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Trend table status

Trend

SP-500

R2000

COMPX

Primary

?+ 6/30/20

?- 3/31/20

Up 5/29/20

Intermediate

? 6/5/20

? 6/5/20

Up 6/5/20

Sub-Intermediate

?+ 7/6/20

?- 7/7/20

Up 7/2/20

Short term

Up 7/6/20

? 6/11/20

Up 7/2/20


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 (-)

Wednesday, November 30, 2016

Daily update 11/30

High volume reversal bar.


Well, I was just plain wrong.  I did not think OPEC would actually announce a cut.  I also thought that if they did it would be good for both SPX and oil.  Dummy me.  Oil liked it, but SPX not so much.  I will predict that OPEC members will cheat and any cut in production will be less then the agreed upon amount.  We will see how I do on that one.  The market gapped up on news of a probable OPEC deal, but found sellers right away when SPX got above Friday's high.  The last four bars look like a short term reversal pattern.  That pattern needs downside follow through.  That was quite a bit of volume today.  If this chart was upside down the bulls would be screaming bottom.  If only tops worked the same as bottoms things would be a lot easier.  Breadth was -59%.  New highs were up a good bit to 203.  New lows kicked up quite a bit to 49.  That is not good on a day when SPX hits a new intraday high.  Once again I am sure that was a lot of bond funds.  I am not sure that gets the market off the hook though.  SPX closed back below the Feb. uptrend line once again.  Maybe that matters, maybe it doesn't. 


The futures ended the day below the 20 SMA.  They really tried to bounce off that line, but found significant resistance.  Downside follow through tomorrow would put us in a micro downtrend.


The green count slipped below 50.  Not a good thing when SPX touches a new intraday high.


Conspicuously absent from the indexes making new highs after the election is NDX.  Big cap NASDAQ stocks are lagging the market.  Those same stocks are in SPX so weakness in this index is very important to the overall market.  Former market leaders on the upside might now become the leaders on the downside.  I think this is a pretty big red flag.

This week SPX got above 2210 twice and found active sellers.  This was not a case of just running out of buyers.  There was real resistance up there.  If we had just run out of buyers we could be pretty much assured the dip buyers would come in on a pullback for at least a test of the high.  With real resistance there is no way of knowing if that will happen or not.  I will be watching the -DI line on the futures again now.  Since SPX made a new bull market high it needs to get over 35 before a bigger decline becomes a possibility.  If it stays below that then buying the dip at some point for at least a retest of the high would likely work.  We will see what develops.

I am sorry, but it is pretty hard for me to be unbiased here.  I see so many red flags waving at me.  This post election rally looks very much like a final blow off top.  It is not hard to imagine this is one last high before a big fall.  I showed the financial conditions index for the U.S. which is showing some problems.  There is more to it then that.  Credit conditions are tightening all around the globe.  China has been busy lately withdrawing liquidity.  I keep hearing talk about major dollar funding shortages.  Some say the worst since Lehman.  All of this is much more consistent with a global recession then a big bull run.  If the transports manage to make a new high to confirm the Dow I would have to seriously reconsider things.  As it is, we got a valid Dow theory sell signal and the transports have not made a new high since 2014.  I personally find the sentiment shift truly amazing.  The mostly pessimistic mood in retail investors the last two years has turned into outright enthusiasm just on the election of Donald Trump to the presidency.  Who would have thunk that!  Does that really make sense?  There was a big flood of money by retail investors into the market since the election.  Could that be another case of bad timing?

Bob

Tuesday, November 29, 2016

Daily update 11/29 Bloomberg Financial conditions index

Bounce back fell a little short of yesterday's high.


The morning dip was met with some buying when SPX dropped below 2200.  However, when SPX got to within 1 point of yesterday's high the sellers showed up again.  Breadth was slightly negative.  New highs were stable at 131.  New lows picked up a bit to 25. 


The futures bounced off the 20 SMA, but did not get very far.  They are sitting just above it as I write this.  Will they break it or bounce?


The green count picked up just a bit today and remains above 50.  Still bullish, but not as strong as one would like to see on a break out type move.


