Weekend January 14, 2018
Consumer Confidence is at a 17 year high and we have multiple triple digit advance days. One fund manager suggested in Friday's WSJ that the tax act would greatly increase corporate earnings. While P/Es are high now, he suggested higher earnings would lower P/E ratios allowing for a continued rally. And he noted that many are worried about a market top and tops never happen when we are worried about them.
Transports versus Utilities
this is a ratio chart of Transports versus Utilities. Utilities are a defensive sector.The out performance by Transports shows the market is embracing growth not yield. And rising interest rates are pressuring Utilities as well.
Five Year Yield
Five year yields have already quadrupled form the 2013 low of .5%. Rates are clearing the entire 2009-2017 basing period. Expect the rate of change to accelerate as the 2.5% resistance level falls.
Five Year Yield Arithmetic Scale
Here you can see yields are challenging the long downturn in rates. This downturn actually extends to 1982 though I am only showing 20 years. I wonder who the FED is going to sell their uber low rate bonds to? The new FED Chair better hurry, there won't be many bids for low rates later this year.
TBF A fund that rises with interest rates
TBF is yet another example of a completion of wave one up and well, wave two is ending. The convergence of the MAs is the clue. This could be a very profitable LONG term hold.
GSG Goldman GSCI ETF
Here is the potential for commodity inflation. It is huge. An every Central Bank around the world has been fueling this potential with low to zero rate bonds issues.
Japanese Yen versus the Dollar
The Yen is soaring relative to the US Dollar. This too will cause commodity prices to rise as the dollar falls.
Cliff Natural Resources
Wave One up and Two Down look complete, hop aboard
Baltic Dry Shipping Index versus Frontline FRO
Frontline is a Norway based ocean oil shipper paying a high dividend. It may be turning up with the BDO.
XMA.TO is starting to rise. I is like the metals ETF XME but with more gold miners.
Gold
Gold has been basing since 2013.Now the MAs are converging which they do before a major trend change. Taking out 1375-1400 will get things going.
Better pick out gold and silver related shares now, look how fast other sectors have taken off.
Silver
Silver is lagging gold. Silver needs to take out $20 to really get going here.
Silver Miners SIL
Here is another chart completing a second wave down. Notice how the market exploded from January February 2016.It is hard to position once things take off. Better to prepare now.
Energy
Apache APA finally broike through overhead resistance. It is likely to be on a tear just as Anadarko has been.
Dow ndustrials
The Dow Industrials are rising faster and faster, that is clear from the rate of change indicator at bottom. And price is pulling the upper Bollinger Band higher and higher. Normally this would be an indicator of extreme danger. An article in the WSJ this past week indicated investors have stopped purchasing put protection. Puts are optios which rise in value when the market declines.
Stocks remain on a tear.The big surprises this year are oil prices at $80 and interest rates climbing much faster than anyone expects. Gold and silver plays should be accumulated now. Other sectors which have exploded tell us that it does not pay to wait to get on board.
Social Mood
The Socionomics Institute has concluded high horsepower vehicles appear at market tops.We have listed numerous examples in this space. With gasoline prices rising, FIAT Chrysler gives us the $89K Jeep Trackhawk.
Car and Driver reports its super charged 707 bhp engine delivers a thrifty 11 mpg city 17 mpg highway. With a top speed of 180 mph one can dust off even the Maserati SUV.
Negative political mood hit yet another higher negative note this past week. Lindsey Graham and Dick Durbinboth claim Trump referred to African nations with a vulgar slur. Trump denies this. Both despise Trump, could they have agree before hand to have their stories straight? But the social mood point is that the atmosphere is so negative such a charge can be made.
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