Anybody with half a brain can see the inherent contradictions in this series of statements and headlines, and sure enough, on Saturday 'morning Iranian gunboats conducted at least three attacks on commercial ships in the Strait of Hormuz. fired upon ships transiting the Strait of Hormuz. The Iranian military also stated unequivocally that the Strait is closed and that passage through the Strait of Hormuz would be conducted based on the "designated route" and with "Iranian authorization." Iran has also stated that it has not agreed to another round of talks with the U.S.
So, as the BS spins, the market rallied to fresh highs once again on Friday, this latest development could put the current rally to the test when the new trading week starts on Sunday evening when futures open up. Meanwhile, the NASDAQ Composite, S&P 500 and small-cap Russell 2000 are trading in new-high price territory, for now.
Big-stock tech names have led the rally off the late March and early April lows but have become quite extended on the upside. In a few cases, the stocks have had such persistent upside moves that the only long entry set-ups we are seeing have come in the form of Century Mark long entries. Below we see Broadcom (AVGO) posting one at the $400 level, Ciena (CIEN) at the $500 level, Coherent, Inc. (COHR) earlier in the week at the $300 level, and Nvidia (NVDA) at the $200 level. Technically, these are actionable using the relevant Century Mark as a tight selling guide. COHR is, however, extended from the $300 level and the rest are in well-extended two-week rallies off late March lows. Should any of these reverse at their respective Century Marks then they would morph into Century Mark Short-Sale set-ups using the respective Century Mark as a covering guide. Unless Trump pulls a new line of B.S. out of his hat this weekend, the short side of these charts may come into play this coming week.
Earnings season is now moving into its busiest phase. Both ASML Holdings (ASML) and Taiwan Semiconductor (TSM) reported earnings on Wednesday and Thursday morning, respectively, and both gapped down in response. It is not clear whether support at the 10-dma/20-dema in either is buyable or whether these will break support and trigger short-sale entries in the coming trading week.
Crude Oil prices plummeted on Friday on what markets now know was fake news regarding an open and unhindered Strait of Hormuz. This sent the United States Oil Fund (USO) gapping nearly 8% lower on Friday as its tests the late March lows. Expect this chart to change as reality sets in again tomorrow when futures open.
As the news flow goes so goes the market, and that looks to remain the case as we head into the new trading week. Traders can certainly test long or short set-ups as they arise in real-time, but one must remain nimble and alert as the news flow can change quickly and at this stage it would appear that all the good news is in the market. Lasting peace in the Middle East, or a return to a war footing?The Market Direction Model (MDM) remains on a SELL signal.