The Market Perspective

Markets Up for Wed Openning

Wed May 25, 2016

A reader writes as to why our view is changing on the markets. Indeed, Tom McClellan just changed his opinion in his latest letter last night. He was in the bear camp and now states the bull market roars on.  John Murphy at stockcharts feels more confident that the long 'correction' has ended. Let's look at the Transports for clues.

Dow Transports

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The blue dots are the PAR SAR buy sell indicator. It flashed a buy on the Transports yesterday.

If this index registers a weekly close over 8100, the bear case is in disarray. That would be 419 points a 5.5% move from here. That is certainly not out of the question.

Arcbest ARCB

This Arkansas based trucking company was referenced in the refining article we linked yesterday. It completed a five wave advance and then an ABC correction. It is a bit worrisome that it made a new low, a higher low would be preferable, but at least we have a PAR SAR buy signal.

BRKB Warren Buffet

BRKB popped over its 50 day MA and while not shown also generated a buy signal on the PAR SAR.

The DJIA was up about 86 when I last looked it is now 6 31 AM CST pre market openning.

 

 

Stock Markets Rallies

Tuesday May 24, 2016

Monday I closed all shorts and added these positions.

 

Today I added Cullen Frost common at 64.83 closing at  65.13 and Globalscape at 3.32 closing at 3.40.

I will be adding a spreadsheet to track our success or lack there of.

NASD Fund

Okay from the top, DDM is the dow fund and QLD is the QQQ fund. The ratio chart shows QLD outperforming DDM. So smaller caps are taking off.

Tomorrow we will add positions in UWM and SAA,both small cap funds.

In the middle section we got our first PAR SAR buy indicator so we are getting in at the start of this wave up. This should be Wave 3 following Wave One from February 9 low and the Wave Two low created the last two or three days. So the largest part of the move lies ahead.

Apparently Wall Street thinks rates are rising as bond prices fell today and bank stocks rallied.

XLF Financial Sector

 

Wave Three to the upside is just getting under way. Not shown but this also generated a PAR SAR buy signal.

It is time to buy the refiners.

Holly HFC

I like Valero VLO and Tesoro TSO but Holly HFC is the best bet. Read the link above and say to your self,

HFC pays a 4.74% dividend.

More tomorrow, and keep checking back,
now that we have identified an excellent entry position we need to make the most of it.

And what the heck, let's buy some Warren Buffet

Finally gold and silver are in decline as the dollar advances, a better buy lies ahead...

 

 

 

 

Market Remains Quiet

Monday May 23, 2016

Today was one of the quietest trading days of the year with little change from Friday.

End of day indicators will be posted later but I doubt there will be much additional useful data from Friday.

120 minute chart DIA

I count five waves down from the top. The PAR SAR is giving a buy signal from the reversal Friday.

And  notice this is about where the market found some support in early April. We shall see.

NYSE A/D

From the upper panel down

RSI bouncing at the 50% level

the index itself bounced of the 34 day line

MACD could be moving sideways,

Tom McClellan suggesested than in election years the market holds up into July, that may be the case here.

A Trip to England

Weekend May 22, 2016

Advice on Flying Across the Pond

The academic conference in England had not only accepted my proposal, they invited me to join the keynote speakers in a final panel discussion! So the trip was on. If you are considering a trip to England, here is my suggested travel map.

Handily, my former TWA pilot friend knew that British Airways flies non-stop from Austin to Heathrow/London. And one arrives in just nine hours. No matter where you are inTexas, I suggest you drive to Austin to catch this flight.It is non-stop, a mere nine hours, and you miss the DFW or Houston nightmare of mega airports.

I also took the advice of another world traveler, upgrade he said. I honestly could not tell at the travel agent office what the next upgrade level meant. As it happens, it means quite a bit. Only the Brits could come up with this descriptive phrase, premium economy. That sounds like an oxymoron, but it means eight seats across the Boeing 777 rather than twelve. The twelve across might be termed steerage, remember those poor souls at the bottom of the Titanic? This looked much the same. The upgrade, also known as World Traveler (sounds sophisticated right?), means you have legroom, enough room to recline the seat back, and a lot more wiggle room in your seat. Trust me this is worth every one of the $350 dollars each way. And by the way, you do have a kindle paperwhite loaded with all manner of books to read, right? If not do not board the plane, you are clearly not serious about boredom avoidance.

