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Jul 5, 2018

Stocks making the biggest moves after hours: PSMT, FLR & more I After Hours I CNBC.

cnbc.com

Stocks making the biggest moves after hours: PSMT, FLR & more

Miguel Pineda


Wall Street New York Stock Exchange NYSE Scott Mlyn | CNBC
Check out the companies making headlines after the bell:
PriceSmart stock was down nearly 7 percent in after-hours trading. The San Diego-based company missed on earnings for its third quarter, earning 61 cents per share versus the 63 cents per share expected by analysts. PriceSmart did beat analysts' revenue expectations generating $782 million versus the $777 million expected.
Shares of Fluor were down more than 1 percent in extended-hours trading, before recovering its losses. The engineering and construction firm has faced accusations that it misled investors about the performance of its gas-fired projects. Shareholders recently filed a class-action lawsuit against Fluor. The company's shares are down more than 5 percent year to date.
Shares of Digital Realty Trust were down nearly 2 percent in extended-hours trading, before recovering those losses. Digital Realty Trust is in discussions to acquire Brazilian data center operator Ascenty, according to Bloomberg, citing sources. Ascenty is valued at more than $1 billion. 

How low can U.S. unemployment go? What to watch in the June jobs report I MarketWatch

marketwatch.com

How low can U.S. unemployment go? What to watch in the June jobs report

Jeffry Bartash


Like a new house built rapidly from the ground up, the U.S. economy is surging in the spring. That means more jobs and maybe even better pay for workers.
Job openings and hiring are as strong as ever and unemployment has fallen to an 18-year low, but increases in worker pay haven’t kept up. Is that big payday coming?
Here’s what to watch in the employment report for June, to be issued Friday morning by the Labor Department.
Wages and labor shortages
The unemployment rate has fallen to an 18-year low of 3.8% and more and more companies complain they can’t find enough skilled workers. You’d figure that would be boosting worker pay, especially with so many people now switching jobs. Some 3.4 million Americans quit in April, almost matching a record high.
Wages have been rising, but not nearly as fast as might be expected. Hourly pay rose at a 2.7% pace in the 12 months ending May, but that’s far less than the 3% to 4% rates that usually prevail when unemployment is so low.
Economists are convinced wages will move higher, perhaps crossing the 3% barrier later this year for the first time since 2009. It just won’t happen this month. Economists estimate the yearly rate will edge up to 2.8%.
Jobs, jobs and more jobs
Sooner or later the rate of hiring simply has to slow. The U.S. has added almost 19 million new jobs since 2010, leading to a far smaller and still-shrinking pool of available labor. Many of the people looking for jobs are also either very young or lack the necessary skills.
“Businesses are having a more difficult time finding qualified workers to fill open positions,” said Bank of the West chief economist Scott Anderson.
Read: How Trump’s European auto tariff proposal could backfire
The expected dropoff in hiring will probably occur over a period of months, however, and economists doubt it will start in June. They predict the U.S. economy added close to 200,000 new nonfarm jobs last month.
How low can unemployment go?
Economists predict the unemployment will remain steady at 3.8% in June, but it’s widely believed the jobless rate will soon move toward 3.5% and reach levels not seen since the 1960s.
Here’s the conundrum. A low unemployment rate has long been associated with rising inflation, but prices are still relatively mild even after a sharp increase over the past year.
Worker pay tends to rise more rapidly in good times since businesses have to pay more to recruit or retain talented employees. Economists have a name for this phenomenon: They call it, uh, NAIRU.
That stands for the non-accelerating inflation rate of unemployment, but no need to remember it. The fact is, wages aren’t rising all that quickly. And the link between employment and inflation appears broken or, at the very least, in hibernation.
The unemployment rate can only go so low, however, before labor-market shortages push wages higher.
Watch the relationship between wages and unemployment very closely. If wages top 3%, the Federal Reserve is likely to raise U.S. interest rates TMUBMUSD10Y, +0.04%  more aggressively.
Also read: Trump pushes U.S. closer to once-unthinkable trade war. Wall Street’s battered and it could get a lot worse
Already suffering from trade-war worries, the stock market DJIA, +0.75% SPX, +0.86% COMP, +1.12%  could suffer further declines if investment cash shifts to bonds from stocks. DJIA, +0.75%

