The Market Perspective

Social Mood Lurches Negative

Weekend Sept 28 2019

Read the wiki article on Watergate. From the loss of DJIA of 41, stocks peaked at 1040 by 1973. In the next two years of Watergate, the market gave back about half that gain settling in Dec 1974 at 577. The potential for trouble via negative social mood here is quite large.

https://en.wikipedia.org/wiki/Watergate_scandal

Markets hate uncertainty. We now have loads of uncertainty.

The NYSE Advance Decline index is the most reliable indicator. It is topping.

 

While still high, the bullish percent index is topping now, rice MACD, and the index itself.

NFLX will have lost 50% of  its value since 2018 if it returns to its 2000 week MA. f This is a textbook A B C correction.

TLT exhibits the same sort of parabolic run up to its top at 147.5

Have interest rates finally bottomed?

XAU

The XAU could fall back to its moving averages around 80 . That would give back half of  its recent gains.

After jumping on the Iran attack, oil has returned to the mid 50s. Energy service stocks remain mired in a huge bear market.

XLE Energy ETF is failing at its moving averages, no lack of oil supply in the world.

Sept Oct is the weakest season of the year for the stock market. Gerry Seib's column in the weekend WSJ noted that two weeks ago none of the Dem candidates were talking impeachment. In a short two weeks, all the Trump derangement group has seized on a single phone call to the Ukraine President. Bad judgement yes but hardly a high crime.  But here we go.  Expect the non-stop anti-Trump media to go bonkers over these hearings. Peolosi is not doubt reluctant to call the roll call vote in the House which would surely show just how partisan this is.

The only winner here is Putin. His strategy is to sow chaos on America and  now has just that. Congress will likely do nothing on anything substantive. And that includes the Mexico Canada trade agreement.  I have no idea how that has changed NAFTA and I doubt Trump does either. The Chinese economy appears to be weakening. And so the world slows. .

It looks like Warren has taken out Biden. Biden is on record bragging ab out threatening the Ukraine prosecutor himself.

Warren is apparently too far left even for Wall Street. But all the others seem to be fading.

This only adds to the uncertainty of the next 13 months.

We have urged caution for months now. That seems better advice than ever.

 

Market Pulls back from Resistance

Tuesday Sept 24, 019

The Russell 2000 shown and Transports are the leaders and they are leading down.

All bank stocks are selling off today.

 

Markets At Seasonal Top

Weekend Sept 22 2019

Seasonal weakness typically sets in after Labor Day. Significant lows often occur in October. I am not predicting a 1929, 1987, 2008 crash low but it does appear markets are setting up for a pull back.

Transports

After ten years of advance the markets are not all going to turn on a dime.  Markets corrected last fall quite a bit. Then they rebounded into May. Since then it looks like a distribution to the late comers.  Transports were turned back on this third rally attempt. PMO is rolling over at bottom. Industrials have hit new highs but are not joined by Transports, that is not a Dow Theory Buy signal.  Russell 2000 looks like the Transports. At a minimum, prepare for a re-test of the bottom of this trading range.

Note this reversal Friday.

TLT Bonds

TLT failed to make a new high on the Wed rate cut by the FED, as Carl Swenlin predicted that was already baked into the market. we are surely making a multi-decade high in bond prices and low in interest rates.  The XLF bank ETF is rolling over to the downside as well.

FRAK

Crude oil made the front page of the WSJ Weekend after the attack on Saudi. But it does not seem to have legs.

Here is a week  long blip that did not exceed the previous high in June. Energy has been the weakest of the ten economy ETFs, I do not see that changing.

Silver

Gold and silver will continue to pullback and consolidate for the next few weeks.

Bottom Line

Look for lower stock prices in the near term.

Social Mood

Leaf through the paper and note the onslaught against Cavanaugh has been renewed. Ginsberg must be worsening health wise. Now Trump is accused of prompting an investigation  intoBiden's son, yet this is never a problem when Dems toss out unsubstantiated claims, see Cavanaugh.

Comparing this to 1973-74 it is really amazing the markets have stayed so high so long.

 

Oil and Stocks Looking Bullish

Thursday Sept 19 2019

 

Oil Pops on Attack, Bullish Mode Returns

 

Last week we noted that oil was just mired in the mid-50s, not showing any real action. Apparently that comment did not go unnoticed in Tehran. Iran launched an attack on a Saudi processing plant. That knocked the world production down about 5%. Recall that the United States has convinced most countries to embargo or refuse to buy Iranian oil. This is in retaliation for Iran’s backing of terrorists and our pulling out of the Iran nuke deal.

 

The motivation for Iran’s attack is two fold. One to increase the price of oil for what they can sell. And two, if enough production is taken off the market, some countries might be convinced to ignore the US sanction and buy from Iran anyway. As usual, Iran is the world’s worst diplomat as this comes before the start of the UN meetings.

