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July 23, 2016 – Weekend Market Comment

July 23, 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).

 As I mentioned three weeks ago, if we break resistance the markets could move up sharply and it did. Now we are taking a pause as traders see the market is for now short term overbought.

101 Bull Bear
Bull market (dark green over red) and now the short term (light green) is up sharply. NOTICE THE SLOPE (second window), this could be part of a long term up trend.  Bull market -- expect bullish outcomes.
103 NYSE High Low Market Forces
Nothing but positive. In the right side highlight we see green is above is below yellow. Really positive.

105 Non Farm Payroll
Lots of jobs! But beware this is lagging indicator. The smart money is gone before this turns down.

107 Industrial Production
Could be turning up again, if not expect rally to fail.

115 Renko
Nothing but strength.
203 OBV
CAUTION: OBV is still with market but we are now consolidating in a range.

207 VIX
VIX should bounce about this red line for a while as traders start to understand a pull back here might help.

209 VIX Evaluator
Nothing but strength.

211 S&P500 over 50 day
Now over 86.2% stocks are above their 50day MA. Strength but looking a bit overbought.

213 Green Arrow
Only put new money to work when I draw a green arrow.
Still rising, notice MACD is fading.

301 NASDAQ Summation
Nothing but strength here.

303 Aggressive Defensive
Aggressive but could be the end of the cycle. Overbought can go on how long?

305 Consumer Bonds vs Equities
Bonds drop but consumer does not react. Mixed signal

307 Bond Direction
Strength in bonds indicates overall market caution.

309 Sectors
Defensive staple stocks like dividends, utilities are strengthening. Tech is loosing steam as investors start to fear risk.

311 Nations
A look like international weak. Germany is Kaput!

313 Major sectors
International gains not out of merit but as an alternative to the now overpriced US market.

! = Pay attention this chart is important this week.

What I Find Interesting

According to Factset one quarter ago, analysts"projected" Q3 earnings growth would return this quarter. It now appears that won't happen. We look forward to updating this analysis some time in October when "analysts" are forced to shelve their optimistic expectations for a Q4 rebound, as EPS for the entire year go negative once more. At this point in time, 19 companies in the index have issued EPS guidance for Q3 2016. Of these 19 companies, 14 have issued negative EPS guidance and 5 have issued positive EPS guidance.

As of this moment, for all of 2016, analysts are still projecting earnings (+0.3%) and revenues (+1.7%) to increase slightly year-over-year.

I would say that the 2017 estimate look stretched.

What Works Now

The worlds biggest brewer Ambev makers of Bud, and Corona are selling lots of beer this summer. Ambev SA, formerly Inbev Participacoes Societarias SA, is a Brazil-based company engaged in the brewing sector. The Company produces and sells beer, carbonated soft drinks (CSDs) and other non-alcoholic and non-carbonated (NANC) beverages across the Americas. The Company's activities are divided into three segments: Latin America North, including sell of beer, CSD and NANC drinks in Brazil, as well as operations in Dominican Republic, Saint Vincent, Antigua, Dominica, Guatemala, El Salvador, Nicaragua and Cuba; Latin America South, distributing products in Argentina, Bolivia, Paraguay, Uruguay, Chile, Ecuador, Peru and Colombia, and Canada, represented by Labatt’s operations, which comprises sales in Canada. The Company markets products under various brand names, such as Adriatica, Brahma, Leffe, Budweiser, Corona, PepsiCo and Lipton. It is a subsidiary of Interbrew International BV.

Heavy Equipment
With a return of commodity price comes orders for equipment to mine. Cummings is on the move.

China goes to school
New Oriental Education & Technology Group Inc. is a provider of private educational services in China. The headquarters of New Oriental is located in the Haidian district of Beijing. It is currently the largest comprehensive private educational company in China based on the number of program offerings and total student enrollments.

What I Think 

Short term traders expect sideways or a little pull back, take some profits. Long term players hang on things still look overall bullish. Markets are very strong.

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