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September 6, 2014 – Weekend Market Comment

September 6, 2014 – U.S. stocks erased losses and rose on Friday, with benchmark indexes extending gains into a fifth week, as investors detoured around a surprisingly disappointing jobs report. Wednesday the Dow Industrials and Transports tested their summer highs. The Dow Transports have hit new highs (led by rails and truckers). The Dow Industrials, are testing their July peak. After a 59-point fall, the Dow Jones Industrial Average rose 67.78 points, or 0.4 percent, to 17,137.36, leaving it with a we at weekly gain of 0.2 percent and less than a point from its record close of 17,138.20, set July 16. Nike led blue-chip gains that extended to 22 of 30 components. It might have been a great day for Nike but fellow consume discretionary stock the GAP had a big miss and sold off strong. A cease-fire in Ukraine gave a big boost to Russian stocks as well as European stocks closely tied to Russia. Energy paced gains among the 10 major industry groups on the S&P 500, up 10.06 points, or 0.5 percent, to 2,007.71, and 0.2 percent higher than the week-ago close.

For fun this week I am going to put out my whole list of core charts and then below each chart in big green words I will type my gut feel take on that chart. So you can see the way I analyse the market. As you will see not all the charts agree and the art is getting an impression from each and then come to a concussion.

Primary Sell:
Pros Might be Getting Nervous! Don't Panic Yet. 

Long Term Bull Bear Lines:
Short term bounce complete from here we trudge up at a slower slope or sell off. Move from aggressive high beta to more conservative low beta investments.  

NYSE High Low:
Looks really good, growth has been a bit too strong, may consolidate before continuing to move up.  

On Balance Volume:
Was looking unfavorable -- Pros might be getting nervous! Don't panic yet. Move from aggressive high beta to more conservative low beta investments.  

S&P500 Percent Stocks Above 50 day MA:
Nearing the last phase of bounce, when more than 80% of stocks are leading -- momentum seldom holds for more than 3 weeks. No rush yet. Move from aggressive high beta to more conservative low beta investments. 

Expect VIX to complete a cycle of optimism and dip below 11.50 -- No rush yet, but in next 3 weeks expect a sign of low vix -- thus marking the rotation from those in the know to the over optimistic dumb money. 

Nasdaq Summation Index:
Looks really good, clearly the bounce has been all about high beta Nasdaq tech stocks.  

Aggressive Defensive:
Slow Stochastic is falling. Move from aggressive high beta to more conservative low beta investments.  

Green Arrow Graph:
Slope is falling. Move from aggressive high beta to more conservative low beta investments. This is no time to invest NEW money.

Now lets look at our three lagging economy indicators, by the time these change it is too late but we can at least see what economic force got us here.

Nonfarm Payroll:
Looks really good, new record high.

Industrial Production:
Looks really good, new record high.

USA Renko Chart:
Looks really good, the bull shows no sign of ending soon.

What Works Now
This week I bought some Stantec - a Canadian engineering firm with impressive results. I have a tight stop on this because this is not the part of the cycle for new investments, but I was tempted.

I also rotated out of all leveraged positions and raised a  "war chest" of cash. I sold some aggressive equities favoring more conservative stocks like pipelines, utilities and banks.

You can learn more about my indicators by visiting the CME4PIF school by clicking here.