The short term bull pressure lines are getting ever closet together.  The intermediate line is still rising, but remains below the level of the last red line spike.  The long term line has quite a ways to go to get to its last red peak.  If the market turns down without eclipsing any of the red peaks on the various time frames it would be highly likely we would see the last swing low again.

It appeared that 2200 held as support today.  The more important support should be the area of the prior high 2190-93.  Should that fail to hold selling will likely pick up. 

Tomorrow is the much talked about OPEC meeting.  There did not seem to be very much optimism on a deal today, but who knows what will happen when they really sit down together.  It seems unlikely to me there will be any cut in production.  I think the best would be a freeze.  That freeze would be coming when OPEC production was the highest it had ever been.  I am not sure that will be very supportive of price.  The correlation of SPX to oil has been somewhat loose lately.  However, if there is no deal and oil reacts very negatively it could become important once again.  An actual production cut could be very bullish to both. 

On Dec. 4th there is a big referendum vote in Italy that could be market moving.  A no vote is supposed to be bad for markets, but we have heard such things before with no serious consequences.  Maybe this one is for real or maybe it is just another non event.  It may put a bit of a damper on buying enthusiasm in an overbought market until it is over though. 

I have not taken a look at this index in a long time.  It is painting a slightly different picture then SPX at the moment.  First lets look at the index starting back in 2007.


The index went negative in Aug. of 2007 and stayed there throughout the crisis in 2008.  The index was still negative when SPX set its bull market high in Oct. of 2007.  Now lets look at the current chart.


The index has been negative most of the time since Aug. 2015.  It is only slightly negative at the moment as SPX hits a new high.  While it is not as negative as it was when SPX hit its high in 2007 it has been negative for a lot longer period of time.  The recent peak was below the peaks back in May and July.  This index is lending some credence to the theory we might be seeing a blow off top.  The economic situation is not nearly as rosy as the pundits would like everyone to believe.  This is just one more piece of data showing that.

Bob

Monday, November 28, 2016

Daily update 11/28

My index watch list has this funny look to it with red prices.  I thought only green days were allowed.


SPX closed below a prior day's low for the first time since before the election.  Breadth was -65%.  New highs slipped way down to 136.  New lows were stable at 16.  SPX came to rest on the uptrend line from the Feb. low.   A pretty odd looking daily chart.


The futures touched the 20 SMA for the first time since the election.  They closed below the minor uptrend line (yellow line) from last week's low volatility move up.   This was an odd move.  The price pattern looks like one of those slow creep up patterns that can reverse sharply.  However, the breadth was stronger then normally seen in that pattern..  If this is a blow off top it would be normal to have the stronger breadth I guess.


The green line moved down significantly. The peak achieved on this rally is much lower then the one at the left edge of the screen from the summer break out.  The market might not hold up as well as it did back then.

A little profit taking came in today.  I heard Bob Pisani and a few others notice the rapid rise in bullish sentiment.  That is especially true for retail investors.  With somewhat weak internals this could be a contrarian sign.  So far SPX has just made a marginal new high.  It really needs to keep going to even call it a break out.  The small caps and transports that had been showing relative strength were showing relative weakness today.  They had a big run so that was not really unusual.  The real question is whether this latest move up is truly sustainable or not.  I can't see where the fundamentals are improving.  The economy is still weak and the FED is about to raise rates anyway.  The dollar is holding its break out really well so far.  There does not appear to be an OPEC oil deal to be had at the Nov. 30 meeting.  Global interest rates have had the biggest move up in several years.  What is it exactly that is good for earnings here?  I can't seem to find it.

Bob

Friday, November 25, 2016

Daily update 11/25 IP and Wholesale inventories

Bulls took full advantage of a lack of sellers this week.


To the moon.  Internals don't mean much on a part day.  


The overnight volatility remains very low.  The market is slowly creeping up.


The green count popped up near the overbought level.  That is about the same level as the peaks back in Sept.  Whether that is a problem or not I cannot say.



The short term lines are still diverging from price.  Bulls would like to see that last peak in the red line exceeded.  So far no go.

