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Friday, January 6, 2017

Daily update 1/6 How Bad Will the “Bond Massacre” Get?

Pop the cork.  Let the celebration begin.  Oh wait.  The Dow only got up to 19,999.63.  While they say 20,000 is just a number, it may end up being significant.  The Dow first topped 1000 intraday in 1966.  However, it did not close above it until late 1972.  It went up a bit further into Jan. of 73 then collapsed 50%.  It did not get above 1000 to stay until 1982.  We talked about Dow 10,000 for over a decade.  Will 20,000 be another one of those numbers?

SPX broke out of the range on the upside as it should have based on the pattern.  I figured if I said it might not happen that it would.  The market likes to do that to me.  The breadth was actually slightly negative.  Not a great sign.  New highs were only 106.  Not particularly good when making new highs.

The futures got above their Dec. high, but failed to close there.  Not a ringing endorsement for new highs.

The green count crossed back above the red, but remains below 50.  Also not a ringing endorsement for new highs.

This new high does not have very strong internals.  The VIX dipped briefly below 11 today.  I think it will be difficult for the market to gain much altitude from here.  The market looks pretty tired.  A date with the 50 DMA would not be a surprise.

Next week we will start getting some earnings reports which could shake things up a bit.  Will they be able to deliver on the high expectations the market seems to be pricing in?  The dollar index is higher then it was all of last year.  The worst year over year earnings comparisons are going to come in Q2 and Q3.  The dollar index was much lower throughout those quarters.  Full year guidance is going to be interesting.  There might be a chance of some disappointments.

This is a good article on the makeup of the bond market and some history.  How Bad Will the “Bond Massacre” Get? 

Have a great weekend.


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