Friday, 9 December 2016

December 10, 2016 – Weekend Market Comment

December 10, 2016 – Welcome to my weekend market comment, an analysis tool I use in my own portfolio decisions, published free to the web every weekend before the New York opening bell. You can read the latest version each week by bookmarking http://cme4pif.blogspot.ca/. For full details read my disclaimer (link at the bottom of this page).

As this ad from the 1970s says EVERYONE is bullish on America right now. Stocks are off the charts and the bull keeps running!

Lets see what is in the charts this week:





101 Bull Bear
Bull market (dark green over red) and now the short term (light green) is up sharply. Also note the dark green 50 day average is in a firm uptrend. NOTICE THE SLOPE (second window), this could be part of a new long term uptrend.  Bull market -- expect bullish outcomes.
!
103 NYSE High Low Market Forces
Wow look at this take off. Nothing but strength although not a maxed out as last week. 

105 Non Farm Payroll
Lots of jobs! But beware this is lagging indicator. The smart money is gone before this turns down.

107 Industrial Production
Could be turning up again.

115 Renko
Market is rebounding 10 white bricks! SUPER BULLISH!

203 OBV
OBV (red line) is with the market. This means the big funds are participating and playing catch up. Bullish
!
207 VIX
Fear returns. cci says perhaps done for now, notice the slight up turn!!

209 VIX Evaluator
Very much bullish

211 S&P500 over 50 day
Now about 73% of stocks are above their 50day MA, up from last week when it was 60%. Bullish.

213 Green Arrow
Only put new money to work when I draw a green arrow. TRIX says green light, could be a green arrow soon. Notice how this was a great early warning. 


301 NASDAQ Summation
New happy days, breadth returns to Nasdaq expect an on going bounce up! Bullish
!
303 Aggressive Defensive
Aggressive but the Slow stochastic says we overdone. Neutral

305 Consumer Bonds vs Equities
Bonds fall. Consumer flat, perhaps ready for a run for Christmas?  Sorta bullish

307 Bond Direction
Weakness in bonds indicates overall market caution of coming rate hikes.

309 Sectors
Notice on Friday some move to safety with small gains in Utility stocks but also the Nasdaq. Consumer tanks, not good at Christmas.

311 Nations
German looks like oversold bounce!

313 Major sectors
Nothing but US Equities doing well. 

! = Pay attention this chart is important this week.



What I Find Interesting


Canada debt Exceeds GDP
According the National Post for the first time ever, the level of debt held by Canadians has exceeded the country’s gross domestic product as the red ink spilled over in the second quarter to 100.5 per cent of GDP, up from 98.7 per cent during the previous three-month period.

Equifax says the percentage of Canadians who are 90 days or more behind paying their debt grew to 1.14 per cent from 1.05 per cent during the same year-over-year period. It says the increase in delinquency was largely driven by oil-producing provinces in Western Canada and Newfoundland and Labrador, where default rates tend to be higher.

Golden Dragon
Last week bankers and traders told the Financial Times that after the summer of 2016 most gold importers have had difficulty obtaining approval to bring in gold as the weakening renminbi raises Chinese investors’ interest in the metal.

China imported about 905 tonnes of gold in the first nine months of this year and then the levels dropped dramatically. China can and does limit investor holdings of gold, by import controls and full government ownership of the Shanghai gold exchange. Notice the effect on the price of gold.


This Just in . . . Americas Butts are Fatter!

For the first time in U.S. History Americans are living short lives. According to a new report from the NCHS, last year, life expectancy at birth was 78.8 years for the total U.S. population—a decrease of 0.1 year from 78.9 years in 2014 . For males, life expectancy changed from 76.5 years in 2014 to 76.3 years in 2015—a decrease of 0.2 years, and for females, life expectancy decreased 0.1 year from 81.3 years in 2014 to 81.2 years in 2015.

The cause is obesity, the prevalence of overweight and obesity in children and adolescents is on the rise, and youth are becoming overweight and obese at earlier ages.

