The Market Perspective

Get on Board for Gold and Silver

 

Thursday Nov 15, 2018

We suggested that Wave Two was ending and a much stronger Wave Three to the upside would soon begin.  That is exactly the case.

 

Here is a two hour or  120 minute chart with the wave labels shown previously on the daily chart.

Investors are catching a falling knife, buying the the morning only to see the market reverse to the downside later in the day.

 

Today is a typical example. And this is an example of socionomics in action. The switch was turned October 3.

Yesterday I put some headlines from the WSJ on the site. Even FB employees mood is sullen. Mood towards all the FANG stocks evaporated in February.

Weekly SPX

 

It's not the end of the week but the weekly chart of the SPX is not encouraging.  The rally from January  2016 appears to have ended in five waves up. SPX is trying best the 50 bar MA, I suspect this attempt will fail.

Here is social mood in action. From bull to bear in stocks in a month and a reversal in gold and the dollar on the same day.

 

 

Negative Mood at FB and Around the World

Thursday Nov 015, 218

 

Amid a plunge in the stock price, ongoing leadership turmoil and critical media coverage, just over half of employees said they were optimistic about Facebook’s future, down 32 percentage points from the year earlier, according to the survey, which was taken by nearly 29,000 employees. Fifty-three percent said Facebook was making the world better, down 19 percentage points from a year ago.

 

DJIA Drops 600 PoInts

Monday After Market Close Nov 12, 2018

 

This weekend we warned that the Transports and Russell 2000 were not confirming the new high in the DJIA. We concluded that evidence was mounting that a significant top had occurred. Today only re enforces that idea.  WE also noted world wide deteriorating social mood which came on full force today.

DJIA Turns Down

Monday Nov12 2018

This weekend we noted the non confirmation by the Transports and Russell 2000. According to Dow Theory this is very negative. Sure enough the DJIA has begun the day down.

Negative mood continues with Trump angering Macron and not attending a ceremony this weekend with the other leaders.

The fraud continues in Florida, a negative mood holdover from the Gore Bush contest  not considering Obama's Supreme Court pick and the Kavanaugh hearing.

 

Not to t a Bottom Yet

Monday Oct 15 2018

 

the charts speak for themselves.

 

Gregg Schnell on stockcharts.com compares markets around the world now as well as at past market highs. Looks like this is the HIGH.

Other Oversold Indicators

Weekend Oct 14, 2018

Copyright and membership prevents me from re printing John Murphy's spot on comments in his last update.

But to paraphrase

bond yields re rising and home building stocks are falling fast

My take, 34 years of lower interest rates forced more and more investors into the stock market

As rates rise the risk of one week 8% corrections will cause many to go back to the bank, already newspaper ads tout .752% CDs, a pittance compared to 1981 but that

was an interest rate high.

Yes the economy is strong but the stock market anticipates chnge, at market tops talking heads always claim this is a correction not a change

The fact that so many indicators have reversed so hard below February lows is surely an early warning sign.

NASD A D

One week erased the entire advance in this indicator since April.

Bullish Percent 50 Day SPX

 

Here is an example of an indicator below the February low and again in one week's time. And the MACD has yet to bottom. Only 15% of SPX stocks are in bullish formation suggesting some sort of bottom is near.

 It really took until April for the February low to resolve to the upside. So expect some erratic behvior ups and downs in this typically seasonal weak period of October.

NASD New Highs New Lows

Here is another example of an indicator taking out the February low. The multiple examples of this suggest a fifth wave top.

Cullen Frost Bank

 

CFR has been falling since  its April top and now the entire year advance has been wiped out.  No bottom in MACD yet.

 

CFR tripled from its$40 low at book value. Banks should do better in a period of rising rates. This is one to watch.

Bottom Line

Watch the XAU and HUI for a sign of a bottom this week.

Expect choppy action in stocks but the low BP in SPX suggests an eventual bounce is possible.

Not sure of the wave count but should stocks tank again, evidence mounts this is a top of significance.

Social Mood

Mary O'Grady on the WSJ Editorial Board months ago noted that Trump was making a big mistake showcasing the stock market as evidence of his success. The stock market

will go where it wants.  If the market has topped, Trump will be hard poressed to explain why amid his early successes. And rest assured the Democrats will pounce on just that. Stock prices fall seven times faster than they rise. This is thelongest stock expansion on record, none have lasted longer. All this suggests the big correction may be looming.

