The Market Perspective

Market Rallies on Positive BREXIT Poll

Monday Morning June 20, 2016

6 32 AM Central Time

Well so much for the weekend update, Apparently wave two has ended as the dow is up 200 points this morning.

but it was not able to hold those gains, I think I will stick withe original scenario of still looking for a low in two weeks.

Weekend June 19, 2016

The unusually dovish comments from the Fed on Wednesday showed a lot more pessimism on the U.S. economy. There also appears to be a growing fear that central banks are losing their ability to boost global stocks or economies.

John Murphy, Stockcharts.com

Is a Chance of War with Russia on Tap?

Central Banks are out of ammunition

DJIA Monthly

It has been tough to determine just where we are and I regret any confusions caused. Here is the monthly, weekly and then

two hour chart to better pin point where we are. Above we are on a monthly PAR SAR buy signal indicating that Wave Four has ended. That means we are in a final "Wave Five. My count of the fractals may be off but it does appear that the markets are range bound at least for now.

 Dow Industrials Weekly

The double bottom at 15,500 is probably the bottom of Wave 4 on the long term chart shown below. In that case Wave One of Five

peaked just over 18,000. The DJIA is now in perhaps Wave Two of Five. The low is expected the last week of June or the first week of July.

Until the DJIA breaks above the previous high 18,351.36 or the low form last August at 15,503.01, we are stuck in a trading range.

The PAR SAR is rising but is  210 points short of a weekly sell signal. We should be alert this next week for to detect if that level is breached.

DJIA Two Hour

Here is a depiction of the progression of the Fifth Wave.  Wave one of five ended at the April 19 high. We are now eight weeks into the current ten week cycle.That cycle should bottom the last week of this month. Waves A and B appear complete meaning we are now in a final Wave C headed to wherever the bottom will be.the market fell hard in the last week of that cycle ending August  15 and February 19. Brace for a repeat. With the BREXIT vote and numerous other social mood negatives, that wold not be surprising. See our social mood section for a headline run down.

Transports

The view of the last chart, expect fireworks shortly to the downside, is re enforced by the weekly PAR SAR sell signal just flashed

 in the Transports. Note the lower highs here by the way.

 

DJ Utilities and  Thirty Year Bond

The bull market in stocks began in 1982. At that time the bond market was making a bottom in price. No wonder, yields were around 12% on treasuries and even higher on mortgage backed bonds. With double digit yields guaranteed, who was interested in stocks, even XOM with a 10% dividend. But lower yields shifted money to stocks. Now a FIB 34 years later, European yields have gone to zero. That is way lower than I thought yields would go. But surely that is the end of the bond rally. The thirty year bond is in the lower panel while the Dow Utilities are on the main page.   IF both utilities and bonds have topped in price, that suggests the broader averages will be or have made tops already.

Energy

This could be an A B C pattern with A just ending and B up.But the overall trend is still up. And price bounced right at the 50 day MA.

Is this a fifth wave beginning in oil?

Central Fund CEF

Central Fund looks like it has nearly completed five waves up. That makes sense as gold bottomed before oil so it should top sooner as well.

The Bottom Line

Stocks should make a low the last week of June.Then Waves Three, Four, and Five need to complete to attempt another call for a top in stocks.The fact that bonds are at all time highs along with Utilities also speaks to a high somewhere in the near future. Transports has NOT made a new high meaning we are still technically on a Dow Theory Sell signal.

But this suggests a trade able low due over the next two to three weeks. Expect a big drop followed by a big recovery.

Crude oil pulled back to 46 but not 44. Not sure here. Gold looks like it is toppy. If the Dollar firms, both gold and oil should fall.

Social Mood

Apple Hits Hurdle in China

Yahoo CEO Stumbled

Russian Track Team Banned from Olympics - see lead link to war between US and Russia

51 State Dept Officials Want Assad Out, Call for more Violence in Shria

Obama to put Britain at Back of Que of they vote to BREXIT

On the Other Hand

Finding Dory is doing quite well at the box office

This mix of mood would align with a further advance in the market.

Pop Trends Price Culture

 

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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.

