Saturday, 30 July 2016

July 30, 2016 – Weekend Market Comment

July 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).

The action on this week was different than what we've seen recently as investor focus seemed to turn to safety ahead of the GDP report and after the FOMC announcement on Wednesday. Consumer staples (XLP, +0.44%) and utilities (XLU, +0.39%) led the six advancing sectors while basic materials (XLB, -0.14%) was the worst.






101 Bull Bear
Bull market (dark green over red) and now the short term (light green) is up sharply but rounding. NOTICE THE SLOPE (second window), this could be part of a long term up trend, that might pull back here.  Bull market -- expect bullish outcomes.
 !
103 NYSE High Low Market Forces
Nothing but positive. In the right side highlight we see green is above is below yellow. Really positive.

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, if not expect rally to fail.

115 Renko
Nothing but strength.
 !
203 OBV
CAUTION: OBV is still with market but we are now consolidating in a range.

207 VIX
VIX should bounce about this red line for a while as traders start to understand a pull back here might help.

209 VIX Evaluator
Nothing but strength.

211 S&P500 over 50 day
Now over 76% stocks are above their 50day MA, down form last week 86%. Strength but looking a bit overbought.

213 Green Arrow
Only put new money to work when I draw a green arrow.
Still rising, notice MACD is fading.


301 NASDAQ Summation
Nothing but strength here.
 !
303 Aggressive Defensive
Aggressive but could be the end of the cycle. Overbought can go on how long?

305 Consumer Bonds vs Equities
Bonds gain a bit, but consumer does not react. Could be a bit of fear returns.

307 Bond Direction
Strength in bonds indicates overall market caution. .

309 Sectors
Its all about tech as the Nasdaq sweeps ahead.

311 Nations
International gains interest as U.S. market looks overbought, Germany marches ahead.

313 Major sectors
Only emerging markets are doing better than U.S. equities.

! = Pay attention this chart is important this week.


What I Find Interesting
Bloomberg had an interesting bit on a new type of weather called a rain bomb. It also pointed out this week the Empire state building was struck twice by lightning. I imagine what the guy in that office thought... Watch it on video here:




What Works Now
Canadian metals giant Teck Resources

Oshkosh by gosh!





You Asked
A reader of this blog asked me this week if this is a good time to be in gold. Well no one knows the future . . . If another 911 type event happens this week and sure buy some gold. But it is not the heart of my portfolio First off in general, I don't like gold if for no other reason than it has no value except if you fear everything else. Unlike equities that can rise due to hard work and earnings gold is a vote for apocalyptic visions. So it was a fine thing for the characters in a post-apocalypses movie to use to barter for food or medicine, but it is not a great investment, because often cooler heads eventually prevail.  



Now if you look at my 100 series charts, we see we are in a bull markets, with strong breadth, strong employment, rebounding manufacturing, not much of an apocalypse. But we are over bought...

If you zoom back and look at the big picture you can often see the overall direction of a market. By using Renko charts you eliminate the question of time and can just see direction. Here are two Renko charts one is for IWN the Russell 2000 stocks, used here to represent equities and one is for gold... So now ask yourself, would you rather be in equities or gold?




Don't get me wrong, I am expecting a small pull-back here in equities, after some sideways consolidation In a pull-back I expect gold will rise a bit. That said, so will t bills, VIX futures (very dangerous animals) and other safe haven investments so gold might advance, but you will probably do better with something else. 

Gold is in a rebound off its low, but as you can see it has come a long way already. 

So the final answer is, if you don't mind short term trading,  sure hold some gold in to this pull-back, if you like, but don't linger, it should sell off after the summer pull back, and IF the market is solid this fall it probably will not out perform equities.



What I Think

Look over my charts this week to see the plethora of BUY signals, you seldom see the market so strong for so long. Look how many charts I say Nothing but strength on.  Yet the market is traveling sideways and has been for 12 days. Should we expect an upside break or downside break?

There are two ways to approach this type of price activity. It is the "cup half-empty" or "cup half-full" approach. If you are in the bearish camp (half-empty), you would rightly point out that price has been unable to penetrate the top of this range for days and therefore, it is time for a decline. However, a bull "cup half-full", would point out correctly that price has held on to support for days and has refused to break down. Whose idea holds the most promise? Well by a tiny margin I would say the intermediate-term indicators are calling for a short decline.

Major indexes are extended after big gains the last five weeks. In addition to being ripe for a corrective period, August is here and this has been a weak month on the seasonal charts. SPY is up over 9% the last five weeks and a pullback or corrective period would be perfectly normal at this stage.  


If we look at the aggressive defensive chart we can see we have been in this over bought area too long, and the OBV chart is still going sideways, but I expect the support to fade. But then again I though that last week and we made an S&P500 high.




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

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Saturday, 23 July 2016

July 23, 2016 – Weekend Market Comment

July 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).

 As I mentioned three weeks ago, if we break resistance the markets could move up sharply and it did. Now we are taking a pause as traders see the market is for now short term overbought.