Coalition's GST changes described as a 'magic pudding' as states await modelling | Australia news I The Guardian

theguardian.com

Coalition's GST changes described as a 'magic pudding' as states await modelling | Australia news

Amy Remeikis


A bigger slice of the pie or a magic pudding? The proposal to reform how the GST is distributed has been greeted with both reserved optimism and scepticism by the states, as they work to digest what it means.
Queensland was one of the first out of the blocks. Its premier, Annastacia Palaszczuk, said she would reserve her state’s judgment until after the modelling was made clear.
She said she had spoken to the prime minister before the review’s release but had not yet seen any detail.
“We need to see the modelling,” she said. “The modelling has not yet been provided to myself as the premier, to the treasurer, or to our Treasury officials and we do need to see that modelling as soon as possible.
“It does seem to me to be highly ironic that all of a sudden there is a pie that gets bigger.
“Where is the money coming from? I will not stand to see any cuts to services, especially our hospitals and schools across Queensland. It appears that this is more of a magic pudding than it is a pie that continues to increase.”
Queensland is one of the beneficiaries of the current system and, under the changes, could expect to be $518m better off overall.
Palaszczuk’s response has so far been the most reticent. Her Labor colleague Ben Wyatt, the Western Australian treasurer, labelled the proposal “a pragmatic and creative response”.
WA’s budget is to receive an additional $3.3bn by 2026-27, with a new “floor” of 70 cents in the dollar put forward. WA’s share fell to 30 cents after the mining boom, making GST reform one of the state’s highest priorities.
The federal government has previously offered top-ups but tied the money to infrastructure projects. If adopted, WA will not have restrictions on how it spends the additional funds.
In order to offset the additional funds, the federal government has recommended it offset the pool, which has led to Queensland’s scepticism and WA’s relief.
“That is fundamental,” Wyatt said. “To get the buy-in we’re looking for, you couldn’t have a scenario where one state is particularly worse off.”
Western Australia and Queensland will prove instrumental at the next federal election. Both have a large number of Coalition MPs facing election wipeout.
The finance minister, Mathias Cormann, led his federal colleagues in welcoming the proposal, speaking in front of a backdrop of Liberal MPs.
“The initial response right across the country, on a non-partisan basis, has been positive, open-minded and people have been prepared to work through the detail,” Cormann said.
Victorian Labor’s acting premier, James Merlino, warned of the “devil in the detail” but said the state was waiting to see the modelling, while New South Wales welcomed the changes.
“For too long the unofficial motto of Queensland has been ‘beautiful one day, subsidised by NSW the next’,” the NSW treasurer, Dominic Perrottet, said.
“The people of Queensland would be embarrassed to know their schools, roads and hospitals are being paid for by NSW taxpayers.”
Labor’s federal shadow treasurer, Chris Bowen, was also reserved, questioning where the money would come from.
“We’ve always said Western Australia has legitimate concerns,” he said. “We said that in Perth, we said it in Hobart, we said it in Brisbane.
“But we have also said that, under our model, no state or territory would be worse off. Now, Scott Morrison said that was nonsense, you couldn’t top up GST payments from the commonwealth, that it was not the way forward, and now he is proposing to lock top-ups in, in a very considerable way.
“Not just for Western Australia but for other states and territories as well.
“So states and territories and Australians who are interested in good funding for schools and hospitals are entitled to be very cynical, are entitled to expect guarantees from this government.”
The state’s treasurers will meet with Morrison in September to discuss the plan. While the commonwealth can move forward with changes to the distribution formula without the states’ approval, Morrison has said he wants to do it with consensus, to ensure continuity in the event of a changed federal government.

