foxex: Jet Set

Monday, August 24, 2020

Jet Set

Chart Advisor | Focus on the Price

Monday, August 24, 2020 Headlines

1. Markets inch higher as airline industry holds higher new support
2. Dollar strengthens as metals weaken
3. Delta lightens its load

Market Moves

The S&P 500 index (SPX) rallied one percent higher into the close, fueled in no small part by investor optimism regarding the state of the airline industry. The Nasdaq lagged behind the benchmark at .6% higher and the Dow Jones Industrial Average (DJI) led, closing 1.35% higher.

The chart below shows that the airline industry, as tracked by the U.S. Global Jets index ETF (JETS), has managed to bounce off a higher support level. This establishes the requisite characteristics of an upward trend, namely, a higher high and a higher low.

[NEW READER SURVEY: We are running another two-week survey of our U.S.-based readers to gauge your sentiment and see what moves, if any, you have been making with your money given the market recovery, and current economic conditions. We'll share the results, as always, and we thank you for your time and participation.]

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Dollar Strengthens as Metals Weaken

As stocks power higher, precious metals seem hindered by a rising U.S. Dollar index (DXY). The chart below compares the price pattern of the index with State Street's Gold trust index ETF (GLD) and iShares' Silver trust index ETF (SLV).

The most recent four days of the dollar's price action represent the longest uptrend in the greenback this summer. The shift in the price action corresponds with a brief downward trend in the precious metals (lower two panels), so it may be a warning sign for gold and silver prices.

Lululemon (LULU) Extends Rally on Price Target Increase

Salesforce (CRM) Risky to Buy at Current Levels

Delta Lightens Its Load

One of the reasons investors decided to crowd into the airline trade came from some positive news announced by Delta Air Lines (DAL) today. The company reported that over 1800 of its employees had taken early retirement, and that several of its international routes will soon reopen.

Today's market-beating move is unlikely to have been triggered by the Robinhood crowd, but there is a good chance that news like this will attract their attention. Retail investors looking for some more post-COVID-rebound returns, wherever they might be found, may decide to join the trade lifting Delta shares higher. The chart below gives an indication that if DAL closes above $33 per share, it could have a substantial gain ahead of it.

The Bottom Line

Large cap stocks moved higher today, outpacing their tech counterparts. The Dollar index put pressure on precious metals, but not on stocks. Airline companies proved to be big winners today and look as though they have quite a bit of runway ahead of them.