A National Institutes of Health report showed that from 1962 until 2006, obesity in adults age 20-74 more than doubled, increasing from 13.4 percent to 35.1 percent. The average adult weighs more than 26 pounds more than they did in the 1950’s, according to the CDC.  In 2016 one out of six children and adolescents ages 2 to 19 are obese and one out of three are overweight or obese. Early obesity not only increases the likelihood of adult obesity,  it also increases the risk of heart disease in adulthood, as well as the prevalence of weight-related risk factors for cardiovascular disease such as high blood pressure, high cholesterol, and high blood sugar.

Top 10 most obese metro areas (with percent of residents considered obese):
  •     McAllen-Edinburg-Mission, TX: 38.8
  •     Binghamton, N.Y.: 37.6
  •     Huntington-Ashland, W. Va. 36.0
  •     Rockford, Ill.: 35.5
  •     Beaumont-Port Arthur, TX: 33.8
  •     Charleston, W. Va.: 33.8
  •     Lakeland-Winter Haven, Fla.: 33.5
  •     Topeka, Kans.: 33.3
  •     Kennewick-Pasco, WA: 33.2
  •     Reading, Penn.: 32.7


Some U.S. states particularly on the West coast and in New England, people are more prone to shun big meals, sugary drinks, alcohol and sedentary life choices as can be seen in this state by state chart. California’s obesity rate climbed slightly last year, although its ranking (fifth best) is vastly better compared to most states. The Golden State’s obesity rate was 25 percent in 2014, compared with 24 percent in 2013. It was 19 percent in 2000. But children, especially toddlers, were more likely to be obese in California than any other state.





China Wack-A-Mole
According to Bloomberg China is trying to stop capital fleeing China by capping the amount people can take out ATMs in gambling halls of Macau, the new limit is about $600. Thursday following a report from the South China Morning Post saying that China's government will cut the amount of money people can withdraw from China UnionPay ATMs in the gaming region by half starting Saturday.

Thursday MGM Resorts International shares closed down 4.3% to $28.65, Wynn Resorts fell 11.1% to $90.72 and Las Vegas Sands dropped 12.8% to $54.67 following the report.

Referring to it as Wack-A-Mole Bloomnberg says the Chinese government is trying absolutely everything to stop money from fleeing mainland China. It is exactly this capital flight that I said would cause a major recession in China in my article The China Problem.

The ranks of China’s wealthy continue to surge. As their economy shows signs of weakness at home, they’re sending money overseas at unprecedented levels to seek safer investments — often in violation of currency controls meant to keep money inside China.

This flood of cash is being felt around the world, driving up real estate prices in Sydney, New York, Hong Kong and Vancouver. The Chinese spent almost $30 billion on U.S. homes in the year ending last March, making them the biggest foreign buyers of real estate. Their average purchase price: about $832,000. Same trend in Sydney, where Chinese investors snap up a quarter of new homes and are forecast to double their spending by the end of the decade. In Vancouver, the Chinese have helped real estate prices double in the past 10 years. In Hong Kong, housing prices are up 60 percent since 2010.

In total, UBS Group estimated that $324 billion moved out last year. While this year’s numbers aren’t yet in, during the three weeks in August after China devalued its currency, Goldman Sachs calculated that another $200 billion may have left. Other academic estimates put it at over $900 billion U.S. dollars every 9 months. That over a trillion bucks a year!




What Works Now


CAD Software
AutoDesk maker of quality engineering drawing software AutoCad (Ticker:ADSK)




Rental Cars
Consolidation is helping the rental car business -- behold: Avis Budget group (Ticker: CAR)




What I Think
We are in one of the greatest Bull markets in history! However, this week not only did stocks shoot higher, so did the VIX and Bonds. So the pros are getting ready for the end of a run or are these things just way oversold?


Oddly as the currencies of Japan and the Euro fall apart, the markets in these countries are picking up, expecting strong exports to dollar strong America. Here is the German DAX as of Thursday.


I am off to Mexico to spend a bit of my profits, next week the comment will be brief, if at all.  Image below is a representation of possible vacation, my actual  vacation may differ from image presented.


   


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Saturday, 3 December 2016

December 03, 2016 - Weekend Market Comment

December 3, 2016 - Welcome to my weekend market comment, an analysis tool I use in my own portfolio decisions, published free to the web every weekend before the New York opening bell. You can read the latest version each week by bookmarking http://cme4pif.blogspot.ca/. For full details read my disclaimer (link at the bottom of this page).

