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Friday, December 16, 2016

Daily update 12/16 Foreigners are Dumping US Treasurys as Never Before

Odd day.

Despite nearly all indexes being negative the breadth was +54%.    They were buying utilities, oil and gold stocks.  Can you say safety.  That could have been because of the report of China taking  a U.S. unmanned sub.  New highs were close to yesterday's total at 114.  New lows were 33.  Today was quarterly option expiration which can have lots of cross currents.  Once upon a time that used to make for a volatile day.  In recent years though it seems to me the volatility is actually pretty low on those days.  SPX did not tell us much.

The futures tried to launch off the 20 SMA this morning with a gap up.  However, the market never got going and ended up lower.  At the end of the day the futures held the 20 so they might try for a bounce again next week.

There was a negative cross in the red/green count chart.  The last one was a bounce cross leading to higher prices.  I don't know if we have had enough of a pullback to entice buyers yet or not.

Like the red green chart the short term bull pressure lines also got a  negative cross. 

The most interesting event of the day was the transports falling back below the break out point.  In Daily update 12/7 Dow Theory buy signal  I wrote

"Now that we have a Dow theory buys signal what happens now.  The Dow theory sell signal back in Feb. marked the exact closing low for the Dow.  In other words it was a massively failed signal as there was no further downside.  Is this the start of a really big break out?  Could it be we end up with another massively failed signal?  I sure wish I knew. "

We still do not know the result here, but today's action opens up the door for another massively failed signal.  This break out lasted a whopping 6 days.  Of course the bulls may show up again and re-break out the index.  On the volume, a friend (tnx sunny) downloaded the volume for all the component stocks.  It turns out those big volume bars are correct.  However, all the proceeding data is wrong.  I guess somebody found the error and corrected it, but not in the history.  At any rate there was no big volume surge like it looks like.  The big volume on today's failed break out is valid, but could have been enhanced by expiration day.  There was a ton of media coverage on the Dow theory buy signal, but I bet there won't be any mention of the failed break out if indeed that is what just happened.

I noted the other day that buying returned to big cap tech, but I did not really give the topic the coverage I should have.  The NDX 100 is a key index and up until 12/13 it had not made a new high post election.  However, it did not follow through on the upside and closed today just a few points above its break out level.  It clearly is in jeopardy of failing.

Market internals are weakening once again.  Will the bulls step in here to buy the dip or wait for lower prices? 

Somebody must have passed a law that the phrase "animal spirits" must be uttered or written everyday.  Over the years I have heard some flimsy excuses for why the market is going to go higher, but this one may win the booby prize.  What does it really mean anyway.  Have a bunch of dead bull's (cows) spirits taken over human bodies and forced them to buy stocks?  If there was ever an anecdotal sign of a bull market top this is it.  I guess we will see what happens.

This is a pretty interesting read.  Foreigners are Dumping US Treasurys as Never Before  Including this chart.


Have a great weekend.


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