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Monday, March 20, 2017

Daily update 3/20 Industrial production (iP)

I guess the lack of buying enthusiasm had nothing to do with option expiration.

SPX tested below the 20 SMA and bounced.  While it held the MA at the close this is not the most inspiring looking chart at the moment.  Breadth was -56%.  New highs dropped down to 107.  New lows picked up a bit to 23.  The old Wall Street saying "markets can fall from their own weight" comes to mind.  There is clearly a lack of buying pressure at the moment.  How long that might last is impossible to say.

The futures are slightly below the 50 SMA.  It looks like it could be time to bounce or break.  A break could send them down to the 100 SMA.

The green count slipped considerably today, but remains above the red line.  So far that last spike up to oversold in the red line has not generated a lot of buying interest.  I take that to mean the market needs a catalyst to move higher from here.  Just getting oversold does not seem to be enough to entice the buyers.

I am going to throw this out there even if it might sound a little crazy.  There are some things I don't understand.  The last move up in early Feb. came after DJT tweeted out they would have a phenomenal tax package in a few weeks.  A few weeks later we find out they can't do the tax package until they do the healthcare changes.  I have a bit of a hard time believing they did not already know they wanted to do healthcare first.  So why talk about the tax plan?  Then they throw out a healthcare plan that practically nobody seems to like.  They say it has no chance to pass the senate at this time.  Next DJT claims that BO spied on him, but there seems to be no evidence of that so far.  Why would you say such a thing if you did not have some reasonable proof.  Over the weekend the G20 meeting ended with the possibility of trade wars.  Does any of this makes sense?  Now put those same actions into a context of wanting to spark a sell off in the market.  They set the market up for disappointment with the tax plan, but that didn't work.  Knowing they want to do the healthcare before taxes they throw out a plan that is very unlikely to pass.  That didn't work either.  Get radical and let the president sound a little nutty.  So far that hasn't worked either.  Start speculation of global trade wars.  The market didn't seem to notice that today.  If the objective is to get the market to sell off we will see more crazy things come out of D.C.  If that is not the objective, then I have no idea what they are doing. 

You might ask why would they want the market to go down.  That one is easy.  Clearly the market is in a bubble.  You might recall DJT saying that on the campaign trail.  The sooner it pops the easier it will be to blame it on BO.  If the market stays up too long DJT will definitely get the blame.  Of course the real truth could be I am just going loco.

Here is a look at the latest IP chart.

IP looks rather flat the last three months.  IP has never been negative over a 24 month period without the U.S. being in recession.  I don't think we are in recession, but I don't think there is an all clear sign yet either.  This is the longest period of U.S. economic weakness of this magnitude where the U.S. did not fall into recession.  Could it be different this time?  I am not yet convinced of that, but there is a first time for everything.   I think the jury is still out especially with the FED raising rates.


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