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Trend table status

Trend

SP-500

R2000

COMPX

Primary

? 3/31/20

?- 3/31/20

Up 5/29/20

Intermediate

?- 5/29/20

?- 5/29/20

?+ 5/29/20

Sub-Intermediate

Up 4/20/20

Up 4/22/20

Up 4/17/20

Short term

Up 5/20/20

Up 5/20/20

Up 5/20/20


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 (-)

Friday, September 29, 2017

Daily update 9/29 U.S. Households Are Loaded Up With Stocks

Bull market target met.


The 2514 Elliot wave target was reached today.  Breadth was +57%.  New highs were 202.


A little quarter end buying.  The futures ended the day above the upper channel line.  Will they stay out there next week?  If so we are in accelerated up move mode.  If they come right back in the most likely result will be to pullback to the lower channel line.


The green count picked up a bit, but is still below 50.  It is not very strong looking.  I guess we will see if that matters or not next week.


QQQ had a nice day, but remains below recent highs.  I think this is probably the most important chart at the moment.  Will it continue higher or fail to break out?

For next week I will still be watching SPX for a close below 2490.  I will also be watching IWM and QQQ very closely.  Bulls want to see QQQ heading higher and IWM holding on to its new highs.

On the front page of the Money section of the USA Today there was an article about the Dow hitting 1,000,000 by 2117.  What the ...  I doubt there are many investors around today that plan to hold on to their equity positions until then.  What is the purpose of the article?  Are we supposed to invest every last penny we have because the Dow might hit 1,000,000 in 100 years?  Seeing that headline reminded me of the book Dow 36000 that came out right around the 2000 top.  The entire article seemed stupid to me and like something that would be printed around the time of a bull market top.  The sentiment is certainly very similar to past tops.

I have had an uneasy feeling this entire bull market that the end would not look like other bull market tops technically.  We currently do not have a technical condition that would make one think a bear market is right around the corner.  With the exception of QQQ not being at a new high with the other indexes and my green count being below 50 everything is perfect.  The last few weeks have seen some pretty strong buying.  The McClellan oscillator is positive for the first time since Aug. 2016.  So what happens now?  Does the market just keep on plugging away on the upside?  Why do I have this feeling I should be worried when there is obviously nothing to worry about.  Maybe it is the lack of worry by everybody else that bothers me.  I know for a fact the economy is not as strong as the pundits would have us believe.  However, there is no sign that a recession is in the immediate future.  With the economy only growing in the 2% range we could fall into recession in less then four months at any time.  But will anything happen over the next few months that would cause that to happen.  Auto sales have been bad, the housing sector is weakening and retail is closing stores at a higher rate then 2008.  While none of that seems to have shown up in the data can we be assured that won't happen over the next few months?  The ECRI WLIg indicator went negative this week.  That often indicates some slowing in the economy.  Is that just because of hurricanes and temporary?  I sure wish I knew.  Nothing would surprise me from here.  We could be 10% higher in 6 months or 20% or more lower.  I don't think I can say which one has the higher odds of happening.  Bull market tops happen when things are as good as they are going to get.  Therefore things always look good at tops.  Which is the primary reason most people never have a clue a top is upon them.  There is just enough going on in the economy that this could be as good as it is going to get.  The FED is raising rates and about to start reducing its balance sheet.  What affects on the economy will all that have in the months ahead.  Nobody knows.  I find it interesting that two interest rate sensitive sectors (housing and auto) are showing some considerably negative signs.  The FED's latest rate hike has not worked its way through the economy yet.  What happens if they hike again in Dec. like they are clearly talking about?  While everything seems to be perfect for the market there is a chance things go wrong.  The market is highly leveraged and is like a ticking time bomb.  Some day it will blow up, but we can't see the timer.

It is official.  This bull market is the second most loved bull market since data begins in 1950.  U.S. Households Are Loaded Up With Stocks


Due to the move to passive index investing in recent years I would not expect to see the euphoria seen in 2000.  Individual investors are all in.  The main driver to the upside will be incremental money coming in.