The market was pretty much totally devoid of sellers this week.  How much longer that continues I have no way of knowing.  Until the market does something wrong for the bulls there is not much to talk about. 


IP has been muddling around the last few months.  Has IP started a new uptrend?  Is the bounce in IP already over and it is headed back down?  We really need IP to take out that July peak before we can say an uptrend has started.  A sharp move down would probably indicate the downtrend is resuming.



This close up look shows that for the last two months the wholesale inventories have been negative YOY.


Expanding out to the full data set shows that the last two times this data went negative the U.S. was already in recession.  Unfortunately we have a very limited amount of data available.  At least over the last two decades it has not been good for this indicator to be negative.  Currently the other available data does not suggest we are in a recession.  However, the economy is weak enough that future downward revisions could change that picture.  There is not enough data to tell us how significant an event this is.  However, there is enough data to suggest this may be a warning sign.

Bob

Wednesday, November 23, 2016

Daily update 11/23 Ultra-Easy Money: Digging the Hole Deeper?

Wow, that was an exciting day. 


Curiously, today's low hit the low from yesterday exactly.  Odd.  Breadth was dead even.  New highs dropped just slightly to 262.  New lows picked up a bit to 34.  They remain elevated with the indexes at new highs.  Normally they are under 10 (15 at the most) in this condition.  This is likely related to bond funds continuing to sell off. 


The futures are forming a consolidation pattern at the high.  That can be good or bad.


The green count fell a bit more.  Unlike yesterday the red count turned up noticeably today.  Clearly people are not exactly piling into the big cap stocks here.  That might be dollar related.

The dollar is up over 6.5% since Oct. 1.  That will impact earnings considerably.  Interest rates have had the fastest move up in several years.  The real question is whether those moves are sustainable or not.  I am certain the dollar is as I think there is a global scramble for greenbacks going on.  The bond market is a different situation.  We clearly have a bond bubble.  I have not heard anybody try to say otherwise in a long time.  However, determining when a bubble is bursting can be quite problematical.  There seems to be some inflation worries in the market that may be driving the sell off.  Some of the current inflation we are seeing in the system is from the rapid rise in oil and other commodities.  That will be transient.  Some people seem to fear rising wages.  There has been a bit of an uptick in the wage data.  I believe that is driven largely by increases in the minimum wage.  There have been various increases all around the country.  That is much harder to judge how significant that is.  Whether the current inflation is transient or not really does not matter.  What really matters is people's perception of inflation.  Listening to people talk I think there is a developing perception that more significant inflation is on the way then what we have been seeing.  If that is the case then rates will continue to rise.  As weak as the economy is that would slow it down for sure.  We might already have seen enough of a rise to be noticeable in a few months.  The higher rates also hurts the Wall Street mantra that high stock valuations are justifiable because of low rates.  That could lead to trouble in stocks.  Don't forget about the risk parity funds discussed a while back.  These are leveraged stock and bond funds.  If bonds go down enough those funds might need to sell stocks to meet margin calls.

What happens to stocks is most likely going to be determined by what bonds do.  What happens to bonds is most likely to be determined by investor's inflation expectations.  I don't exactly know how to handicap that.  Predicting a stock market crash is always difficult.  It is pretty easy to see how the bond market could make that happen in this situation, but will that actually happen.  I mentioned a while back this is likely the moment of truth for stocks.  Is the 2 year consolidation a top or a base to go higher.  I believe we will find out in the near future.  Should it be a top the downside is probably pretty big given the over valuation and weak economy.  This is probably an important time to monitor investment portfolios closely.  There is lots of data and events coming up next month that could easily shake things up.

This is an extremely interesting paper on central banking from an insider.  Ultra-Easy Money: Digging the Hole Deeper?

Happy Thanksgiving to all.

Bob

Tuesday, November 22, 2016

Economics 101 Trade

I was very glad to see Trump start talking about trade when he first started campaigning.  They had a number of debates on CNBC on the subject.  Unfortunately those debates indicated just how ignorant of economics many people are.  The anti trade argument usually mentions the loss of manufacturing jobs.  The pro argument usually centers on cheaper prices for consumers being good.  Just once I would like to see somebody talk about basic economics.  Here is the high level formula for GDP standard in any basic economic text book.

