Weekend Oct 31 2015
From Of Two Minds
Everything is now dependent on the stock market going up. 401Ks, Pension Plans, Corporate Buy backs with low interest rates, you name it, will that happen?
China's Next Bet is on Natural Gas Which is another reason things are not working out for China, read this 2013 article and then look at the nat gas chart later in this post
And from John Murphy
-- STOCKS HAVE STRONGEST OCTOBER IN FOUR YEARS
-- S&P 500 ENDS NEAR TWO-MONTH HIGH BUT LOOKS OVER-EXTENDED
-- EQUAL WEIGHT STOCK ETFS NEED TO CATCH UP
-- JANUARY EFFECT SHOULD BOOST SMALL CAPS
-- WEEKLY MACD LINES TURN POSITIVE
-- RISING BOND YIELDS FAVOR CYCLICALS OVER STAPLES
-- NYSE BULLISH PERCENT INDEX RISES ABOVE 50%
Of Two Minds makes the point that the last top to top took 394 weeks, Well we are right there again! Here is an example of another cycle top coming into play. Recall we are 40 years plus one out from the Dec 1974 low of Dow 577. The Transports gave the first signal of weakness last November. This is from Of Two Minds recent post I did not link due to a really gross depiction of a jack o lantern, well never mind...
CAT has pretty much the same chart pattern.
NYSE Weekly Advance Decline
The reliable NYSE A/D weekly chart has completed a 50-61.8% re tracement. And it turned down but not decisively so, quite yet. The 13 week EMA has not moved above the 34 week. We noted last weekend this was something to watch.
Dow versus Value Line
A Tale of Two Markets - The DOW Industrials continue to outpace the small caps.
Transports lead in bear markets and were the first to fall last November. The MAs are all headed down.
Richard Russell often remarked that key to long term investing results was patience. That is the case for one of my long term holds, San Antonio based GSB. The small firm specializes in secure transfer of information over the internet.This is a topic very much in the news with all the cyber attacks that are occurring. GSB has had three big up moves since 2013. But it you were not long already, you missed it. the latest 20 cents per share earnings for the quarter places the firm in the 'real earnings' category.
China The World's Economic Engine Sputters
The big slow down in China is taking emerging markets and commodity prices with it.
Ten Year Note Yield
Ten year note yields challenge the down trend line but that is all that can be said for now.
Exxon Mobil XOM
I am going with XOM as the best predictor of the energy complex. It has
completed a relief rally that erased the oversold money flow at top
the relief rally has re traced 50% of the entire move down.
Looks like nat gas is headed back to it 2012 low of $1.91.
Gold Stocks Roll Over to the Downside
Looks like gold stocks are rolling over again.
The Bottom Line
Stocks are at a 40 year plus one cycle high. We should see many more violent swings like the last since July down then up in 2016. This was the best October in four years but then it was the worst August as well. The smaller cap indexes have not moved up like the DJIA or SPX nor has the Transports. So different indexes are moving out of synch with one another. We do not have a Dow Theory buy signal.
Commodity prices have again turned down in copper, crude oil, natural gas, gold, and silver. Mining stocks are also rolling over.
We expect a bottom in commodity prices over the next few months.
Pop Trends Price Culture
Friday's Arena section in the WSJ has a fine two page spread on Demonic Possession re appearing as new series' themes on Starz and Netflix. The Exorcist was billed as the scariest movie ever made with its 1973 debut, just five years (note the fib relation) after Rosemary's Baby. Three years later we had The Omen.
1973 ushered in the 1973-74 50% market breakdown. My personal favorite of the whole bunch was An American Werewolf in London released in 1981. The scene where David Naughton turns into a true wolf not just a hairy guy is to this day a standout for make up awards. This is Director John Landis at his best and don't miss attractive Brit Jenny Agutter. But I digress. Cinemax will have a ten session premier of The Outcast. At any rate, demonic possession is even busting out on Discovery's Destination America known more for BBQ Pitmasters. This is a lengthy article and we suggest you clip it fryer files for a road map of where social mood is taking us. When The Devil is competing with Bubba at the BBQ pit, you know The Exorcist is back in fine mainstream form.
Marco Rubio's campaign has sent out a message that only Rubio, Cruz, Carson, or Trump is likely to be the nominee. So half the field is outsiders, an exclusionary socionomic trend.
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