Weekend March 26, 2016
What Killed the Middle Class?
I have featured many higher and higher prices for exotic cars at auction. Interestingly an article on page B2 of the weekend WSJ reports that the price of a 1955 Mercedes SL Gullwing has fallen from a high of $1.9 M to $1.65 M. This is another clue that world markets are turning down.
John Murphy at stockcharts was fearful the market was headed ever lower on January 20. That and Feb 11 were the dates of the lows. Now after a two thousand point DOW rally he is bullish. I suspect we have just completed another leg up in the continuing up down series that will continue to generate lower highs.
JUNK
This chart reflects my view. JUNK is falling short of testing the 200 week MA and rolled over this past week just above the RSI 50% line.
And JNK has re traced half its fall from the its June high.
Weekly NYSE Advance Decline
Granted this is not the sign of a major turn in this all important indicator. But it is coming at the time I expected a market down turn. Note
it is also making a lower high than it did in near the same time period of March April a year ago.
Dow Industrial
We are at the opposite juncture from the lows of Jan 20 and Feb 11. MACD at bottom is topping, price is rolling over in the main chart, and
money flow at top has likely peaked.
Bank Index
From the July 2015 high we can easily count one two three and now a fourth wave concluding.
Low interest rates are not helping ban stocks. the 80-56 price drop was a 30% decline clearly a bear market.
As with all the other charts, RSI and MACD are rolling over from a topping position.
Barclays
Some like Barclays are in worse shape than other banks. Here Barclays was cut in half
in about six months.
Cullen Frost Bank
Notice how closely CFR is following the Bank Index in the previous chart. Again I sold my shares a week ago Friday.
Bonds TLT
If stocks do fall, TLT is likely tocontinue its rally. Note it stalled as stocks continued to rise the last few weeks.
XLE Energy ETF
Higher oil prices have boosted the overall market as stocks and oil move together. Here it looks like the XLE Energy Index
has peaked again. Hence, my belief that stocks will fall with energy. The XES Service Index is also failing at its 200 week MA as well.
Crude Oil WTIC
From the top, RSI is failing at the 50% level. In the main chart price is failing at the 200 week MA.
And in the bottom panel on balance volume rolls over. Nothing bullish about any of this. I am unable to tell how far price might fall this time. We will just have to track the market.
Copper
Copper is sending the same message as oil. After a thirty cent rally it too is failing at the 200 day MA.
US and Canadian Dollar
The MACD is slightly higher on this last sell off. The US Dollar is likely bottoming as the Canadian Dollar has topped in the bottom panel.
This also is a negative for oil. As the dollar strengthens oil priced in dollars can fall.
Gold
Gold has completed five waves up. Notice the higher red volume bars this last month of March at bottom.
After a $220 move it will be interesting to see where gold bottoms. For now we have a PAR SAR sell signal,
see blue arrow.
Silver
Recall I sold my SLV position last Friday. Air pocket drops like Wednesday can only be avoided by selling ahead of time.
Notice the PAR SAR sell signal here as well.
The Bottom Line
It has taken stocks some time to really fall. After the November high the real fall did not start until January. However seasonal weakness beckons after April 15. We are out of long positions and accumulating DOG and DXD bear funds. This position is affirmed by oil, copper, bank stocks, auto stocks, and junk bonds.
Social Mood
The Florida Governor Rick Scott says Connecticut is one of his favorite states. .The high tax policies there continue to drive wealthy citizens out of CT and into places like Florida. The CT legislature is at it again.
Of some forty universities in CT, it has single out Yale in a proposed bill that would tax endowments over %10 B which is Yale in a class by itself. The idea that a state legislature can tax the earnings of non profit endowment mean that no one is safe in CT. GE picked up and moved out of CT to of all places Boston MA. But Boston offered an attractive package to GE probably to offset its Taxachusetts image.It is hard to imagine how the legislature thinks this will attract other firms to the state. And of course unlike GE, Yale can hardly pick up and move which is no doubt why Yale was targeted. Yale is one of the largest employers in the state.
Pop Trends Price Culture
dennislelam@gmail.com
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