I think this is how many investors feel at this moment.  How much longer will it last?

Have a great weekend.

Bob

Thursday, September 28, 2017

Daily update 9/28

SPX makes a new high close.


SPX did not get above yesterday's high, but a new high close is a new high close.  QQQ ended the day slightly in the red though.  Breadth was +52%.  New highs slipped down to 153.  Not much excitement in the internals to go with that new high close.  That is more like the slow creep up pattern.


The futures stayed above the 20 SMA today.  However, they still have not confirmed an upside break.  It is generally much better to bust through the MA and take off.  A failure to get confirmation of the break in the first few bars often leads to a reversal.  That just happened on the downside.  The futures spent days below the 20 SMA, but never confirmed a break down.  The bulls would like to see a confirmation tomorrow.  A failure to do that would start to increase the odds the market will reverse again.


The green count actually slipped a bit today.  This is not a very inspiring chart for bulls. 

Today was a rather wimpy new high close.  I just don't believe we will go significantly higher without QQQ breaking out with the rest of the market.  Can the bulls pull off another upside thrust from here?

Lately it has all been happy talk on CNBC.  I can't remember the last time they interviewed anybody even the tiniest bit bearish.  Josh Brown has been busy telling us how perfect everything is.  There is the problem if there is one.  With the perception being that everything is great I can't imagine many money managers wasting money on hedges.  Should something come along that causes some real selling pressure the market could fall more then most are expecting.  If only I had a working crystal ball that could tell me if such a catalyst was going to come along.  They usually do in a year 7.  If nothing happens in Oct. then the market is probably home free until next spring.

Bob

Wednesday, September 27, 2017

Daily update 9/27 The Illusion of Prosperity

Intraday volatility picking up a bit.


SPX gapped up then sold off fairly hard early on.  Then mid day the market rallied and SPX ran to new highs and came within 2.25 points of my 2514 bull market target.  The sellers returned in the last hour to send SPX back below the prior high close.  Breadth was +54%.  New highs increased considerably to 201.  New lows also increased to 19.  Slightly elevated for a new high.


The futures closed above the 20 SMA, but as of yet have not confirmed an upside break.  Still in consolidation mode.


The green count is still above the red line, but remains below 50.  It is even lower then it was a couple of days ago despite the run to a new high today in SPX.  That is not exactly giving me a lot of confidence in further upside.


Small caps exploded as IWM was up nearly 2%.  That actually makes sense as the proposed tax cuts would benefit the little companies that don't have all the tax attorneys the big boys have.  That big move makes the breadth figure of only +54% seem very odd.  Breadth usually tracks pretty well with IWM as there are a lot of stocks involved in the tracking index.  With that kind of move and indexes all positive I would have expected breadth to be somewhere in the upper 60s.  This could be a breakout of an upward sloping trading range or a climax top.  There is a pretty big run up from the last low at the 200 DMA.  That could make the temptation to take some profits pretty high.  It is really hard to break out and keep going after going straight up to get to the high.  If IWM closes back below today's low it could bring out considerable selling pressure.

Last Wed the FED announced that balance sheet reduction will start in Oct.  Since then the market has developed a pretty consistent intraday pattern.  It sells off in the morning, finds a bottom and rallies mid day, then sells off a bit going into the close.  This is a very odd pattern.  I can't recall having ever seen it on a multi day basis.  It is likely European traders doing the morning selling.  I would guess U.S. retail investors are doing some of the mid day buying.  Some persons/entities unknown are pulling money out of stock mutual funds causing the late day dips.  I don't know if there is any predictive power over the short term of such a pattern.  A nice playbook for day trading though.  Despite the strong break out by IWM I believe the market is still at risk of a pullback here.  Unless the selling in QQQ is over.  It could be, but I have no reason to believe that at this time.  If IWM stays in new high ground and QQQ can join it we would have a different picture.  Stay tuned.