Well I am really getting poetic when I drag out the old Kansas songs. But is it time for "Don't hang on", time to get out? Is this a peak? Will the Fed kill the Bull? 


Lets see what is in the charts this week:





101 Bull Bear
Bull market (dark green over red) and now the short term (light green) is up sharply. Also note the dark green 50 day average is in a firm uptrend. NOTICE THE SLOPE (second window), this could be part of a new long term uptrend.  Bull market -- expect bullish outcomes.
!
103 NYSE High Low Market Forces
Wow look at this take off. Nothing but strength although not a maxed out as last week. 

105 Non Farm Payroll
Lots of jobs! But beware this is lagging indicator. The smart money is gone before this turns down.

107 Industrial Production
Could be turning up again.

115 Renko
Market is rebounding 10 white bricks! SUPER BULLISH!
!
203 OBV
OBV (red line) is NOT with the market. clear keeping distance from price. This means the big funds are participating tepidly. Tread carefully -- Not wonderful.
!
207 VIX
Fear returns. cci says perhaps done for now, notice the slight up turn!! Bullish

209 VIX Evaluator
Very much bullish

211 S&P500 over 50 day
Now about 60% of stocks are above their 50day MA, backing off from last week when it was 70%. Bullish.

213 Green Arrow
Only put new money to work when I draw a green arrow. TRIX says green light, could be a green arrow soon. Notice how this was a great early warning. 


301 NASDAQ Summation
New happy days, breadth returns to Nasdaq expect an on going bounce up! Bullish
!
303 Aggressive Defensive
Aggressive but the Slow stochastic says we are done clear down trend. Neutral

305 Consumer Bonds vs Equities
Bonds bottom. Consumer flat, perhaps ready for a run for Christmas?  Sorta bullish

307 Bond Direction
Weakness in bonds indicates overall market caution of coming rate hikes.

309 Sectors
Notice on Friday some move to safety with small gains in Defensive and Utility stocks. Consumer tanks, not good at Christmas.

311 Nations
Canada shows hope on Opec cut to oil production.

313 Major sectors
Some life in Canada and commodities.

! = Pay attention this chart is important this week.


What I Find Interesting

President Trump promised to save the coal industry in the U.S. but the problem is no one is building coal plants. China is doubling its Nuclear capacity and already creates more nuclear power then the U.S. Now Canada has a new clean initiative. Even India is lowering coal needs. Between green initiatives and super efficient appliances and light bulbs, global power demand is not where the experts predicted. 

The IEA is also skeptical of the marginal impact on coal mine profitability from Trump’s proposals. Market equilibrium for the U.S. coal industry will require further industry consolidation and more mine closures according to the group. U.S. coal won’t disappear completely, but the industry will keep shrinking through the early 2020’s in the IEA’s view. 

For the longest time, electricity sales and consumption went hand in hand with economic growth. In the last several years, not so much. Electricity retail sales peaked at 3.77 trillion kilowatt-hours in 2008, dropped in 2008 and 2010, recovered a bit in 2011, and fell in each of the next two years. The 2013 total of 3.69 trillion kilowatt-hours was down 2 percent from 2008.

Utilities are confronting the prospect of significant and widespread demand destruction. The reason for that demand destruction is starting to become evident: lighting. An LED bulb uses between 70 and 80 percent less electricity to produce the same amount of light as an incandescent light bulb. That differential has proven irresistible to large companies and organizations. Starting in 2010, Macy’s Corp. began replacing traditional light bulbs with LEDs in more than 800 Macy’s and Bloomingdale’s stores. By 2012, having changed some 1.1 million bulbs, the company reported that it had slashed the use of energy related to lighting by up to 73 percent. Los Angeles has completed its project of installing 140,000 LEDs in street lights, cutting energy use associated with that lighting by 62.9 percent. Detroit is in the midst of a program to install 64,000 LEDs as streetlights.