MAKE IT I CNBC

Daily dose of inspiration:
"If money is all a job has to offer, make sure it's for a worthwhile reason, or it may be time to look for something new — and more valuable — to do with your life."
- Suzy Welch, best-selling management author and CNBC contributor
3 things to help you make it.
1.
5 common white lies you should remove from your resume immediately
Stretching the truth on your resume can hurt your chances of getting hired.
Read More »
2.
More female leaders at big companies plan to give themselves raises—here’s why it’s a big deal
"This change is very good news," write Marsha Firestone and Lisa Schiffman in the Harvard Business Review.
Read More »

3.
The only 3 times it's OK to work just for the money
"If money is all a job has to offer," says CNBC contributor Suzy Welch, "make sure it's for a worthwhile reason."
Read More »

Alasdair Macleod: Inflation rearing its ugly head I GATA I THE GATA DISPATCH


Alasdair Macleod: Inflation rearing its ugly head

Submitted by cpowell on 09:58PM ET Thursday, July 5, 2018. Section: Daily Dispatches 5:58p ET Thursday, July 5, 2018
Dear Friend of GATA and Gold:
GoldMoney research director Alasdair Macleod today reviews the deceit of government inflation data, which always tries to conceal increases in prices.
Macleod writes: "It is in the interests of the statisticians' paymasters, the state, to see price inflation under-recorded, so it should be no surprise that independent attempts to record price inflation put it far higher.
"Independent estimates suggest that a price inflation rate of around 10 percent, depending on the urban location, is a more truthful assessment. If this was officially admitted, the continuing impoverishment of the ordinary American would be exposed, because the gross domestic product deflator would be large enough to record an economy continually contracting in real terms. And this appears to have been the situation since the Lehman crisis, as well as in many of the years preceding it.
"You cannot, year in year out, take wealth away from consumers without crippling the economy. ...

"The purpose of monetary policy has quietly changed from what is commonly stated -- that is, to foster the health of the U.S. economy. Instead it is to ensure that government spending can proceed without interruption and without asking the people's representatives permission to raise taxes."
Macleod's analysis is headlined "Inflation Rearing Its Ugly Head" and it's posted at GoldMoney here:
https://www.goldmoney.com/research/goldmoney-insights/inflation-rearing-...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

* * *

Byelections are a chance to overturn some furniture | Scott Ludlam | Opinion I The Guardian

