The Market Perspective

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THursday June 15 2023

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2 Sectors to Watch

Wed June 14 223

 

Will These 2 Sectors Lead the Stock Market Lower?
This key sector continues to be "fragile"

By Elliott Wave International

Although it doesn't feel like it sometimes, the U.S. stock market has been in a downtrend since January 2022.

The reason it doesn't feel like it is because the S&P 500 has been in a narrow trading range between about 3700 and 4300 for more than six months -- going back to at least November.

Some observers believe a narrow trading range will persist (Reuters, May 24):

Stocks set for range trading as central banks near end game: Reuters poll

Unsurprisingly, some believe that if stocks break out of this trading range, it will be to the upside.

The strong rally on June 2 -- when the Dow Industrials surged more than 700 points -- certainly lends credence to that bullish opinion.

Of course, there's the possibility that more upside is ahead.

However, in addition to using Elliott wave analysis, Elliott Wave International regularly reviews dozens of market indicators and we see a lot of red flags for the market.

If, indeed, the bear market is not over, which sectors will lead the way lower?

Well, one of the prime candidates is the banking sector.

Back on March 17, the Elliott Wave Theorist, a monthly publication which covers major financial and cultural trends, showed this chart (wave labels included for subscribers) and said:

It is well to keep in mind how fragile the banking system is. ... [The chart] shows that the banking sector is emerging as a downside leader.

As I write on June 5, there's nothing about the index's price action which would alter our March analysis.

Another sector to keep in mind is technology.

As the June Elliott Wave Financial Forecast, a publication which covers major U.S. financial markets, noted:

The NASDAQ's recent outperformance is dramatic relative to the market's most senior stock index, the Dow Jones Industrial Average.

Of course, the NASDAQ is dominated by big tech names. If they finally reverse, keep in mind that sectors which lead on the upside often turn around and lead on the downside.

A key way to keep on top of the NASDAQ (as well as other stock indexes) is to employ the Elliott wave model.

If you're unfamiliar with Elliott wave analysis, read Frost & Prechter's Elliott Wave Principle: Key to Market Behavior. Here's a quote from the book:

All waves may be categorized by relative size, or degree. The degree of a wave is determined by its size and position relative to component, adjacent and encompassing waves. [R.N.] Elliott named nine degrees of waves, from the smallest discernible on an hourly chart to the largest wave he could assume existed from the data then available. He chose the following terms for these degrees, from largest to smallest: Grand Supercycle, Supercycle, Cycle, Primary, Intermediate, Minor, Minute, Minuette, Subminuette. Cycle waves subdivide into Primary waves that subdivide into Intermediate waves that in turn subdivide into Minor waves, and so on. The specific terminology is not critical to the identification of degrees, although out of habit, today's practitioners have become comfortable with Elliott's nomenclature.

Get free access to the entire online version of this Wall Street classic by signing up for a free Club EWI membership.

In case you don't know, Club EWI is the world's largest Elliott wave educational community and members enjoy complimentary access to a wealth of Elliott wave resources on investing and trading.

Get started by following this link: Elliott Wave Principle: Key to Market Behavior -- get free access.

This article was syndicated by Elliott Wave International and was originally published under the headline Will These 2 Sectors Lead the Stock Market Lower?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

INDU Not Confirming XLK

Tuesday June 12 123

Purple INDU going sideways, XLT up up and away poered by eight stocks, the top draws closer

Tuesday June 12 2023

 

Garth brooks Makes Bud ;Lite Statement

 

Garth Brooks doubles down on selling Bud Light at new bar: 'Inclusiveness is always going to be me

 

The iconic singer is getting ready to open his entertainment space, Friends In Low Places Bar & Honky Tonk, in Nashville, Tenn. Some of his neighbors, like conservative bar owner Kid Rock, stopped serving Bud Light amid the controversy. However, Brooks explained he won't do that.

 

"I know this sounds corny," he told Billboard last week, "I want it to be the Chick-fil-A of honky-tonks … I want it to be a place you feel safe in, I want it to be a place where you feel like there are manners and people like one another. And yes, we're going to serve every brand of beer. We just are. It's not our decision to make. Our thing is this, if you [are let] into this house, love one another. If you'r

 

expeltive deleted

there are plenty of other places on lower Broadway."

