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April 12, 2015 – Weekend Market Comment

April 12, 2015 –U.S. stocks closed higher on Friday, with the Dow topping 18,000 for the first time in April as investors looked ahead to the official start of earnings season next week.
The Dow Jones Industrial Average closed up 98.92 points, or 0.55 percent, at 18,057.65, with General Electric leading advancers and Nike the greatest laggard. The index briefly added more than 100 points in afternoon trade.
The S&P 500 closed up 10.88 points, or 0.52 percent, at 2,102.06, breaking the significant resistance levels of 2,090 and 2,100. Industrials gained 1.8 percent to lead all 10 sectors higher.
The Nasdaq closed up 21.41 points, or 0.43 percent, at 4,995.98. Three stocks advanced for every two decliners on the New York Stock Exchange with an exchange volume of 671 million and a composite volume of 3.1 billion in the close.


What I Think
I think this week we had some pretty good headlines—high profile M&A that boosted confidence, especially the Shell deal (indicating there) will be more M&A in energy. The big news of teh week was on Friday a major restructuring of GE Capital, including the sale of most of the unit's assets, and will institute a $50 billion stock buyback program with proceeds from the move. In short GE is once and for all out of the banking business and back to focusing on what it does best, make jet engines and power plants. GE jumped 10.8 percent to $28.51 a share, the highest close since September 2008. That said by now you know that I am a technician first and clearly the charts were ready for any excuse to rally until about the third week of April.


It All Shows Up In The Charts . . . 

Bull Bear Lines
Well the bounce back up is clear. As you can see if you buy now your a bit late for the current party but who knows how much the market will give us. Volatility is making market timing difficult. Still dark green is over red, we are in a bull market.




Primary Sell 
Looks like the smart money go caught the wrong way as the week started and now cant wait to be long.



Aggressive Defensive Graph
We are off to the races as small caps outperform the safe bets.


Bond vs Equities
Well Bonds held up well two weeks ago but the clear winner this week is equities. 




S&P500 Over 50 Day
Classic up turn as bargain hunting goes wider.




Green Arrow Graph
This concerns me as the market is turning toward big stocks over mid caps just when it should not. This is important because if we don't see improvement soon, we could have run too far too fast already.  



Nasdaq Summation
Tech is now catching on in fact teh NASDAQ was the big star this week easily outperforming the other exchanges.  




NYSE New High Low
Strength returns to the big board as the upward march continues. The Message here is the money is returning to the market but it is in the big name safe plays.


Sectors
This chart mirrors what the Aggressive Defensive Chart says. The new trend is safer stocks like the defensive ETF. 
XLF - Financial Stocks - Dark Blue dots
QQQ - Nasdaq - Purple
XLY - Consumer discretionary - Green
XLU - Utilities - Red
DEF - Defensive stocks - Brown




OBV
On Balance Volume is keeping pace with the current market. A great relief as smart money returns to the market. Remember most people loose money in the markets and a select few make all most all the profits. This is the smart money so it is important that it participates. 



VIX
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded below 13.



VIX Evaluator
Don't forget this is an experimental VIX indicator... my look how close I am to the edge of my range.....In other words it looks like a run up fora short term and then boom back toa sell off.

What Works Now
There was a recent article in the Economist that talks about the sudden rebound in interest in the Euro Zone. But in fact as I pointed out in the blog there is a rebound in all emerging market equities. The sudden rush of interest is because all the world is parking its money in the United States (best house in a bad neighborhood). This has caused a huge bounce in the value of the US dollar. 
Here is the German Market

and here is the Emerging Markets ETF

As the U.S. dollar becomes too strong U.S. manufacturers are at a disadvantage. The natural result is the other global markets get stronger.

Perhaps most crazy is the rush to Russian equities in a hope the oil has bottomed and the selling was over done. 


A Reader Writes
I was contacted by one reader of this blog . . . he was talking about how little he is making in this market. I found this quite remarkable because readers following this blog should be swimming in money 9 out of every 10 calls I have made in the last 10 months has been spot on!




Let look at the S and P 500 in the last 10 years . . .




Now lets see a ten year version of my Bull Bear Lines graph. . . .

Well how simple is that? As far I can see, if you were long when the green was over red and then went short when the red was over the green, you were making a freaking bundle! No stock picking, no rocket science just buy the SPY ETF or its short version SH.  How the heck can you not make money in this market? We have just been handed the best 10 years in a long time to get rich and how anyone can snivel that the stock market is not treating them right is most likely following other people than MY advise. Perhaps some CNBC idiot like Jim Crammer.   My guess is that this particular reader has been flirting with countries with commodity based markets (like Canada) and playing energy when he was told NOT TO DO THAT. Now if you want to play commodities when I wrote in "Pop Goes the Commodity Bubble" that the party was over, well your not going to make money. If you go trying to pick a bottom in the energy market because you don't listen when I say NEVER catch falling knives, then you are not going to make money. But don't tell me it is my fault, I lead you horses to the water, its up to you to drink it. 


Summary
We are still in a bull market have completed a micro pull back. It is a good time to be long. I think the run to off shore markets is a tad over done. But the current strong breakout and volatility is making me use safer bets and be less aggressive. Until the trend is stronger I don't recommend any hero plays this well could be a long term topping pattern, although I doubt it. The forecast mild and sunny for a week or two followed by possible warm spring rain .



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




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CLICK HERE: To see the 100 and 200 series charts



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