The Market Perspective

Stocks Hit New Highs, Energy Struggles for Support

Weekend July 31 2016

O Two Minds Says This Is a Delusional Market

the Transports have peaked and rolled over. The Fab Five are screaming tothe upside,  GOOGL,FB,PCLN,etc

But be sure to read Of Two Minds who sums this up well.Our take is that the DJIA topped and is now rolling over to a Fall Low.

Interest rates are slowly increasing with bond falling.  The FED is Lost on what to do.

Energy - Bullish Percent

I suggested this chart might  be of more help in spotting a bottom.Looks like it is finding some support at 55

Crude Oil

Our thinking has been that below 40spffered some support, that appears to be  at  least starting.

XOM

Be sure to read Spencer Jakab's column on the majors on page B 10.  All  the international oils had lower profit

reports on friday.But Exxon invested $5.2 B during the quarter, paid out $3.1 B in dividends,and earned  $1.7 B.Something has to  give here.  XOM Price now dropping.

Gold Stocks Bullish  Percent

Maximum optimism exists in gold as  well.  Gold Stocks have soared from zero to 100%, and  gold  has advanced   $300.

The sell off may wait a while but this is no time to  buy. 

Bottom Line

We still believe a top in the markets is in the making.

Stocks  should begin rolling over in earnest soon with lower prices this fall.

It is not time  to buy gold or silver.

We will monitor the energy markets for signs of a bottom.

Social Mood

Pop Trends Price Culture

I am having severe keyboard problems, more this week  when I  get   a new keyboard.

We will continue to update on energy.   But   support appears  to be coming in here.

Doug Schoen's column on page A 11 follows Kim Strassel's conclusion on Friday that this  is  all about HIllary versus Hillary.  It is hers to  lose.

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.

Related articles

The Way We Were - 1950s Television for Kids

Weekend July 29, 2016

It Was Howdy Doody Time

 

We received favorable comments on our column showcasing the 1960s for an upcoming High School Reunion. Today we examine the kid’s shows that undoubtedly influenced the baby boomers.

Television had been around since the 1930s but only reached mass saturation after WW II. Most sets were in the northeast and shows originated in New York City. It was a time of creativity in the new medium. Television responded with numerous live broadcasts focused on children. Here is the profile of a few.

In the same way that I Love Lucy set the standard for all sitcoms that would follow, Howdy Doody did the same for children’s programming. Radio announcer Bob Smith created the show. Smith did the voice of Howdy on radio. He later began the television show on December 27, 1947 until September 24, 1960. Howdy was a puppet at first and later, with the rest of the cast became a marionette.

The show offered a cast of puppet characters including Heidi Doody, Howdy’s sister, Mayor Phineas T. Bluster, and Inspector John J. Fadoozle among others.   The show had a western theme with Smith portraying Buffalo Bob. Today political correctness finds problems with naming football teams after Native Americans. But then the show featured Chief Thunderthud, hea of the Ooragnak (kangaroo spelled backwards) as well as Princess Summerfallwinterspring. Typical of the time, neither was played by a Native American.

It was a live broadcast and featured audience participation. Yep the show opened with Buffalo Bob asking, what time is it? The Peanut Gallery, forty actual kids in the audience would respond, Howdy Doody Time! The phrase Peanut Gallery is now part of the American lexicon. It was so popular that the syndication named Charles Schulz cartoon of Little Folks, Peanuts, to the displeasure of Schulz.

One of the characters was Clarabell the Clown. This part was originally played by Bob Keeshan. In 1-952 Keeshan left over a salary dispute to become Captain Kangaroo on CBS. Doody was an NBC property.

Captain Kangaroo became the longest running children’s series of the time airing from October 3, 1955 until December 8, 1984. The Kangaroo theme related to the large pockets in the Captain’s jacket from which he would produce the inevitable carrot, the object of Bunny Rabbit’s desires.

The show took place in the Treasure House or the Captain’s House. Keeshan interacted with both human and non-human. Mr. Green Jeans was a regular as were Grandfather Clock and Bunny Rabbit. A slew of celebrities appeared over time. From Shari Lewis and Lamb Chop to Carol Chaning to Sonny and Cher.

The puppet theme continued in Kukla Fran, and Ollie. This show aired from 1947 to 1957. Fran was Fran Allison, a radio comedian and singer. The show featured Kukla, the puppet leader as well as Ollie, Oliver J. Dragon.   Creativity was on display with other characters including Madame Oglepuss, a retired opera singer, Beluah Witch, a liberated witch, Fletcher Rabbit, resident fussbudget, Dolores Dragon, Ollie’s younger cousin.

Interestingly the show did not have a script but was ad-libbed. The show was so popular that when the time was cut to 15 minutes in 1951, letters of outrage poured into NBC. With sponsors like Life Magazine, RCA, and Ford Motor Co., the show clearly had its adult fans as well.

