The Market Perspective

Higher Highs

Weekend April 7, 2019

Stocks and oil made higher highs and the momentum is obvious from the indicators.

 

My weekly column warns suggests caution is warranted but the trend is up.   It is now obvious we had a geat buy after Christmas.

Transports are still supportive.

 

Interest rates are still falling. Trump thinks this is a good thing. As noted rates are negative in Germany.

CFR

Yikes I missed the buy at  92 but probably time to buy again.

XAU

Gold and XAU have corrected sideways and have not fallen as much as I thought. Still looking for a low risk entry here in April, watch April 19.

Iron Ore

Stocks are still headed  higher we may have a slight pause given the extreme bullish outlook of near everyone.

HAL

 

Energy Service may be finally taking off, note the bump in HAL>

We are still anticipating a low risk entry in metals.

Social mood remains negative around he world and especially in the USA.  Horror movies are on the rise. Pet Sematary debuted this past Thursday a re make of the  1989 version.

For a look at where social mood is, I record Judge Jeanine on Saturday night watching her opening comment the next morning.  Her show is as biting as there is and consistently rates number one on cable tv for the weekend. This polarization will eventually show up on the markets. For now the strong job report Friday is advanced as evidence things are just great.

 

 

Oil And Stock Prices Make New Highs, but Will this Last?

Friday April 5, 2019

 

Friday April 5, 2019 6:36 AM CST

 

West Texas Intermediate closed Tuesday at $62.58 above the 200-day moving average of $61.68. Prices are up 37% for the year.

 

Signs Point to Durable Rally in Oil, WSJ, Today

 

As noted in this space, oil and stock prices have moved in tandem since the December 24, 2018 low in both. Last week we suggested strength in the Transports and Small Caps (Russell 2000) might assist in a rally this past week. And that is exactly what happened.

 

Looking at international exchanges, one has to wonder.   The German DAX for example rose from 10,250 to 11,998 since the December low. But the news today is that manufacturing orders are down 8.4% from February, 2018 (Germany’s Economy Sputters). This is all the more alarming as Germany is the strongest economy in Europe. China now owns 10% of all the European Ports, part of it s Belt Road Initiative BRI. We will be discussing this in more detail in future columns.   The point being that Italy is not generating enough Gross Domestic Product to fund needed capital investment.

 

 

Option volume on the XLE energy ETF are expanding. We also noted that the XLE and XES did not seem to be broadcasting higher prices. XLE has been flat for the last month and is below its 200 day MA of $67.90. The Energy Service ETF XES at $11.77 is well under its 200 day MA of $13.59.  If an oil price rally is so certain, why aren’t XLE and XES doing better?

 

Investing in stocks sounds easy, just buy low and sell high. But this requires that one be independent of the prevailing social mood. The headlines December 24, 2018 were that some stock indexes had entered bear market territory with a 20% drop . Investors were running away from stocks. This past week one headline noted, investor scoop up stocks afraid of missing out.  This instead is sell low, buy high.

 

Just this past week Pioneer Energy announced lay-offs given the low price of natural gas.   Natural gas prices have been falling from the November 2018 high of $4.80, now at $2.64.   One has to wonder if the abundance of natural gas and falling prices will impact the optimism of the billon dollar export terminals under construction at Port   Corpus Christi.

 

Here is out bottom line. Time-wise markets are three months or one quarter of a year from the December 24 lows.   This suggests a throw over and at least a short-term high of some significance in stock indexes. This may well be the case for energy prices as well.   Once again there is no shortage of oil. And natural gas prices are already falling. We suggest caution.