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May 13, 2017 – Weekend Market Comment

May 13, 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. stocks closed slightly lower on Friday to record their first weekly retreat in nearly a month as investors weighed an uncertain political environment stemming from President Donald Trump’s firing of former Federal Bureau of Investigation Director James Comey. 

The S&P 500 index SPX, -0.15% slipped 3.54 points, or 0.2%, to close at 2,390.90. The S&P 500’s subdued action on Friday marks the 13th straight session that the large-cap index moved less than 0.5%, the longest streak since September 1995, according to the Dow Jones Data Group. 

Here is what the charts say this week:

101 Bull Bear
Bull market (dark green over red)  the dark green 50 day average is in a rising uptrend.  NOTICE THE SLOPE (second window), we might be starting another new slope upward.  Bull market -- expect bullish outcomes.
103 NYSE High Low Market Forces
Breadth lines are firmly up!!!

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

203 OBV
Market flat to down but OBV is along. 

207 VIX
Fear craters... hmmm wow that is confidence.

209 VIX Evaluator
All good again.

211 S&P500 over 50 day
Now about 55% of stocks are above their 50 day MA, down from last week when it was 62%.

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

301 NASDAQ Summation
Nasdaq breadth is dying, but NASDAQ has been all the action, now a breather? Pay attention -- could be volatile.
303 Aggressive Defensive
Defensive - Caution

305 Consumer Bonds vs Equities
Bonds up. Consumer flat.

307 Bond Direction
Bonds still trending up.

309 Sectors
Defensives upturn, tech leads, banking lag. BULLISH!

311 Nations
Asia leads! Canada on bottom of range.

313 Major sectors
Commodities fall, especially Iron Ore, global slow down on the horizon?

! = Pay attention this chart is important this week.

What I Find Interesting

China currency controls start to limit overseas investment. It is almost palatable in both Canada and Belize where I have been the last few months, that Chinese investment projects are slowing as access to U.S. funds is drying up. According to Forbes and Deallogic, they are 90% less than last year. Similar controls were reported in the Financial Times. Check out the gloom in this real estate blog it points that Chinese thirst for California real estate may be drying up, that could be 80% of the new buyers gone. As I predicted in The China Problem as upper levels of the elite move their money offshore the door would begin to close the door to lower levels as the capital flight would destroy the debt based economy. 

What Works NowSemiconductors


Chips in Tawian 

(Ticker: TSM)

What I Think

I think we are in a cyclical bull market (since February 2016) within a near record long, secular bull market (since early-2009), and neither show signs of abating. 

Last weeks super low vix was probably unsustainable, and sure enough a sell off is starting. That is not to say that we are not in bull market, because we are, but this pull back is a time to be unleveraged and in safer investments. Raise cash, raise stops and if you are brave, buy the dip. Be very very careful, a big pull back could hit us this week.

This week I am writing to you from the Canadian wine growing region of Osoyoos BC, where spring comes early. 

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

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