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February 13, 2016 – Weekend Market Comment

February 13, 2016 – 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. You can read the latest version each week by bookmarking http://cme4pif.blogspot.ca/.  For full details read my disclaimer (link at the bottom of this page).

The rout in the markets I have been warning about since last August continues with a small relief rally Friday.
Gold hit a 52 week high in trading yesterday, marking the first time since 2011 (5 long years ago...).

Momentum shifted positive Friday on a 2% plus rally, not surprising. We are at the limits in further downside without getting terribly oversold. Bear market rallies are not for the faint of heart as they generally don't last long, so even if price can rally, internal weakness will continue to put downward pressure on price.
While this means that momentum has shifted positive, it is likely going to be short-lived based on the indicators I'll discuss below.










101 Bull Bear
Bear market (red over dark green). The light green line is turning up signalling the start of a “dead cat bounce”. Bear Market = Bearish outcomes.

103 NYSE High Low Market Forces
In the right side highlight we see green is below yellow. Still many breadth issues.

105 Non Farm Payroll
Lots of jobs! But this is a lagging indicator. 

107 Industrial Production
Not good. Watch this carefully, all recessions have falling industrial production, but data is from the end of Dec.

115 Renko
Obviously – 8 Black down bricks the trend is heading down, fast. Still no up brick even after a great day Friday.

203 OBV
There were some strong upspikes. That looks to be over .

207 VIX
VIX is the fear gage .. near 25 is beyond fear back to all out panic.

209 VIX Evaluator
Heading up again fear returns.

211 S&P500 over 50 day
Now only 27% of stocks are above their 50day MA.

213 Green Arrow
Only put new money to work when I draw a green arrow.
I have added a new rule to eliminate too many arrows, now I do not draw arrows if the TRIX is red over green.
No sign of a green arrow..



301 NASDAQ Summation
Possible up turn.
  !
303 Aggressive Defensive
Looks way oversold, expect dead cat bounce. .

305 Consumer Bonds vs Equities
Disturbing, the consumer is lagging. Bonds are the safe haven trade.

307 Bond Direction
Bonds are the safe haven trade.

309 Sectors
Only defensive areas outperforming S&P500.

311 Nations
Canada surge on gold

313 Major sectors
Gold strong uptick!


 ! = Pay attention this chart is important this week.



What I Find Interesting
 
Russia still has 4000 ICBM warheads pointed west and for the first time in decades they are talking about a possible war with NATO. Click here to read about the saber rattling as reported by BBC. I have often called the Putin presidency as a reboot to USSR 2.0, well here you have the latest example. 


Tensions between the West and Russia have increased in recent years, in large part -- at least in the view of the West -- due to Russia's annexation of the Ukrainian peninsula of Crimea and its support for separatists elsewhere in eastern Ukraine.

More recently, some in the West have questioned whether Russia's intervention in Syria is helpful. Russia says it is attacking terrorists. But some observers contend that Moscow is intent primarily on propping of the regime of Syrian President Bashar al-Assad, who is hanging onto power despite a five-year civil war.

Gen. Philip Breedlove, NATO's supreme allied commander Europe, told CNN that NATO does not agree with Medvedev's assessment. At an earlier briefing at the Munich Security Conference, Breedlove said Russia is not just trying to change the rules but rewrite them.

 
What Works Now
Well as I said 12 months ago basic foods like Hormel inc the makers of SPAM

Ticker HRL


Gold, recommended here in January, is doing well ticker: GLD


and of course my 2016 number one pick this year SHORT the midcap 400 with ticker: MYY



What I Think

First as you learning ion CME4PIF school lesson one: NEVER forget rule number one of my investment philosophy:

WHEN THE BULL BEAR LINES ARE GREEN OVER RED NEVER BE SHORT AND WHEN THE BULL BEAR LINES ARE RED OVER GREEN BE IN CASH OR SHORT, NEVER BE LONG. IF ON THE EDGE -- CASH IS A POSITION TOO.


which helps you with Mr. Buffett's rule #1
 


I think the aggressive defensive chart says we are oversold and due for a relief rally, but it will be short lived and then the chaos will resume. I am taking off my leveraged shorts for a few weeks and continue to hold cash and short ETFS.


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



Don't squint, All graphics can be enlarged by click on them.



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Yet another parabolic up week for the markets. Honestly folks valuations are really stretched here. The air is so thin at this altitude. Then again the markets can and do (on a short term basis) anything they want. Still I would expect a little pull-back in the next two weeks.


Lets see what is in the charts this week:

CLICK HERE: To see the 100 and 200 series charts



101 Bull Bear Bull market (dark green over red) and now the short term (light green) is up sharply. Also note the dark green 50 day average is in a firm uptrend. NOTICE THE SLOPE (second window), this could be part of a new long term uptrend.Bull market -- expect bullish outcomes…