 

 

 

 

 

 

 

The Brexit Vote

Friday June 17, 2016

Brexit: "The Vote Heard Around the World"
Our new free report gives you our well-researched opinion on Brexit -- and the markets

By Elliott Wave International

The campaign for the June 23 referendum on whether or not Britain should remain a member of the European Union has just hit a horrific milestone. CNBC reports that,

"A British lawmaker was shot to death while meeting with constituents Thursday in an attack that halted campaigning over whether the U.K. should leave the European Union.

"Cox, a 41-year-old member of the opposition Labour Party, had been campaigning to keep the U.K. in the European Union."

While the police are still investigating the motive, it wouldn't be a stretch to imagine that it had to do with the lawmaker's position on Brexit. After all, this event would have a huge impact on the future of the EU, and passions are running high.

The financial markets are seen to be particularly at risk if Britain votes to leave. As our May 2016 European Financial Forecast put it,

"... the market's Brexit reaction was deemed to be so critical that Bloomberg conducted a special 30-minute webinar on the subject. Entitled 'Market Response: 'Brexit' vs 'Bremain,' Bloomberg brought together four leading economists to pour over the 'financial market implications of the vote.'

"Clearly, the recent headlines show that the bulls and bears identify strongly with the view that the historic vote will severely affect the country's financial markets.

"But is it true that the vote will cause upheaval in the financial markets?"

You may be wondering the same thing.

That's why we've put together this free report, "The Vote Heard Around the World," featuring EWI Chief European Market Analyst Brian Whitmer.

Brian has been tracking EU break-up signs since he first made a forecast for the Union's coming unraveling back in 2009.

This new report comes right out of Brian's May European Financial Forecast. In it, he asks and answers investors' most pressing questions -- your questions.

Have your Brexit questions answered now -- from a unique, Elliott wave point of view. Get a free copy of "How to Invest for Brexit" now >>

 

Long Term Update

Weekend June 12, 2016

Transports Monthly

This count suggests we have had four of five waves. A fifth wold follow to new highs. That would cause the

market to make a new high in a year or two.

Transports Weekly

ON the other hand, I don't see a fourth wave A B C correction here.

Transports Daily

I suggest the action of the Transports over the next few weeks may serve to clear up the picture.

For the time being, we are in summer doldrums and at least a correction of significance began this past week

in oil and stocks.

 

The Ten Week Cycle Re Asserts, Oil Begins Correction

Weekend June 10, 2016

The Flight to Safety

Bernanke Should have Raised Rates in 2013

Well we did warn you starting Tuesday and then on Thursday outright said we sold FLS and CFR and sure enough, the markets dropped Friday.

The NASD is dropping twice as fast as the Dow.

Stocks

 Google

Hmm, the MAs are coming together, we have lower highs for the last few months, a change in direction on tap?

Apple

Most stock mutual funds own Apple. And this does not look favorable to the bulls hoping for the next big  thing from Apple.

Price has failed twice to exceed the 200 day MA.  Now it is failing to exceed the 50 day MA. We have lower lows and lower highs.

There is a  positive comment on Apple in the WSJ today but I don't see it in this chart, do you?

I believe I suggested a target of 60 for Apple a few weekends back...

The Ten Week Cycle on the S & P Percentage Chart

August to November

November to February

February to April

April to presumably the end of June

Those are the last ten week cycles which are clearly visible on the above chart.

The rally from May to June convinced many (one only had to watch CNBC with the sound off to see it on the faces) that the bull market was still in full force. But the action of the last couple of days denies that.

Transports

Seven weeks have passed since the high of April 19. That leaves a mere three weeks to get to whatever bottom

will be seen the last week of June. Notice the last decline during January, it was steep. We can expect this one to be the same, steep.

US Dollar

Well two days may not make a trend but the collapse in oil prices suggests the Dollar is about to take off.

Continental Resources

What a rally!  And this is Wave One! Support surely lies at the convergence of MAs near 30.

Natural Gas

UNG looks overbought on the three month chart. So I went back three years. Things are just getting underway.

Natural gas has lagged oil so it may be a bit before it pulls back but dollar averaging into a position here looks reasonable. The upside is considerable.

The Bottom Line

I suspect stocks topped April 19. They have used up seven weeks casually moving sideways to up,  causing most to believe the bull market is in great shape. Eye the headlines listed below if you think that is the case. A ten week low is due the last week of this month June 27-July 1. If the previous low at Dow 15,500 is taken out, the bear market will have truly arrived.

