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April 2, 2016 – Weekend Market Comment

April 2, 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  For full details read my disclaimer (link at the bottom of this page).

101 Bull Bear
Bear market (red over dark green). The light green line has come a long way up, and the dark green line is turned up but could be seen as getting flatter, clearly a strong recovery. In short this is impressive and although still technically a bear market this no time to go deeply bearish, trying to time a sell off.  Bear Market = Bearish outcomes.

103 NYSE High Low Market Forces
Very important: This is the chart that makes me rethink my stand. Notice the second panel of this chart, as red disappears you begin to see that this recovery is getting very broad and that is the sign of a healthy market.

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 February. I see a clear round top in the 12 period moving average

115 Renko
Obviously – 8 white up bricks trend is heading up. Clearly we have come a long way back. Hard to be a bear in an up trend this obvious

203 OBV
Pros are lagging the market volume fades! Don’t ignore this, with volume comes safety.

207 VIX
VIX is the fear gage .. under 13.7 and falling. Notice what often happens when the top panel CCI is in the oversold brown zone, it often is the start of a rise in VIX and in this case that would mean the end of the bounce. Be ready to play your short plays.

209 VIX Evaluator
Heading down clearly. Caution.

211 S&P500 over 50 day
Now 92% of stocks are above their 50day MA. However top window shows a MACD past top and falling. Clearly a monster move, but is this the roll over?

213 Green Arrow
Only put new money to work when I draw a green arrow.
TRIX has crossed signalling a possible green arrow in the future?.
Notice the slope is loosing momentum.
No sign of a green arrow..

301 NASDAQ Summation
NASDAQ looks strong but over bought here.
303 Aggressive Defensive
Finally a topping a roll over, end of the strong uptrend? I have been mistakenly calling this a top for a month, that is real strength folks.

305 Consumer Bonds vs Equities
Consumer still steady. Bonds bottom?
307 Bond Direction
Short term bonds rise in a strong long term uptrend.

309 Sectors
Tech and Utilities lead in a mostly sideways chart.

311 Nations

313 Major sectors
Also Meh!

 ! = Pay attention this chart is important this week.

What I Find Interesting
In a sure sign of low risk appetite, for the first time since 2009 dividend paying stocks are outperforming the companies with the big share buybacks. This chart shows the ratio between two ETFs -- the firms that are big on share buy backs (ticker:PKW) and  The big dividend payers
(ticker:DVY). As the chart drops the market favors big buy backs as it rises it favors Divided stocks. Wow now that is a change of direction!

What Works Now
I made a nice bit of profit since last summer until this February on the recent weakness in Junk Bonds and there maybe another opportunity in the Short Junk ETF (ticker:SJB). In a recent research report
BofA High Yield strategist Michael Contopoulos said: "cumulative losses over the length of the entire cycle could be worse than we’ve ever seen before"

He went on to say that the biggest prior Junk Bond crash had a 33% default rate and his own numbers came in closer to 40% for the current market for Junk Bonds. Which I already pointed out is much larger now.

I have placed the TSI indicator below the chart to show the recent change in momentum. This is not an investment for your retirement money, but if you want a gamble...

What I Think

This week the markets edged higher, as they have since the turn in mid February. We have had a strong March recovery. But in the big picture we really have gone nowhere since Jan 2015. 

Now we are entering April and the momentum seams to be slowing also there is a real resistance point at about 2100 on the S and P 500. 

Add to that dribbles of data showing a slowing in manufacturing and it is not hard to see a mild recession on the horizon this summer. 

I have said before that even if the January sell off recovers that I expect weakness and a likely spring sell-off based on the general slowdown in global trade. There has been some change in the market in the last week. Here are some key areas of the market vs the S and P 500 over all.  Notice the defensive are doing well in fact the only offensive section to remain strong is the American consumer (green). 

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.