The Country Music Hall of Famer addressed the controversy on his Inside Studio G livestream on Monday. Brooks said he saw people "wanting to burn" his CDs and merch.

"I get it, everybody's got their opinions. But inclusiveness is always going to be me," the singer shared. "I think diversity is the answer to the problems that are here and the answer to the problems that are coming. So I love diversity. All inclusive, so all are welcome. I understand that might not be other people's opinions, but that's OK, man... they have their beliefs, I have mine."

 

 

Not A New Bull Mrket

Is It a New Bull Market?

Me, I’m going with the Dow Theory.

Richard Russell author Dow Theory Letters

Today a headline in the WSJ announces, the S & P 500 Starts a new bull market!  As this column has noted and the article does mention this is in large part due to a handful of companies posting outsize gains.  These comprise the usual suspects of Amazon, Tesla, and Invidia.  The weighted SPX hit a new high of 4304.  The equal weighted SPXEW is 400 points below its February high.

The Dow Theory states the Transports and Industrials both must make new highs to signal a new high or low. Transports are around 1500 points below their February high. Hence, we do NOT have a Dow Theory signal using the equal weighted Dow.  This is ironic considering Charles Dow began the Wall Street Journal.   The same paper also declares Europe is now in recession.

It’s been an interesting week.  Trump is indicted for having classified documents at his home.  This is the first time a former President has been indicted. It seems odd that the DOJ would do this considering Biden is desperate to run against Trump. More legal entanglements make Trump’s nomination less certain.  No indictments over payments to the Bidens or Hillary’s e-mail server have been made. These are sure to be discussed in the House.

Thew EW SPX and the price of crude oil both continue sideways.  The Saudis cut oil production one million barrels per-day but the price has not changed.

The next market worry are loans of commercial real estate.  The problem is two-fold.  First, workers are not returning to the office post covid. Firms are already allowing workers to locate where they want or come in to the office say three days a week. The result is that many firms will not renew leases when they come due.  The second worry is that amid the low interest environment fostered by the FED, many mortgages became interest only balloon notes.  Interest only was paid during the mortgage. At maturity the borrower planned to either sell or roll to another mortgage. Now neither possibility seems realistic.  The result is likely to be billions of dollars of foreclosures, but who will buy near empty buildings?  From this standpoint, commercial offices now resemble shopping malls as more buyers went on-line to shop.

I expect a stock market resolution this month.  The EV government mandate is weakening as the reality of mine pollution and reliable batteries and their high cost are more apparent.

For now, expect sideways pricing in stocks and crude oil.

Monday June 5

My entire energy service screen is red meaning all stocks are down, same for energy.

This seems odd given the Saudi decision to cut production on MBD over the weekend.

 

This is why I waited to see what happened Monday. DJIA is off65 zt 9 52 CST

spx equal weight

 

We, and other sites, hve noted equal weight spx hs been declining while spx has been increasing.  The big move up Firday was in reaction to the debt ceiling.

Is is  a head fake or something more substantial, my guess is a one day wonder.

Friday Picks For June

Friday June 2 2023

My overall view of the markets has not changed, we should top in the NASD this month.  However recall Warren Buffet is buying occidental like 25% of the company.

There is more than I am up  to adding  this afternoon so check back this weekend. Here is a start, energy and energy service bullish percent is in the buy territory as is copper and CRB index.  While the world is goig  wild for TECH which is at its highest ever valuation, look at these charts. Energy and Energy service bullish percent are in buy territory,  CRB and Copper are comming off corection from their March highs. As the Administration is bragging that inflation is down, it is surely down temporarily, they may be a great contrary indicator.

While energy is over sold let's watchese stocks below for now.  The top I refer to in the open comment is being confirmed so the chance the entire market will sell off is strong.

 

I will be a adding more content.  Here is my short list for now

NR

Insider Stock Buying Reaches US$2.3m On Newpark Resources \

Insider Stock Buying Reaches US$2.3m On Newpark Resources \

PTEN

CLF

MSB - 27% dividend

FRO - 29% dividend

I sill like the NR complex esp the preferred

 

Macy's COstco Sound //warning

Friday June 2 2023

hAnother early warning indicator

Tom McClelan on Gold Predicting Oil Price

Friday June 2 2023

Gpd {redocts Oil Prices

A top in oil prices in November. a bottom next May-August