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March 11, 2017 – Weekend Market Comment

March 11, 2017 – 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).

U.S. equities rose in choppy trade Friday following a strong jobs report, while investors were already looking ahead to a Federal Reserve meeting next week. The Dow Jones industrial average gained around 45 points, with UnitedHealth Group contributing the most gains. The S&P 500 gained a third of a percent, with utilities outperforming. The Nasdaq composite advanced 0.4 percent. The major indexes, however, posted weekly losses, with the S&P and Nasdaq snapping six-week winning streaks. The Dow snapped a four-week winning streak.
Here is what our charts say:

101 Bull Bear
Bull market (dark green over red)  the dark green 50 day average is in a firm uptrend.  NOTICE THE SLOPE (second window), we might be starting another long ride down.  Bull market -- expect bullish outcomes.
103 NYSE High Low Market Forces
Breadth lines almost crossed, last November this was what set off the year end correction. Also notice the second window three red patches recently. This is the sign the market is running out of steam.

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
Flat but strong industrial production.  That is good news.

115 Renko
Black brick not good

203 OBV
OBV (red line) is beyond the market. likely bounce, Bullish!

207 VIX
Fear is way down.

209 VIX Evaluator
Very much bullish but flatter.

211 S&P500 over 50 day
Now about 68% of stocks are above their 50 day MA,  down from last week when it was 78%.

213 Green Arrow
Only put new money to work when I draw a green arrow. Heading down. Notice loss of TRIX momentum. CAUTION

301 NASDAQ Summation
Nasdaq breadth is rolling over. Pay attention trouble could be brewing.

303 Aggressive Defensive
Clearly defensive. Perhaps overdone. Could be a sharp turn like Jan 1 or a mess like Nov 1.

305 Consumer Bonds vs Equities
Bonds fail. Get used to this in a rising rate environment. Consumer stalls

307 Bond Direction
Bonds sideways moving average. 
309 Sectors
Everything is doing well but consumers. Bazaar.

311 Nations
no comment

313 Major sectors
Ray of hope with gold lagging.

! = Pay attention this chart is important this week.

What I Find Interesting

China Debt
China's corporate debt levels are too high but it will take time to bring them down to more manageable levels, the head of the central bank of China said on Friday, underlining an uphill battle to put the world's second-largest economy on a more sustainable footing.

Click here to read more from Reuters

Or read my own take on the China Problem that I wrote last October.

What Works Now

Northern Trust (Tricker:NTRS)

What I Think

I think this is a bull market. Bull Market means we expect bullish outcomes. Heck folks it has not even been a month since the market hit all time highs. That said a few weeks ago I went on the defensive side of things and that also was the right move. 

Like most defensive moves we see large-caps are holding up quite well over the last few weeks, but mid-caps and small-caps are not and continue to bear the brunt of the correction. "Correction" is the key word here. The long-term trends are clearly up and any weakness would be deemed a correction within these bigger uptrends. Even though SPY and QQQ have yet to correct, we can see corrections unfolding in the S&P SmallCap iShares (IJR) and some other ETFs. 

Charts 103, and 301 measure market breadth. That's a fancy way of saying how many stocks up and how much down. Chart 301 is based on the NASDAQ, and represents smaller companies with more volatile stocks. So it is no surprise that it gives warnings of market weakness much earlier. Chart 103 is a based on the big board NYSE companies and of course reacts slower. The 301 NASDAQ chart has shown weakness for several weeks now, but we are starting to see trouble in the 103 NYSE breadth too. 

Don't panic, it is still a bull market, we might correct here but it is way to soon to worry too much, just be aware. 
I am long but much much more defensive. Anticipating a bounce soon. 

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

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