A Sucker Punch August 2nd, 2019 by John Gross
A ‘sucker punch’ is defined as a punch made without warning, or while the recipient is distracted, allowing no time for preparation, or defense on the part of the recipient.
That’s what we got last week – A Sucker Punch.
Just about every market, to include base metals, energy and equities all felt the severe pain of the blow, with copper particularly hard hit, as it fell almost 10¢ between Thursday’s after market and Friday’s close.
The weekly Copper Bar Chart shows Spot falling through a key support line, and putting it dangerously close to testing a structurally important foundation of the market.
Likewise, the Copper Price & Inventory Chart has Spot falling to a two year low on a closed basis, with $2.50 being the next line of support.
With the exception of nickel, the rest of the base metals group is also on track to testing their respective support lines.
The energy complex saw crude oil fall $4.63, or 8% on Thursday, with heating oil and gasoline both off more than 10¢ per gallon.
As for equities, with the exception of minor gains in India and Brazil, every other major market fell on the week.
On July 26th, the S&P 500 closed at a record high 3,025.86. From that point, the S&P has given up 93.81 points, or 3.1% to close at 2,932.05 on Friday.
Here too, as the S&P chart illustrates, it is sitting precariously on a support line.
Regrettably, one is hard pressed to maintain an optimistic outlook given the gravity of recent events, with the trade war becoming more confrontational.
Where does it end?
Just as you don’t shout ‘Fire’ in a crowded movie theater, one should not shout ‘More Tariffs’ to an already anxious marketplace.
View Charts (PDF)