Weekend February 5, 2017
Stocks moved up 186 DJIA points onthe news that Trump intends to de-regulate, banks were real lbeneficiaries
as all Obama did was penalize banks his entire term.
Transports
The Transports have yet to confirm the move to new highs in the Industrials. The Industrials and SPX bounced
nicely on Friday on the news of deregulation by the Trumps administration. Obama never met a regulation or tax he did not like and
the stellar performance in stocks since Hillary's defeat speaks to that. But the Transports and the RUT 2000 need to join in.
I am coming to the conclusion that yes a pullback is coming but it is likely to be more of a buying opportunity in mid April.
Treasury Yields
The ten year yield has consolidated and is testing the 50 day MA. RSI at top suggests it is about to start rising again, note the rocket launch form 1.8%.
At bottom we positioned the REIT ICF. All related interest rate securities have fallen with rising rates. That is likely to recur as the ten year rate rises.
Exxon Mobil
I noted in my University class that Exxon Mobil was not generating enough cash to fund investments AND pay the dividend.
An alert student asked well then who is lending them money? The answer is simply faith in one of the world's largest companies. But the market seems to be noticing the
problem. This is a poor performance.
OIl Price versus XLE
The oil price in blue is outperforming the ETF for energy stocks represented by the XLE. Why? I honestly do not know.
And the XLE is sagging as the DJIA makes new highs, again something is amiss here.
XAU
The XAU needs a pullback here.
The Bottom Line
Stocks are over bought but fund managers keep piling in fearful of missing out. Add in the positive seasonal factor and here we are at new highs. This I guess will continue until it does not.
Interest rates are surging again threatening utlities and REITs.
Crude prices are out pacing energy stock prices. Exxon Mobil not looking good.
The XAU is perhaps outpacing metal prices.
Social Mood
Robert Folsom discusses Bob Prechter's new book the Socionomic Theory of Finance
And he, Alan, and TR discuss the transfer of power in two longer podcasts
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