This is a very interesting article.  The Illusion of Prosperity

Bob

Tuesday, September 26, 2017

Daily update 9/26

Mixed day.


The bulls showed up for a little while after the open.  However, the sellers showed up and started hitting the bids.  Nothing too serious, just persistent selling into strength.  The breadth was +55%.  New highs were stable again at 142.


 The futures got over the 20 SMA after the open, but once again failed to stay there.  The consolidation rolls on.


The lines continue to get closer together. 

SPX was unable to close back above 2500, but did not collapse either.  The sideways pattern of recent days looks just like the rest of the sideways patterns at the highs this year.  They always need a move down before taking the next leg higher.  The biggest difference this time is the slight weakness in QQQ.  It is below its June 9 intraday high.  History shows that very often QQQ leads SPX up and down.  I don't know off hand why it would be different this time.  We need to keep an eye on QQQ in case it breaks down from its multi month trading range.  Should that happen I would expect it to take SPX down as well.  Until that happens QQQ could end its correction at some point and resume leadership on the upside. 

The year 7 of a decade is famous for having a pullback in the 2nd half of the year.  Getting through Sept. does not mean we have avoided the pullback this year.  Back in 1927 the Dow made a new high in early Oct. and then dropped 10% that month.  Maybe we don't get that sizable pullback this year, but we will likely get something that gets the VIX high enough to push the market higher.

Bob

Monday, September 25, 2017

Daily update 9/25 4-Warnings For The Bull Market

Selling in QQQ was very pronounced.


There was some selling pressure this morning as things heated up with NK again.  However, the dip buyers showed up to get SPX well off its low by the close.  SPX closed below 2500 for the first time since closing above it earlier this month.  Breadth was +53%.  New highs were stable at 130.


The futures tested above the 20 SMA overnight, but failed to stay there.  They tagged the 50 SMA and bounced.  The are still in consolidation mode.


The green count turned down just a bit, but remains above the red line.  The red line is slowly rising though.  The bulls need another thrust on the upside and soon.

QQQ started selling off right from the open while R2000 rallied to a new all time high.  We had similar action the other day.  QQQ ended up at a new low close for Sept.  That seems like an odd rotation to me.  I can't remember a time when QQQ was breaking down and small caps were making new highs.  Is it significant?   I can't be sure, but when leadership fails it is often important.  QQQ was leading earlier this year.  After every pullback it was usually the first major index back to new highs.  It has not been the same since that big sell off on 6/9.  While it has not broken any real important support levels yet there is the possibility it will start leading the broad market lower.  It is important to keep an eye on things to see what develops.  With SPX closing back below 2500 the bulls need to show up tomorrow.  A close below 2490 could bring out more sellers.

An interesting read from a money manager.  4-Warnings For The Bull Market

Bob

Friday, September 22, 2017

Daily update 9/22 The Coming Bear Market?

Mixed day.


SPX rallied back to slightly positive after a gap down this morning.  Volume was light indicating there was no interest in selling into weakness.  Obviously we are not going to get any sizable pullback until people get interested in selling into weakness.  The trouble with markets is they can change their mind at any time.  Breadth was +60% as small caps led the way today.  New highs were up a bit to 146.  New lows were also up a bit to 17.



The futures closed under the 20 SMA in the overnight session.  Late this afternoon they rallied up over that MA, but sold off enough going into the close to end the day back below it.  That could be a bearish rejection at the 20, but I really don't like to ascribe too much meaning to action in the last hour.  I think we need to see what happens on Monday.  If we head south then it was bearish action.


The green count picked up a bit.  This could mean the bulls aren't finished yet. 

The Russell2000 was testing its highs today.  COMPX was showing relative weakness.  That could be a sign of some money moving out of FANG and into small cap stocks.  To me that would be money moving from one bubble to another, but what would I know.  SPX is still in sideways mode at the moment.  We await it deciding to break out or break down.  Maybe we get another attempt to reach my 2514 target. 

