Skip to main content

December 17, 2016 – Weekend Market Comment

December 17, 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).

Well this has been some week. While traveling in Mexico I found away to wipe out my charts and make them all the wrong format. So from a tablet last night I fixed them up, and today on a WiFi equiped WestJet 737 I was able to post this weeks data. Sweet. Some of the charts look a little different but not in a meaningful way and in some case I think are simpler. 

OK so the Bull has roarded ahead, we had a small down day late in the week but well we were more than over due for it. 

101 Bull Bear
Bull market (dark green over red)  the dark green 50 day average is in a firm uptrend. The new version of the chart no longer shows the recent trend as it is not that important. NOTICE THE SLOPE (second window), we remain in an uptrend,, a very long term uptrend.  Bull market -- expect bullish outcomes.
103 NYSE High Low Market Forces
Wow look at this take off. Nothing but strength. 

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
Strong but not as strong as it was. 
115 Renko
Market is strong 10 white bricks! You seldom see a run this long, but who knows how far this bull can run. Notice how it is obvious on a Renko chart. SUPER BULLISH!

203 OBV
OBV (red line) is happy. The hedge funds are wading in knee deep. Bullish!
207 VIX
Fear is gone... everyone is long. Bullish

209 VIX Evaluator
Very much bullish

211 S&P500 over 50 day
Now about 73% of stocks are above their 50day MA, backing off from last week when it was 80%. 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
Yeah its up, but tech is not a happy place now so looks a bit flat.... Bullish
303 Aggressive Defensive
Turning very defensive. You will recall 2 weeks ago, I said I was long but profit taking on my high flyers. 

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

307 Bond Direction
Weakness in bonds indicates overall market caution of current and future rate hikes.

309 Sectors
Like last week, a move to safety with small gains in Defensive and Utility stocks. Consumer tanks, not good at Christmas.

311 Nations
Germany and USA are safehaven bets

313 Major sectors
Nothing to see here.

! = Pay attention this chart is important this week.

What I Find Interesting

The Death of Newspapers
As print media dies a every faster death, we saw signs of trouble this week at the New York Times, as they announced that 8 floors will be vacated and sublet. As reported in Bloomberg the high tech NYT HQ building built in 2007 is now far too big for the struggling iconic newspaper.

After a spate of closures and layoffs in the latter part of the last decade, the newspaper industry appeared to find its footing over the past few years. But now that oasis of stability may be drying up.

Hard times are hitting some of the most resilient titles, and the trend indicates that things are only get worse. The decline in print advertising revenue at The New York Times has accelerated from 9 percent in the first quarter of 2016 to nearly 19 percent in the most recent quarter, writes Mathew Ingram in a Fortune story ominously headlined “The New York Times Scrambles to Avoid Print Advertising Cliff.” In announcing its financial results, the paper said it expects the falloff to continue “at a rate similar to that seen in the third quarter,” or at least 19% per quarter.

New levels of Bullish Sentiment  
Put/call ratios nearing extreme lows.  As the ratio gets smaller and smaller, that means that the amount of calls is accelerating faster than puts. When everyone is buying calls, that implies traders are extremely bullish. When everyone is very bullish, that is generally when the market reverses.

To make my point I built this chart to show three types of sentiment indicators, all are high. The way the chart works is the when the upper red window is low and the two lower green windows are high, the market is really enthusiastic, in this case perhaps too much.
Options traders, money managers and individual investors are all very bullish right now. Sentiment is a contrarian indicator, so the more bullish everyone is the more bearish the indicator. It isn't surprising to see these bullish numbers so high given the Trump rally, but they are reaching or have reached the danger zone. Now don't go out and sell everything today but, it is still a bull market, but the warnings are there, keep your eyes open and take profit on your high flyers. Sell Nike buy a utility etf kind of moves. Also tighten your stops.

What Works Now
ETE Energy Transfer (Ticker:ETE)
Trump likes the Dakota Pipeline project and ETE is likely to get a green light soon.

Expect a pop next week as TripAdvisor completes a deal with Expedia (Ticker: TRIP) This is a high risk play, don't bet the farm on this.
What I Think
I think it is crazy to try and type a blog on a tablet in an airplane couch class. 

Other than that I think this is the most amazing bull market. We might rest here but this market keeps surprising, and in a bull market it is important not to miss the bounces. 

We're in a very bullish time of the calendar year as the second half of December has significant bullish historical implications.  The 19th and 20th, however, are the weak link during this period with annualized returns on the S&P 500 (since 1950) of +3.56% and -24.88%, respectively.

We are overbought no question, due for a pull back? Could be true. Caution is suggested here, but don't give up this bull might wake again.


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.

Read My Disclaimer Here