Both Howdy Doody and KFO attempted color broadcasts as early as 1953 using the NTSC compatible color system.

And then there were the animated series. Our favorite was The Rocky and Bullwinkle Show broadcast from 1959 to 1964. This was another show that surely appealed to adults as well as kids with its droll brand of dry humor. The animation was intentionally crude even by the standards of that day, which lent more appeal to the show. Since it was the cold war era, the nemesis of Rocky and Bullwinkle were played by Boris Badenov and Natasha Fatale. Other features included Peabody’s Improbable History. Peabody was as dog accompanied by his pet boy Sherman as they raveled through time to re-live famous events with a humorous take. Fractured Fairy Tales was just that, an irreverent take on famous fairy tales. Dudley Do-Right was a parody of classic melodrama.

Unlike the Disney productions the show was not famous for animation but for quality writing incorporating puns, satire, and humor. Mr. Peabody is currently starring in a spin off series.

The ability to imagine humans interfacing with imagined puppets and marionettes paved the way for all shows that followed including Sesame Street featuring Miss Piggy and Kermit the Frog.

And that’s the way we were, starting in 1947.

Dennis Elam can be reached at dennislelam@gmail.com

Refiners Give It All Back

Thursday July  28 2016

Yesterday we thought the refiners were finally breaking out to the upside. Instead it was a fake out to the upside. On Wednesday all half dozen I track violently reversed.

Tesoro TSO

 

The same pattern appears to be repeating, the price makes a nice two week run and then collapses at or near one of the MAs.

Yesterday was a  3.5% drop. And MACD is topping as well  And at top on balance volume is headed lower. All told, these are negative signs for the refiner complex. Lower prices ahead.

WTIC

The  13 and  34 bar exponential moving averages provide reliable turn points. This was the case on the upside from the February low.

Now it is the case on the down side from the June high. If the 38-42 area is going to be support it needs to happen soon.

WTIC dropped 2.33% and Brent was down 1.59% yesterday.

Is energy leading stocks again?  The stock market is  marking itme rather than going up. With the two conventions ending the markets will soon sgtart worrying about the election, and for good reason.

Refiners Rally on Good Earnings

Tuesday July 26 2016

We have been watching the refiners for some bottoming action.  Today they rallied on better earnings

From the top, Tesoro Valero and Holly all rallied today, VLO reporting good earnings.

Time to buy the refiners.

Perspective, look at this daily chart for the three

HFC in particular has been cut in half. One can see this looks like bottoming action from a very big drop.

 

Fresh Lows for Crude

Tuesday July 26, 2016

Crude drops to fresh lows.

We have been anticipating a test of the low 40s and here it is.

Bullish Percent

The daily bullish percent chart has not bottomed yet. Note previous highs in February at  50%.

If the chart takes that level out we could go much lower, for now that is support.

Daily Crude Oil

Here are the next two logical support levels.But anyone with a chart can see this. Strong dollar is not helping here.

XLE the energy ETF is just now coming off a terrific run. XES energy service ETF has not done as well, mostly sideways.

We will update daily given the importance to our readers.

Dollar Rallies Lowering Commodity Prices

Weekend July 24, 2016

Tell the Truth

Excessive SPY Shares Suggests Two Much Bullish Sentiment

I just lost all I had written rather than e do all this

 

The Bottom Line

 

Stocks rallied into an expected  high this past week. The Transports refuse to confirm with a new high, watch the transports.

Bond prices are falling, and we noted the one and five year yields are rising. We suspect the high in bond prices has been seen with negative yields in Europe.

The  US Dollar rallies taking gold, silver, CRB and potentially oil lower.

Energy may have support in the low 40s but is still falling.

Natural gas is falling as well.

Shanghai has only weakly rallied from its 50% collapse in the last year, not good.

Social Mood

Pop Trends Price Culture

I was in a location to watch Bill Mahr's highly slanted to the left show on HBO this past weekend. The gulf between the two parties will not be eliminated. The Democrats literally think the Republicans are nuts. The Republicans think the same.  We can only guess if there is enough negative sentiment against the direction of the country to help Trump. Trump like any non-politician lacks even a smidge of political instinct, hence he fights back at Cruz how after all lost the race, why bother?  At any rate, on Mahr's show the lefties clearly do not think society at large is in danger. Clearly the Republicans do. The wrong Trump is running. If Trump Sr had the political instincts of say  Joe Kennedy Sr, he would have been lining up Donald Jr (what a terrible name for a politician) to run. Donald Jr is half Hillary's age and would have millenial appeal. And would nto be likely to say any random silly thing that popped into his head. But Donald Sr like all rich arrogant individuals I have dealt with does not think that way.