theguardian.com

Byelections are a chance to overturn some furniture | Scott Ludlam | Opinion

Scott Ludlam


Byelections are strange beasts, and having five at a time makes for quite a menagerie. Given the unusual citizenship back stories behind four of them, and the volatile nature of Australian politics in general, it is worth tuning in even if you don’t live in one of the electorates where campaigns are afoot.
Byelections are sometimes the place where voters can overturn some furniture without fear of overturning the government; you can “send the government a message” even if the message is just one of formless discontent. That trope doesn’t really apply here – none of the seats in contention are held by government MPs. Fremantle, Perth, Braddon and Longman are held by first time Labor MPs, and Mayo is held by the former Nick Xenophon Team’s Rebekha Sharkie. There’s no real downside in this scenario for the Turnbull government. It hasn’t even bothered to field candidates in Perth and Fremantle, and given that the last time a government won a seat off an opposition in a byelection was in 1920, ceding the remaining seats to Labor or Sharkie will hardly be a political earthquake.
So if it’s an earthquake we’re looking for, we’ll have to shake things up some other way.
A clue as to how we do this can be found in the long-run trend of voter abandonment of the major parties, and the steady post-war rise in voting for minor parties and independents. In the 2016 general election, nearly a quarter of voters chose a non-major party for their first preference in the House of Representatives, the highest in the history of the commonwealth. The full preferential, single-member system in the House of Reps guarantees that nearly all of these votes end up accruing to one of the major parties whether you like it or not, meaning that nowhere near a quarter of the seats in the House are held by MPs from outside the major parties. It is possible to win and hold a House seat from outside the majors, as Adam Bandt, Cathy McGowan and others have shown with a combination of charisma, purpose and a big volunteer effort. But until we get proportional voting in the House, the gap between voter intention and parliamentary seats will likely remain a chasm – presently the 23% minor party and independent vote translates into only 6% of the seats.
The major parties have exploited this to numbing effect for as long as I can remember, but it has reached a dangerously cynical degree in the last few turns of the electoral wheel. The LNP, to give them their due, play a more direct hand. When outflanked by a loose insurgency like One Nation, for the most part they smoothly absorb the tone and policies of these strident interlopers, stealing their political oxygen while crab-walking steadily in the direction of hard-line racist authoritarianism. Labor play a quite different game, deploying candidates of genuinely good heart to spread a progressive message on coal and gas extraction, refugee rights and the surveillance state, while their parliamentary wing routinely votes with the government to overwhelm the Greens and other crossbench members on these issues and many others. It’s a form of political gaslighting that depends on the electorate never quite having the energy to call out a party that sends finely honed and entirely contradictory messages to different constituencies.
The excruciating spectacle of Labor walking both sides of the street on Adani’s coal atrocity serves as a valuable case study. Labor’s strategy rests on the assumption that votes directed toward Green and other climate-friendly candidates will preferentially find their way back to the Labor party anyway, relieving them of the obligation to do more than express strategic ambiguity as to their real intentions. That this comatose attitude cost them the seat of Maiwar in the recent Queensland state election doesn’t seem to have changed the basic pattern.
Under the unusual circumstance of a spray of byelections in which the government has absented itself, it is time to bring this dismal strategy properly unstuck. This starts with the recognition that there are more than two sides of politics, and this has been true for a long while. A quarter of the electorate is already voting for someone else, and although the trend has its zigzags, the direction is clear. Phrases like “both sides of politics” are as ripe for retirement as Tony Abbott, albeit just as unlikely to vanish gracefully.
As Senator David Leyonhjelm is managing to demonstrate every single day, the shift away from the majors can have offensive consequences. It’s not enough to just put Labor and the LNP at the bottom of the ballot paper and hope for the best, especially if our aim is as urgent as getting innocent refugees out of camps that have been marked by reports of trauma, self-harm and deaths and that are imposed by “both sides of politics”. But the myth that voting for a progressive minor party or independent candidate is a waste of time is self-fulfilling, and it evaporates as soon as a sufficient number of us let go of it. If you live in one of the lucky five electorates, here’s your chance. Even if you don’t, you can still signal-boost candidates from afar or get in the ear of your friends in the area.
It’s time to overturn some furniture. Call it a practice run for the main event in a few months time.
• Scott Ludlam is a Guardian Australia columnist