So the flight breaks down like this. Once on, begin reading. The stewards bring drinks and pretzels. About two hours later you have a choice between two meals. After that, pick one of the many movies or TV shows, displayed on your own personal viewer on the back of the headrest on the row before you. Then snooze a couple of hours with the seat reclined, handy light blanket and pillow included. Then window shades up, only two hours left.   BA did run out of coffee, only a thimble full for each of us but still a great flight.

British public transportation puts we Americans to shame. I bought my bus ticket at 10:18 and the lorry arrived at 10:25. Two hours later I was at my destination. Understand that the taxis are in que at both the bus and train stations. I took the taxi to the train station to journey to London. And by the way, you will need to arrive at the Paddington rail station to catch the direct express back to Heathrow from London.   Everyone could not have ben more friendly. The Scarman Conference Center at Warwick University was a model of what such centers should be for al universities.

I spent the last 48 hours in London but frankly would have stayed at the University to observe British classes knowing what I know now. The breakfast buffet at Scarman was just too good to miss.

Space London was at a premium. The Comfort Inn room had just enough space to maneuver around the bed and the bathroom was surely designed by Winnebago.

A photo of Buckingham Palace, Big Ben, and such is as good as the real thing, case closed. The British Natural History Museum, the Victoria and Albert historic museum across the street is not to be missed. And finally Harrods, the famous British department store, makes one wonder if even London can support such luxury.

London ain’t cheap, the taxi rides even for a short hop were ten pounds which is fifteen dollars. And the express rail from Padding to Heathrow was $30 pounds which worked out to two pounds per minute. Exchange dollars for pounds at your bank before leaving.

But, a great trip, everyone was helpful, never got lost or deterred, and the direct flight from Austin to Heathrow via British Air is the way to go, for World Traveler types like you and me that is.

Blimey guvnor, is that really nachos on the appetizer menu at Warwick University Varsity Restaurant? It is, and that folks, is what globalization is all about.

Market May Be Finding Support for an Advance

Weekend May 22, 2016

We have a clear five wave pattern to the upside which is replicated in the various indexes themselves. This suggests the market found support at the previous fourth wave formed in early April.  In that case we are probably in for at least a re test of the previous highs.  The market finally had a positive week for the first time in four weeks.

Weekly Dow Diamonds

The PAR SAR blue dots make it clear this will be a decisive week for the market. A break below 172.18 means lower prices while a move up surely means

higher prices.

Summation Index

This indicator is still headed down  But a strong day Monday could begin a bottoming effort.

Interest rates still seem indecisive.

Crude Oil and the Dollar

All the MAs have turned up suggesting the low is in place for oil. The US Dollar shown at top is rising. And we have

previous resistance at $50. I am looking for a pullback here.

Natural Gas

Looks like natural gas will follow crude oil with an important low.The MAs are converging which is usually the sign of a change in trend.

Bottom Line

We will update Monday on the trend in stocks. We reported the huge short position Soros has, but have no way of knowing if he has hedged that.

Crude oil needs a rest and natural gas is trying for a break out.

 

Social Mood

For some reason I am not finding the latest update on 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 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.

 

As Predicted, Dollar Surge Curbs Oil Prices

Wed May 18, 2016

In our last weekend update I suggested that an expected surge of dollar strength would likely put a cap on energy and metals prices. Well here is the

confirmation via the WSJ Energy Report.

MARKETS

Oil prices ticked lower on Wednesday pushed down by a stronger dollar as investors awaited key U.S. supply data.

International Brent crude remains near the $50 a barrel mark after a multi-week rally as outages in Africa and Canada and production declines outside of the Middle East region fuelled expectations of a tighter supply.

A stronger dollar ahead of the release of the latest minutes from the U.S. Federal Reserve pushed oil prices down on Wednesday. The Wall Street Journal Dollar Index, which tracks the greenback against a basket of other currencies, rose 0.4%. As oil is priced in dollars, it becomes more expensive for holders of other currencies as the dollar appreciates.

“[Oil prices] kept dancing around the $49-level… as markets are eying the latest oil inventory report this afternoon,” said Michael Poulsen, oil analyst at Global Risk Management. Read our latest market report at wsj.com.

