Saturday, 30 April 2016

April 30, 2016 – Weekend Market Comment


April 30, 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 as you will see this would be a great time to pull in your horns. Perhaps this bull has room to run, but I am skeptical. 









101 Bull Bear
Bull market (Dark Green over red). That said the short term light green line is heading down. Notice the topping pattern in the second window showing some loss of momentum in the 50 day slope. Bull Market = Bullish outcomes.

103 NYSE High Low Market Forces
Nothing but strength.

105 Non Farm Payroll
Lots of jobs! But this is a lagging indicator. 
 !
107 Industrial Production
Not good. Watch this carefully, all recessions have falling industrial production, but this data is from the end of March. Notice a clear round top in the 12 period moving average. This is the sign of a recession looming.

115 Renko
Obviously – 11 white up bricks trend is heading up. Clearly we have come a long way steady up. Hard to be a bear in an up trend this obvious
 !
203 OBV
OBV lags market. Pros are not with this market -- volume lags but only the last two days.
 !
207 VIX
VIX is the fear gage ... 15.7 and rising fast. This turn could be short lived but the pros are buying insurance that is for sure!

209 VIX Evaluator
A tiny tick upward, a blip or a new trend?
 !
211 S&P500 over 50 day
Last week 80.2% this week now 68% of stocks are above their 50day MA. This has been sliding lower since 3 weeks ago. Loss of momentum.

213 Green Arrow
Only put new money to work when I draw a green arrow.
ALERT! Notice the slope is loosing momentum.
TRIX is green over red, expect positive outcomes.
No sign of a green arrow..


301 NASDAQ Summation
Nasdaq is weak. Looks ready to roll over and die

303 Aggressive Defensive
Finally a toping a roll over, end of the strong up trend? Clearly more defensive.

305 Consumer Bonds vs Equities
Consumer up a bit. Bonds bottom. Bonds have done very well this week. Risk off fear on.

307 Bond Direction
Short-term bonds rise in a rounding top to the long term up trend.

309 Sectors
Notice the defensives/utilities are bouncing up hard, consumer is up but financials and tech are down. Bearish.

311 Nations
Commodities bounce back and Canada perks up!

313 Major sectors
Some recent signs of life in commodities and Gold.

  ! = Pay attention this chart is important this week.



What I Find Interesting

Rhyming couplets can rarely be expected to serve as sound investment advice. But "sell in May and go away" may be a prominent exception and not just in the USA but all over the world. In 37 global markets, returns in the May-to-October period were found to be smaller than those in the November-to-April period.

It used to be that people would say, 'Oh, investors go away for their summer vacations, that's why the market does this.' But if that was the case, this shouldn't work as well in Rio [where summer starts in December] as it does in New York,". Indeed, in the U.S., selling in May generated 6.9 percent of outperformance in recent University of Miami study. That compares to 10.5 percent in Brazil, and a stunning 25.9 percent in Russia.



What Works Now

GOLD - As you know I have been a gold bull since New Years. Since New Years day the worlds ultimate currency is up over 15%.  

Precious metals extended their rally on Friday, with gold and silver rising to 15-month highs. Gold futures climbed 2%, or $29.55 an ounce, to as high as $1,298.95, a level reached for the first time since January 2015. Silver futures rose 2%, or $0.22 an ounce, to about $17.980.



What I Think

Well I have been say since January that we have trouble coming. We are 7 years in to a bull market --- now with falling industrial production -- Slowing global trade -- Look out a recession year is highly likely. But when does it start, well May is often the time for weakness. Monday is the first trading day of May and the first trading day of a month statistically is a strong up day, Monday might be no different. But after Thursdays 200 point plunge in the DOW and strong results for gold I expect this overbought market to pull back in May. That said the Bull Bear lines are bullish and I would not go crazy leveraged short right here either.

If you are aggressive you could be short by to holding MYY (or SH) and hedging with defensive long equities like Hormel ticker HML, gold with the ticker:GLD ETF and ticker:DEF an ETF of stable defensive stocks. BUT I am ready with my figure on the button to change my long short ratio. For the investors on the simple plan just go to cash. 





You can learn more about my indicators by visiting the CME4PIF school by clicking here.



Don't squint, All graphics can be enlarged by click on them.


Saturday, 23 April 2016

April 23, 2016 – Weekend Market Comment

April 23, 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).

Like a feather the markets drift up again this week, the long term up trend firmly in place. But clearly this week it is gentler ascent. We have come so far a rest here is not unexpected.
 
 



101 Bull Bear
Bull market (Dark Green over red). I have little faith in this bull and still expect it  dies in mid May. That said this recover is too strong to be short here. Notice the topping pattern in the second window showing some loss of momentum in the 50 day slope. Bull Market = Bullish outcomes.