Dollar slides to 3-week low after US jobs data report, euro rises Fx I CNBC

cnbc.com

Dollar slides to 3-week low after US jobs data report, euro rises

CNBC


SeongJoon Cho | Bloomberg | Getty Images
The dollar fell to three-week lows on Thursday, as the euro gained on strong German industrial orders, while data showing jobs rose less than expected in June plus nagging concerns about global trade also reined in the greenback's recent rally.
Mazen Issa, senior FX strategist, at TD Securities in New York said U.S. economic prospects remain upbeat compared with the rest of the world, but that advantage could be running its course.
"Early flow data has corroborated a return to U.S. dollar assets, but this could be challenging in the coming months if growth abroad stabilizes and twin deficits becomes topical again," Issa said. "For now, euro/dollar looks poised to test key resistance."
The euro climbed after German industrial orders had a higher-than-expected jump in May following four consecutive monthly drops, as demand from domestic customers and the rest of the euro zone picked up. At the same time, there has been a softening in U.S. trade rhetoric towards European Union carmakers, also helping the euro.
The U.S. ambassador to Germany told German car bosses that President Donald Trump would suspend threats to impose tariffs on cars imported from the EU if the bloc lifted duties on U.S. cars, a German newspaper reported on Wednesday. German carmakers were set to post their biggest daily gain since late March with Daimler, BMW, Volkswagen and Renault leading the broader index higher.
In the United States, there was further pressure on the dollar after data showed private payrolls increased last month, but were lower than forecast, while initial jobless claims rose unexpectedly last week. The dollar trimmed losses after a higher-than-expected U.S. services index.
The dollar index dropped to a three-week low and was last down 0.21 percent at 94.47.
While the dollar has been supported by the perception of the relative strength of U.S. growth and the attraction of its higher Treasury yields, some market players say recent falls in those yields may be undermining the currency.
The euro rallied to a three-weak peak and last changed hands at $1.168 up 0.22 percent. However, a deadline for Washington to impose tariffs on Chinese imports set for July 6, has kept the market rangebound.

FOMC minutes and data in focus I Bonds I CNBC

cnbc.com

FOMC minutes and data in focus

Alexandra Gibbs, Thomas Franck


U.S. government debt yields were little changed on Thursday after the Federal Reserve's latest minutes showed that officials are worried about letting the economy run too hot.
Fixed income investors were also on edge ahead of the Department of Labor's monthly update on the employment situation, due out on Friday.
The yield on the benchmark 10-year Treasury note was slightly higher at 2.842 percent at 2:58 p.m. ET, while the yield on the 30-year Treasury bond was down at 2.952 percent. Bond yields move inversely to prices.
The Federal Open Market Committee published the minutes from its latest meeting Thursday, with some members expressing concern "that a prolonged period in which the economy operated beyond potential could give rise to heightened inflationary pressures or to financial imbalances that could lead eventually to a significant economic downturn."
Nearly all officials felt comfortable continuing to raise interest rates on a regular basis in response to those qualms, even amid growing trade tensions and a flattening yield curve.
"The plan is on: Gradual increases in rates is still what’s on the table," said Putri Pascualy, managing director and credit strategist at PAAMCO. "There’s a lot of talk about the improvement in the economic story and strength in the labor market. But the third pillar, inflation ... despite the strength in the labor market and economy, inflation is just right about where they want it to be."
At their last meeting, the Fed decided to increase its benchmark short-term interest rate by a quarter percentage point. In addition, the central bank signaled that two more rate hikes were expected to occur by year-end. The central bank did, however, note possible negative repercussions from the growing trade dispute between the U.S. and its economic allies — specifically any widespread reduction in business investment as a result of uncertainty.
"The risk of trade policy and specifically tariffs has been identified as the one key factor that could derail the economic engine," Pascualy added. "The Fed seems less concerned about the economic impact of the tariffs themselves. What is potentially important is the impact on confidence – it could change peoples' or businesses’ plans on investment."
Wall Street will likely be watching for any foreign response when the U.S. slaps $34 billion worth of tariffs on China on Friday; Beijing is expected to implement the same amount in counter-duties.
Jobs in the U.S. rose by 177,000 in June, ADP and Moody's Analytics reported Thursday, while economists polled by Thomson Reuters expected a gain of 190,000. June marked the fourth straight month of jobs growth below 200,000. Jobs growth for the previous month, however, was revised up by 11,000 to 189,000, mitigating the impact.
Meanwhile, the number of Americans filing for unemployment benefits unexpectedly rose last week, though overall trends continued to suggest a tight labor market.
Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 231,000 for the week ended June 30, the Labor Department said on Thursday.

