Weekend May 17, 2015
Of Two Minds on Distribution - Good points about how easy it is for High Frequency Traders to juice the market and unload more stock at higher prices to fully invested individuals
If Distribution is Underway, has the Recession Already Begun? Perhaps his best point is this one. The Central Planners whether they be the Bushes, Clintons, or Obamas, will never admit the economy has turned down until it literally falls off the cliff.
A Two Month Recurring Bond Pattern
I believe the trend in bond price is dow with the trend in yields up.But there is also a two month alternating pattern evident this year. Looks like bonds are poised to challenge the downtrend line again around 130.
Scroll back to the first chart, TLT = REIT ! Both are in downtrends. Remember REITs have become America's saving account for millions of retirees. If this downtrend continues when do they get worried.
John Murphy thinks the bottom in bonds has kept utilities and REITs from falling out of bed.
Was that THE TOP in utilities in February? Moving averages are trending down.
MACD at top is weakening, Money Flow at bottom is near negative, certainly pulling back. This supports the distribution theory.
Again John Murphy thought the stock rally Friday rescued the Transports but this looks pretty weak to me. Transport have still not fallen through the 8500 weekly support. When and if they do, they are likely to fall hard. As previously mentioned this is all the more amazing given low energy prices.
Dow 65 Composite
John Murphy also argued that the Dow 65 composite of all three Dow averages was the better picture. I would agree but I don't see a lot to get excited about.
By using USO we can track money flow at bottom which of course is not available for WTIC. What really happened is a brief counter trend rally fueled by short cover buying. This is a busy graph but by overlaying RSI one can see it really tracks momentum. About all we can do now is track this chart to see if the trend really has staying power.
The Dollar, the flip Side of Crude Oil
I substituted UUP an ETF for the US Dollar for USO. And here we have the inverse picture. I suspect the Dollar bottoms this next week, then we will have the real test for oil. My weekly column on oil is the next post. I spotted several articles announcing renewed drilling now that oil has hit $60. Recall my prediction in late April that $61 would be the line in the sand resistance point.
As promised the Administration is putting coal miners out of business. With less coal demand, there is more usage of natural gas This is a stronger chart than crude oil.
Gold via Central Fund
Gold has topped its various moving averages, this suggests our friends at EWI are correct that the low was last November December 2014.
The Bottom Line
This next week okay we have thought this before, but, should be decisive for the stock market.
Bonds look to have bottomed and are likely beginning another month long rally.
Energy has rallied to resistance. It performance is tied more to the dollar and potential expanded supply with increased prices than most think.
Art Markets Hit New Records - Art Collectible Cars and Stocks are all Hitting Highs
t Wednesday’s auction of contemporary art at Christie’s International, which netted $658 million, an electronic screen flashed bids in seven currencies including rubles, Swiss francs and Hong Kong dollars. Collectors from more than 40 countries wound up competing for the offerings.
“Art likes to move around the world, but the scale is so much bigger now,” said Ed Dolman, chairman and chief executive of boutique auctioneer Phillips. “We’re talking an incredible orgy of spending, and it feels like a total transformation.”
Art Market Sees New Auction Highs, New Rules, WSJ 5/15/2015
Covering up the Defaults
This is s good summary of any highly leveraged headed to default situation. Where the word Greece appears in this article one can substitute sub rime mortgage loans in the US in 2008 or student debt in 2015, the same holds true for all. One can
1. write it off
2. extend terms, lower payments, re figure loan rates, etc
3. Or just bury it in the non performing loan section. this is what Japan did which kept them in a twenty year funk after the top in the Japanese market in 1989.
I am guessing the trillion dollar US student loan debt is somewhere between 2 and 3.
thanks for reading TMP.
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