If the one to seven ratio is correct that means we could have a repeat of  1973-74 meltdown. It has been two years since the DJIA visited its 200 week moving average . That now lies some 5,000 DJIA points lower at 20,000.

Such a move would simply correct the last fifth wave up.Social mood is at least as divisive s it was on Nixon's re election in 1972.  We are now seeing that negative mood  migrate into the stock market just as it did in  1973. Should the Democrats take the House or Senate expect the climate to worsen.

 

dennislelam@gmail.com

The Market Perspective bases its information on techniques and sources that have been found to be reliable in the past, and The Market Perspective tries to base opinions on sound judgment and research, however, we do not guarantee that future results will match past performance and no guarantee can be made that advice will be profitable. The Market Perspective accepts no money for stock recommendations and is purely motivated by its own research in recommending any stocks. Put another way, the responsibility for decisions made from information contained in this letter lies solely with the individuals making those decisions. The editor and persons affiliated with The Market Perspective may at times have positions in securities mentioned. Nothing contained herein represents an offer to buy or sell securities. The Market Perspective encourages investors to be diversified, and to maintain sell stops and risk control over their valuable investment capital. No guarantee can be made to the accuracy of text or predictions.

 

 

 

 

 

Global Stocks Led Decline

Thursday Oct 11, 2018

There are a few notables about the stock sell off, several are mentioned in today's Heard on the Street column

Global markets around the world have been selling off for some time. Here is Europe Far East compared with the US SPX in green. It was not logical that the US would continue to out perform the world.

Such sell offs usually see what is termed 'a flight to quality' which means yields on govt bonds fall.

But bond prices failed to rise and yields did not fall, ie no flight to quality.

FANG stocks have been selling off for the last month.  As noted in recent posts, five or six stocks have propelled the NASD to new highs while most of teh NASD has been selling off all year.

Most stock indexes have not re tested 200 week moving averages since early 2016.  The uptrends are still in tact.  I would expect at least a sell off comparable to last February but really the Russell is already there down  150 poiints.

I was probably wrong to give up on gold as it is rallying today and did not get hit yesterday.  Gold needs a weekly close over  1212.   Silver probably need a weekly close over 15.

My take away is that we are headed for higher interest rates. And check out Dan Henninger's column on the lack of civility. Hillary says the Dems cannot be civil until they re take the House and Senate. So expect negative mod to continue. The fact that social mood lurched down so fast with Feinstein holding back the letter until the last minute does not bode well for the markets. With the elections three weeks off, we may not see much rally until the results are known.

New Highs

Weekend Sept 29, 2018

Tom McClellan discusses teh Hindenburg Omen

This signal was created by the late Jim Miekka, who was a mathematician and market analyst. He wanted to improve on Gerald Appel’s “Split Market Sell Signal”, which occurred whenever both NH and NL exceeded 45 on the same day. The adjustments which Miekka made accounted for the growth in the number of issues traded since the days when Appel first introduced that signal, and Miekka also added some other filtering criteria.

I regularly feature Tom's comments but this one is of particular interest. There has been a new record of HOs going all the way back to  1988.

There were 12 HOs just before the February mini crash. Now there have been 10 in September. We urge you to read and notice the chart Jesse Felder created going back to 1988 contained in Tom's update.

NYSE A D Line 10 Months

The ten month chart illustrates the sell and buy signal of last February.  Now this daily indicator is failing again, let's look up close.

NYSE A D Line Three months

This needs to improve qucickly. Recall that October is a prime month for market setbacks, 1929, 1987, top in Fall 2007.

This bears a close watch.

NYSE Index

While the DJIA and Transports have hit new highs the NYSE is lagging quite a bit.

5 Year Yield

Interest rates are on the rise and in a hurry.

 

Silver

Note the big 42 cent or 2.95% spike in silver Friday. Has this market finally seen a wash out and reversal?

West Texas Intermediate

WTIC keeps hitting resistance in the  1970s.

US Dollar

 

The US Dollar has yet to really break down. This is holding price advances in metals and crude oil priced in dollars.

The Bottom Line

We are in the dangerous seasonal part of the year for a stock market break down. Interest rates are headed higher. We are patiently waiting a resolution of the US Dollar to track the next move in metals ad oil.