These bulbs, which are made up of LEDs (light-emitting diodes), are about 10 times more efficient at converting electricity into light than the old-fashioned filament variety. This explains the difference in the wattage needed. So, to replace a traditional 60W bulb you need just a 6W LED bulb. 


The total power consumption of the 10 lights with old-style bulbs comes to 600W or 0.6kW. Electricity is sold in units of kilowatt-hours (kWh) – the amount of energy that a 1kW device uses in an hour. So each hour the 10 lights consume 0.6kWh. Based on a typical unit price of 12.2cents per kWh, replacing 10 old fashioned incandescent lights will cost 7.3cents per hour to run. The daily cost is therefore 73cents if on for 10 hours. This is equivalent to savings of $5.11 a week, $21.90 a month or $266.45 a year.



What Could this be all About
 
Can you spot how these two articles are related?

Read this from the Elliman Report on New York Real Estate:
"The number of Manhattan area re-sales has fallen year over year in each of the last four quarters at an increasing rate.  Listing inventory reflected significant differences in the rate of growth between re-sale and new development.  Re-sale inventory expanded 8.2% to 5,290 while new development inventory surged 27.2% to 973 respectively from the same period a year ago."
 

Then read this yesterday in the Financial Times:
"The Chinese government intensified its efforts to stem capital flight from the world’s second-largest economy on Thursday, as it simultaneously moved to slow renminbi outflows and restrict gold imports. Curbs on international renminbi payments and gold imports are the latest in a string of capital control measures intended to relieve downward pressure on the currency and protect dwindling foreign exchange reserves. Days earlier, China’s cabinet circulated draft rules restricting large foreign acquisitions, while its foreign exchange regulator began to vet outward remittances as low as $5m, compared with a previous threshold of $50m"
 

In short, simultaneously Real Estate is tanking in New York and China is stemming money outflow. I will leave you dear reader to connect the dots. 

A Sad Megaproject
On Tuesday, officials from all over the world gathered about a football field away from the Chernobyl disaster site in Ukraine. They were there to celebrate the final placement of a massive, high-tech shelter over reactor 4, which exploded in April 1986. The shelter, called the New Safe Confinement (NSC), is a feat of engineering. Because it was too dangerous to assemble the NSC over the original shelter that was built in the weeks after the explosion, the NSC was instead built at a distance and moved—slowly, over days—on a pair of tracks parallel to the original shelter. But even that was no simple task. The NSC is 354ft (108m) tall and 843ft (257m) wide, making it the largest mobile metal structure in the world.





What Works Now
RPC Inc. 

The price of oil has risen due to planned cuts by OPEC. RPC Inc. (Ticker:RES) is an oil services firm traded on the NYSE.  







Surfer dude or skateboard punk they all shell out for this high markup junk. Tillys had a great earnings as the consumer comes back. (Ticker:TYLS).



I sure hope you were paying attention as I said banking would do well with upcoming interest rate hike. Behold the vampire blood sucking squid Goldman hits a new high again. (Ticker:GS)
 

What I Think
I think this is one of the greatest bull runs in history. However for now this bull is tired. The daily chart of the Nasdaq 100 doesn't really resemble any of the other large-cap indexes or even most small-cap indexes. Technology sectors have performed terribly. The Election "euphoria" enjoyed by the Dow Industrials and most other indexes really didn't do much for tech. The aggressive sectors are selling off or lagging. 




This chart is not a stock, it is an index of the 100 most favored stocks by hedge funds and mutual funds. If this chart lags the market it means the big money is stepping aside. 


Also from our chart list here is the OBV chart, again if the red line lags then only mom and pop are playing the market. 


Mom and Pop
"Look dear FANG and NOSH are a bargain at these prices. Sweet, I will call that nice man at Merrill Lynch and put all of our nest egg long. Last week he said bet the farm on an iron condor play on the Feb in the money calls, that sounds... exciting."
 
In my opinion we have a few days of retrace coming but this is not the end of the bull. So short term get defensive, but long-term the bull still continues. 
 
Bottom Line: It is a bull market. I am still long until wrong, but I am moving in to lower volatility plays, bigger stable firms as I take profits on my high flyers.

