The Market Perspective

CAT NVDA Are Giving Early Warning Signs of a Market Peak

Tuesday Jan 29 2019

CAT and NVDA announce lower earnings, DJIA drops 208 points.

CAT

 

NVDA

CAT is an industrial bell weather and NVDA is the same for semi onductor chip makers. Both toppe with the overall market Oct 3 and ave been in downtrends sine.

A9 and 13% drop yesterday is probably signalling bad news for the markets.  I m expecting a top in most indexes this week.

Transports

The Transports are a more sensitive index to the economy than the Industrials. Take a look, what do you see?

Transports peaked  in late Sept before the Industrials. Now TRAN is failing at its shortest moving average, the 50 day. The other MAs are converging which is usually a pre cursor to a change in trend.

Market Low Right on Time

Monday Jan 28 2019

I was expecting a market low this Wednesday, It is arriving right on time given the sell off in CAT.

Take a look at AMAT, looks like a  great weekly set up for a buy.

Markets in the DMZ

Friday January 25 2019

 

The big picture is that the fall 4,000 point DJIA drop ended December 24. Since then stocks, and oil have rallied together as they fell together.

Stocks attained the half-way point around 24,400. That is half-way between the low of 22,200 and the high around 26,600.   Friday morning stocks are up again at 24,615 and oil is trading eleven dollars of its low at $53.03.

 

For some reason the stock market replicates oil price movements ten years later. Looking back crude oil bottomed on December 24, 2008 closing at $39.39.   In an amazing repeat, crude oil closed at $42.53 exactly ten years to the day December 24, 2018. As noted, stocks and oil have rallied since.

 

I had thought a resolution in the two markets would be more clear by now but both are still in a sort of No Man’s DMZ, off the lows but not taking out previous highs.   The Energy ETF XLE and bell weather Apache APA are trading at their 50 day moving averages. Which is to say well below their 200 day Moving Averages.  Again I worry that Energy Service XES is failing at its 50 day MA.

 

Stock indexes were squeezing into a more and more narrow wedge and rally have yet to resolve that pattern. Usually such patters resolve to the downside.

 

Semi-conductor stocks are a key component of the technology index.   Thursday the SOX index of those stocks jumped nicely up 5.73%. That is a big positive.

 

Looking through the list of ETFs representing the overall economy, we see most well below 200-day Moving averages. The defensive XLU Utilities is the exception, closing over 50 and 200 day moving averages. But that is indeed cautionary as XLU is a defensive area where money flees the riskier ETFs.

 

The rally from December 24 has gotten ahead of itself resulting in a short-term overbought situation.   That suggests a pull back and test of lower support for stocks and energy shares this next week.

 

Nancy Pelosi only knows she beat down George W. and arl R. by saying no to every overture. And she is doing the same now. Trump had to give up delivering the State of the Union. Last night Judge Napolitano gave the Wall issue clarity. He points out the Wall would be built on private land in Will Hurd’s Texas district. But the land owners all oppose a Wall on their land. So even if Trump got the money he would face years of litigation.   So it seems the bet on Shutdown to get a Wall will fail. The lack of resolution is a huge negative regarding market sentiment.

 

For now we watch for an outcome, hunkered down in the Market DMZ.

 

Whither BRKB

Friday January  25, 2019

Berkshire Hathaway is surely the bell weather stock as to market sentiment. Take a look.

Price has re traced exactly 50% of the entire fall decline. It is below all three moving averages. And it has yet to rise above the resistance line form teh July lows.   Same for MACD in the lower panel.  At top on balance volume is not expanding .  Looks like a pull back is in store for next week.

 

 

Stocks Waiver at Half Way Point

Wednesday January 23, 2019

 

We suggested stocks would encounter resistance half way back to the October 3 high. That is exactly what happened Tuesday. This  suggests the  10% rally from the Dec 24 low as in fact a bear market rally, vigorous but prone to end quickly. Note the DJIA stopped right at the uptrend line.  MAs are converging which is always a prelude to a change in trend.

Volatility

volatility jumped right at support, a whopping 16%. And PMO is bottoming, again this looks like  a resumption of the downtrend.

Hedge A Bear Fund

This is a perfect set up for a long entry and it is a bear market fund, one that advances as the averages decline.  Note higher highs and higher lows, the sign of an advancing market.

