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December 10, 2016 – Weekend Market Comment

December 10, 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 this ad from the 1970s says EVERYONE is bullish on America right now. Stocks are off the charts and the bull keeps running!

Lets see what is in the charts this week:

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.
103 NYSE High Low Market Forces
Wow look at this take off. Nothing but strength although not a maxed out as last week. 

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.

115 Renko
Market is rebounding 10 white bricks! SUPER BULLISH!

203 OBV
OBV (red line) is with the market. This means the big funds are participating and playing catch up. Bullish
207 VIX
Fear returns. cci says perhaps done for now, notice the slight up turn!!

209 VIX Evaluator
Very much bullish

211 S&P500 over 50 day
Now about 73% of stocks are above their 50day MA, up from last week when it was 60%. Bullish.

213 Green Arrow
Only put new money to work when I draw a green arrow. TRIX says green light, could be a green arrow soon. Notice how this was a great early warning. 

301 NASDAQ Summation
New happy days, breadth returns to Nasdaq expect an on going bounce up! Bullish
303 Aggressive Defensive
Aggressive but the Slow stochastic says we overdone. Neutral

305 Consumer Bonds vs Equities
Bonds fall. Consumer flat, perhaps ready for a run for Christmas?  Sorta bullish

307 Bond Direction
Weakness in bonds indicates overall market caution of coming rate hikes.

309 Sectors
Notice on Friday some move to safety with small gains in Utility stocks but also the Nasdaq. Consumer tanks, not good at Christmas.

311 Nations
German looks like oversold bounce!

313 Major sectors
Nothing but US Equities doing well. 

! = Pay attention this chart is important this week.

What I Find Interesting

Canada debt Exceeds GDP
According the National Post for the first time ever, the level of debt held by Canadians has exceeded the country’s gross domestic product as the red ink spilled over in the second quarter to 100.5 per cent of GDP, up from 98.7 per cent during the previous three-month period.

Equifax says the percentage of Canadians who are 90 days or more behind paying their debt grew to 1.14 per cent from 1.05 per cent during the same year-over-year period. It says the increase in delinquency was largely driven by oil-producing provinces in Western Canada and Newfoundland and Labrador, where default rates tend to be higher.

Golden Dragon
Last week bankers and traders told the Financial Times that after the summer of 2016 most gold importers have had difficulty obtaining approval to bring in gold as the weakening renminbi raises Chinese investors’ interest in the metal.

China imported about 905 tonnes of gold in the first nine months of this year and then the levels dropped dramatically. China can and does limit investor holdings of gold, by import controls and full government ownership of the Shanghai gold exchange. Notice the effect on the price of gold.

This Just in . . . Americas Butts are Fatter!

For the first time in U.S. History Americans are living short lives. According to a new report from the NCHS, last year, life expectancy at birth was 78.8 years for the total U.S. population—a decrease of 0.1 year from 78.9 years in 2014 . For males, life expectancy changed from 76.5 years in 2014 to 76.3 years in 2015—a decrease of 0.2 years, and for females, life expectancy decreased 0.1 year from 81.3 years in 2014 to 81.2 years in 2015.

The cause is obesity, the prevalence of overweight and obesity in children and adolescents is on the rise, and youth are becoming overweight and obese at earlier ages.

A National Institutes of Health report showed that from 1962 until 2006, obesity in adults age 20-74 more than doubled, increasing from 13.4 percent to 35.1 percent. The average adult weighs more than 26 pounds more than they did in the 1950’s, according to the CDC.  In 2016 one out of six children and adolescents ages 2 to 19 are obese and one out of three are overweight or obese. Early obesity not only increases the likelihood of adult obesity,  it also increases the risk of heart disease in adulthood, as well as the prevalence of weight-related risk factors for cardiovascular disease such as high blood pressure, high cholesterol, and high blood sugar.

Top 10 most obese metro areas (with percent of residents considered obese):
  •     McAllen-Edinburg-Mission, TX: 38.8
  •     Binghamton, N.Y.: 37.6
  •     Huntington-Ashland, W. Va. 36.0
  •     Rockford, Ill.: 35.5
  •     Beaumont-Port Arthur, TX: 33.8
  •     Charleston, W. Va.: 33.8
  •     Lakeland-Winter Haven, Fla.: 33.5
  •     Topeka, Kans.: 33.3
  •     Kennewick-Pasco, WA: 33.2
  •     Reading, Penn.: 32.7

Some U.S. states particularly on the West coast and in New England, people are more prone to shun big meals, sugary drinks, alcohol and sedentary life choices as can be seen in this state by state chart. California’s obesity rate climbed slightly last year, although its ranking (fifth best) is vastly better compared to most states. The Golden State’s obesity rate was 25 percent in 2014, compared with 24 percent in 2013. It was 19 percent in 2000. But children, especially toddlers, were more likely to be obese in California than any other state.

China Wack-A-Mole
According to Bloomberg China is trying to stop capital fleeing China by capping the amount people can take out ATMs in gambling halls of Macau, the new limit is about $600. Thursday following a report from the South China Morning Post saying that China's government will cut the amount of money people can withdraw from China UnionPay ATMs in the gaming region by half starting Saturday.

Thursday MGM Resorts International shares closed down 4.3% to $28.65, Wynn Resorts fell 11.1% to $90.72 and Las Vegas Sands dropped 12.8% to $54.67 following the report.

Referring to it as Wack-A-Mole Bloomnberg says the Chinese government is trying absolutely everything to stop money from fleeing mainland China. It is exactly this capital flight that I said would cause a major recession in China in my article The China Problem.

The ranks of China’s wealthy continue to surge. As their economy shows signs of weakness at home, they’re sending money overseas at unprecedented levels to seek safer investments — often in violation of currency controls meant to keep money inside China.

This flood of cash is being felt around the world, driving up real estate prices in Sydney, New York, Hong Kong and Vancouver. The Chinese spent almost $30 billion on U.S. homes in the year ending last March, making them the biggest foreign buyers of real estate. Their average purchase price: about $832,000. Same trend in Sydney, where Chinese investors snap up a quarter of new homes and are forecast to double their spending by the end of the decade. In Vancouver, the Chinese have helped real estate prices double in the past 10 years. In Hong Kong, housing prices are up 60 percent since 2010.

In total, UBS Group estimated that $324 billion moved out last year. While this year’s numbers aren’t yet in, during the three weeks in August after China devalued its currency, Goldman Sachs calculated that another $200 billion may have left. Other academic estimates put it at over $900 billion U.S. dollars every 9 months. That over a trillion bucks a year!

What Works Now

CAD Software
AutoDesk maker of quality engineering drawing software AutoCad (Ticker:ADSK)

Rental Cars
Consolidation is helping the rental car business -- behold: Avis Budget group (Ticker: CAR)

What I Think
We are in one of the greatest Bull markets in history! However, this week not only did stocks shoot higher, so did the VIX and Bonds. So the pros are getting ready for the end of a run or are these things just way oversold?

Oddly as the currencies of Japan and the Euro fall apart, the markets in these countries are picking up, expecting strong exports to dollar strong America. Here is the German DAX as of Thursday.

I am off to Mexico to spend a bit of my profits, next week the comment will be brief, if at all.  Image below is a representation of possible vacation, my actual  vacation may differ from image presented.


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