GDP (Y) is the sum of consumption (C), investment (I), government spending (G) and net exports (X – M).
Y = C + I + G + (X − M)
It is the part in parentheses that deals with trade.  Notice the calculation is exports minus imports.  That means a trade surplus adds to GDP while a trade deficit subtracts from GDP.  While GDP is useless in real time for economic analysis the final numbers (years after the fact) provide a reasonable measurement of growth.  I think everybody would agree that the more growth a country has the better it is.  Running trade deficits subtracts from GDP.  That is obviously bad.  That is not debatable.  And yet it is debated.  Here is a look at the U.S. balance of trade.


As you can easily see the U.S. has been running chronic trade deficits since around 1976.  Both parties have been complicit in purposely lowering our GDP and therefore our standard of living.  They pursued poor trade agreements.  This is undeniable.  It is simply basic economics.

Toward the end of the last decade China had a trade surplus over 10% of GDP.  The government built up over $3 trillion of foreign reserves from their profitable trade operations.  The most recent data I saw show that surplus is down to about 2% of GDP.  That has resulted in China's foreign reserves declining as they spend to try to keep their massive bubble economy afloat.  Meanwhile the U.S. with our trade deficits has managed to rack up $20 trillion in debt and lowered the U.S. standard of living so much Donald Trump got elected president.  Trade matters, but it must be done fairly. Trade deficits are not helpful in any way.

Bob

Daily update 11/22 Mixed Signals from Labor Market

Dow hits 19000 for the first time and SPX hits 2200.

A hanging man doji bar.  SPX would have to close below today's low for it to have any important meaning..  Breadth was +67%.  New highs were 267 and new lows were 18.  Volume was up a little bit.  It felt like the bulls had a mission in mind to get to 2200. 

The high in the futures came overnight before the open.  After a morning sell off, the bulls showed up and pushed prices back to the intraday high.  The range continues to be very narrow though. 


Despite the record high close the green count actually slipped a bit.  It is still not showing the kind of strength usually seen on a strong break out.  Very odd.

The small cap stocks are leading the way here.  The curious thing about that is the R2000 index was the most overvalued of the broad based indexes.  I called it a bubble valuation like two years ago when it hit a P/E of 75.  It no longer has a P/E because earnings have gone negative.  Very comforting isn't it.  Every 1000 points since the Dow hit 10000 has usually seen some consolidation or pullback when first touched.  That happened when the Dow hit 18000 in Dec. 2014.  It ended up pulling back almost to 17000.  I see no reason why it would be different this time.  If anything there seems to be some good fundamental reasons not to go higher from here.  I think I have covered those pretty well.  I guess we will see if it is different this time or not.

Here are some interesting charts on the state of the labor market.  Mixed Signals from Labor Market

Bob

Monday, November 21, 2016

Daily update 11/21 THE NEW MAP OF ECONOMIC GROWTH AND RECOVERY

SPX makes a new high close.


SPX closed above the uptrend line from the Feb. low.  I can't say that is significant, but it might be significant if it does not stay there for a while.  The breadth was +71%.  The strong breadth days on this rally have corresponded to strong days in the price of oil.  There still seems to be some connection going on there.  There has been some comments recently on an OPEC deal of some kind.  When those comments are positive on a deal oil goes up.  Whether there ever is a deal is another question entirely.  New highs were 208 which was good, but well below the 330 on 11/14.  New lows came in at 22 which is a bit elevated for SPX closing at a new high. 


The futures closed above the recently drawn upper trendline.  They seemed to be making an attempt to invalidate the bearish looking rising wedge.  They will need to stay up there for a while to make sure that is the case.  Generally speaking when price breaks out of a structure like that and comes right back in it ends up breaking out the other side. 


The green count picked up a bit today, but remains below recent levels.  It also remains well below overbought.  The most curious aspect is that so far it has not gotten as high as that double peak back in Sept.  The summer break out had a much higher peak.  Another sign this thrust does not appear to be as strong at that one was.