Interesting article from Dr. Shiller.  The Coming Bear Market?

I got another rejection by an ISP last night.  I have removed the email address from the list.  The problem is that I can't tell that person their ISP rejected my email.  If you are a subscriber and have been getting emails and they stop it is because of your ISP.  You can send me an email.  Maybe your ISP would let me reply to you.  I don't even know if that is possible.  If you send me an email and you don't hear back it is not because I am ignoring you.

Dinner is served.


Have a great week end.

Bob

Thursday, September 21, 2017

Daily udpate 9/21 Ford shutting in some production

Minor selling.


SPX ended the day down just a little.  Breadth was -56%.  New highs dropped considerably to 133.  There was a lack of enthusiasm in the buyers today.


The futures found support at the 20 SMA.  The consolidation continues.


The green count continues to drift lower.

Neither the bulls nor the bears were very ambitious today.  All year the market has tended to shoot up a bit, go sideways for a while, sell off a bit then rinse and repeat.  It is starting to look like SPX might not make much more upside progress before the next pullback.  I am still watching for a close below 2490.  SPX is still in the range of a possible double top with a slightly higher high.  Given that QQQ has made no progress in weeks there is the possibility of some kind of top forming here. 

I have noted poor auto sales for many months now.  Even with the hurricanes ruining some cars Ford is shutting in some production.

Ford Motor Co said on Tuesday it plans to idle five North American vehicle assembly plants for a total of 10 weeks to reduce inventories of slow-selling models.

The plants affected include three assembly plants in the United States and two in Mexico, the company said in a statement. The vehicle models include the Ford Fusion and Lincoln MKZ midsize sedans, the Ford Focus compact car, the Lincoln Continental and Ford Mustang, Ford Fiesta and the Ford Transit van.

The factories involved employ more than 15,000 people, according to Ford’s website. The company did not say how many of those workers would face temporary layoffs.

I think this is a good example showing that the economy is not nearly as strong as many seem to believe.  I can't remember a time in my life when an auto company reduced production in a strong economy.  Maybe this time is different.

I think I understand what happened with the subscriber email list problems.  Since I am not a spammer or a mass marketer I did not really look into the ways emails get labeled as spam.  One of the ways is when emails get rejected a lot.  People go on vacation sometimes and their inbox can get full.  I was not proactive in removing email addresses from the list that were getting rejected.  That has happened a few times over the years.  I was waiting a month before I removed the address.  Apparently if you only have one email reject they don't name you as spam.  The problem arose this year when I had two subscribers pass away fairly near in time.  I did not find out what happened to them until later on.  The second email address started getting rejected before I had removed the first one.  I think that was when I got the spam label.  There are quite a few blacklist databases and there are web sites that can check to see if an IP address is in any of them.  My address is in a few of them.  That is why some of you get my emails and some don't.  It all depends on what blacklists your ISP checks.  Given time with no suspicious activity the databases are supposed to drop the IP addresses out.  Unfortunately my playing around testing different things has kept me in some of the databases.  I can send the email with no link and not get any rejects.  Within a few weeks hopefully I will get dropped from the blacklists.  Once that happens I should be able to send the link again.  I will manage the list proactively so it doesn't happen again.  The internet has a lot of info and sometimes it takes a while to figure out the right thing to search on.  This problem took me much longer to figure out then it should have.  I apologize for that.

Bob

Wednesday, September 20, 2017

Daily update 9/20

The FED announcement was pretty much a non event for stocks.  However, volatility showed up in the dollar and gold.  They even moved the way one would expect them to move.  How odd is that!


SPX had a 12 point intraday range which is big by recent standards.  However, that was pretty small for a day the FED actually did something.  At the end of the day SPX was slightly positive.  Breadth was +52%.  New highs were up a bit to 188.  New lows were stable at 17.  This looked like a typical slow creep up day with internals to match.  This pattern is prone to a sharp reversal.