It will take an army of voters to beat the Clinton machine backed by the media.

 

 

 

 

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.

Related articles

Oil update via Weekly Newspaper Column

Has the Rig Count Bottomed?

Halliburton HAL seems to think so. CEO Dave Lesar notes that rather than being sent to their home yards, 26 drilling rigs were re-deployed in the last few weeks. He suspects the US rig count has bottomed out.

When bad news seems to be the only brand available, companies will often take advantage of just that. This is known as taking ‘the big bath’ in accounting terminology. And HAL did just that this past quarter. The idea is to search the books for every conceivable, problematic hanging by a thread event, and write it off. If we are experiencing a loss, make it a darned good one. If every so-so project is written down to zero, the thinking goes, if anything goes right, the next few quarters should be profitable.

HAL was denied its acquisition of Baker Hughes. HAL booked $3.52 billion of costs related to the failed merger. And in true Big Bath style, followed that with another $423 million of other losses.

Another 9%, about 5,000 workers have recently received pink slips. The overall employment level now stands at 50,000, down from a peak of 80,000 during the recent boom.

All of this resulted in a loss of $3.21 billion or $3.73 per share. But you would never know that to look at the stock price. HAL has risen $28 to $46+ pulling back to $44.28 today. Indeed its chart rise looks quite similar to the price of oil itself. This is not surprising given HAL’s number two status in the energy service business.

In this space we speculated that oil would pull back from its recent high of $52 to the low 40s. On the continuous chart crude is at $45.75 on the Thursday close. We peg support at the $40-42 level.

And as always we note that globally, oil is priced in dollars. Since May the US Dollar has risen from 92 to 97. Typically commodities priced in dollars fall when the dollar rises. Given the recent world turmoil, from Turkey to you name it, a rush to US Dollars is not surprising. This puts the US Dollar back above its 50 and 200 day moving averages.

If HAL is correct, recall they never saw the drop in the oil price coming, the refiners are worth a look. Holly Frontier HFC dropped to $22.25, rose and now trades at $24. Valero VLO dropped from the low 70s to $47 and has risen to $51; it is a bit over bought here and could fall back to the 50 day moving average at $49.50. At these prices the stock offers an almost 5% dividend.

Natural gas futures soared form $1.90 to $3.00. Price is pulling back now. Support appears to be at $2.60 and then $2.30.

If crude holds the low $40-42 range, we should expect a resumption of the up trend the next few weeks.

Let’s look at a missed opportunity. The two political parties are offering a stark contrast for the future of America.   Elizabeth Warren and the President both claim ‘you didn’t build that.’ Their view, along with Al Gore and Nancy Pelosi, is that the government essentially underwrites all progress.

In contrast the Republicans are still trying to project a view of something different. And two recent convention speakers could have done that but did not.

In 2012, Clint Eastwood gave his ‘empty chair’ speech ending with a crude taunt to the President. Monday evening, Melania Trump foolishly entrusted her husband’s advisors to write her speech. A hastily cribbed couple of paragraphs from Michelle Obama’s speech gave free reign to all sorts of plagiarism charges, from the original fiction writer, Brian Williams, now at MSNBC.

Here is the missed opportunity. Both Clint and Melanie rose from obscurity to the height of success in the most difficult of arenas, entertainment and fashion. Both are self-made success stories, who unlike Elon Musk, did not depend on government subsidies. Yes they are both attractive individuals, but both industries are chock a block full of attractive people. And few make it to the top.

That is the story each should have told. I just finished reading Lucy and Desi by Warren Harris. At the end of his life, Desi comments that in no other country could a sixteen year old from Cuba have achieved the success he did. Clint, Melania, there’s your story, try to get it out in the future.

Dennis Elam is an accounting professor at Texas A & M University San Antonio. Dennis.elam@gmail.com

HIgh in Place for Now?

Friday July 22, 2016

Various stock indexes probably made highs this week, whether that was THE high remains to be seen.

Transports did not make new highs. So Dow Theory wise, we have non confirmation.

This looks like a bullish peak. As we get closer to the election a pull back given the uncertainty seems likely.

Transports Fall Short of New High

Transports are not confirming with a new high. Transports typically lead in market changes.

Oil is holding the mid to low 40s for now. Nat gas has turned down, next low likely in August.

I am out of town at my high school reunion this weekend, but not much else to say now.

 

Market Top?

Wed July 20, 2016

One analyst predicts lower oil prices near term.

Refiner Update

Tuesday July  19 2016

This weekend I suggested that Holly HFC needed to find support half way between its recent high and low.

Monday it looks to have done that.

HFC Two hour

A brief spike below the 50 bar MA found buying interest.  The different refiners are at different degrees of trend. But HFC looks like a buy here.