103 NYSE High Low Market Forces
Nothing but strength.

105 Non Farm Payroll
Lots of jobs! But this is a lagging indicator. 
 !
107 Industrial Production
Not good. Watch this carefully, all recessions have falling industrial production, but this data is from the end of March. Notice a clear round top in the 12 period moving average. This is the sign of a   possible recession looming.

115 Renko
Obviously – 11 white up bricks trend is heading up. Clearly we have come a long way steady up. Hard to be a bear in an up trend this obvious
 !
203 OBV
OBV exceeds market. Pros are with this market volume holds! This could indicate a continued buying in a BEAR trap!
 !
207 VIX
VIX is the fear gage ... 13.22 and falling. The most you could say is this is about as optimistic as traders get and often where the market sells off due to shortage of buyers… perhaps.

209 VIX Evaluator
Nothing here but strength and conviction in the BULL. Again if you try you might say it is overdone… but that is no guarantee.

211 S&P500 over 50 day
Now 80.2% of stocks are above their 50day MA. This has been sliding lower since 2 weeks ago. Loss of momentum.

213 Green Arrow
Only put new money to work when I draw a green arrow.
ALERT! Notice the slope is loosing momentum.
TRIX is green over red, expect positive outcomes.
No sign of a green arrow..


301 NASDAQ Summation
Nasdaq is still strong, in fact it is the only index this strong, an optimist would see aggressiveness a pessimist would say the funds are stuck on FANG and NOSH.

303 Aggressive Defensive
Finally a toping a roll over, end of the strong up trend? Clearly more defensive.

305 Consumer Bonds vs Equities
Consumer declines a bit. Bonds bottom. Bonds have not done well this week.

307 Bond Direction
Short-term bonds fall in a rounding top to the long term up trend.

309 Sectors
Despite some poor earnings from the major banks, financials lead..

311 Nations
Global slowdown is pulling all nations down

313 Major sectors
Some recent signs of life in commodities.

 ! = Pay attention this chart is important this week.



What I Find Interesting


Economists were excited last month when the Philadelphia Fed manufacturing region index broke into positive territory. Economists expected a continuation (as they invariably do whenever there is good news). Instead, the index is back in contraction with a huge plunge in shipments. A PMI below 50 indicates a lowering of manufacturing output, and the figures always are a bit over optimistic

This week's Philly Fed poor numbers was more indicative as US Manufacturing (flash) PMI printed 50.8 (from 51.5 in March and notably missing 52.0 expectations). According to trading economics this is the lowest print since September 2009 with New Orders sliding (weakest since Dec 2015), and Employment at its weakest since June 2013. 


What Works Now
Zacks sent out a buy recommendation on Lithium and the commodity is in very high demand. You can even buy a Lithium ETF (Ticker:LIT)

Demand for lithium — the hottest commodity on the planet and the only commodity to show positive price movement in 2015 — is poised to continue on its upward trajectory, becoming the world’s new gasoline and earning the moniker of ‘’White Petroleum."

Driven by the rise of battery gigafactories and game-changing Powerwall and energy storage businesses, the world now finds itself at the beginning of a lithium super cycle that is all about securing new supply, much of which is poised to come from lithium superstar Argentina.

We have Tesla in the far corner, building its battery gigafactory in Nevada, for which it needs tons of lithium at a reasonable price, and just last week Tesla announced its plans for the Model 3, which has already hit over 300,000 pre-orders. To give you an idea of just how meaningful this is, Tesla produced less than 50,000 cars last year. Elon himself mentioned during the unveiling that Tesla will be gobbling up much of the world’s lithium supply with plans to produce 500,000 EVs per year. “In order to produce a half million cars per year…we would basically need to absorb the entire world’s lithium-ion production.” Remember – this is one man, one company. Tesla’s soon-to-be-completed gigafactory will produce more lithium-ion batteries than the rest of the world combined.


Tesla 3 consumer priced super car

Chinese billionaire Jia Yueting is stepping onto Tesla’s playing field with its own electric car start-up, Faraday Future, and Apple is planning one too, by 2019. Through its Alphabet holding company, Google is also getting into the game with plans for a self-driving car.

They are fighting it out not only to be the first to capture the most electric vehicle market share and the best engineers, but they are getting down to the core of this arena, which is lithium—the key element that will make it all work.


Ride the Rails
Followers of the DOW THEORY watch transportation stock as leading indicators of economic activity. It is encouraging that rail stocks are doing much better:




What I Think

Well we are in a bull market and so we must expect bullish outcomes. This market has been a monster and the strength in the NASDAQ, some uptick in oil prices, some uptick in China's economy and in the short term the OBV chart stronger than the market (for a day) all tell me you don't want to be short yet. 

Then again, on the bigger picture, we are still over bought as we have been for weeks. The 107 Industrial Production chart tells you this will not end well.  Many of my momentum indicators are flat or falling indicating a consolidation that my lead to a sell off. Finally as I have said in my blog since the new year, with global trade this bad 2016 is probably a recession year and the target for the sell off (this is a guess) May 15 2016.   So not likely we get a sell off this week, but this maybe a great Sell in May and go away year.