 

Long Term Count on Apple

Wed Mayh 18, 2016

Apple

Yesterday the WSJ reported the newbies at Buffet's fund bought Apple, big time. It could be that a Wave A low is occurring now after completing the five wave advance from when

Jobs re joined the firm in the late 1990s.

Twitter and Square One Lead Tech Sector Down

Wed May 18, 2016

What You Can Gain From One Tech CEO's $355 Million Loss

By Elliott Wave International

Exclusive invitation: We just released a new subscriber-level summary report for independent investors, The Coming Cold Reality for Tech Stocks. If you have money in tech, you'll want to read this report, right now. Learn more and get your free copy here >>

"How to lose $355 million in two weeks" -- it's a lesson tech CEO Jack Dorsey just learned the hard way. This from a recent MarketWatch article:

Shares of the two companies that Dorsey founded and now runs -- Twitter Inc. and Square Inc. -- have plunged since their quarterly reports, wiping away a combined $3.7 billion in market value. If it's any consolation to investors, Dorsey is feeling their pain, as he personally has lost a combined $355 million on his stakes in the companies.

The article went on to blame the companies' lackluster quarterly statements for the declines.

As a result, on May 9, mainstream analysts dropped their ratings from Hold to Sell ... just as Twitter hit new all-time lows.

Their position is a stark contrast from fewer than six months ago, when analysts pointed to the IPO market as "proof" that there is no tech bubble. This from a Nov. 10, 2015, Fortune article:

Square IPO Price Proves There Is No Tech Bubble

A real tech bubble, many say, can exist only if irrational exuberance has extended to the public equity market--where most tech company value lies--and that Square's relatively modest pricing expectations are evidence that it has not.

Our analysts disagreed. This from EWI's Financial Forecast Service on Dec. 4, 2015:

... the dissipating interest in IPOs actually fits perfectly with the early stages of a bear market. We know because we listed "a record rate" of IPO cancellations under "More Signs of a Burst Bubble" in [The Elliott Wave Financial Forecast's] May 2008 issue, shortly before the bottom fell out of stock prices.

So not only were the experts saying just the wrong thing at just the wrong time, our analysts here at EWI were preparing subscribers for what virtually no one else saw coming: declining tech stocks.

And in this month's issue of The Elliott Wave Financial Forecast, part of EWI's flagship Financial Forecast Service, they're doing it again. This from our latest analysis:

A year ago, as the NASDAQ Composite finally managed to rally to a new all-time high for the first time since 2000, many technology enthusiasts insisted that this time the rally was on "more solid ground than its counterpart in 2000." EWFF countered that bullish imaginations were inflamed nearly as much as they were then and stated that the "technology euphoria [of 2015] was powerful enough to fuel another outsized retrenchment by the NASDAQ." As the index topped in July, EWFF noted the dominance of a few tech heavyweights and stated that the sector was "falling in line with the nascent bear market." At the end of the year, the champagne corks were still popping and EWFF quoted widespread expressions of a "limitless belief in technology." While sentiment toward technology "remained effervescent," the January EWFF observed the narrowing participation of tech stocks and stated that it was a sure sign that the technology sector was ready for its next sobering.

Since then, many of the core myths that underpinned various high tech "story" stocks have been revealed as dubious propositions.

Now, if you were a Financial Forecast Service subscriber, you could continue reading right now the special section our editors' titled, "Technology Wakes Up to a Cold New World."

But since you are not yet a subscriber, here's the next best thing: Read the entire special section inside our new free report for Club EWI members, The Coming Cold Reality for Tech Stocks.

The Coming Cold Reality for Tech Stocks -- a quick 5-minute read -- includes our latest research, logic and perspective on the tech industry and the U.S. stock market (the stuff our subscribers pay for exclusive access to every month).

If you have a financial interest in tech stocks, you don't want to miss this free report. Follow the link below to have the report sent directly to your inbox, 100% on the house.

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Soros Doubles Down on Bearish Bet

Tuesday May 17, 2016

Soros fund owns 2.1 million S & P puts!

And the fund has increased its bets on gold and silver.

