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November 12, 2015 – Weekend Market Comment

November 12, 2015 – Welcome to my weekend market comment, an analysis tool I use in my own portfolio decisions, published free to the web every weekend before the New York opening bell. For full details read my disclaimer (link at the bottom of this page).

Yes I know Nov 12 is a Thursday but I am at a conference this weekend.

I am getting tired of writing the weekend market comment. It takes hours to do all the formatting. WHICH THANK YOU GOOGLE BLOGGER IS TOTAL FUBAR. So either I getn me an assistant to publish this (fat chance) or you can all suffer. On the good side I am lowing the price from free, to 20% off of free.  I think it is worth every penny!

This is the new experimental trimmed down version.  The charts are now in a pdf file you click to view. The Primary sell chart is gone, it is too much work to publish. Also expect a lot less guidance from me. I am not an adviser.

Click Here to see charts Charts 100 and 200 series.

Weekend Market Comment Nov 12 2015

101 Bull Bear
Still says it is a bear market (red over dark green) and now the short term (light green) is falling off
103 NYSE High Low Market Forces
In the right side highlight we see green is below yellow this is the number on reason I am pulling in my horns.

105 Non Farm Payroll
Still looks good
107 Industrial Production
Watch this carefully, all recessions have falling industrial production

115 Renko
Nothing but bullish
203 OBV
Red line must keep up with price. It is ok if it lags for a day but this is more than a day. This is your big warning.

207 VIX
Clearly the pros are buying protection. The upper panel CCI says it may already be overdone.

209 VIX Evaluator
Looks like it wants to go higher.

211 S&P500 over 50 day
Falling as expected. Expect trouble if this continues.

213 Green Arrow
Only put new money to work when I draw a green arrow.

Click Here to see charts Charts 300 series

301 NASDAQ Summation
Says might be some hope

303 Aggressive Defensive
Very defensive

305 Consumer Bonds vs Equities
Consumer kicks in for Christmas, rest of market getting defensive despite danger of fed rate rise.

307 Bond Direction
Has been very negative
309 Sectors
Beware when utilities and defensive stocks rise.

311 Nations
German and USA only bright spots

313 Major sectors
Glimmer of a bounce in gold that has set new low recently and is fighting a strong US dollar.

! = Pay attention this chart is important this week.

What I Find Interesting

Fancy a Flat in London Mr. Wong?
Bloomberg points out that  new proof of income rules and taxes on foreign ownership are in both Australia and the U.K. making it harder for Chinese to use real estate to launder money. Canada (wink wink nudge nudge) has still not caught on, as Vancouver is still selling well. Here is what $1.5 million will get you in Vancouver. Lets see what you get in the USA under $200,000

Nosh and Fang to the 'Rescue'
This came to me from Goldman's client research . . . It says that the last recovery from the August sell off was primarily from just 8  darling stocks. FANG and NOSH refers to FANG (Facebook Amazon Netflix Google) and NOSH (Nike O'Reilly Automotive Starbucks and Home Depot)

These are the core holdings of mutual funds and hedge funds. They are sporting crazy valuations and fund managers know it. History has been here before look up the Nifty 50 era, people all bought the same stocks, then it ended in a terrible crash when big funds all sold at once. But at least that was 50 stocks now we are down to just 8.

What Is Hot Now

You can read this: at Bloomberg Energy Default Alarms Get Louder as Pain Seen Lasting Into 2016.
Now you know why Junk Bonds are toxic waste. SJB is the Short Junk Bond ETF

If the market has a pull-back think about being long the VIX with the VXX ETF. Caution this is a very volatile ETF don't play this with your core holdings.


What I Think
I have not believed in this market since Aug when the NYSE High Low Market Forces (52 week high low) chart sloped down. Yes I was bullish during the recent bounce, how could you not be, it was very impressive.

Right now I stand alone. Many experts just this week say this is a buy the dips market, I say it is a sell the pops market. We will see who wins. My logic is simple, every country in the world is facing a slowing economy including all of the G8. Economies number 2 (China) and 3 (Japan) are particularly in trouble.

Lets see how this week went:
  • S&P -3.2% - worst week in 3 months
  • Retail -8.2% - worst week in 4 years
  • VXX +17.9% - biggest week in over 2 months
  • VRX -8% - down 7 of last 8 weeks
  • AAPL -6.4% - worst week in 2 months
  • Financials -3.2% - worst week in 2 months.
  • Copper -3.5% - worst week in 2 months (down 5 in a row)
  • WTI Crude -8.7% - worst week since Dec 2014
  • HYG -1.7% - worst week in last 7 weeks
  • HY CDX +35bps - worst (non-roll) week since Decmber 2014
  • Long Bond +0.8% - best week in last 4
  • 5Y Yield dropped 5bps - most in over a month today

Most of the gains lately were concentrated in a few stocks (see above) and much of the increase in value in the market is coming from stock buy backs not real business. Meanwhile the USA is experiencing a pull back in manufacturing and the only thing people can point to is rising employment. That means service industry jobs - here is your paper hat.

Most of the market gains lately are concentrated in a few top 100 stocks and especially the big 8 (see above). Plus much of the increase in value in the market was coming from stock buy backs, not real business, but even that is ending. Overall debt is at a record high for both nations and individuals. The boomers are demographically downsizing and they are clutching on to their change purses. Both Hedge Funds and Mutual Funds are experiencing cash outflows and so their is little fuel for a rally.  Add to that we are 6 years in to a big bull run, on the verge of a interest rate hike and stocks are fully valued, I see nothing much to cheer about.

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

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