 

But, it does appear that oil may resume a bullish trend. Momentum indicators are turning up. Three of the four moving averages I track are coming together. This usually is a prelude to a change in trend.

 

And there are other positives. Energy ETF XLE is challenging its downtrend line at $$62. Conoco COP has moved up nicely to 60 after falling from 78 to 50. The shale ETF FRAK is still sagging. The shale producers simply took on too much debt.

 

The refiners as previously mentioned bear watching. CRAK is at its 200 day resistance of $28.   The moving averages are coming together for Valero VLO and it has risen to $85.

 

While the energy sector is the weakest of the ten ETF sectors in the stock market, things are looking better there. Tech stocks, specifically Microsoft MSFT, are in the lead. Gee what a difference replacing Steve Ballmer with Sartya Nadella as CEO has made.   Small capitalization stocks represented by the Russell 2000 are challenging resistance at 1575.   The Dow Industrials are at new highs but need to be joined by the Transports for a Dow Theory buy signal. At 10,750, the previous high is 11,500.

 

I expect that will happen. This has been a better September than usual, and the pullback we expected only lasted a couple of days. Our overall outlook is positive into 2020. Yes there will be some more fall hesitation. A Dow Theory buy confirmation with a new high in the Transports will help. The NASD is already there.

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Hysteria on the Rise

Monday Sept 16 2019

Iran apparently strikes Saudi

Oil up $5+, gold and silver as well

GM workers to strike, never content that the firm is back in business

Chicago teachers consider strike

Stocks  experience  100 point modest pullback

Let things settle down a bit

WSJ notes Bolton was right about Venezuela and Iran

Energy and Financials Bouncing on a Slow Day

Tuesday Sept 10 2019

We noted Tom McClellan's suggestion that energy and financials were due for a bounce this past weekend. And Monday it happened.

XLE

The XLE bounced 2% yesterday but it has failed three times at the 200 day MA.  At bottom the down trend is clear.

So hard to get really excited until we have a reversal of trend.

XLF

XLF looks quite a bit better. We have three higher lows in price marked by green arrows. And the PMO is turning up at bottom.

I believe we have seen the low in interest rats. Another FED cut is already in the market, that has been announced on the front page of the WSJ.

 

Cullen Frost

CFR has been beaten down  on low interest rates when the FED  was talking raising rates.  The final parabolic rise in TLT looks terminal to me. And the faact that Alan Greenspan predicted negative rates for American Treaueries, well that is the kind of comment we get at market lows.

TLT

TLT has had a 30% rise this year. Considering how low rates already were, this is incredible. Incredible that so many would grab for such low yields risking being trapped in low yielding securities when rates reverse.

I suspect XLF and CFR are worth a buy here.

Finance and Energy May Have Bottomed

Monday

Sept  9 2019

This weekend and lasts i suggested that banks might be ready to take off, interest rates have surely hit bottom.

We know maximum mod occurs at the end of a move. TLT  chart is straight up moving from 100 to 148.

And for months we have noted the poor performance of energy service stocks.

Looks like all that is about to change.

More tomorrow morning

Interest Rate 4,000 Year Low

Weekend Sept  8 2019

Weekly

Look rally hard and you will see the reversal, bar reversal at right

Monthly

The bon rally dated from  1982 has finally ended.

No less than Alan Greenspan predicted negative interest rates in the USA ion CNBC,this is the kind of comment that occurs at points  like this.

 

Higher rates ahead.

 

Bullish Percent Stocks Participating Falls

Weekend Sept 8 2019

Yes the DJIA made a new high Thursday on  the usual promise that something would happen on trade. See my column in previous post. I suspect the Chinese wait this out till the election  14 months from now.

The NYSE includes all the  stocks on the New York so it is a much broader picture.  The index is in green. But the bullish percent has been falling since may and is now under 50%. This is true across the various indexes. This means declining breadth with the smaller stocks not participating. FANG is holding  this market up.

 

All e other major indexes in Europe and China have been in downtrends for months. That is not good and reflects the lack of resolution of trade and negative mood in protests  in Moscow and Hong Kong as well as new governments in Britain and Italy (like what else is new in Italy).

Even if the FED cults another quarter point, that expectation is already in the market. My guess is that we have essentially seen the low in interest rates. That would be confirmed by  a low and rally in bank stocks.

XLF

INdeed it looks like that is happening. I also like Cullen Frost CFR here.

CRAK Refiner ETF

CRAK is still in a downtrend but rallying from a lower low. It needs to clear that last high at 28.5 to reverse the trend.

Support for gold is 1375 now trading at 1515, I doubt it goes anywhere near that low.

Silver at 18..12 is correcting, 16.5 - 17 looks like support.