The futures dipped down to the 20 SMA after the announcement, but found support.  They are still below the upper channel line so we are still in consolidation mode.


The green count slipped a little bit more. 

The slow creep up pattern is becoming clear in SPX now that internals are matching.  The market is looking a little tired.  We could see a sharp down day any time now.  That is usually how the slow creep pattern ends. However, the pattern can last for several days.  A fall correction still looks possible.  I guess we will see if it happens.

Bob


Tuesday, September 19, 2017

Daily update 9/19 "This Is Where The Next Financial Crisis Will Come From"

Zzzzzzzzz.


SPX had a 4.5 point intraday range.  I don't think it can get any smaller.  Narrow ranges are usually indicative of a short term top.  Breadth was barely positive.  New highs were 160.  New lows the last couple of days have crept up a bit to 18.  I like to see the lows under 10 when at the highs in the indexes. 


The futures closed inside the upper channel line this morning signaling they should be in consolidation mode now. 


The green count dropped below 50.  That is a big loss of momentum. 

Today looked like the typical slow creep up type of day.  The big drop in the green count combined with the very narrow range indicates a short term top is likely close in time.  I am still watching for a close below 2490 as an early warning of a possible short term pullback.

I saw a survey done by CNBC that said 68% of respondents expect the FED to begin balance sheet reduction in Oct.  The FED appears to have a green light to announce that action tomorrow.  Will it be a non event?  That is impossible to know.  Most investors I have seen interviewed seem to expect it to be a non event.  Sometimes the market does the unexpected just to keep us on our toes.  I have seen the FED do exactly what they were expected to do and volatility break out anyway.  Other times there is little to no reaction to the announcement.  The only thing I know for sure is the money the FED created out of thin air is going to start disappearing month after month.  At some point there could be considerable market and economic affects.  I don't believe the economy is nearly as strong as many people seem to believe.  There seems to be a belief the current tick up in inflation is an indication of that strength.  With the dollar dropping somewhere around 12% this year I believe that accounts totally and completely for what little bit of inflation we are seeing.  I am very interested in seeing how the dollar reacts to the balance sheet reduction.  There is always the possibility it reacts positively to dollars disappearing.  If that turns out to be the case that would act as additional tightening.  I think there is the possibility the economy might slow faster then most economists expect.  One problem we are going to have is the two devastating hurricanes are definitely going to be negative for the economy in the short term.  I don't have any idea how much the economy will be hurt and for how long.  The Fla. losses were largely from wind and much of the damage will be insured.  The Fla. economy will pick up considerably once the insurance money starts to flow.  With much of the damage in Texas from floods there is going to be a lot of uninsured losses.  How that works out is unknowable.  If the economy does slow over the next 2-3 months I think it will be very hard for me to tell if it is just short term or something longer lasting and important.  This is going to be a tough situation to analyze for a while.

Interesting article.  "This Is Where The Next Financial Crisis Will Come From"   The article does not answer the question where the next financial crisis will come from or when it will happen.  However, it does have some interesting info.

We think the final break with precious metal currency systems from the early 1970s (after centuries of adhering to such regimes) and to a fiat currency world has encouraged budget deficits, rising debts, huge credit creation, ultra loose monetary policy, global build-up of imbalances, financial deregulation and more unstable markets.

It sure looks that way to me.  Government debt has run up like crazy all around the world.

We see China’s credit growth post GFC as also an area of great concern. As an example, in a recent IMF report they analysed 43 global cases of credit booms in which the credit to GDP ratio increased by more than 30 percentage points over a 5-year period. Only 5 cases ended without a major growth slowdown or financial crisis immediately afterwards.




The rapid debt expansion makes a financial crisis possible in China.  However, the Chinese government has a big pile of reserves.  I don't know if that will be enough to avoid a crisis over there or not.  It is something I have been watching, but so far the little files they have had have not gotten out of hand.  When the next global recession hits it may be a different situation.