 


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Friday, 25 November 2016

November 26, 2016 – Weekend Market Comment

November 26, 2016 – Welcome to my weekend market comment, an analysis tool I use in my own portfolio decisions, published free to the web every weekend before the New York opening bell. You can read the latest version each week by bookmarking http://cme4pif.blogspot.ca/. For full details read my disclaimer (link at the bottom of this page).

Yet another parabolic up week for the markets. Honestly folks valuations are really stretched here. The air is so thin at this altitude. Then again the markets can and do (on a short term basis) anything they want. Still I would expect a little pull-back in the next two weeks.


Lets see what is in the charts this week:





101 Bull Bear
Bull market (dark green over red) and now the short term (light green) is up sharply. Also note the dark green 50 day average is in a firm uptrend. NOTICE THE SLOPE (second window), this could be part of a new long term uptrend.  Bull market -- expect bullish outcomes.
!
103 NYSE High Low Market Forces
Wow look at this take off. Nothing but strength.

105 Non Farm Payroll
Lots of jobs! But beware this is lagging indicator. The smart money is gone before this turns down.

107 Industrial Production
Could be turning up again.

115 Renko
Market is rebounding 10 white bricks! SUPER BULLISH!
!
203 OBV
OBV (red line) is NOT with the market. clear keeping distance from price. This means the big funds are participating tepidly. Tread carefully -- Not wonderful.
!
207 VIX
Ahh fear subsides. ccci says perhaps done for now, notice the slight up turn!! Bullish

209 VIX Evaluator
Very much bullish

211 S&P500 over 50 day
Now about 70% of stocks are above their 50day MA, way up from last week when it was 59%. Bullish.

213 Green Arrow
Only put new money to work when I draw a green arrow. TRIX says things might be safe soon. Notice how this was a great early warning.  Still Bearish!


301 NASDAQ Summation
New happy days, breadth returns to Nasdaq expect an on going bounce up! Bullish
!
303 Aggressive Defensive
Aggressive but the Slow stochastic says its a bit long in the tooth. Perhaps the best of the move is over. Very Bullish!

305 Consumer Bonds vs Equities
Bonds tank. Consumer flat, perhaps ready for a run for Christmas?  Bullish

307 Bond Direction
Weakness in bonds indicates overall market caution of coming rate hikes.

309 Sectors
Notice on Friday some move to safety with small gains in Defensive and Utility stocks.

311 Nations
Meah, there is only one trade this week, U.S. equities.

313 Major sectors
Meah, there is only one trade this week, U.S. equities.

! = Pay attention this chart is important this week.


What I Find Interesting

One of the most touted list of stocks in the world is the Investors Business Daily 50 or IBD50 for short. This stock picking system was made famous by William O'Neil and became the whole basis for the website (http://www.investors.com/) and newspaper, Investors Business Daily. O'Neil's book "How to Make Money In Stocks" is a staple on the book shelves of investors everywhere. Essentially, Bill O'Neil's motto is "buy the strong, sell the weak." His criteria for identifying a stock that's about to head for the stratosphere are summarized in his well-known acronym CANSLIM.

Mr. O'Neil has twice tried to run a mutual fund based on the system. He first tried in the '60s with some immediate success, but then the market crashed in 1968-69, taking his fund down as well. The fund had a total loss of -53.6 percent from 1969-74, compared with a loss of 18.8 percent for the S&P 500. O'Neil sold the fund in 1975 with just $6 million in assets, down from a peak of $49 million.


In 1992, O'Neil launched his New USA Growth Fund, which was managed by David Ryan, an O'Neil follower who won the stock-picking contest known as the U.S. Investing Championship in 1985, 1986 and 1987. However, the fund showed lackluster results. According to Barron's, the fund had a total return of 3 percent from April 1992 through June 1994, versus 17.4 percent for the S&P 500.

Mr O'Neil's system CAN SLIM, picks hot stocks and follows them. To hear the the people at IBD this is the best and only logical way to invest. According to the Investor's Business Daily Web site, the IBD 100 (which is an index of the top 100 stocks according to the CAN SLIM system) has trounced the S&P 500 Index 132.8 percent to 20.8 percent for the S&P 500 since May 2003.