Oil falls sharply after surprise jump in US crude stockpiles I Oil Price I CNBC

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Oil falls sharply after surprise jump in US crude stockpiles

CNBC


Mohammed Barkindo, secretary general of the Organization of Petroleum Exporting Countries (OPEC), speaks during a news conference following the 174th Organization Of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria, on Friday, June 22, 2018. Stefan Wermuth | Bloomberg | Getty Images
Mohammed Barkindo, secretary general of the Organization of Petroleum Exporting Countries (OPEC), speaks during a news conference following the 174th Organization Of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria, on Friday, June 22, 2018.
Oil prices fell on Thursday after weekly government data showed a surprise rise in U.S. crude stockpiles last week as refineries cut output, while gasoline stocks decreased and distillate fuel inventories rose.
Crude inventories rose by 1.2 million barrels in the week to June 29, the Energy Information Administration said on Thursday, compared with analysts' expectations for a decrease of 3.5 million barrels.
“An unexpected build in the U.S. commercial crude inventory has prompted profit-taking,” said Abhishek Kumar, Senior Energy Analyst at Interfax Energy in London.
U.S. West Texas Intermediate (WTI) crude futures ended Thursday's session down $1.20, or 1.6 percent, at $72.94. Brent crude futures fell 79 cents, or 1 percent, to $77.45 per barrel by 2:27 p.m. ET.
Oil earlier traded near its highest in 3-½ years on Thursday, boosted by potential disruptions to flows from Iran and the Middle East despite a fresh demand from U.S. President Donald Trump that OPEC cut prices.
@realDonaldTrump: The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW
Trump again on Wednesday accused the Organization of the Petroleum Exporting Countries of driving up fuel prices.
"The OPEC Monopoly must remember that gas prices are up & they are doing little to help," Trump wrote on his personal Twitter account. "If anything, they are driving prices higher as the United States defends many of their members for very little $'s.This must be a two way street. REDUCE PRICING NOW!"
OPEC together with a group of non-OPEC producers led by Russia started to withhold output in 2017 to prop up the market.
"If Trump continues to believe that OPEC are not doing enough, we would not rule out an SPR (Strategic Petroleum Reserve) release from the U.S., or possibly even export restrictions on petroleum products," ING said in a note.
"However with plenty of uncertainty over Iranian supply, and the Syncrude outage in Canada, the market is likely to remain fairly well supported in the near term."
Recent price rises have also been spurred by a U.S. announcement that it plans to reintroduce sanctions against Iran from November, targeting oil exports.
OPEC and Russia said in June they were willing to raise output to address concerns of supply shortages due to unplanned disruptions from Venezuela to Libya, and likely also to replace a potential fall in Iranian supplies due to U.S. sanctions.
Despite these measures, Goldman Sachs said in a July 4 note to clients that "the market will remain in deficit" in the second half of the year.
An Iranian Revolutionary Guards commander, meanwhile, said on Wednesday that Tehran might block oil shipments through the Strait of Hormuz, a major route for transporting crude in the Gulf.
"If they want to stop Iranian oil exports, we will not allow any oil shipment to pass through the Strait of Hormuz, Ismail Kowsari was quoted as saying.
The U.S. Navy stands ready to ensure freedom of navigation and free flow of commerce, a spokesman for the U.S. military's Central Command said on Thursday.
Earlier in the session, the escalating trade row between Washington and Beijing triggered another sell-off in Asian stocks and was felt in oil markets, with China warning it could introduce duties on U.S. crude imports.

Gold steady despite Fed support for hike in interest rate I Commodities I CNBC

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Gold steady despite Fed support for hike in interest rate

