Skip to main content

April 01, 2017 – Weekend Market Comment

April 1, 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).

Signs abound of a reheating market. The Nasdaq booked its biggest quarterly advance (more than 530 points for about a 10% gain) since the fall of 2013. And since the Nov. 8 election fueled hopes for a package of market-friendly policies, the index has advanced nearly 14%.

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 are firmly up. 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. 

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 2 down... caution.
203 OBV
OBV (red line) is slightly below the market. But the pros are still with this market. If ths gets worrse worry.

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 61% of stocks are above their 50 day MA,  up from last week when it was 56%.
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 returning. Pay attention -- could be volatile.
303 Aggressive Defensive
Aggressive, may not hold.

305 Consumer Bonds vs Equities
Bonds drop. Consumer up tick. BULLISH

307 Bond Direction
Bonds sideways moving average. 

309 Sectors
Everything is doing well but banking. Bazaar.

311 Nations
Germany doing well boads well for western markets.

313 Major sectors
Not much to say

! = Pay attention this chart is important this week.

What I Find Interesting

When apartheid ended in South Africa, the former (mostly white) major landholders fled predicting the nation would not have competent government to replace the existing system. This view was widely viewed as self-serving and simply racist. Obviously in many nations people with black skin rule their nations successfully -- Tanzania is a good example. However it does appear, as predicted, in the case of South Africa, the transition was too fast. Today it is clear there is a reason beyond prejudice that the change in power should have been slower and more cooperative. 

Once again South Africa’s government is in turmoil after president Jacob Zuma (pictured above) axed the finance minister and his deputy and shuffled 18 other cabinet members in a dramatic midnight move on Mar. 31. The removal of finance minister Pravin Gordhan followed many months of animosity between Zuma and Gordhan. Still, the market reaction shows an economic recklessness on the part of the president, and investor's fears that the president and his cronies have strengthened their grip on the national treasury. The aftermath of Zuma’s shuffle also reveals a decision that was taken unilaterally, excluding even the ruling African National Congress.

South Africa was once the shining star of Africa's economy, is today suffering immeasurably as it spirals into decay and decline.  In 1990 the average per capita income was ranked 50th in the world, but this has slipped to 77th in 2013. 2016 was a disaster and SA GDP dropped nine places to 86th place. Today the average Chinese citizen and the average person from Azerbaijan; Turkmenistan; Belarus and Bulgaria are all richer than the average South African. In fact, South Africans are now in the bottom half of the world in terms of income. On a per capita basis, the average person there earns only 63% of the average person globally. South Africans of all races are hurt by rising crime, falling GDP and feeling investors, under one of the most disorganized and and corrupt governments in the world.

What Works Now

Advanced Micro Devices (Ticker:AMD)

What I Think

I think we are in a bull market and you must expect bullish outcomes. So yes we could continue a bounce upward.

Many indicators, especially breadth look a bit better, but this is not the roaring market of last year. Chart 213 the Green Arrow Chart has a TRIX that has rolled over. In other words the greater trend maybe lower or at least sideways.  We also had the red splashes recently on the chart 103 and that is always concerning.

So yes it is a bull market... but this is a very tired bull. Don't panic, but proceed with caution. This is a fully valued market and it only has select opportunities.

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