August Issue

Top Market Events

With most of the Q2 earnings reports announced by August 3^rd, big tech seemed to run out of steam, along with the other major indices. Given that many stocks were in overbought territory, this is likely to be a short-term sell-off, giving the moving averages a chance to catch up with price.

Meanwhile, Russia and Saudi Arabia have agreed to further cuts in the supply of oil with the aim of pushing crude to $100 a barrel. And we are already on the way there. On August 10^th, Brent Oil hit $87 and WTI hit $83, with little sign of a pull-back in sight.

Gold, on the other hand, continues to slide lower towards the next major support line around 1907. If the recent up-move by the US dollar falters, Gold bulls will be looking to get in again to push the precious metal back up to 2050, highs not seen since early May of this year.

In the Spotlight

GBPUSD

As the dollar index climbed higher during July, the pound came crashing down. The Bank of England’s decision to raise the base rate another quarter of a point on August 3^rd quickly reversed the pound’s decline. Since then the pound has begun to base, ranging between 1.267 and 1.275. If the USDOLLAR Basket should break below its previous low around 12,635, there is a strong possibility the pound may break out, heading for previous highs at around 1.31.

NAS100

The NAS100 has had a tremendous run for most of the year and hasn’t even come close to breaking the 50 EMA since March. So, it’s perhaps hardly surprising to see the bulls taking a holiday during August, allowing the bears to come in and cool things down a little. Price on August 11^th has dropped below the 50 EMA (short term bearish) but remains well above the 200 EMA, and therefore bullish long-term.

US2000

Since the US2000 broke above the 200 EMA in early June, it has been making steady progress upwards, reaching 2002 by the end of the July. As with the other US indices the Russel 200 has seen some selling off in the past few days, although this may in large part be due to the low trading volume typical of August.

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