Well now the claims at IDB are easy to test. There is an ETF (Ticker: FFTY) called The Innovator IBD® 50 Fund. It buys and sells the CAN SLIM stocks for you so you don't even need to look, buy and hold CAN SLIM. In effect this a manged fund like a mutual fund. You know what I think about Mutual Funds if you read my Thought posting "A Warning About Experts" to quote me... 

"Standard and Poors research found that most mutual funds can't beat indexes because of the fees involved."

So lets see if this "magic formula" fund of hand picked stocks beats the bench mark SnP500 unmanaged ETF (Ticker: SPY). Well If you bought both a year and half ago, you would be underwater with FFTY (red line) -6% and in profit +8% with SPY (black line). I admit it is true during this mid November bull run, the "dog" is catching up a bit, but still long term -- it just is not worth it.




Deck the Halls with Trump?
Hey what could be more festive than a good old right wing, misogynistic, xenophobic, we shall over comb -- iconic Christmas ornament. Available on Amazon, buy two so your Mexican nanny can enjoy one as well (not available in Spanish). Order now to get your tree trimmed before Christmas eve. 



Below is singer Jess Greenberg -- she draws a six figure (in pounds) paycheck as a London Investment Banker with Winton Capital Management.  Of course she only got this important job because of earning a degree in economics, statistics and finance from University College London. As you can see she has great "assets" to offer her employer. Please no emails on this one, I swear I don't have her bloody cell phone number -- OK, you can reach her at work, the main number in London is +44 20 8576 5800




What Works Now
Recommended a few weeks ago and still going strong in to Christmas. Foot Locker. By the way this stock is on the IBD50.



Stock Brokers are raking in the bucks. Look at discount broker Charles Schwab (Ticker: SCHW)

CyberSecurity
With more and more prominent websites getting hacked everyday you might make a long term buy on one of the cyber-security plays, either the etf HACK or a stock like CYBR FEYE.

Adult Friend Finder Network has reportedly been hacked. The site is famous among swingers and people with kinky fetishes. With over 412 million accounts, email addresses, and passwords from their websites made available on criminal marketplaces. Notably, the database does not include more detailed personal information, but could still be used to confirm whether a person was a user of the service. Read about it in the hacker site Leaked source.

Here is the chart for the cyber-security ETF (Ticker: HACK)

Hasbro
 Break out your action figures from Star Wars to The Avengers to My Little Pony and Play-Doh... Predictable Christmas favorite Hasbro (Ticker: HAS) just reached a new 52 week high and it pays dividends too.

In 1923, three brothers named Herman, Hillel and Henry Hassenfeld founded Hassenfeld Brothers, a company selling textile remnants. Since then they have seen highs and lows from G.I Joe to a disaster of law suits with lawn darts. Today Hasbro is the third largest toy maker in the world with revenues of approximately $4.45 billion.



A Reader Asks
A reader said a company was pitching her that now was the perfect time to own gold. Really? Gold Now? In a super bull market you want to invest in the currency of last resort? Gold is at a nine month low according to MarketWatch. But just look at the chart it says it all. What about this Gold chart below makes it more exciting than the charts (above) for owning Charles Schwab or Foot Locker? 



What I Think

I think this is one of the most remarkable bull runs in history. On the other hand that OBV line refuse to follow the market, often a sign of coming trouble. But OBV is like a weather chart, and it is not 100% perfect. VIX CCI is also near the edge of its range, a return to fear could be here.

So the questions on your mind are the same as mine . . .
  • Is it too late to get in? Who knows?
  • Will it pull back? It should, but then again it should have by now too.
  • The Fed Meets in about 2 weeks and probably will raise interest rates, won't the market sell off before then? Yeah that sounds plausible, but on the other hand where are all those t-bill dollars going to flee to, probably equities. So meah -- who knows? 
  • Is it going to continue? A trend in motion is your friend. So long term probably. 
  • Should I fear the High Valuations and low volume in the market? Well they should be on your mind, but remember the "Market can remain irrational longer then you can remain solvent" so don't go betting against a bull market. 
Bottom line: I am long, I have locked in some profits with stops loss orders, but I plan to be "long, until I am wrong". 





 

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