!
101 Bull Bear
Bull market (dark green over red) and now the short term (light green) is up sharply. NOTICE THE SLOPE (second window), this could be part of a long term up trend.  Bull market -- expect bullish outcomes.
!
103 NYSE High Low Market Forces
Nothing but positive. In the right side highlight we see green is above is below yellow. Really positive.

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, if not expect rally to fail.

115 Renko
Nothing but strength.
!
203 OBV
CAUTION: OBV is still with market but we are now consolidating in a range.

207 VIX
VIX should bounce about this red line for a while as traders start to understand a pull back here might help.

209 VIX Evaluator
Nothing but strength.

211 S&P500 over 50 day
Now over 86.2% stocks are above their 50day MA. Strength but looking a bit overbought.

213 Green Arrow
Only put new money to work when I draw a green arrow.
Still rising, notice MACD is fading.


301 NASDAQ Summation
Nothing but strength here.

303 Aggressive Defensive
Aggressive but could be the end of the cycle. Overbought can go on how long?

305 Consumer Bonds vs Equities
Bonds drop but consumer does not react. Mixed signal

307 Bond Direction
Strength in bonds indicates overall market caution.

309 Sectors
Defensive staple stocks like dividends, utilities are strengthening. Tech is loosing steam as investors start to fear risk.

311 Nations
A look like international weak. Germany is Kaput!

313 Major sectors
International gains not out of merit but as an alternative to the now overpriced US market.


! = Pay attention this chart is important this week.


What I Find Interesting

According to Factset one quarter ago, analysts"projected" Q3 earnings growth would return this quarter. It now appears that won't happen. We look forward to updating this analysis some time in October when "analysts" are forced to shelve their optimistic expectations for a Q4 rebound, as EPS for the entire year go negative once more. At this point in time, 19 companies in the index have issued EPS guidance for Q3 2016. Of these 19 companies, 14 have issued negative EPS guidance and 5 have issued positive EPS guidance.

As of this moment, for all of 2016, analysts are still projecting earnings (+0.3%) and revenues (+1.7%) to increase slightly year-over-year.

I would say that the 2017 estimate look stretched.



What Works Now

Beer
The worlds biggest brewer Ambev makers of Bud, and Corona are selling lots of beer this summer. Ambev SA, formerly Inbev Participacoes Societarias SA, is a Brazil-based company engaged in the brewing sector. The Company produces and sells beer, carbonated soft drinks (CSDs) and other non-alcoholic and non-carbonated (NANC) beverages across the Americas. The Company's activities are divided into three segments: Latin America North, including sell of beer, CSD and NANC drinks in Brazil, as well as operations in Dominican Republic, Saint Vincent, Antigua, Dominica, Guatemala, El Salvador, Nicaragua and Cuba; Latin America South, distributing products in Argentina, Bolivia, Paraguay, Uruguay, Chile, Ecuador, Peru and Colombia, and Canada, represented by Labatt’s operations, which comprises sales in Canada. The Company markets products under various brand names, such as Adriatica, Brahma, Leffe, Budweiser, Corona, PepsiCo and Lipton. It is a subsidiary of Interbrew International BV.



Heavy Equipment
With a return of commodity price comes orders for equipment to mine. Cummings is on the move.



China goes to school
New Oriental Education & Technology Group Inc. is a provider of private educational services in China. The headquarters of New Oriental is located in the Haidian district of Beijing. It is currently the largest comprehensive private educational company in China based on the number of program offerings and total student enrollments.


What I Think 

Short term traders expect sideways or a little pull back, take some profits. Long term players hang on things still look overall bullish. Markets are very strong.




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.

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Sunday, 17 July 2016

July 16, 2016 - Weekend Market Comment


July 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).

As I mentioned two weeks ago, if we break resistance the markets could move up sharply and for 6 days now they did just that, with a small profit-taking slip on Friday. The commodities have pulled back gently this week near two-week lows. In the face of the commodities pulling back, global markets have rallied. Financials have rallied globally and JP Morgan fueled a broad rally in bank stocks.




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

103 NYSE High Low Market Forces
Nothing but positive, in fact wow crazy positive. In the right side highlight we see green is above is below yellow, by a big margin. 

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 great. Watch this carefully, all recessions have falling industrial production, new data is from the end of June, looking a tiny bit better.

115 Renko
A new up white brick, nothing but strength.
203 OBV
Strong
 !
207 VIX
VIX bottoming?
 !
209 VIX Evaluator
Nothing but strength.

211 S&P500 over 50 day
Now nearly 87% stocks are above their 50day MA. Strength despite sell off.
 !


213 Green Arrow
Only put new money to work when I draw a green arrow.
Recent Green Arrow!

301 NASDAQ Summation
Nothing but strength here.

303 Aggressive Defensive
Perhaps overbought?
 !
305 Consumer Bonds vs Equities
Bonds lag consumer flat, bullish with caution.

307 Bond Direction
Strength in bonds indicates overall market caution.

309 Sectors
Defensive staple stocks like dividends, utilities are starting to bounce back as risk is coming off.  Consumer is taking a kicking.

311 Nations
A look like international weak. Germany is rebounds as Briexit turns to who cares!

313 Major sectors
Canada and Gold takes a pause!

! = Pay attention this chart is important this week.


