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March 25, 2017 – Weekend Market Comment

March 25, 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 closed mixed Friday after a choppy trading session after U.S. House of Representatives pulled a key health-care bill. The Dow Jones industrial average, which had traded more than 100 points lower earlier in the session, closed about 60 points lower. However the memorable day this week was Tuesday March 21 the DOW fell by about 238 points, a drop of more than 1%. It was its biggest slide of the year and biggest decline since the Trump election.

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, but this was narrowly avoided. Also notice the second window three red patches recently. We had many patches like this after mid 2007. This is the sign the market is running out of steam. See the What I Find Interesting section below.

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
12 up but the latest is down... caution.
203 OBV
OBV (red line) is slightly below the market. But the pros are still with this market. 

207 VIX
Fear is on the way up, but could stall here.

209 VIX Evaluator
Don't panic yet but that is an up tick ... hmmm.

211 S&P500 over 50 day
Now about 56% of stocks are above their 50 day MA,  down from last week when it was 69%.
213 Green Arrow
Only put new money to work when I draw a green arrow. Notice loss of TRIX momentum. CAUTION

301 NASDAQ Summation
Nasdaq breadth is evaporating. Pay attention --trouble -- could be volatile.
303 Aggressive Defensive
Just turned aggressive, may not hold.

305 Consumer Bonds vs Equities
Bonds win, "smart money" heading for the exit? Consumer up tick. 

307 Bond Direction
Bonds sideways moving average. 

309 Sectors
Everything is doing well but banking. Bazaar.

311 Nations
Global lift in the anything except USA trade

313 Major sectors
Ray of hope with gold lagging.

! = Pay attention this chart is important this week.

What I Find Interesting

One reader asked last week how I knew recently the market was getting soft and if I could give some advise to lower risk. Regular readers of the Market Comment know that I am big believer in using Market Breadth as my "canary in the coal mine". 

I could write a ton of stuff here, but I said it so well before in Lesson 5 of the CME4PIF school. Please revisit that lesson to see why I am less impressed with the market right now. 

Now lets visit chart 103 our NYSE High Low chart:
Notice the red spikes in the histogram (second window). 

The NASDAQ is even worse: 

It is too soon to panic, but I think we could easily be heading into a period of choppy markets. Choppy trading periods often preceded a recession, but in the markets, nothing is 100% certain. 

What Works Now
China Unicom (Ticker: CHU) is a huge telecommunications company -- it ranks 4th in the world for subscribers. 

What I Think

Bull market expect bullish outcomes. So yes we could have a bounce upward.

Last week I  added a few aggressive positions, well that lasted a about an hour into Tuesday. I was glad it was not a big positions because of a warning  I wrote here:  "it is still good to be cautious we have had red patch on the NYSE breadth chart (chart 103) recently and that is not a good sign". I also said "Clearly everyone is long, and that is dangerous". 

So yes it is a bull market... but this is a very tired bull. Don't panic, but raise your stops, stay away from risk and take some profits. 

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