Weekly Market Review & Analysis For August 8, 2022

The market experienced real inflation this week, partly because of the indicators of disinflation in the CPI (Consumer Price Index), PPI (Producer Price Index), and Import-Export Price Index reports for July. All of them went according to market trends; that is to say, they were in line with the narrative of peak inflation.

The gains were broad and substantial. In the end, S&P 500 scored its fourth consecutive week of weekly gains and surpassed a significant mark of Key Res 4177, which some interpret as a sign that the June low was the lowest of that bear market.

The major indexes all came out on a high note during an aggressive rally on Friday. It wasn't matched by a considerable volume but was impressively strong. The S&P 500, hovering around 3600 in the middle of June, ended on Friday at 4280. Some may consider the move above Key Res 4177 significant psychological and technical development.

Ultimately, the numbers aren't always as significant as the overall trend. The inflation numbers came in on Wednesday; although the surprise was not huge, this was still positive. A minor blip in the negative on inflation gives the market belief that the prices of food and oil might have reached their peak, and the lower demand is slowly being passed on to inflation numbers.

Some think that 8.5 percent isn't too high. Still, perhaps the most significant figure for the month was that inflation was at 0% even though the expectations were 0.2 percent, the same as the increase in inflation last month exceeding 1 percent. Concerning fuel costs, gasoline prices were down 7.7 percent which offset the increase in food costs by 1.1 percent.

"Price stickiness," referred to in economics, is the condition where prices increase rapidly due to the higher costs for producing those items but don't decrease as the pressure on price is reduced. It isn't expected nor likely for prices to return to pre-pandemic levels. However, if we can see a way to return to the historical inflation levels, the market will stop participating in massive rate rises soon. This should result in a greater appreciation of bonds and stocks. This is why there was a positive market reaction to the inflation figures this week.

Although cryptocurrency is an asset class we usually study, a report from Morgan Stanley sheds light on the latest exciting factor to consider when considering this type of investment. Typically, cryptocurrency is sold as an inflation hedge or diversifier to stocks. The opposite was confirmed in the last year.

As inflation rose to decades-high levels, Bitcoin's market value fell around 75% from its peak of $69,000 in November of last year, the fourth-largest decline in history for Bitcoin. When this occurred, Bitcoin's relationship with stocks grew to a record high, making it less effective as an investment diversifier.

This isn't meant to be an attack on cryptocurrency but an opportunity to remind investors that, like all risk assets, excitement can be overpowered by the underlying market data.

As we approach the final market week of summer vacation, We're eagerly awaiting the data for July on the number of housing starts. This will reveal what effect the interest rate increase has had on the buying power of homeowners and real property investors.

Market elsewhere

The U.S. dollar market - while the greenback is far from being at or near par with the Eurodollar just a few weeks ago - is substantial. Most people do not delve into the logic chain to understand the implications of The Strong Greenback.

If the purchasing power of the U.S. dollar increases - What do we get:

  • It doesn't require as many of them to purchase one ounce of gold or silver.
  • Crude oil and certain food items can have the same effect.
  • Reaching a similar "break-up" (less expensive) value of publicly owned companies. Like the "book value," remember that if you pay with more powerful cash and it is much stronger, it will also go further.
  • Over the past few weeks, the U.S. dollar has softened (relative to the Eurodollar, for example. Thus this has led to:
  • With the silver and gold markets being much stronger
  • Food and energy commodities are rising.
  • This, which in turn, increases inflation.

We can write volumes (and look at our 90-day Euro bond futures market as a signpost of what's in store with future dollar-based valuations). However, our aim isn't to make you into the kind of Swiss banker. We're a bit more intelligent humans than the majority, nevertheless.

Con men in precious metal pricing

As gold is now threatening the $1800 mark This week, the metal spent consolidating its $100 + rise from the $1681 low set on 21 July. Gold closed at $1802, up $28 on the week, and silver traded at $20.78, up 90 cents for the same period.

Do you believe that it's true that Gold or Silver markets are manipulated? This week's most under-reported story in the financial world has been that of the Justice Department press release Former J.P. Morgan Traders Convicted of fraud, attempt to price manipulation, and spoofing in a multi-year market trading scheme.

Restitution for being prey who is on the wrong side of the trade? As former Leslie Neilsen said: "Shirley, you can't be serious." "I am serious, and don't call me Shirley!"

Notice that the government hasn't taken action to ban naked short-selling? Well, the world is now over to the crooks, for sure. Take a look at the last three decades of elections; haven't they revealed that?


The Bitcoin price level today (around $24,500 at the time of writing) isn't precisely what will happen next in cryptocurrency volatility. It's partly because Bitcoin is in a problematic bubble. Here's a different way of looking at it:

In other words, from record-setting highest levels ($69,000 ) down to the recent lows of $20,700 on 26 July size of the market can be seen as a scenario for the next few months or two, where:

The Bitcoin chart shows the price advancing to the next Outer Coin Rally at $27,800 or higher. Also, Bitcoin could rise to the $32,000 level and collapse to zero.

What's on the horizon that could slam the Bitcoin bubble? What was the Biden administration's Executive Order Means For The Crypto Industry released in March this year? As we can argue endlessly that only silver and gold constitute "constitutional money," - it will not really matter. The simple truth is that "Governments despise competition."

Market summary

INDEX:         STARTED WEEK        ENDED WEEK       CHANGE       %CHANGE       YTD%

DJIA:                   32803.47                    33761.05              957.58                 2.9              -7.1

Nasdaq:              12657.55                    13047.19               389.64                 3.1             -16.6

S&P 500:              4145.19                      4280.15               134.96                 3.3             -10.2

Russell 2000:       1921.15                      2016.62                 95.47                 5.0             -10.2

This article was printed from TradingSig.com

Print Article