What I Find Interesting

Transports
The Dow Theory says that transports often predict a strong economy. The idea is if rail cars are full of raw materials and finished product and Fed Ex is delivering tons of stuff for Amazon the financial reports of companies will reflect a rise soon. 

Here is a chart of the Dow Transport index. Looks positive. 


TINA
Equities are boosted by TINA (There Is No Alternative) (a term coined by Margret Thatcher) because money must flow someplace and not much else looks good. The Price to Earnings ratio shows when the price of a stock is too high compared to earnings. The current P/E is 25, which places the Index well above the normal overvalue level of 20. Last quarter the P/E was 24, so the situation is getting worse. To clarify, the S&P 500 is at 2162, which is 25% above the overvalue level of 1729. The current P/E is 50% greater than the normal 10 to 20 point P/E range. In short overbought, but nothing like the Tech bubble of 1999 that hit a record PE ratio of 45!


What Works Now
Well frankly, everything positive, from banks to industrials, except oddly the consumer. Safety is taking a back seat as gold retreats a bit and utilities lag, but a big uptick in both Friday. 

The party continues internationally, especially commodity based economies. With the big push in the markets recently, global markets continue to break out to 52-week highs. Brazil hosts the world in three weeks with the Olympics. Even some former basket case like Brazil and Russia are at 52 week highs. Canada and Australia are doing better too.


What I Think
Well as I said, we have broken out in to new territory and all the "buy the breakout" traders and computers piled on. A few will want to take profits here, and we saw that in selling on Friday. Here is a chart called "Above the Green Line". It is my version of the charts provided by Joanne Klein click here to read her free excellent blog. If you are looking for a simple trading system that works, she is as good or better than most. 


The first indicator with the red arrow is the Slow stochastic (Joanne calls this the money wave) and right now it is indicating Overbought. However, markets can stay overbought a long time and even if they do pull back a little they are likely to resume their upward climb. So just because we are overbought, does not mean anything like a big correction is on the horizon. 

The VIX is the fear gauge as investors buy high and sell low due to emotions of fear and greed. Well its all on for greed right now. We can also see the over enthusiasm in my 207 VIX chart, shown here with an indication that caution has now been thrown to the wind and probably will return a bit soon, again probably a minor pull back for a few days of profit taking. We saw this on Friday. 

So what do I think? I think we are heading for short term weakness in a serious bull market. This would appear to be a very broad, worldwide push. My take would be that we are probably not in a bear market when we are breaking out to new 52-week highs. 

Keep an eye on the OBV chart in the next weeks, the pros will probably grab some profits, but for most long term investors sit tight, this could be a very bullish summer.



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.

Read My Disclaimer Here

Saturday, 9 July 2016

July 9, 2016 – Weekend Market Comment

July 9, 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 I mentioned last week, if we break resistance the markets could move up shaply and on Friday they did just that. Some lag in employment was showing on our charts, now all trace of that is gone. This bull rally could go a lot longer. 






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

103 NYSE High Low Market Forces
Nothing but positive, in fact wow crazy possitive. In the right side highlight we see green is above is below yellow. This is the number on reason I am still seeing possible upside.

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 down white brick, nothing but strength.
 !
203 OBV
CAUTION: OBV says pros were not with this market as volume fails to join up searge.
 !
207 VIX
VIX shows rapidly increasing uncertainty now about 13.
 !
209 VIX Evaluator
Nothing but strength.

211 S&P500 over 50 day
Now nearly 73% stocks are above their 50day MA. Strength despite sell off.
 !

213 Green Arrow
Only put new money to work when I draw a green arrow.
New Green Arrow!

301 NASDAQ Summation
Nothing but strength here.

303 Aggressive Defensive
Turning Aggressive.
 !
305 Consumer Bonds vs Equities
Bonds lag consumer rises, bullish!!

307 Bond Direction
Strength in bonds indicates overall market caution.

309 Sectors
Defensive staple stocks like dividends, utilities are starting to retrat as risk is coming on stronger. 

311 Nations
A look like international weak. Germany is rebounds as Briexit turns to who cares!

313 Major sectors
Canada and Gold takes a pause!

! = Pay attention this chart is important this week.


What I Find Interesting
Here is a chart on Bloomberg.... notice how factory orders and recessions are correlated, that is of course why we look at factory output in our 100 series charts.



Manufacturing as a share of the U.S. economy has been plummeting. In 1965, manufacturing accounted for 53 percent of the economy. By 1988 it only accounted for 39 percent, and in 2004, it accounted for just 9 percent. Some say the markets and manufacturing have decoupled, and that Americans can do just fine with new consumer oriented jobs like WalMart greeters and Starbucks Baristas. But those jobs do not pay like manufacturing jobs and they only exist as long as their is value being created in the economy. Their is also a ever enlarging civil service that pays better but by taxing who?


What Works Now
Gold


What I Think

Fridays bounce was impressive and both the Bull Bear Lines and the NYSE 52 week high low arelooing very strong, we have a green arrow, its a very aggressive bull market. Yes the OBV is lagging a bit and you could make an argument for over-bought, but really the only place to be in this market is long. 



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.

Read My Disclaimer Here