Addicted to Chaos and Drama

It almost seems as though several asset classes these days, especially equities, have become addicted to the daily and nightly chaos we are seeing now, be it the swirling Iran headlines, Japanese Yen weakness and possible interventions, bond market softness here in America, an AI bubble which always seems to fight back to remain intact, or the energy markets highly sensitive to an off-the-cuff Trump remark. 

Just today, for example, we have the usual suspects in MU SNDK surging 5-10% higher and leading the AI/semis/Nasdaq rally while energy markets slump on, you guessed it, hope that the Iran escalation are much ado about nothing. The counterpoint is that this is precisely the type of price action you would expect to see in a market forming a major top--Churning, gapping, wildly indecisive, with complacent bulls and frustrated bears. 

To make matters more complicated, it is not like we have some thriving economy here at home to override the Iran issues. Specifically, Costco reported weak (relative to expectations) June same store sales numbers, something you would not expect to see given the World Cup plus Independence Day/America 250 celebration prep, not to mention the allegedly robust economy bulls and the White House have been touting. COST is down 4% as I write this and, more importantly, confirming a rejection below its 200-day moving average. 

Furthermore, Walmart is also looking dicey. On the updated WMT daily chart, below, you can see an obvious bear flag consolidation in the context of an intermediate-term downtrend. 

On a long-term basis, both COST and WMT have gone parabolic and seem to be bending now. 

As the old saying goes, "the trend is your friend until it bends in the end."