Bullish Percent tops just under 40%

And here we have lower lows and lower highs, the opposite of HEDGE, looks like the ten year bull is  ending.

Short TermView

On the other hand, the one hour chart back to the December low looks more like a correction, note the late rally of  150 points into the lose.

Bottom line the jury is still out on correction versus bear market.

Stocks Reverse at 50% Re Tracement Level

Tuesday January 22, 2019

 

NYSE Advance Decline Line

 

Today marks the fourth failure of the A/D line to vault the 61.8% re tracement level. Note RSI rolling over at top and MACD topping at bottom.

This suggests that the vigorous rally from Dec 24 was in fact a bear market rally.

 

VIX bounces at support

 

This is ominous.  VIX has bounced at support suggesting it will attack previous resistance at 36. VIX is up, MACD is bottoming, RSI is turning up below 50, all this is very negative.

SPX

 

SPX if failing just above the 50% level. All this adds to a picture suggesting this really is a bear market.

Scan the headlines in the  WSJ today. There is little positive mood. China sags, PM May cannot find a way out of Brexit, Gridlock abounds in the USA,

Hedge Two Hour chart

 

I am adding Hedge shares tomorrow.  IO suspect the counter trend rally has ended from Dec 24.

 

 

 

Weekend January 19, 2019

The current rising wedge is worrisome. It has risen a bit more than the usual 10% bear market bounce. And PMO loks better. The  200 day MA at 271 will be a big test and price is now back to a down trend line not shown.

Weekly SPY

Weekly charts are far more important.Here we see SPY dropped bout 50% of the entire advance from the February 2016 low which would be a normal correction. I am  tending towards the normal correction given the turn up in the weekly PMO at bottom.

 

Daily Advance Decline

 

The daily Advance Decline has broken the down trend line.

Weekly Advance Decline

 

The weekly certainly appears to be turning up.

Weekly Advance Decline Close Up

 

From the top

RSI is above 50

A/D line is above all weekly MAs

Weekly MAs turning up

MACD turning up as is the histogram

All this is very positive

 

Cullen Frost Bank Daily

CFR is the best managed independent bank in Texas.  It is the only large independent which did not merge ore get taken during the real estate crisis and oil collapse of the  1980s.

Here the daily indicators of MACD and RSI are getting way over bought with the big break out above the down trend line at 97.5 resulting ina  2.18% gain just Friday.

 

Weekly CFR

The exponential MAs are displayed in Fibonacci fashion 8 13 21 34. Price now faces the final hurdle of the  34 week MA.

But PMO at bottomand RSI crossing 50 both look very promising. Doe you see the five wave pattern form May now complete in late December?

Clearing the lst high mark around 102.5 will be another positive. if this is correct a return to the old high of 120 is not out of the question.

Social Media SOCL

This sector looks to be recovering. FANG rises again.

Gold

 

As stocks are recovering  gold has begun a correction. A 13.5 month low was due in the January February time period and rthat is setting up now.

Support for silver is at teh 14.80 level.

Kirkland Lake KL and Wheaton are the two strongest gold miners

A pullback to  22 would be  buying opportunity.

More later on the markets.

What Worries the Gurus at Stockcharts.com

Weekend January 19, 2019

 

One needs to remember that bear market rallies can be most impressive, before they fail at the down trend line.

At right we have a rising wedge formation, and this has the gurus at stockcharts.com worried that a collapse is coming.

A /D Line Turning Up

Wed January 16, 2019

The Weekly Advance Decline line is now above the MAs, this is a very positive sign.

Daily A/C

The daily may be getting ahead of it self but is also positive.

Bullish Percent

 

The MAs are turning up and the index is above them , another positive.

Energy Rebounds in Similar Fashion, Looking Toppy

Weekend Jan 12, 2019

 

Yes the oil price has advanced 10 dollars but the share of energy and service firms are still in firmdowntrends.  Consider the bullish percent graph above, still well below its downtrend line.

Chevron CVX

 

Energy has followed or led the general stock market. And  here we are again with energy stocks completing an A B C move up and now against resistance. PMO is topping on the 2 hour chart.

 

This promises to be an interesting week.