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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?


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