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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Saturday, 19 November 2016

November 19, 2016 – Weekend Market Comment

November 19, 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 the rally continues and we are in a new era of risk on.





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 has begun to rise up. 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.

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
Market is rebounding 6 white bricks! BULLISH!
!
203 OBV
OBV (red line) is NOT with the market. clear down trend. This means the big funds are not participating. Tread carefully -- Not wonderful.

207 VIX
Ahh fear subsides. ccci says perhaps done for now. Bullish

209 VIX Evaluator
Very much bullish

211 S&P500 over 50 day
Now 59% stocks are above their 50day MA, way up from last week when it was 54%. 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 a bounce up! Bullish
!
303 Aggressive Defensive
Now topping out 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
Consumer rise! Banks love rate hikes. Bullish.

311 Nations
Canada has a come back! The Economist Magazine declares Canada the new leader of the free world.

313 Major sectors
Canada again on the rise.

! = Pay attention this chart is important this week.



What I Find Interesting
Thanks to Ralph Nader also many laws and law suits cars are safer than ever. But as the Statista web site shows more people now are dying of drugs that car crashes. Methamphetamine and Fentanyl are a scourge on our streets. Fentanyl is a powerful synthetic opioid analgesic that is similar to morphine but is 50 to 100 times more potent. Read more about the problem in Vancouver on the CBC web site.

 
What Work Now
Well this is an odd one since it is more like what does not work now. But with impending rate hikes coming soon U.S. Treasuries have been in a sell off. (Ticker:TLT) but you can get an inverse ETF for treasuries (Ticker:TBT)
 

What I Think

I think we are in a bull market, perhaps overbought but since July safe stocks like utilities are are down 11%, risky financials  are up 20% and super safe bonds (Ticker:TLT) are the lowest since January. That is a risk on environment, people are taking chances again. Yes we might pull back a bit early next week but expect this trend to be in last for a while. After all with yields so bad in Treasuries what is left but stocks?  The only kill joy is that falling OBV line. The Dow was the first to rocket after the election and the other indexes started following suit only a day or two later. Notice, price is trending higher, but volume is not. The OBV is indicative of this as it began to flatten out almost immediately. That is your warning not to run away, but to be on alert.


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, 12 November 2016

November 12, 2016 – Weekend Market Comment

November 12, 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).

Last week all doom and gloom, as gold looked like the only long investment left. This week, wow. Within a week, the market went from egregiously oversold to overbought. They managed to repair all the damage done during the nine-day losing streak.

As it was every day after the election,
U.S. equities closed mostly higher on Friday, with the three major indexes posting their best weekly gains of the year on the back of a surprise Republican sweep. Looks like that news TRUMPED all the rest. (ha ha)



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 has begun to rise up. 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
Rebound! Green over Yellow. But don't forget this is new trend and could fall apart.

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
Market is rebounding 4 white bricks! BULLISH!
!
203 OBV
OBV (red line) is NOT with the market. clear down trend. This means the big funds are not participating. Tread carefully -- Not wonderful.

207 VIX
Ahh fear subsides. Bullish

209 VIX Evaluator
Turned back up for the first time in ages. BEARISH!

211 S&P500 over 50 day
Now 54% stocks are above their 50day MA, way up from last week when it was 27%. Bullish.

213 Green Arrow
Only put new money to work when I draw a green arrow. TRIX says no way we draw a green arrow here. Notice how this was a great early warning.  Still Bearish!

!
301 NASDAQ Summation
New happy days, breadth returns to Nasdaq expect a bounce up! Bullish
!
303 Aggressive Defensive
Very defensive, but as an pessimist you might say oversold? 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
Consumer rise! Banks love rate hikes. Bullish.

311 Nations
Das Germans are looking safe and stable, rest of globe looks to America!

313 Major sectors
America the only star!

! = Pay attention this chart is important this week.



What I Find Interesting

 
Copper

Wow has copper ever been going crazy this week, there was a time in the 80s when copper would not budge for months. Not anymore look at the run from mid October. Copper has just had a one month 24% rise. Trying to capture 25% every month is hard to do. We are up against the 5-year channel. How you choose to trade it is obviously important, but it is probably too late to enter.

The important thing to know about copper is that it rise in price when demand for expansion is underway. Since copper is used to wire new neighborhoods, build house and power plants, it is generally a leading economic indicator. 





A Reader Asked
A reader asked if I should keep saying "Bull market -- expect bullish outcomes" If the Bull Bear Lines are dark green over red -- even if things recently are not going well in the market. Yes!!! -- That is the purpose of the chart and I mean what I say. 

Basically markets pull back and then rise in a series of wave like cycles. Of course every so often the market sells off very hard and keeps heading south, a true bear market. The Point of the Bull Bear Lines is not to tell you if this coming week is an up-trending market, the point of the chart is to tell when to "give up" and when to have faith. Basically as long as the 50 day moving average (dark green) is above the 200 day moving average (red), it is still a market that we should try to "err on the side of optimism". 

This week is a good example, if you were too pessimistic then the post election rally left you in a corner. For example what if you were to buy an inverse ETF like QID, or a VIX ETF just before the U.S. election, you probably got your lunch handed to you -- you would have been short in a come back rally. You know the rule NEVER SHORT  a BULL MARKET. Just look at the picture, that what a bull market can do to you. Now you know why. 
 

What Works Now

AIG
Insurance companies do well in a rising rate environment (Ticker:AIG)
 
Foot Locker
Christmas is coming and there will be a set of Nike cross trainers under the tree in every home from 5th avenue right down to the "hoods" of Baltimore.  (Ticker:FL)







What I Think

I think the macro events like a new U.S. president "TRUMP" the technical indicators all the time. The Bull Bear lines are a reminder that a market can and generally will rebound if it is a bull market. The Bull and Bear lines tell you when to keep your faith.  I saw a lot of weakness last week BUT I did not play any short side moves, I just lightened up (CASH was a recommendation) and I bought gold. Gold had been oversold and it had upside potential but probably little downside. I also "bought on the rumor and sold on the news"  exiting right after the election results were in. Thus I was ready when the indicators went positive mid week and am now long. However I still have only a partial position because of the recent history of failed rallies keep me wary. 








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