 7.51 7.60
BULL APPLE X10 VON20
DE000VV2K3W0 Apple Inc. 10.00 Long SEK 21.75 21.99
BULL APPLE X10 VON21
DE000VV3R221 Apple Inc. 10.00 Long SEK 51.93 52.50
BULL APPLE X10 VON17
DE000VX8WXW8 Apple Inc. 10.00 Long SEK 1.40 1.42
BULL WTI X10 VON33
DE000VP29J53 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON41
DE000VQ9Q060 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON53
DE000VV34D70 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.14 0.144
BULL WTI X10 VON46
DE000VX5RHK2 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON47
DE000VX8WXZ1 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.002 -
BULL WTI X10 VON48
DE000VX8XQQ2 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.012 0.02

On Friday, a scary looking doji was created in Tesla. In terms on RSI, the share is overbought. EMA9 serves as a first level of support followed by Fibonacci 23.6 meeting up around 1 683 USD:

Bull & Bear-Certificates

 Symbol ISINIndex reference instrumentFactorTypeCur.BidAsk 
BULL APPLE X10 VON5
DE000VE38708 Apple Inc. 10.00 Long SEK 0.001 -
BULL APPLE X10 VON4
DE000VE3EQ97 Apple Inc. 10.00 Long SEK 0.001 -
BULL APPLE X10 VON1
DE000VF533C5 Apple Inc. 10.00 Long SEK 0.006 0.015
BULL APPLE X10 VON10
DE000VP2RC04 Apple Inc. 10.00 Long SEK 0.174 0.178
BULL APPLE X10 VON11
DE000VP3MTV0 Apple Inc. 10.00 Long SEK 0.138 0.142
BULL APPLE X10 VON12
DE000VP3NQ50 Apple Inc. 10.00 Long SEK 0.068 0.072
BULL APPLE X10 VON13
DE000VP5UD88 Apple Inc. 10.00 Long SEK 0.012 0.02
BULL APPLE X10 VON15
DE000VP9V6U9 Apple Inc. 10.00 Long SEK 0.352 0.356
BULL APPLE X10 VON14
DE000VP9VHN0 Apple Inc. 10.00 Long SEK 0.704 0.712
BULL APPLE X10 VON18
DE000VV11SJ7 Apple Inc. 10.00 Long SEK 2.83 2.87
BULL APPLE X10 VON19
DE000VV19AU5 Apple Inc. 10.00 Long SEK 7.51 7.60
BULL APPLE X10 VON20
DE000VV2K3W0 Apple Inc. 10.00 Long SEK 21.75 21.99
BULL APPLE X10 VON21
DE000VV3R221 Apple Inc. 10.00 Long SEK 51.93 52.50
BULL APPLE X10 VON17
DE000VX8WXW8 Apple Inc. 10.00 Long SEK 1.40 1.42
BULL WTI X10 VON33
DE000VP29J53 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON41
DE000VQ9Q060 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON53
DE000VV34D70 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.14 0.144
BULL WTI X10 VON46
DE000VX5RHK2 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON47
DE000VX8WXZ1 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.002 -
BULL WTI X10 VON48
DE000VX8XQQ2 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.012 0.02

Finally, Apple, which is the single most important stock, continues to run on rocket fuel. After the bull flag that we drew, the stock has created a new all-time high. Apple is certainly a leader, so this development must be respected. The Fibonacci projection indicates that the next level on the upside can be found around 515 USD:

But at the same time, the development gives strong warning signals that not everything is right. The monthly graph shows the parabolic development. We are not talking about a small company here, but about the world's largest listed company, in terms of market value:

Bull & Bear-Certificates

 Symbol ISINIndex reference instrumentFactorTypeCur.BidAsk 
BULL APPLE X10 VON5
DE000VE38708 Apple Inc. 10.00 Long SEK 0.001 -
BULL APPLE X10 VON4
DE000VE3EQ97 Apple Inc. 10.00 Long SEK 0.001 -
BULL APPLE X10 VON1
DE000VF533C5 Apple Inc. 10.00 Long SEK 0.006 0.015
BULL APPLE X10 VON10
DE000VP2RC04 Apple Inc. 10.00 Long SEK 0.174 0.178
BULL APPLE X10 VON11
DE000VP3MTV0 Apple Inc. 10.00 Long SEK 0.138 0.142
BULL APPLE X10 VON12
DE000VP3NQ50 Apple Inc. 10.00 Long SEK 0.068 0.072
BULL APPLE X10 VON13
DE000VP5UD88 Apple Inc. 10.00 Long SEK 0.012 0.02
BULL APPLE X10 VON15
DE000VP9V6U9 Apple Inc. 10.00 Long SEK 0.352 0.356
BULL APPLE X10 VON14
DE000VP9VHN0 Apple Inc. 10.00 Long SEK 0.704 0.712
BULL APPLE X10 VON18
DE000VV11SJ7 Apple Inc. 10.00 Long SEK 2.83 2.87
BULL APPLE X10 VON19
DE000VV19AU5 Apple Inc. 10.00 Long SEK 7.51 7.60
BULL APPLE X10 VON20
DE000VV2K3W0 Apple Inc. 10.00 Long SEK 21.75 21.99
BULL APPLE X10 VON21
DE000VV3R221 Apple Inc. 10.00 Long SEK 51.93 52.50
BULL APPLE X10 VON17
DE000VX8WXW8 Apple Inc. 10.00 Long SEK 1.40 1.42
BULL WTI X10 VON33
DE000VP29J53 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON41
DE000VQ9Q060 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON53
DE000VV34D70 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.14 0.144
BULL WTI X10 VON46
DE000VX5RHK2 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.001 -
BULL WTI X10 VON47
DE000VX8WXZ1 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.002 -
BULL WTI X10 VON48
DE000VX8XQQ2 WTI Light Sweet Crude Oil Future Nov 2022 10.00 Long SEK 0.012 0.02

The EUR/USD has lost momentum. The pair closed Friday below EMA9 close to MA20. Given the negative divergence between the pair and MACD, the risk seems to be on the downside. In case of a break below the rising trendline, the next level can be found around 1.165 where Fibonacci 23.6 meet up:

The gold price has come under another wave of pressure. Further strengthening of the USD is a threat. The metal is pushed downwards by EMA9 and is trading below MA20. Fibonacci 23.6 serves as a support. A falling MACD indicates a declining momentum. In case of a break on the downside, MA50 around 1 863 USD per troy ounce is the next level:

For oil, the two storms that are on their way into the Gulf of Mexico are in focus and could possibly disrupt oil production. The last time there were two storms that hit this area at the same time was in 1933. Ordinary storms are not some much to worry about, but there is some concern that these two will affect each other and create something called the Fujiwhara effect…meaning that they hook their arms together and dance and reinforce each other.

The picture is from 1974 of hurricanes Ione and Kirsten in the Pacific Ocean.

Below is the weekly graph for brent oil:

Legal notice

This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

30/09/2022 15:05:34

 

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