Social Mood

The 44 minute response by Judge Kavanaugh shows just how far basic civility towards a judicial nominee has fallen.  While Dr. Ford could not remember anything but Cavanaugh's name,, not the place, date, how she got there or returned home. He is quite specific even to a  remarkable 982 calendar. No doubt Dr. Ford believes what she has to say but no one else she names is able to recall her version of the facts. Believe what you want about the two. But I lived through the 1973-74 Watergate breakdown with a similar attack in the media on a daily basis.The markets slowly tanked 50% in two years. Social mood is not in mere decline or tatters it is being torn apart like a Gladiator up against a lion in the Coliseum. The Dems overlooked far more serious behavior by Jack and Ted Kennedy, Gary Hart, Bill Clinton,  and John Edwards.  But this is a Republican.

 

While this sounds extreme, I noted one comment on this at the digital WSJ. The writer wondered if this was telegraphing the final end of the USA as a power.   The Dems have disregarded the concept of innocence until proven guilty. And all the Republicans are not for the Trump nominee either. As he notes, by the time this is done Judge Kavanaugh may not even be able to coach a girls' basketball team.

 

dennislelam@gmail.com

The Market Perspective bases its information on techniques and sources that have been found to be reliable in the past, and The Market Perspective tries to base opinions on sound judgment and research, however, we do not guarantee that future results will match past performance and no guarantee can be made that advice will be profitable. The Market Perspective accepts no money for stock recommendations and is purely motivated by its own research in recommending any stocks. Put another way, the responsibility for decisions made from information contained in this letter lies solely with the individuals making those decisions. The editor and persons affiliated with The Market Perspective may at times have positions in securities mentioned. Nothing contained herein represents an offer to buy or sell securities. The Market Perspective encourages investors to be diversified, and to maintain sell stops and risk control over their valuable investment capital. No guarantee can be made to the accuracy of text or predictions.

 

Amazing Analogy to 1994

Thursday Evening August 30 2018

Tom McClellan posts an amazing analogy to this time in 1994

A mew President had been elected two years prior

scandals ensued

Market advanced, then sold off then peaked again

and then

check this out

 

Stockcharts.com on decision point I noticed was very nervous that its timing showed all ETFs on a buy signal, how can things be that bullish they wondered

 

Perhaps this is the answer, a three month correction beginningnow

A Socionomic Look at the News

Weekend July 22, 2018

Auto Armageddon avoided for Present

Commerce Secretary Wilbur Ross says ‘it’s too early to move ahead with 25% tariffs on imported cars and parts.’

Wall Street Journal today July 20, 2018

We have written numerous columns this year warning of a ‘gathering storm’ of retaliatory tariff wars. Social Mood is slowly lowering markets as political leaders, not wanting to appear weak to Trump threats, resist. Around the world only Canada seems to be making a new high, with India revisiting the last high. Most other markets made their high in January along with the US. Shanghai in particular, has fallen from 3,550 plus to 2,765.

Now consider these news headlines.

Trump Raps FED (once again Trump’s Wharton degree fails him, the FED simply follows the two-year note yield. Higher rates are a sign of a more robust economy, low rates reflect the weakness of the last eight years. )

EU threatens of Retaliate for Levies

US Automotive Policy Council Opposes Tariffs (that is GM, Ford, Chrysler and Toyota et al)

America’s Chinese Ambassador Feels Heat

Investors Treat Asian Junk Bonds Like trash (yields rising to 9%)

Alcoa Shares Tumble 13% on Tariffs

Stocks Decline, Weakened by Financials (odd in that rates are supposed to be going up)

British Sterling Falters over Brexit Worries

Trade fears Crunch U S Grain Prices (farmers voted for Trump)

Another article suggests that even powerhouse German is now the ‘sick man of Europe with small company productivity lagging.

On a positive note, Blue Origin passes Test in West Texas

Amid worries about the EU and Brexit, the US Dollar has risen from 89 to 95. That is a counter to the fall from 102 to 89. But it is enough to have crushed various commodity prices. In the past four months gold has dropped from $1,370 to $1,224. Silver is down from $17.60to $15.19. In the last two months copper fell from $3.30 to $2.70. All this weighs on emerging markets which are basically commodity exporters.

Crude oil has dropped about the same 10.7% as gold.  We predicted a pullback and oil dropped from $75 to $68. Unleaded gasoline prices eased by 25 cents. Note that Congress is working for the US to ship more LNG to Europe in response to Trump’s comments that Germany is too dependent on Russian energy supplies.

The bottom line is that markets do not like uncertainty. Foreign markets are pulling back due to their weaker currencies and uncertainty over higher tariffs.   Most world markets have not re joined their January highs. With the November elections 3.5 months off, don’t expect new highs in mood, or the markets.

dennislelam@gmail.com