A Messy World - Negative Mood on the Loose

Weekend May 15, 2016

A Messy World

Brasília (AFP) - Brazilian President Dilma Rousseff was suspended Thursday to face impeachment, ceding power to her vice-president-turned-enemy Michel Temer in a political earthquake ending 13 years of leftist rule over Latin America's biggest nation.

A nearly 22-hour debate in the Senate closed with an overwhelming 55-22 vote against Brazil's first female president. Pro-impeachment senators broke into applause.

_________________________________________________________

Puerto Rico has defaulted for the second time in five months, as the island struggles with massive debt obligations and a flagging economy.

Last week, the island's governor said it would pay most, but not all, of the nearly $1bn (£681.6m) it owed, using extraordinary financial measures.

Governor Alejandro Padilla has called for the island to be granted bankruptcy rights like those on the mainland.

Overall, the island has a total debt load of about $70bn, which Governor Padilla has said the island cannot pay.

___________________________________________________________

Donald J. Trump and Hillary Clinton barreled toward a general election showdown on Tuesday night as they dominated primaries in Pennsylvania, Maryland and other Eastern states, piling up enough delegates to close in on their parties’ nominations.

Looking past their fading rivals, the two even taunted each other in dueling election-night events. Mrs. Clinton chided the Republican’s penchant for harsh language by saying that “love trumps hate.” Mr. Trump was more bluntly dismissive of Mrs. Clinton, saying her appeal boiled down to her gender.

“Frankly, if Hillary Clinton were a man, I don’t think she would get 5 percent of the vote,” Mr. Trump said.

The bull market is exhausting itself. The FED is raising the odds of the economic tail risk they are trying to avoid. It is an ephemeral sugar high. This moment reminds me of he period before the 2008 financial crisis.

Stanley Druckenmiller, Billionaire Trader, WSJ Thursday May 5,2016

All markets, both energy and the stock market, take their cues from internally generated mood of the market participants. A read of the above recent news items causes -me to conclude that mood is decidedly negative.

Just a few years back, Brazil was the mover and shaker in the popular BRIC four country Brazil Russia India China combo. Today impeachment is front burner in Brazil amid the Petrobas scandal. Russia reels from lower energy prices leading to a collapse of the ruble. India is probably in the best shape but still suffers from regulatory strangulation. China seeks to draw attention away from an economic slow down by projecting military strength into the South China Sea. Expect Russia to ramp up its military excursions again for the same reason.

Puerto Rico, a US Territory, is now officially bankrupt. Forty years ago in the market cycle New York, a major city, missed debt payments. Now we have an entire Territory on the rocks. Yet this seems to go unnoticed.

And finally with majorities in the House and Senate, the Republicans have an apparent candidate that none of the Republican ‘establishment ‘ is behind. Welcome to 2016.

Energy

West Texas Intermediate broke to a new high on Wednesday. It climbed to $46.75, a five percent increase in one day. We recently noted in this space that inflation was coming back. Perhaps we need to make that stagflation. Stagflation was a term coined in the 1970s. It denotes a combination of a lack of job growth, inflation, and a stagnant stock market.

Still the rise in oil price has not been enough to stave off oil patch bankruptcies. Eighteen energy firms filed for Chape3r 11 bankruptcy protection in March and April, the most since prices began dropping in the summer of 2014. Some seventy firms have filed for bankruptcy in the US and Canada since prices fell below $100. We predicted this in that no one will buy these firms as that would mean assuming their external debts. It is far more advantageous to buy the assets in bankruptcy court without the debt burden.

Natural gas futures have roared back from the early March low of $1.50. Now trading at $2.17, futures need a weekly close over the last high at $2.30 to affirm the uptrend.

Stock Market

The ten-week rally in stocks from the February 9 low appears to be ending..   Watch the action in Apple shares which have officially entered bear market (down 20%) territory. Recent support is $92.50 while the 200 week MA is at 89.73. Taking both those levels out would be quite negative.

Essentially the large stock indexes have gone nowhere since the highs of last November. The bell weather Transports are also signaling weakness.

Market tops exhibit diminishing breadth with fewer new highs and a lessened leadership.   Puerto Rico is not alone with its municipal outsized debt, Chicago and even San Antonio and Houston also have serious future underfunded pension obligations.   As we said, the tenor of the markets has changed. We look for a new lows the last week of June.