Weekend July 7, 2018
Rally Road sounds a lot like the structure of tax shelters back in the 1970s.
The operators bought an asset, say a railroad car, the investor got heavy up front depreciation, operations for a few years, and then supposedly the asset would be sold for a
capital gain. But funny, it never worked out like that. The operators made money and the shelter never provided anything other than part of the promise, a loss.
Stocks had a solid up day Friday as evidenced by the NYSE A/D line.
But clearly the better entry point as February. Yes we had a great jobs report, continued low unemployment but the trade tremors are growing.
Bullish Percent 150 MA
In contrast to the A/D line this chart has been correcting sideways since February. Now we have a series of higher lows. So this should support a rally of some length.
XLV Health Care and XLP Pharmaceuticals were the leaders Friday.
Financials XLF
This chart looks great, a good entry point for banks and insurance companies.
BRKB
BRKB looks much the same, it is correcting from its February 217.5 high.
BRKB overshot its February low but looks to be making a final bottom here. PMO is below the zero line which suggests there is the potential for a good rally.
And this may be as reliable an indicator as the 150 MA BP, both have been correcting.
XLC
XLC is a brand new ETF for communication companies.
Apparently money is still pouring into these stocks, whether it is rather late in the day to jump in, I cannot know but these are the Wall Street darlings.
Central Fund
Central Fund is simply a pile of gold and silver bullion in Canada.It is not a leveraged play. But with the dollar topping in the top frame, and CEF probably bottoming, see PMO in lowest panel, the gold and silver stocks may be ready for a run up.
Okay how about a beaten up sector, say China?
Sure the US and China are starting a trade war. But SSEC is down from 3500 t 2747. The ETF tha mimics Shanghai is ASHR.
SSEC is the red black bars and ASHR is the solid black line. There is a high correlation. This bears watching.
ASHR
It is not time to buy yet but certainly time to watch for signs of a bottom.
ASHR Long Term
ASHR is approaching its long term uptrend line.
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