Saturday, 15 April 2017

April 15, 2017 – Weekend Market Comment

April 15, 2017 – 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).

Stocks posted their second straight weekly decline in a holiday-shortened week, as investors digested bank earnings and as tensions with Syria, North Korea, and Russia, along with a bombing that targeted ISIS on Friday, prompted some unease in the markets. While the year started out with very modest volatility, it's realistic to expect periods of higher stock price movements, underscoring the importance of balance across sectors and asset classes. Overall, the backdrop for stocks remains mostly favourable, supported by improving economic growth expectations and earnings growth.

Here is what our charts say:






101 Bull Bear
Bull market (dark green over red)  the dark green 50 day average is in a flattening uptrend.  NOTICE THE SLOPE (second window), we might be starting another long ride down.  Bull market -- expect bullish outcomes.
!
103 NYSE High Low Market Forces
Breadth lines are firmly up. Also notice the second window three red patches recently. We had many patches like this after mid 2007. This is the sign the market is running out of steam. 

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
Flat but strong industrial production.  That is good news.

115 Renko
12 up but the latest is 1 down... caution.

203 OBV
OBV (red line) is below the market.  If this gets any worse, worry.

207 VIX
Fear is on the way up, but could stall here.
!
209 VIX Evaluator
Don't panic yet but that is an up tick ... hmmm.


211 S&P500 over 50 day
Now about 43% of stocks are above their 50 day MA,  down a lot from last week when it was 57%.
!
213 Green Arrow
Only put new money to work when I draw a green arrow. Notice loss of TRIX momentum. CAUTION

!
301 NASDAQ Summation
Nasdaq breadth is returning. Pay attention -- could be volatile.

303 Aggressive Defensive
Defensive. CAUTION

305 Consumer Bonds vs Equities
Bonds woosh! up up up. Consumer flat. CAUTION

307 Bond Direction
Bonds UP! 

309 Sectors
Everything is doing well but banking. Bazaar.

311 Nations
Germany and Philippians doing well boads well for global markets. Expect this too fizzel.

313 Major sectors
Safe haven up ticks


! = Pay attention this chart is important this week.


What I Find Interesting

Bill Gross
Hedge fund wizard Bill Gross thinks we are in an overvalued market.

"Equity markets are priced for too much hope, high-yield bond markets for too much growth, and all asset prices elevated to artificial levels that only a model driven, historically biased investor would believe could lead to returns resembling the past six years, or the decades predating Lehman. High rates of growth, and the productivity that drives it, are likely distant memories from a bygone era."


Well Bill Gross is THE Bond King and if he says bonds are over priced he should know.

Go Solar and Wind

Acording to the Independent (a UK paper). Just ten years ago, generating electricity through solar cost about $600 per MWh, and it cost only $100 to generate the same amount of power through coal and natural gas. But the price of renewable sources of power plunged quickly – today it only costs around $100 the generate the same amount of electricity through solar and $50 through wind. The cheap price of solar and wind energy is already encouraging companies to build more plants to harvest it. The US is adding about 125 solar panels every minute, according to the Solar Energy Industry Association and investment in renewables in 2015 rose to $286 billion, up 5 per cent from the year before.


What Works Now
Gold

With the market in a pull back, bond rates rising, global tension, a falling US currency, debt in China, there is no alternative (TINA). That one thing left to invest in is GOLD.


Wind

Vestas Wind Systems A/S is a Danish manufacturer, seller, installer, and servicer of wind turbines. It was founded in 1945, and as of 2013, it is the largest wind turbine company in the world. (Ticker: VWDRY)



What I Think

Stocks may be in for a deeper pullback, now that the so-called fear index is finally breaking out higher. The CBOE Volatility Index (.VIX), considered the best gauge of fear in the market, closed above its 200-day moving average for the first time since the election this week. The indicator jumped more than 2 percent Thursday afternoon at one point to a fresh high for the year. 

Notice chart 209 that compairs short and long term VIX futures, it has begun an uptick, and as you can see it generally only goes down... so that tells you the smart money is getting nervous. Just like it did at the start of 2016.




Our Bull Bear chart says this is a Bull Market and so the odds favour a pull back not a sell off. That said as I pointed out last week this bull is tired and old. Also Sell in May is coming, you would be foolish to be too eager to bet the farm on a market like this. Raise your stops, take profits on your high fliers and sit in cash, bonds, gold and some solid dividend payers.



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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