Bob

Monday, September 18, 2017

Daily update 9/18

Missed it by that much (for folks that might remember agent 86). 


Today's high fell just 6 points short of my 2514 target.  SPX found its high early in the day and then sellers started hitting the bids.  Nothing too hard, but they were persistent until late afternoon.  Breadth was +54%, but was +67% early in the day.  Clear selling into strength.  New highs picked up to 168.


The futures are still outside the upper channel and so are still in an accelerated up move (even if it is slow up).  I think we might have hit a more significant resistance level today.


The green count turned down considerably for an up day.  We may be losing some momentum.

QQQ has been unable to make any upside progress the last couple of weeks and was even slightly red today.  The price bars in SPX are like a slow creep up, but the short term internals are much stronger then usual for that pattern.  Apparently a good number of stocks are rising, but by a small amount.  Maybe SPX can reach the target in the next few days.

Wed. is FED day and they are expected to announce the go ahead for the balance sheet reduction.  This is widely known.  However, sometimes even when the FED does exactly what is expected volatility breaks out.  The direction of that volatility is not always what one would expect it to be either.  I don't know if the announcement will be a non event or cause some wild gyrations in the market.  It is likely to cause volatility in the dollar which could move gold around with it..  The rate hikes the FED has done so far have not tightened financial conditions as Yellen has noted.  I think it is important to note that reducing the balance sheet will take money out of the economy.  While the market might not react negatively right away it might at some point down the road.  Time will tell.

Bob

Friday, September 15, 2017

Daily update 9/15

It made it.  SPX hits 2500 on the nose.


The intraday range for the last four days has been 6 or 7 points.  At this price level that is unbelievably small.  If it was not for down openings on the futures the range would probably be even smaller.  Amazing.  Breadth was +59%.  New highs were up a bit to 115.


The futures held above the upper channel line all night and launched off it this afternoon.  The accelerated move continues for now. 


This morning QQQ flew up to its all time high to the penny.  Then it stopped dead.  Funny how that happens.  It remains in its recent trading range for the moment. 

In Daily update 7/19 Elliot wave 5 up near an end? I came up with an ultimate target of 2514 for this bull market.  We are within spitting distance of that now.  At 3-4 points a day it could take a while to get there though.  The very narrow price range often means a short term top is near.  Maybe SPX does not hit the target before a pullback.  The resistance that had been present above the 9/12 high was not evident today.  However, buying enthusiasm at the highs was non existent.  It was yet another late day push that got SPX to 2500.  I believe what is driving the market up is index fund inflows.  A lot of that money gets put to work in the last 30 minutes of the day.  There is no way of knowing how long those inflows will keep coming.  I am still looking at a close below 2490 as a sign the rally may be coming to an end for the moment.

In Daily update 5/17 Global credit impulse I showed the chart of the Chinese credit impulse tanking big time.  The recent economic data out of China has been below expectations.  Their economy may be starting to respond to that credit situation.  We probably need to start watching more closely now.  Chinese economic worries have sent global stock markets down twice since 2015.  A third time is not out of the question if their economy really softens.

I am going to go back to sending out the subscriber emails with no link.  Who would have thought a simple blog that does not scam anybody and sells nothing would be spam!  Maybe some day I will figure out how to fix it, but right now I don't have the time. 

Lineman take their job very seriously!


Have a great weekend.

Bob

Thursday, September 14, 2017

Daily update 9/14 Fund Managers Drop US Exposure to 10 Year Low

Resistance held again.


Like yesterday when SPX got above the 9/12 high it sold off.  Not hard, but enough to know there is resistance.  Breadth was slightly negative.  New highs fell to 98.  More loss of momentum.


The futures are down a bit after hours.  They are just about at the upper channel edge.  Closing inside the line should mean the current thrust is over and consolidation has started.


The green count is turning down from overbought.  I don't think this tells us much though.