The short term lines are showing a little bit of a negative divergence of late.  It is not unusual to peak before price does.  The intermediate lines got a positive cross.  The long term lines have come together.  Since Sept. the short term red line spikes have been higher then the green line spikes.  That generally means the market is in some kind of corrective phase and upside progress is tough to come by. 

Internally this break out does not appear to be nearly as strong as the summer one was.  That strikes me as a bit odd as the financial and small cap indexes are at new highs this time.  The transports have been moving up strongly as well, but have not made it back to the high yet.  If you just look at the indexes the market looks super strong.  I believe this is caused by the inflows going mostly to index funds and ETFs.  As long as those inflows keep coming then the market will keep going up.  But now that all major indexes are at the highs will those flows keep coming?  Valuations are still high and rates are rising.  Not to mention the dollar breaking out on the upside.  Interesting juncture.  Is the two year stagnation coming to an end or not?  This is the second attempt to break above the 2015 high.  If it fails again it might bring in more selling pressure this time given the fundamental backdrop.

Thanks all for the nice comments on Friday's post.

This is an interesting report (sent in by a friend, thanks Manny) on the performance of the economy  in different areas of the country.  THE NEW MAP OF ECONOMIC GROWTH AND RECOVERY

Bob



Friday, November 18, 2016

Election

Reading and listening to post election comments indicates to me the media and most democrats have absolutely no idea what happened on election day.  I suspect many top republican party leaders may also be a bit clueless.  This election was not about racism, hatred, left vs right, liberal vs conservative, or anything the media tried to make it out to be.  This election was about this chart.

The Wealth Inequality Problem in One Chart

To borrow a phrase from Bill Clinton's campaign, "the economy, stupid".  I have said a number of times in this blog that people's perception of the U.S. economy is highly impacted by where they live.  The major coastal cities are doing okay while middle America sucks royally.  It just so happens the voting population is about evenly split in the two areas.  For an awful lot of folks in this country the economy really, really is poor.  That is why they voted for Trump.  Hillary campaigned on everything is fine she will continue it.  She even called Trump supporters deplorable.  Well, sorry to say, but everything is not fine and that is why she lost.

Trump campaigned from the start about the economy.  About putting America first.  About creating better jobs.  The heartland decided that in spite of all his faults he would be the better president for them.  Hillary never really tried to get their vote.  She spoke mostly to her base in the big cities.  More then anything else Trump is a nationalist.  Europeans have uprisings in many countries that they call populism.  Many people around the world are getting left behind in the global economy that serves mostly those at the top.  The brexit vote and the Trump election are just signs the movement is gaining strength.  This seems likely to continue to me.  There could be global economic ramifications.

Most of the generation before me never went to college.  Yet most high school only educated men got jobs, married, bought houses and raised families.  Many of my high school classmates attended college, but many did not.  Those that did not were still able to buy houses and raise families.  Look around at the world today.  Even quite a few college educated kids are living at home with their parents unable to find good jobs.  In a truly good economy Uber would not even exist.  Do you really think that people like picking up complete strangers and driving them around in their personal cars?  I don't.  They do it because of necessity.  There are not enough good paying jobs.

Our economic problems are not easily solved.  We have too much debt, an aging population and many jobs being automated away.  There will be no magic wand waved that makes things suddenly better.  I find it curious how so much optimism suddenly appeared after the election simply because the market did not crash.  People's expectations are way too high.  The new president will not be able to even come close to the growth promises that were made in the campaign.  He will most likely have to deal with a global recession that could be worse then 2008.  Be prepared for what unfolds and don't expect miracles.

I don't know exactly how all this will work out.  What I do know is that if the globalists do not figure out a way to get more wealth distributed down to the working class the nationalist/populist movements will gain strength.  It may even be too late already.  I think it is important to note this is very much a replay of the 20s.  That was the last time the wealth distribution was so skewed.  That period was followed by the great depression.  Will it be different this time?

