The Market Perspective

Stocks Regain Losses for the Year, Oil Completes Big Rally

Weekend March 19, 2016

Tom Sowell Last Chance for America? 

Of Two Minds, a Year of Volatility, the Year of the Monkey

The Bull Case

COMMODITIES CONTINUE TO RALLY ON FALLING DOLLAR AND DOVISH FED -- SILVER WHEATON LEADS SILVER ETF HIGHER -- SOUTHERN COPPER CLEARS 200-DAY LINE -- FEDEX AND DOW TRANSPORTS CLEAR 200-DAY LINES -- % OF NYSE STOCKS ABOVE 200-DAY AVERAGE BREAKS OUT TO EIGHT MONTH HIGH -- NYSE ADVANCE-DECLINE LINE AT HIGHEST LEVEL IN A YEAR -- CANADIAN AND MEXICAN STOCK ETFS CLEAR 200-DAY LINES -- ALL OF WHICH IS GOOD FOR U.S. STOCKS WHICH ARE RISING

John Murphy at stockcharts.com

Numerous headlines speak to the resurgence of positive mood, seen Friday

Dow Turns Positive for the Year as Oil Rises and the Dollar Falls

Oil Hits $40 as Rally Goes On

Weekend WSJ Below

Stock Rally Rewards Big Bets

The Bear Case

Optimism accompanies market tops. With the Dow rallying from the Feb 11 low of  15,660 to 17,481 the market and sentiment returns to the late December highs. But what about the 20/40 year cycle and the sell off so far this year?  Is it possible the Dollar just hit a low and oil is done for now?

Energy USO

I sold my position in USO friday afternoon. Here we show a potential five waves up on the 120 minute chart. And that is a 50% rally adding 16 points from the low at $26 in about one month. Time for a rest I would think. We have a lower MACD at bottom. Pulling back to the previous fourth wave low at 9.50 would take some pressure off the chart.

Stocks Dow Industrial

MACD looks toppy as this mimics the oil chart. And the DJIA is back to potential resistance form November.

Transports

Despite the vigorous rally, money flow at top has been slim into the Transports. This is the sort of bounce one sees in a bear markets.

Rails have also bounced giving hope to the bulls.

DJUSRR is approaching both the 50 and 200 week MAs, this will be a decisive test. If the bears are right this index turns down at that point.

CLF

Friday afternoon I was struck by how similar the formations of March 7-9 are to where CLF is right now. With a lower high forming, I exited 3/4 of this position

while holding all my MSB.

US Dollar

The Dollar has not been near as weak as reported. In fact for the last year it has been in a trading range of 94-101. It is now back at the lower end of that trading range.

It is the Canadian Dollar which has been weak and is now rallying with commodity prices. A Dollar rally from this higher low is probably the most likely near term outcome, especially given the negative press for the dollar.

Central Fund Gold and Silver

CEF is consolidating, but it is up 25% in three months. Here I am not so sure but I am sure I made some money on my last trade.

The Bottom Line

I suspect a top in the markets is more likely than a continuation of the uptrend. I mean this is as good as it gets.

It is amazing just how fast the market went form 10% bullish to 90% bullish, this is typical bear market behavior.  Yep, the Year of the Monkey and Volatility. There was a great deal of money to be made if indeed one had the courage to jump on the uptrend after Feb 11.

 

Social Mood

Pop Trends Price Culture

As I write on Saturday afternoon, protests have caused a massive traffic jam at a Trump Arizona rally. This will only cause Trump supporters to be more determined.

Desperate Tactics Sowell points out the folly of  the Republican Establishment Strategy to oust Trump. All of this speaks to the extreme negative social mood we have written abut in this space for the last couple of years. It is here now and it is certainly ugly. 

dennislelam@gmail.com

The Market Perspective bases its information on techniques and sources that have been found to be reliable in the past, and The Market Perspective tries to base opinions on sound judgment and research, however, we do not guarantee that future results will match past performance and no guarantee can be made that advice will be profitable. The Market Perspective accepts no money for stock recommendations and is purely motivated by its own research in recommending any stocks. Put another way, the responsibility for decisions made from information contained in this letter lies solely with the individuals making those decisions. The editor and persons affiliated with The Market Perspective may at times have positions in securities mentioned. Nothing contained herein represents an offer to buy or sell securities. The Market Perspective encourages investors to be diversified, and to maintain sell stops and risk control over their valuable investment capital. No guarantee can be made to the accuracy of text or charts.

 

 

 

 

 

 

 

2015 A Transition Year for Stocks

Weekend March 19, 2016

(Interview) Learn Why 2015 Was a Key Transition Year for Stocks
Steve Hochberg explains why he thinks we're in the early stages of a bear market

By Elliott Wave International

Our Chief Market Analyst Steve Hochberg talks to Moe Ansari on Market Wrap Radio. You'll hear his take on what we've seen in the markets so far in 2016 -- and why Steve thinks 2015 was a "transitional" year.