The most important thing today was probably that QQQ was quite weak.  I mentioned that since it made a new high days ago it stalled.  It may be turning down from that stall so it needs to be watched closely.  The last two days the bulls faithfully bought the slight down openings.  However, once price got to a new high the sellers showed up.  Not in force, but enough to push prices back down a bit.  I wonder if the futures are down again tomorrow if they will buy it.  The short term market internals are pretty strong on this rally.  However, the price action of the last three days looks quite tentative.  I don't know if that is because the key 2500 level lies just above or the rumor NK is readying another ICBM for launch.  It may be both.  There is also the belief the FED will announce the start of their balance sheet reduction.  The trend indicator on the daily SPX chart suggests this retest should fail.  The intermediate indicator on the red/green count chart suggests a failure is likely to lead to a trip to the 200 DMA.  The bulls need another thrust bar to clear the air and get the market going higher.  I don't know if that will happen in this news environment.  I guess we will see.

There are some interesting charts in this article.  Fund Managers Drop US Exposure to 10 Year Low  I found this one particularly interesting.


Fund managers have now dramatically dropped their allocation to -28% underweight, the lowest since November 2007 (1.2 standard deviations below its long term mean). This is where US equities typically start to outperform again.

In most cases when fund managers get underweight U.S. stocks they have tended to outperform global equities.  It is a little curious that we now have the biggest underweight reading since Nov. 2007.  That was right after the bull market top in Oct. 2007.  If we are not on the cusp of a new bear market this should eventually get resolved with the U.S. outperforming the rest of the world.  However, I can't be absolutely sure we are not on the cusp of a new bear market.  Rather then being very bullish this chart could be indicating that is the case.  I am hopeful things will become clearer in Oct. and Nov.

I am still having email problems to sort out.  Sorry if you are not getting the notification email.

Bob




Wednesday, September 13, 2017

Daily update 9/13 The Terrible Facts about Real Earnings of Men

Slow creep towards 2500.


SPX closed at a new high thanks to a last minute run up into the close.  Earlier in the day it had climbed above yesterday's high multiple times and sold off a bit.  Nothing dramatic though.  There appears to be a slight bit of resistance here.  Breadth was just barely positive.  In what may be an indication of trouble ahead new highs dropped down to 114.  It looks like we are losing momentum not gaining it.


The futures have started to trade sideways a bit.  They are down a couple of points after hours.  They opened down 3.75 points this morning.  The bulls rushed in to buy those fabulous discounted prices.


The green count rose strongly today and is in the area of overbought.  Notice the sizable divergence in the intermediate indicator.  That will be important if the market turns back down on this retest.  Often in a strong bull market that indicator going below 50 leads to a strong rally to new highs and beyond.  When SPX does not do that we usually get a pullback to the 200 DMA.

This does not look like a market that is launching higher to me.  Another strong thrust day through 2500 could change my mind.  If SPX falls back through the 20 DMA (2457) I think the odds go up we are headed down to the 200 (2372).  A close back below 2490 might be an early warning sign.  That would indicate a potential break out failure.

I commented a while back about how boys in my generation were able to graduate from high school find jobs, buy houses, and raise a family.  Many of my class mates did not attend college.  That is extremely difficult to do today.  This is a good article on what has transpired since the 70s.
The Terrible Facts about Real Earnings of Men


Globalization has worked to hold down men's salaries in this country while inflation has eaten away at their purchasing power.  This is why so many young people are living at home even as they reach their 30s.  This is happening throughout many countries in the western world.  Hence the rise of what the globalists (and they are scared to death of) call populism.  It certainly appears that people have a legitimate complaint with the way things have gone for the last four decades.  We have already seen the beginnings of political turmoil caused by this.  I think we can expect that to get worse in the future which may cause some turbulence in markets eventually.  Somehow we have to get wages and living expenses back in line and that won't be an easy thing to do. 