Bob

Daily update 11/18

Rotation winding down.


SPX is still hanging out below the uptrend line.  We opened up a little bit this morning and the sellers went right to work.  However, they brought a pretty small hammer today.  Breadth was only slightly negative.  New highs were down a bit to 149.  New lows were up a bit to 43.  The number of  new lows clearly go up and down with bonds.  Today's high was fractionally below the high close.


The futures stayed within the rising wedge pattern mentioned yesterday.  Going to be impossible to stay there much longer. 


The green count slipped below 50 today.  Oddly the red count plunged as well.  Maybe there was a little bit of dip buying in some stocks that had been down recently. 


Today was day 10 off the low.  I marked day 10 off the brexit low which was the peak of the breadth indicators in that rally.  As you can plainly see this launch is not nearly as strong as that one was.  Both the MCO and 10 DMA lines are well below where they were in that rally.  This appears to be half-hearted to me.

I find this situation totally amazing.  The day before the election Trump would kill the economy if he got elected.  Since the market did not crash after the election the rhetoric coming out of Wall Street now is that he will be a great growth president.  I actually heard a guy talk about how it reminded him on the floor of Reagan coming in.  Seriously?  The talk is bordering on euphoria while the internals are really weak.  I heard Pisani talking about record weekly inflows into ETFs.  That would explain the weak internals.  The money flow is mostly into index ETFs.  Some money managers make use of ETFs, but I would be willing to bet there was a large influx of retail investor money on this rally.  This seems like the perfect environment for this to be a final blow off top.  I guess we will see.

Have a great weekend.

Bob

Thursday, November 17, 2016

Daily update 11/17 Dollar breaks out while SPX tests the high

This is going to be interesting.


SPX kissed the underside of the uptrend line again.  It closed just 3 points below the high close.  Oddly the breadth was barely positive at the end of the day after being +70% at 9:50 AM.  While price advanced all afternoon there was considerable selling underneath the covers.  New highs picked up to 170 while new lows dropped down to 23.


The futures made it over the trendline again.  Will they stay there this time?  If you look at the price action the last several days it looks like a bearish rising wedge forming.  I added white lines to help visualize it.


The green count dipped a bit today.  This confirms the selling into strength today.  That is not what bulls want to see.


The weekly dollar index chart shows the breakout.  The dollar moved up swiftly after Oct. 1.  Wow.  Who could have seen that coming.  Oh wait.  I did see.  Daily update 9/29 IMF's SDR change on Oct. 1  I think this break out is for real and DXY is probably headed up towards 120.  The global economy is not going to like this.  I don't think SPX will either.

SPX tested the all time high from back in Aug.  The internals did not look very good.  Bulls want to see momentum and strength going into such a test.  They got people selling into strength.  Not a particularly good sign.  I have heard some mention of the dollar on CNBC, but not much.  If this break out sticks this is truly an extremely important event.  Rising rates and rising dollar are rapidly tightening monetary conditions.  What the FED does at the next meeting is really irrelevant.  Their little teeny tiny raise means nothing.  The markets have already tightened way more.  Against this backdrop I have a hard time seeing what will drive SPX higher.  Q4 earnings are going to be hurt by the market's actions.  This seems more and more likely to be a blow off top.  Those can reverse sharply so stay tuned.

Bob

Wednesday, November 16, 2016

Daily update 11/16 Who’ll Get Hit by Fallout from the $11-Trillion Commercial Property Bubble in the US?

No follow through on yesterday's strength.


The volume was back to average today.  I would say the election rotation is largely done.  The breadth was even.  New highs dropped again to 110.  New lows also dropped to 18.  The market is quieting down a bit.  Despite all these days above the 50 SMA we do not have a confirmed break.  SPX needs to close above that 11/10 high.  Its an odd pattern around that MA. 


Curiously the futures have been unable to stay above the trendline.  That seems a bit odd, but it is what it is. 

The green count was stable again today so lets look at the bull pressure chart.


The short term green line turned down a bit today.  It has not gotten up to the same level we saw the red line get on the last pullback.  If we go down before it crosses that would give pretty high odds of retesting the last low.  The intermediate lines have gotten very close, but are still negative.  The long term lines also remain negative. 