Want the rest of this 7-minute interview with Steve Hochberg?

Hear it now -- as part of our new, free report, State of the Global Markets Report -- 2016 Edition.

---

Your FREE Report: State of the Global Markets Report -- 2016 Edition This 50-page, chart-filled report may be the most valuable publication you read this year. It will help you avoid the dangerous pitfalls and spot the biggest opportunities in the year ahead. State of the Global Markets Report is one of the most anticipated annual reports for investors like you. For a limited time, we are making the report available 100% free of charge. After that, it goes to $99 per download, where it will stay for the rest of the year. Claim your free 50-page report now >>

This article was syndicated by Elliott Wave International and was originally published under the headline (Interview, 2:15 min.) Learn Why 2015 Was a Key Transition Year for Stocks. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

I Took Some Profits

Friday Afternoon March 18 2016 2 06 PM CST

Oil has gone from well up to negative today. so I sold

all my USO

all my SLV

3/4 of my CLF

 

taking profits on an up day in all

 

I kept all my MSB

 

Dennis

A Decrease in Stock Buy Backs

Wed March  16 2016

Waning Enthusiasm for Share Buybacks Signals Major Market Reversal
"State of the Global Markets Report -- 2016 Edition" (excerpt)

By Elliott Wave International

Editor's note: The following article was adapted from the just-published State of the Global Markets Report--2016 Edition, one of our most anticipated annual reports for technically minded investors and analysts around the world. We are making the first 10,000 copies of this $99 report available 100% free. Click here to get your free copy now >>

In the May 2008 issue of The Elliott Wave Financial Forecast, three months before the infamous Lehman Brothers bankruptcy, we cited a sudden loss of enthusiasm for company buybacks as another component of a major market reversal.

We noted that for companies issuing buyback announcements "cheers invariably turn to jeers" as the stock market reverses from up to down.

Our evidence included the following headline from 2001: "Buybacks Hit a Wall of Fear."

The 2008 version from The Wall Street Journal read, "[From] Buyback Boom To Buyer's Remorse."

Well, here are some more recent headlines:

Stock Buyback Deals Can Be Stinkers (USA Today, Nov. 5, 2015)

The Stock Market Has a Buyback Problem (Fortune, Nov. 18, 2015)

Surge In Stock Buybacks Good or Evil? (The Wall Street Journal, Nov. 22, 2015)

As the following chart shows, through the first three quarters of 2015, buybacks were the strongest since the record year of 2007, when stocks made a major top.

Until recently, share repurchases were considered a positive development for companies. But a widely circulated report from Research Affiliates says buybacks offer "little overall benefit. 'Buybacks are simply a mirage.'" Fortune concludes, "Investors might soon regret the buyback binge."

They always do, and the outbreak of skepticism is a sure sign that the falling share prices that invariably compounds those regrets is very close.

Originally published Nov. 6, 2015.

To continue reading insights like this, we recommend you get the 50-page State of the Global Markets Report--2016 Edition 100% free. See below for details.

---

Your FREE Report: State of the Global Markets Report -- 2016 Edition This 50-page, chart-filled report may be the most valuable publication you read this year. It will help you avoid the dangerous pitfalls and spot the biggest opportunities in the year ahead. State of the Global Markets Report is one of the most anticipated annual reports for investors like you. For a limited time, we are making the report available 100% free of charge. After that, it goes to $99 per download, where it will stay for the rest of the year. Claim your free 50-page report now >>

This article was syndicated by Elliott Wave International and was originally published under the headline Waning Enthusiasm for Share Buybacks Signals Major Market Reversal. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

Crude Oil at 20 Year Support

Tuesday March 15 2016

Crude oil is finding some support at a 20year support level.

USO Two Hour Chart

But it has come too far too fast on the two hour chart. Looks lik 9.0-9.4 will be a support area.  That would still be above $30.

 

GM Ford Materials look Toppy

Tuesday March 15 2016

An article in the WSJ warns of weakening sub prime auto loans. This is another clue of a weakening economy. Car sales have been strong due to low interest rates and cheap gasoline, not an expanding economy.

GM and Ford make lower highs on strong sales, whoops.

 

And I suspect the short rally in materials, gold, and oil is ending.

I have the major ETFs for banks, brokers, tech, retail, materials in one folder. Scanning them many look just like this

as do GM and Ford above.

Last week and this week are transition weeks to the markets turning down.

Related articles

Auto loan delinquency spikes in Alberta, Saskatchewan

The Name is Bond, James Bond

Monday March  14 2016

BBC plays Bond

CLF, MSB jump on Mine Re Openning

Monday March 14, 2016

CLF and MSB jump over 10% on mine re openning.

We made the point this weekend that the two hour chart looked ready to revers, sure enough there is always a fundamental to justify the technical signals.

