If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Monday, August 8, 2016

Daily update 8/8 Debt-To-EBITDA ratios high

It was a good day to watch the Olympics from the beach.

The futures gapped up a bit this morning, but the sellers were slightly more ambitious then the buyers.  The volume was extremely light so there was little participation from either the bulls or bears.  The breadth was +53%.  New highs were consistent again at 246.  No upside follow through from Friday's slight excitement. 

The futures poked up through potential resistance overnight, but failed to stay there.  That new line is at least minor resistance for now.

The counts came slightly closer together today, but the red line is still above the green.

It appears that bulls need some news to push prices higher.  Otherwise, they seem to just sit on their hands.  The market is staying elevated because of a lack of sellers.  Market internals are still weak. That makes the market vulnerable to a selling catalyst, but there is no way to know if such a catalyst will come along.  It would certainly have been better for the bulls if buyers had come out again today since we are not overbought.  The market is a little precarious here until we get some more strength.

I ran across this interesting chart.

I find the behavior of this chart during this bull market rather peculiar.  The ratio rose during the 2001 and 2008 recessions which makes sense as income fell both times.  However, during the bull market from 2003-07 there was a big drop in the ratio.  During this bull market the ratio started to drop until the middle of 2011.  Then it started rising dramatically in 2012.  The economic data indicates the global economy started weakening in 2011.  This is backed up by most commodities peaking out and entering severe bear markets in that time period.  For the last four years debt has been rising faster then income.  I can't be a good thing.  We already know it is very unlikely corporations have near the level of cash Wall Street says they do from the analysis of AAPL.  This chart says they are in the worst shape in the last 16 years for income to service their debts.


No comments:


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