Without further strength a close by SPX back below the 50 DMA looks like it would lead to a test of the recent low.  The dollar index tested above it's bull market high and was the highest since 2003.  It is already high enough and early enough in the quarter to affect the earnings in Q4.  Further strength is going to be bad for emerging markets and possibly U.S. stocks.  The 10 year rate has crossed slightly above the SPX dividend yield making stocks less attractive for those that use that valuation model.  There are reasons why this market might not be ready to go higher at this point. 

The gang on CNBC were really hyping financial stocks.  I showed the chart of XLF the other day with all that volume.  Clearly a strong break out to go higher or a final blow off top.  Delinquencies of just about every kind of loan are rising.  Reading the article below suggests there could be serious problems going on with CRE.  The sentiment versus fundamentals would seem to point to that move being more likely to be the final blow off.   That would disappoint a lot of people.

I have heard a lot of talk about the CRE bubble.  Interesting article on it.  Who’ll Get Hit by Fallout from the $11-Trillion Commercial Property Bubble in the US?

Bob

Tuesday, November 15, 2016

Daily update 11/15

Buyers showed up again.


Volume was strong, but tailing off a bit.  Breadth was +70% the strongest day by far since 11/7.  New highs were well down from yesterday at 156.  New lows also came down dramatically to 47.  I wonder if the portfolio adjustments are winding down a bit.  SPX is just a little ways from the high now. 


The futures are up a few points after hours.  They got above the trendline again today at the close.  I don't know if that is significant.  It may be just coincidence that the futures were having trouble with that line.


The green count did not rise with the rally in SPX today.  That strikes me as a little odd, but I can't say if it was significant yet.  Only if SPX continues up without the count would it signify a possible divergence.

Today turned the short term trends up in SPX and COMPX.  How much follow through there is I cannot say.  Do we make new highs in SPX or fall short?

Rate hike odds for the Dec. meeting have risen to 90%.  Unless something drastic happens the FED will be raising rates.  The last hike caused a bit of sell off to say the least.  That does not seem to be bothering anybody so far.  At this point I don't think the news really matters.  Portfolio adjustments are the main driver.  Once that settles out and the volume dies down the market may start caring once again what is happening in the world.

Bob

Monday, November 14, 2016

Daily update 11/14

Very curious.


High volume continues without upward price movement.  Rotation still going on.  Breadth was slightly positive.  New highs came in at 330 while new lows came in at 299.  Both numbers that high is just plain crazy.  SPX is running in place at the moment.


The futures made another move above the trendline in the night, but once again failed to stay there.  The 20 SMA is still below a ways, but is coming up pretty fast.  That could slap the market higher or provide a downside pivot.


The green count increased a bit today, but remains below overbought. 

I mentioned the other day this could be a blow off top.  While SPX and COMPX are not looking like that here are a few other charts to ponder.  First up is SPX's blow off top from 2000.


That spike up was the ultimate top in 2000.  Here is what is going on now.




The small caps, financials, and transports have all been lagging for a long time.  All off a sudden they are racing higher.   IWM made a new all time high.  XLF a new bull market high.  IYT still has a ways to go.  Don't you find these charts a bit odd?  If they are not a blow off top I don't what they could be.  People are clearly piling in with reckless abandon.  Look at all that volume.  Maybe I am just crazy.  Maybe Donald Trump getting elected means the world is saved.  The world being saved seems like the less likely scenario to me.

DXY has continued on its merry way higher.


Triple top or base to go higher.  We will find out in the months ahead.  DXY is testing that prior double top.  This is the moment of truth for the dollar, but it may take a while before we know the result.

We are clearly at a critical juncture for the markets.  This is all so strange.  Bunches of new highs and new lows.  Some indexes flying up, others doing nothing.  Bizarre.  I read the global bond market has lost over $1 trillion since the election.  Ouch.  To me it looks like investors have gone nuts.  That has been known to happen at the ends of major trends before.  We will see what happens.

Bob

Important

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