CNBC


Gold coins Getty Images
Gold was flat on Thursday, as the U.S. dollar weakened and the Federal Reserve minutes revealed “almost all participants” thought a hike in interest rates was appropriate.
Spot gold was unchanged at $1,255.70 per ounce. U.S. gold futures for August delivery settled up $5.30 at $1,258.80.
The dollar index fell to its lowest level in more than a week while the euro climbed half a percent to near three-week highs following strong German data.
"The dollars down, giving some support to precious metals," said Chris Gaffney, president of world markets at TIAA Bank.
The minutes of the U.S. central bank's June meeting demonstrated strong support for an interest rate hike for 2018. During the discussion, the Fed had projected two more rate hikes in 2018 for a total of four. Gold is sensitive to rising interest rates, as higher rates increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which the metal is priced.
Investors are also awaiting the release of non-farm payrolls and unemployment data on Friday.
"One would not like to have any bullish bets on gold when the labor market trend is strong," ThinkMarkets chief market analyst Naeem Aslam said.
Physical gold demand has been lackluster in India, the second-biggest gold consumer after China, Commerzbank said, lending no price support.
Meanwhile, silver was down 0.24 percent at $16.01. Palladium was flat at $945.25 while platinum declined 0.45 percent to $836.24 after touching its lowest since 2008 at $793 on Tuesday.
"It's a speculative-driven selloff in platinum, it's not a fundamental driven selloff," said Jonathan Butler, commodities analyst at Mitsubishi. "And when we think about the fundamentals, at $800, most South African mines are losing money. So if we maintain these prices sub-$900, there will eventually be a supply-led response."

Time to Buy Gold for a Trade I Investopedia

investopedia.com

Time to Buy Gold for a Trade

Alan Farley


Gold prices have taken a beating since the yellow metal reversed at 2016 resistance in April, dropping more than 125 points to the lowest low since December 2017. Aggressive action by the Federal Reserve on interest rates has driven the decline, with bearish sentiment reinforced by a looming trade war. Fortunately for bulls, it's fallen too far too fast and is now sitting at a support level that should offer long-side trading profits through the summer months.
This is a trading call rather than a buying recommendation because the decline incurred technical damage that could mark an eventual top and downtrend. It will now take a rally above the first quarter high to ease that headwind, which seems unlikely given the Fed's ambitious rate hike schedule. However, a trade war could play with inflationary fire, triggering supply disruptions that lift commodity prices to 21st-century highs. If so, gold could break out in the coming years and head toward $2,000 per ounce. (See also: 8 Reasons to Own Gold.)

GLD Long-Term Chart (2004 – 2018)

The SPDR Gold Trust (GLD) came public near $45 in 2004, when the underlying commodity was trading just above $450, and sold off to $41.05 in the first quarter of 2005, marking the lowest low in the past 13 years. It turned higher in the third quarter and entered a powerful uptrend that stalled in the lower $70s in 2006. The fund cleared that level in October 2007 at the same time the equity bull market came to an end, lifting to resistance at $100 in March 2008.
It fell more than 30% during the bear market, coming to rest in the upper $60s while the subsequent bounce reached the prior high in February 2009. A seven-month consolidation completed a historical breakout into the triple digits on the fund and the quadruple digits on the underlying commodity. The rally escalated into third quarter of 2011, topping out at all-time highs near $186 and $1,905. The metal built a descending triangle top into April 2013 and broke down, entering a brutal decline that finally bottomed out at 2009 breakout support in the fourth quarter of 2015.
The monthly stochastic oscillator crossed into a sell cycle in May 2017, finally reaching the oversold level in June 2018. It has now dropped into the most extreme bearish reading since 2014, signaling a potential buying opportunity for market players willing to take profits at proportional retracement levels. This excludes long-term bulls, who should wait for a breakout above five-year base resistance (red line), now located near $129.
[Learn to analyze the charts of gold and other commodities in the Technical Analysis course on the Investopedia Academy, which includes interactive content to enhance your trading skills.]