Make that 15 and 22%

A Look Back at 2000-2002

Weekend March 13

We are seven years out from the Mark Haines March 9, 2009 stock market low. Haines was a commentator on CNBC and picked the low for the move on air. He died two years later.

Our analogy for the current stock market decline is the period from Year 2000 when the Dow topped to the low of  2002.

I left the chart full size of easier viewing and left the PAR SAR buy sell signals on the main chart as well as the CCI ups and downs on the lower panel.

From the top in early 2000 I can count at least 16 PAR SAR signals. This made the decline form 2000-2002 very different from 2008-09 which was just a waterfall  decline. Here the market would fall only to recover again, keeping the bull market idea alive.Indeed there are articles in the Sunday paper today that the bull market is alive and well. Let's compare today with back then.

Today

Indeed the pattern of lower highs is already developing. If this is the case any further rally this next week should end in the 17,500-17,750 area.

I eyeballed the daily and weekly PAR SAR signals. I suspect one needs a 2.5 day PAR SAR to better filter signals. The daily gives too many and the weekly generates the signal after most of the move has transpired.

Arrow added to emphasize the lower highs, General news reports are wrong, the stealth bear market is underway!

Are Stocks Topping or Just Getting Underway to Higher Levels?

Weekend March 12, 2016

We had thought this past week would transition to a high last or next week. And then the market would roll over respecting its seven week cycle.  But at least one stop loss in the NDX was hit Friday, and another day or two of rally will surely threaten other stop losses.

We read numerous sources and here is the take from each side.

Bullish - John Murphy at Stockcharts.com

John believes the market correction ended with the January low noting many indexes held a previous support level right there. He further notes many ETFs are now crossing their 200 day moving averages. Discretionary goods are strong. And materials  from gold to copper to silver to oil are all moving up. That helps emerging economies that export commodities and it is strengthening the currencies of those countries.

Bearish - EWI, Insiide, Tom McClellan

No doubt they would all point out that confidence has been restored after quite a rally leaving most indexes  relatively close to their former highs. Indeed the WSJ notes this rally has almost erased the losses so far this year. This group argues that all sorts of cycles are suggesting a 40 year top.  And that we have concluded five waves up again generating positive sentiment, the same sort that accompanied the tops in late fall 2015.

We shall see this next week.Of Two Minds in the bearish camp

CH Smith notes this rally does not pass the smell test.

NYSE A/D

But our most reliable indicator, the weekly NYSE A/D shows no signs of a top, at least not yet.

% over 200 BAR Weekly MA

This one chart offers a strong case for John Murphy's position. The market tested the low twice. On the second test it made a slightly higher low.

Now the percent of stocks is over 50% and the 13 BAR MA is turning up. This supports John's idea that the market has successfully bounced off long term support.

Dow Industrials

And the DJIA just flashed a weekly PAR SAR buy signal, note blue button at the bottom of the chart. On the re test of the 15500 low, the CCI displays a much more shallow low.

CLF

CLF has corrected half its advance.  Not shown but the MACD appears ready to turn up.

Natural Gas ETF

The Nat Gas ETF is bouncing along with oil and everything else. Could this have been THE bottom for nat gas?

USO the ETF for Crude Oil

USO is already over bought after the ten dollar (39%) rise in crude oil prices. If crude oil falls, will it take stocks back down with it, I would guess so.

CEF

Central Fund for gold and silver is consolidating after  a good rise in gold. Note the down day Friday.

Materials ETF

The materials ETF regained its 200 day MA. This is buoying emerging markets and the currencies of those countries.

EEM with Currencies at the Top

EEM is surging and is over bought. The Emerging Market currency fund is at top and  it is showing strength.

The Bottom Line

Stock indexes are nearing previous peaks set last year but so far have established lower highs. Oil and EEM are already over bought. Gold is as well.

Social Mood

After a 1500 point Dow rally the headlines are gushing positive mood.

Stocks Gain for Fourth Week in a Row

Fear of Missing Out is Turning Cash into a Sin

Oil Rises to Highest Level in Three Months

Stocks are Recover Most all of their Year Losses

I am guessing stocks simply moved further in a rally amid a bear market than I thought they would. But this week will tell which direction the market wants to go.

 pop trends price culture

dennislelam@gmail.com

The Market Perspective bases its information on techniques and sources that have been found to be reliable in the past, and The Market Perspective tries to base opinions on sound judgment and research, however, we do not guarantee that future results will match past performance ands no guarantee can be made that advice will be profitable. The Market Perspective accepts no money for stock recommendations and is purely motivated by its own research in recommending any stocks. Put another way, the responsibility for decisions made from information contained in this letter lies solely with the individuals making those decisions. The editor and persons affiliated with The Market Perspective may at times have positions in securities mentioned. Nothing contained herein represents an offer to buy or sell securities. The Market Perspective encourages investors to be diversified, and to maintain sell stops and risk control over their valuable investment capital. No guarantee can be made to the accuracy of text or charts.