The Market Perspective

Rally Fades

1/14/2025 tuesday

 

The Rally in the COMPQ NASD and NDX NASD 100 both faded to a  small negative close today. SPX could not sustain its high closing only slightly positive. The Dow held up but 221 points but is really just a bounce from the big decline last Friday.

Both hourly charts show a move up which faded by hour three. These are the indexes to watch as tech has powered the 25% rally in  2024. Once it is over in  2025, we will see much lower prices.

SH Bear fund of SPX

I added more bear funds near the close sensing the rally was not sustained.

Crude oil corrected a dollar, still in uptrend PTEN close up 3%, RIG sold off to 3.92 but rallied back to 4.07 at the close.

Gold and silver still correcting. Bonds are too oversold to short now.

A Pauise in the Downturn

1/13/20258

\Markets dropped initially and mostly rebounded filling the gaps left from Friday sell off

I am expecting a day or two re bound before the downtrend resumes

I will be watching closely to add at prices below SH PSQ HDGE, and we can enter those tomorrow, BEARX is  simply end of day as are Rydex Inverse funds

Bonds got away from me, my original comment that TBF was a long term hold was correct and will be for years

Explaining socionomics

Monday 1/13/2025

 

Here is a typical  market news headline

Dow creeps higher as rate-cut fears drag on Nasdaq

The Nasdaq is leading the retreat as bond yields climb and market faith in rate cuts this year fades.

_______________

 

Friday amid a great jobs repport, the dow fell over 600 points, the media struggled for an answer.

Last year the Mag Seven were all the rage, NVDA is down today, the Industrials fell first, then SPX, now NDX is joinging the group

What has interest rates to do with NASD?  It is the only explanation the writer could find.

The better explanation is that the market has concluded five waves up in various fractal times, certainly from  2009 low. And now the only way is down.

But that would be complicated to explain in a headline.

the market ois sensing trouble, and there is plenty around, natural disasters in Carolina and Los Angeles, weakness in the EU and China, the realization that wind and solar need natural gas and coal fired generator back up, hey crude oil up another two bucks today!

the bear funds I have recommended continue to do well

 

PSQ, SH, HDGE, BEARX

 

Crude Oil Break Out

1/11/2025

 

Crude oil jumped 3.53% Friday closing up $2.61. Crude did what it had to do,challenging the October high. It also  broke its downtrend line. The arrow show weekly PMO bottom and RSI top breaking out as well. This is another puzzle piece cemented my idea that we are set for a replay of the 1970s. That era featured higher oil prices and inflation, higher interest rates, and a much lower stock market, down 50% from 1973-4. The low was Dec 1974 at a mere 577 for the Industrials. Even by 1982 the market had not surpassed the 1973 top just over 1,00.

PTEN and RIG have both had nice rallies and are now going a bit sideways.

Interest Rates

The ten year note yield is the most quoted so let's go with that. From the March 2020 low, the note price peaked  in Fall 2023. It then had an A B C correction ending last September. It is now in a third wave the strongest of the developing five Elliott pattern. And we had in that third wave a one up into  Fall 20245, a short correction and now a third strong wave. The thirty year bond touched 5% Friday  and the ten ended at 4.77%. Mortgage rates are virtually 7%.

After a 'strong' jobs report Friday the media is struggling to explain the 600 point drop in the Dow and the rise in rates. The FED got it wrong at the WSJ editorial points out today with a 50 and  25 bp cuts, the ten year yield has soared ever since.

Here is the longer term wave count going back to the March 2020 39 year cycle low.

The wave count is more clear on the arithmetic chart, above is a logarithmic chart.

Stocks

As always the NYSE Advance Decline line is our most reliable indicator.  The actual NYSE index is shown below. The A/D line peaked with the NYSE index in Late ovember justbefore the Industrials did so.

Another confirming chart is the NYSE stocks showing a bullish pattern on the point and figure chart. It dropped again Friday 5.97%.

SPX, INDU, NDX

INDU with fewer tech stocks has fallen further, then SPX, then tech heavy NDX which is just now starting to fade a bit.

 

 

Overvalued Market

Friday 1/10/2025

 

Click here of a P/E representation of where the market is now.

Above is a link to the latest Decision Point Alert. If one subscribes to stockcharts.com, one can received DP alerts for free, they also offer different levels of service.

Point is that normal p/e is about 15, undervalued is 10, over value is 20, it is now 29.

Crude Oil Challenges October High

Friday 1/10/2025

Crude Challenges October High

Last week we stated that crude oil needed to first take out the October 7, 2024 high of $76.55. Today it is attempting just that.