You can learn more about my indicators by visiting the CME4PIF school by clicking here.



Don't squint, All graphics can be enlarged by click on them.


Saturday, 16 April 2016

April 16, 2016 – Weekend Market Comment

April 16, 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).

The continued upward momentum took the bull bear lines this week in to the Bull sector. It was a pretty good week for the stock market with the Russell 2000 iShares (IWM) and the Finance SPDR (XLF) showing upside leadership for a change. IWM gained 3.21% for the week and led the major index ETFs higher. XLF gained 4.60% and was the second strongest sector (behind XLE). 




 ! 
101 Bull Bear
Bull market (dark green over red) and now the short term (light green) is leading up. Bull market, expect bullish outcomes.

103 NYSE High Low Market Forces
In the right side highlight, we see green is above yellow. This is the number on reason I am still seeing possible upside. There is recovery now but it could disappear in a hurry. 

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
Not good. Watch this carefully, all recessions have falling industrial production, new data is from the end of March, looking worse.
 ! 
115 Renko
A new up white brick, nothing but strength for weeks. .

203 OBV
OBV says pros are with this market still no danger yet. .

207 VIX
VIX shows falling uncertainty now below 14.

209 VIX Evaluator
Nothing but good news and falling fear.

211 S&P500 over 50 day
Now over 88% stocks are above their 50day MA. Bullish but little place for growth.

213 Green Arrow
Only put new money to work when I draw a green arrow.
Declining interest in broad market is slowing a bit in the 20 day slope (top panel). 




301 NASDAQ Summation
Nothing but strength here.

303 Aggressive Defensive
Still aggressive mode but looking like it might roll-over since it is topping?

305 Consumer Bonds vs Equities
Disturbing, the consumer is lagging. Bonds are in an mild up-tick.

307 Bond Direction
Strength in bonds indicates caution. .

309 Sectors
Defensive staple stocks like dividends, utilities are strong but also the consumer is rising. Financials are lagging. A mixed sign.

311 Nations
A look like international stronger, but the mix moves here from growth countries to stable Europe.

313 Major sectors
I got nothing here!


 ! = Pay attention this chart is important this week.



What I Find Interesting
According to a just released report in Japan's Nikkei, Apple will continue its reduced production of iPhones in the April-June period in light of sluggish sales, according to parts suppliers notified of the plan. 
The website reports that slow sales of the flagship iPhone 6s and iPhone 6s Plus, which debuted last autumn, have forced Apple to adjust inventories. It lowered production for the January-March quarter by about 30% from the year-earlier period. With sales still sluggish, the U.S. company has told parts suppliers in Japan and elsewhere that it will maintain the reduced output level in the current quarter.


Apple apparently does not plan to produce a large enough volume of the small iPhone SE released last month to offset the slump of its flagship series. However, should Apple decide to release its next flagship model earlier than the usual September launch, parts production for that smartphone could take off around late May.

A prolonged production cut would hurt Japanese parts suppliers such as liquid crystal display panel manufacturers Japan Display and Sharp, memory chip supplier Toshiba and Sony, which provides image sensors for cameras. With their plants already operating at reduced rates, they may be forced to downgrade their earnings forecasts for the April-June quarter.
The current production cut could last longer than the one Apple implemented in 2013. Some 1.5 billion smartphones are shipped globally in a year, but the market's growth is slowing.


What Works Now
U.S. Financials (ticker:XLF)


Dividends paying large cap stocks (ticker:DVY)



Bonds: U.S. 30 year T-bills (ticker:TLT)



What I Think

There is only one side of the market to be on, they right side. There is no question that the Bull Bear lines are firmly in the Bull camp. 


If I were to guess there still will be a sell off in the coming month, but for now there is no way this market can be shorted. Yes it is an expensive market, yes there are warning signs particularly in global trade and manufacturing numbers. Look at chart 107 -- Industrial Production -- still very disturbing:

We also are within a few percentage points of the resistance, an all time high. That said you can not ignore this market it has been one direction for weeks now. To visualize that just look at our Renko chart of the Russell 2000 index.: 


While the S&P 500 hasn’t quite taken out its May 2015 all-time high (it needs about 2% more of gains), the index’s trailing 12-month P/E ratio is set to make a new six-year high if market gains hold today, now hovering at 19. That is up from 13 back in 2011. P/E ratio tells if stocks are expensive or cheep. In this case, today we could buy most firms in the S&P 500 and pay for them with 19 years of earnings. In 2011 it would only take 13 years of earnings to buy most firms. 

So the short story is be long, but play it slow. Place your stops closer than normal and be ready for trouble in the date range May 2 to May 20.
 



 
You can learn more about my indicators by visiting the CME4PIF school by clicking here.



Don't squint, All graphics can be enlarged by click on them.