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Trend table status

Trend

SP-500

R2000

COMPX

Primary

Up 7/31/20

?- 3/31/20

Up 5/29/20

Intermediate

?+ 9/25/20

Up 8/21/20

?+ 9/18/20

Sub-Intermediate

?- 9/15/20

Dn 9/11/20

Dn 9/21/20

Short term

? 9/4/20

? 8/18/20

? 9/4/20


Don Worden of Worden Brothers (makers of Telechart software) used to keep a trend table before his health issues got in the way. I always found it useful. Mine is slightly different. Hopefully helpful. Up? or Dn? means loss of momentum. ? by itself means trend is neutral. ?+ or ?- means trend is neutral with bias of up(+) or down (-)

Thursday, March 5, 2015

Daily update 3/5 New orders falling off a cliff

The bulls tried all day to get a good rally going, but just didn't get it done.  Here is a look at SPX.


While most indexes ended in the green the NYSE down volume was higher then the up volume.  Breadth was +52%.  New highs increased by nine to 114.  Nothing to write home about in these stats.  That was an extremely feeble attempt by the bulls to put an end to this decline.  While SPX closed above 2100 it stopped cold at 2104.   The lows before the breakdown were all in the 2103-2105 area.  For today that was clear resistance.  Lets have a look at the futures chart.


The ADX line is rising rather sharply.  This down move is starting to show a real trend.  That is going to make it harder for the bulls to turn things around.  The 50 SMA is trying to hold as support, but there is nothing else positive about this chart.  The odds should favor the bears sending price lower.

The last two days have shown SPX has support in the 2085-90 area and resistance around 2103-5.  Tomorrow is the Feb. jobs report.  That can sometimes create some volatility.  I have no idea what the market wants to see.  Good data risks a rate hike sooner rather then later.  Bad data could mean no rate hike soon, but then again it could mean the economy is weakening significantly.  With earnings estimates already falling like crazy that might not go over very good with investors.  Would inline data be good, bad, or who cares?  We got good support and resistance numbers to work with.  Lets see what the market does.

Here are a couple of rather scary looking charts on new orders.


This chart looks a lot like 2000 with the odd spike up in new orders then a falling off the cliff.  The last two times we were this negative YoY we were in recession.  The other big drop was the Asian crisis of 1998.  We avoided a recession then as we were busy building the tech bubble.  This is clearly the softest this piece of data has been in this recovery.  The next chart looks even scarier though.

 Source

The only time in the last 25 years we have had a 6 month change this negative was during the great recession.  Something is going on.  There can be no doubt about that.  We have a collapse in oil demand causing huge builds.  Then the Chicago manufacturing number plunged to 45 indicating contraction.  Now the new orders data is literally falling off a cliff.  I am not an economist, but I really have to wonder if we are not starting a recession.  If that ends up being the case it would catch nearly every economist on the planet by surprise much less most investors.  We definitely need to monitor the incoming data closely.  If we don't get a major turn to the upside and soon a recession becomes much more likely.

Bob

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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.