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April 4, 2015 – Weekend Market Comment

April 4, 2015 – Sorry this Market Comment is late, it is in fact published Monday morning, too much fun this weekend I guess. Bucking a recent trend, non-farm payrolls only grew by 126,000 last month, the worst since December 2013, though the jobless rate remained unchanged at 5.5 percent. 

 In thin trading Friday, the 10-year yield temporarily slid below 1.80 percent for the first time since February, and the euro broke a key level of $1.10 as the dollar weakened. Dow futures finished the Friday session down 165 points. The stock market was closed on Good Friday so traders were forced to bid on stocks in an early morning futures session that finished at 9:15 a.m. ET. Bonds were trading until noon.

What I Think
I think the market is spooked that the fed is about to raise rates yet in a bizzar Wall Street logic the bad payroll report makes the market confident enough that the economy sucks just enough to keep the easy money flowing from the Fed. In short the experts on Wall Street don't care if U.S. industry does well, they just see the short term sugar high from free interest rate loans as all they really care about. Well that can't go on forever, and I think people are getting used to the idea that the punch bowl has already been out too long. 

That said what the heck is so bad about the news that the economy is recovered and robust? The market loves to climb a "wall of worry" don't be fooled the bull bear lines tell you this is still a net positive environment. This recent bad job report is mostly the fall out of the destruction of the U.S. drilling industry. Job openings rose in the Midwest. Many industries including professional and business services, health care and social assistance, and accommodation and food services saw job openings increase over the year. But they decreased in oil, mining and logging. In short America is stronger in every area except over priced oil.

As I noted previously the rapid gains upward in the market are somewhat stalling and cycles of up and down are getting tighter, in other words consolidation. Interestingly this flat return scenario is taking place right on time, its April folks! Yes the maxim "Sell in May and go away" is coming earlier each year and I would expect the markets could loose steam about the third week this month. Now do I know that for sure? Of course not... no one can predict the future. Lots of springs the market does well, however the market is now fully valued, and with the fed no longer juicing the economy a bit of a minor correction in about 3 weeks would be right on time. 

It All Shows Up In The Charts . . . 
Bull Bear Lines
Well the bounce back up is clear. As you can see this was a very rapid pull back. Volatility is making market timing difficult. Still dark green is over red, we are in a bull market.



Primary Sell 
Looks like we have an all clear sign from the pros who are again buying insurance. 


Aggressive Defensive Graph
Not much to say this week... making up its mind.

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


S&P500 Over 50 Day
Negative sentiment from last week is obvious that does not mean that that this week will not be good.



Green Arrow Graph
Our almost a green arrow turned into a failed rally and now it meanders looking for a clear signal. 


Nasdaq Summation
Tech is looking disappointing as the markets are in uncertainty. 



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.



 VIX
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.5. 

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.





Proceed with caution!


Summary

We are still in a bull market have completed a micro pull back. But the current 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 . . .








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CLICK HERE: To see the 100 and 200 series charts



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