This morning February 2025 West Texas Intermediate is up 3.56% which is a  $2.61 jump.  The news concerning the jump, as usual, provides mixed causality at best. Demand in China is down but German and Japanese earnings are improving suggesting more demand. One might as well assert that the popularity of the Landman series on Paramount has renewed interest in the Permian Basin.

Well whatever let’s take the result.  Here is the rig report from Baker Hughes.

Baker Hughes reported last Friday that active US oil rigs in the week ending January 3 fell -1 to 482 rigs, modestly above the 2-3/4 year low of 477 rigs posted November 29.  The number of US oil rigs has fallen over the past two years from the 4-1/2 year high of 627 rigs posted in December 2022.

We are at a 2 ¾ year low for the drilling rig count. Producers will not drill more unless the price raises to reward their effort. That is now happening. Recall this column recommended Patterson PTEN a Texas based energy services company trading for less than book value. A recommendation for Transocean RIG trading at half book value then was also made. Shares in both firms immediately dropped, But both have rebounded from new lows the last two weeks. RIG hit $4.19 earlier today, and PTEN had a high of $8.59. The public has not embraced the idea of higher oil prices or these two would be doing better. Once the oil patch believes higher oil is here to stay, the phones will be ringing at energy service providers.

I thought the markets peaked in July but instead all the major indexes made a second high in December, 2024. The markets are now in quick retreat and the trend is down for Industrials (-675), SPX (-95), and NDX (-395). As with energy, the public has not embraced the idea that we have seen a very long term peak in the stock market. The indicators are clear, one example being that Nvidia is worth as much as Apple. For that matter that Apple, basically now a phone company, is worth three trillion dollars. What to do? Stock dividend yields are a mere 1.4%. Treasury bills yield 4.5%. As rates increase, trust me they will, for many years, the rates on three-month bills will do the same. Buy yourself peace of mind with T Bills. Interest rates bottomed March, 2020 and have soared since. Higher rates are just getting started.

Stay current with my weblog at www.themarketperspective.com

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Debt Delinquency on the Rise

1/8/2025

 

Debt, Defaults and Delinquencies (Oh My!)

By Elliott Wave International

It's a double whammy: U.S. credit card defaults jump to the highest level since 2010 as personal savings dry up. Expectations for the months ahead are even more glum. Elliott Wave International lay it out in their November Financial Forecast:

The latest New York Fed Consumer Loan Survey reveals that consumers' expectations for delinquencies rose to 14.22% in September, as shown on the chart below. Over the past seven years, the only higher readings came in March and April 2020 in the midst of the last U.S. recession:

The survey goes back only to 2013, but the history of consumer loan delinquencies suggests that the next debt crisis will be way more disruptive than those of the 2000s. Ahead of the relatively mild recession that began in the first quarter of 2001, for instance, delinquency rates on consumer loans barely budged, rising less than 1% from March 2000 to the start of the recession in March 2001, according to the Fed. By the end of that recession, the consumer loan delinquency rate was actually lower than it was at the beginning of the economic contraction. As its moniker suggests, the Great Recession of 2007-2009 was rockier. Ahead of the recession that began in December 2007, consumer loan delinquencies rose for two full years to 2.64%. At the end of the recession in June 2009, the delinquency rate was at a modern-day high of 4.85%. The current setup suggests a bigger rise in delinquencies. As of mid-2024, the rate has been rising steadily for 3 years and 9 months, from 1.52% in the third quarter of 2021, which was the lowest level in the Fed's half century of data. Currently at 2.74%, consumer loan delinquencies are up 79%. "Consumers Have a Debt Problem," says a headline from The Wall Street Journal on September 16. The subhead adds that they are therefore "leaning on credit cards as other sources of credit have dried up." This trend is untenable as the latest Forbes survey places the average credit card interest rate at 28.7%.

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This article was syndicated by Elliott Wave International and was originally published under the headline Debt, Defaults and Delinquencies (Oh My!). 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.

 

WTIC Oil Price

1/7/2025

 

Round numbers the next two resistance are 76 and 79, I am thinking WTIC will finally make it, the energy service sector looks like it

 

Energy Service Breaking Out

1/7/2025

 

Energy service is roaring ahead, RIG and PTEN both now in uptrends.

The major stock indexes are weakening.

More tomorrow morning

My accounts were up $850  today  and only a tinyfraction are in bear funds and energy service, what did you account do?

Check in here daily

A Wave 2 Ends

Monday 1/6/2025

 

The INDU had a 4100 point intra day range and closed down. No this rally doe snot have legs.

 

Here are the charts of the major indexes showing today's new high and then reversal. This was the top of a Wave  2, Wave 3 should begin tomorrow, note the NDX which did better than INDU or SPX due to the abundance of tech issues. One advisory I follow today said does this rally have legs, they say yeah maybe, I say no, More tomorrow