Spain and Argentina played for the World Cup at MetLife today. I have Spain to win, but Messi at 39 has been the show of the month. Funny detail: our June 2 summer playbook had this final on its calendar, and the guy in the header photo happened to be wearing a Spain shirt. The rest of that piece aged well for better reasons, and this week is where it earns its keep.
First, the grade, because that’s what you’re paying for. ES lost 1.6 percent on the week, and the published map still made money: the trade of the week filled at the shelf Monday on a resting order, banked its first target into Wednesday’s high, and the runner went out flat instead of round-tripping. That’s the fourth straight week the first touch of a published level was the entry, after last week’s runner paid 127 points off the same pattern. The breakout idea never armed, which kept you out of the fourth failed try at the top of the range in as many weeks; that discipline was worth real money. And the one ticket built for either direction, the break structure from Wednesday’s note, caught Friday’s 120-point slide. Down weeks are where a map shows whether it’s real. This one got graded in public, again.
Here’s the week in one paragraph. Inflation came in soft Tuesday and the bond market spent three days walking down to the exact line that has capped our score for a month. Price poked at the top of the range again Wednesday and Thursday, couldn’t close it, and broke down Friday to finish at 7,497.75, the low end of a three-week range. Then the twist: the 10-year finally closed under its line on Friday, at 4.545 percent, the same day price broke the shelf. The key turned. The door didn’t open. Our upgrade needs both, and for the first time in a month the bond is the half that’s cooperating.
Two more things happened over the weekend, and both matter for Monday. An Iranian attack in Jordan killed two American soldiers Saturday, the US answered with its seventh straight night of strikes, and Sunday’s futures open will price all of it before Monday does anything. Korea reopens Monday from a holiday, mid-liquidation. And the options market repriced the week on Friday: it now expects a range nearly double what it priced seven days ago.
The Lie: 0 NEUTRAL, fourth straight reading. The components underneath sum slightly positive, but our published upgrade rule requires a specific close that hasn’t printed, so the score holds. The exact number, and why the model reads better than the price does, is below the fold.
Interesting bits… There is a record $963 billion of authorized share buybacks in this market, and as of last week 97 percent of the S&P 500 wasn’t allowed to touch it (Goldman’s buyback desk). Companies sit out the weeks before they report. Every company that reports this week walks out of that blackout about two days later, and the flow builds through August. Now look at the other side of the market: Korea’s margin liquidations and trend-following funds don’t choose their timing. They’re forced, and they’re active now. Forced sellers have this week. Scheduled buyers have next month. Knowing who has to trade, and who’s allowed to, explains most of what price does.
Below the fold: the full scorecard, the seven-level map with two buy zones and the one close that saves the trend, the wide-range playbook with entries and stops, and the 45-year study that says this momentum washout is closer to its end than its start.