Last night part way through the sending of the subscriber emails I started getting an error that said I was sending too many emails.  I have no idea what went wrong.  At the moment gmail won't let me send an email.  It is suppose to reset after 24 hours and it might.  I don't know if there is going to be a problem in the future yet or not.  If you don't get any emails from me it is because I am having a problem with gmail not because I am ignoring you.  It is not like I can send out a message saying I am having trouble!  .

Bob

Tuesday, September 12, 2017

Daily update 9/12 Irma edition

Thanks for all the well wishes!  One of the blog readers had power out a week from Harvey.  We were very fortunate to have power back so fast.  Much of the local town is still out.  Back in 2004 we were about the last to get power back on.  I guess things even out over time! 


SPX closed at new highs both yesterday and today.  It is now just 3.5 points from 2500.  Breadth was +75% yesterday and +58% today.  New highs were 207 yesterday and 166 today.  Those are ok numbers, but nothing to write home about.  Volume has been good of late.  Participation has picked up after the summer lull.  Something I did not mention before involves the red bars in the trend indicator.  We had those back in April as well as the recent dip.  Notice how price struggled at the March high and actually dipped before going significantly higher.  That is the normal action on a retest of the high after red bars.  It is extremely rare for SPX to continue significantly higher without a consolidation period and more often another pullback.  SPX could move a little higher yet, but odds are very low it is doing a blast off.


The futures really launched when the world did not end over the weekend.  Irma was not as bad IN Fla.  as feared (plenty bad though) and NK tensions apparently have eased a bit.


The green count actually turned down a little despite the higher high and decent breadth.  I am not sure if that means anything, but it is a bit of a negative divergence should price fail here.


QQQ made it to a new high days before SPX, but has done nothing since.  Its not exactly leading higher like it was earlier in the year.

I was expecting to see 2500 on SPX before the fall correction began in earnest.  It has taken a while, but SPX is now within spitting distance.  This is close enough for me should the market turn back before it gets over the line.  While SPX, QQQ and the Dow are at new highs IWM, MDY, XLF and IYT are lagging behind.  That is not particularly good.  On the positive side the all company advance/decline line made a new high.  In theory that should mean any pullback this fall should at least lead to a retest of the high.  Outside of the advance/decline line the technical condition looks like the market is in need of a correction.  I keep reading about bullish sentiment surveys in retail investors.  The most recent AAII survey was only 29% bulls which seems to contradict everything else I read.  FANG week on CNBC certainly seems like something that would only happen near a bull market top.  I can't quite figure out whether we should be worried about an important top or not.  The economic data is currently ok, but there are bothersome things.  The major indexes keep making new highs, but there are bothersome internals.  The sentiment is very bullish, but not clearly the end of the bull market type of thing.  I believe we will have a pullback of some sort into this fall, but it is not clear to me how deep that might be.

I am sure everybody saw the horrible aftermath of Harvey.  This is the first time in recorded history the U.S. was hit by two cat 4 hurricanes in the same year.  We got around 18 inches of rain around here.  My backyard before and after.



The lake was already high from summer rains.  I normally have a strip of grass mowed outside the fence.  It has been so wet I could not even mow all the way to the fence until this last cut just before the storm.  Not going to be cutting this for a while.


Nothing like Harvey fortunately.  We got lucky as Irma moved on rather then stalling.   My house is still several feet above the water.  We had high water a few weeks after I moved in back in 2004 from two storms that flooded the yard, but this is much worse.  On the bright side I only have to clean up half my yard for now.  The rest I will get as the water recedes.  Backyard fishing anyone!

We were extremely fortunate here.  There are so many people outside this country as well as in the states that were greatly affected by Harvey and Irma.  It is really hard to imagine how two storms could cause so much havoc.  What is truly extraordinary is the very low loss of life for such powerful hurricanes.  I attribute this to lessons learned over the years by both forecasters and government officials.  We are getting better at preparing for these situations and that can only be a good thing in the future.

Bob


Important

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