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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.


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