Oil prices fell Thursday Friday also marking the top of a 56% move up from the February low. Support is likely at $40-44.

Gold and silver have launched. It will be interesting to see if those prices remain up as the U S Dollar rises.

Around the world other stock markets have topped which is additional evidence a top is taking hold here.

I will be visiting West Texas Monday through Wednesday so no updates until my return.

 

 

Social Mood

Let's scan the headlines from the Weekend WSJ

US Friendly Fire Kills Syrian Allies

Brexit Vote Splits British Political Duo

Peru-"this has the characteristics of a governability crisis" regarding the new 77 year old President

Ousted Brazil Leader's Backers Stage Protests

The last two days I have been putting together what will become our first MOOC on socionomics. More on that as we progress to the start date.

But I was discussing the mix of mood and focused on  Mohammed Bouazizi.

Mohammed set himself on fire after the police confiscated his vegetable cart, for no good reason.  The ensuing outrage brought then so called President Zine el Abidine Ben Ali to the hospital. Mohammed lived from December 17 to die January 4. the dictator's 23 year rule was over.

Now notice how negative mood has spread across the entire world. Here in the USA we have two candidates with the highest negatives ever. The race has already descended into crass name calling. And the conventions have not even begun!

This continuation of negative mood is likely to bring world stock prices much lower before a bottom is seen.

______________________

Pop Trends Price Culture

This podcast continues to grow in popularity.

 

[email protected]

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.

 

 

 

 

 

 

 

Dollar Shows Signs of a Bottom

Friday June 10, 2016

Here is the story on higher oil and stock prices. The US Dollar has been in decline since early  February. And Feb 9 marked the bottom in stocks and oil.

So stock and oil prices rose priced in a cheaper dollar. Now the US buck looks to be making a higher low. And stock prices are sliding again today.

I posted that I sold several positions two days ago.  Our original thought was to expect a ten week low the last week of June. Looks like we are

on track for that to happen.

WTIC Price

The average advance for the first leg of a new bull market in oil since the 16980s is about a 56% jump. That is about what has happened thus far.

The 40-44 area looks like reasonable support. That is the  50-61% re tracement area and where the MAs will likely converge.

At that point we will look to establish a serious long position in energy.

Taking Some Profits

Thursday June 9, 2016

Taking profits in FLS, CFR, MSB, RIG, CLF

I don't know if this is THE top but sentiment was certainly high yesterday as the market re touched 18,000

Still the potential for a low at month end, I see Soros is takin gpersonal charge of trading at his firm expecting lower markets

as we reported here earlier.

Transports Hourly

Tuesday June 8, 2016

Dow Transports Hourly

The PAR SAR generated  a buy signal last Friday with the blue dots under the price.

It sure looks like it will click to a sell signal this afternoon unless the Transports really take off again.

Transports gained some  250 points from the buy signal, which is enough to constitute a fifth wave, I would think.

Sentiment is  wildly optimistic with CNBC headlining Dow 18,000, highest since November on the tv screen.

Point is, I am wondering if it is time to take short term profits and just sit back.

Our friends at EWI thought the DJIA would hit a new high but that would just be another 200-300 points on the DJIA to accomplish that.

Still oil is strong.

Ah the lazy hazy days of summer, what to do...

Update 1302 CST, the hourly Transport Chart just flashed a PAR SAR sell signal, is that significant, is that the top for now, hard to say.

Transports Make New High, DJIA Sells Off Last Hour

Tuesday June 7, 2016

Typepad was out for a bit this morning so I sent an e mail. If the Transports took out the last high at 7830, the chance of a deep

low would be lessened. the Transports did just that but the DJIA sold off hard the last two hours.

DJIA

 

The pattern is a bit different but here too we see five waves up. The fourth wave low is a mere 300 points below at

17,700. We shall see how this plays out. We could get a pullback to work off this overbought condition, see MACD

and then a set-up for a buy in a couple of weeks.

 

Dollar Plunges, Asia Demands More Oil

Tuesday June 7, 2016

A couple of articles in the WSJ today suggest that Asia, particularly India, is helping in the increased demand for oil.

And the plunge of the dollar last friday has stocks and oil at higher prices.

US Dollar

FLS was up a full dollar yesterday and while well above its $34 spike low, it surely headed much higher.