GLD Short-Term Chart (2016 – 2018)

The initial recovery wave off the 2015 low stalled at $131 in July 2016, generating a pullback that ended near $107 in December. Price action has traded within those range boundaries for the past 18 months, denying profits to long-term bulls and bears. Bilateral swings across the 200-week exponential moving averages (EMAs) during this period are showing no inclination to build directional energy and break out above the long-term base resistance or descend through long-term support.
The fund found support at the 50% range retracement level in December 2017, completed a round trip into the September high and reversed, completing a 100% retracement into the prior low earlier this week. This establishes a rectangular pattern that forecasts a bounce into resistance located at the intersection between the May 1 range breakdown, unfilled May 15 gap, and tightly aligned 50- and 200-day EMAs. In turn, dip buyers at support could profit from a bounce that reaches $122 to $125 before the next major reversal.  A tight stop loss is needed to manage risk in this scenario, placed safely under December and July lows. (For more, see: Gold Price Forecast: Weak Corrective Gains, Defensive Support Still Lacking.)

The Bottom Line

The gold fund has reached support after giving up 100% of the December 2017 into April 2018 rally wave. This location favors a healthy bounce that eventually ends at intermediate resistance in the low to mid-$120s. (For additional reading, check out: Pinch Pennies With a New Gold ETF.)

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6 Big Bank Stocks May Face More Pain Ahead I Investopedia

investopedia.com

6 Big Bank Stocks May Face More Pain Ahead

Mark Kolakowski


Many big investors proclaimed that bank stocks would be market leaders in 2018, fueled by deregulation, rising interest rates and increasing returns of capital to shareholders via buybacks and dividend increases. Instead, shares of the 6 largest U.S. banks are all down significantly so far this year, and the Financial Select Sector SPDR ETF (XLF) is down roughly 4% year to date through the open on July 5. Craig Johnson, the chief market technician at Piper Jaffray, sees a "cloudy" outlook for the ETF, which is dominated by large cap U.S. banks, per his recent comments on CNBC.
Big Banks Are Big Losers
Source: CNBC. Gains based on July 5 opening prices.

Reasons for Concern

Johnson shared three reasons for concern about large cap U.S. bank stocks, making specific reference to the Financial Select Sector SPDR ETF (XLF) as a key proxy for the industry. First, the XLF closed down after the Federal Reserve announced positive results from its annual banking stress tests.
Second, the XLF recently endured its longest losing streak ever, down for 13 straight trading sessions, which also is its longest streak since 2009. During this downtrend, the XLF broke below its long-term support line extending from the lows of 2016. It subsequently closed on July 3 below the support level of $26.50 that Johnson had cited.
Third, the S&P 500 financial sector is showing very weak breadth, with only 25% of the stocks therein trading above their 200-day moving averages. This places it among the worst S&P 500 sectors in this regard, he indicated.
While Johnson noted that the XLF historically has rebounded during the four weeks following a losing streak of seven days or more, he is not confident that history will repeat itself this time. Instead, he believes that any rebound is likely to be temporary, representing "just a relief rally." He sees a brighter outlook for small cap and mid cap banks based on several technical indicators.

Bank of America: Topped Out? 

Bank of America reached a high for 2018 in intraday trading on March 12, at $33.05 per share. Its opening price on July 5 represented a drop of more than 15%. A bearish reading of the charts suggests that Bank of America stock may be in the midst of a long term decline, possibly even giving up most of its gains since Election Day 2016. (For more, see also: Bank of America Stock Could Enter Steep Decline.)

The Bullish View

Johnson's bearish view on the big banks runs counter to the optimists' opinion that big boosts in bank dividends and share repurchases, as authorized by the Fed pursuant to its recent stress tests, will buoy these stocks. Among the optimists is Jason Goldberg, a banking analyst at Barclays. He recently estimated that the 22 biggest U.S. banks will offer a combined return of about 8% from dividends and share repurchases, and that this is bound to attract buyers for these stocks.
In particular, Goldberg saw upside of about 41% in Citigroup stock, and about 29% in JPMorgan Chase. Regarding Bank of America, it may increase its cash dividend alone by more than 50%, Barron's reports. (For more, see also: Why Bank Stocks May Be Ready to Rebound.)
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