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July 29, 2017 – Weekend Market Comment


July 29, 2017 –The Nasdaq composite ended 0.1 percent lower at 6,374.68 after falling as much as 0.7 percent. The tech heavy-index climbed its lows as Facebook, Netflix and Google-parent Alphabet erased earlier losses.

The Dow Jones industrial average closed 33.76 points higher at 21,830.31, notching intraday and closing highs. The S&P 500 declined 0.13 percent to close at 2,472.10 after falling as much as 0.43 percent. Consumer staples led seven sectors lower. The major indexes posted a mixed weekly performance, with the S&P and Nasdaq ending slightly lower while Dow rose 1 percent in the time period. Investors also digested a slew of earnings reports this week.


Here is what our charts say:


CLICK HERE: To see the 100 and 200 series charts



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 long ride up.  Bull market -- expect bullish outcomes.
!
103 NYSE High Low Market Forces
Breadth lines very strong. BULLISH

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
Renewed strong industrial production.  That is good news. BULLISH

115 Renko
New Highs BULLISH

203 OBV
OBV (red line) is with the market. Big funds are participating. BULLISH
!
207 VIX
Fear is way low, but has turned here.
CAUTION

209 VIX Evaluator
NEW UP TICK CAUTION


211 S&P500 over 50 day
Now about 66% of stocks are above their 50 day MA,  down from last week when it was 73%. CAUTION

213 Green Arrow
Only put new money to work when I draw a green arrow. 


301 NASDAQ Summation
Nasdaq breadth is wobbly. Recent negative breadth. Pay attention -- could be volatile.
BEARISH
!
303 Aggressive Defensive
Turn to defensive. CAUTION

305 Consumer Bonds vs Equities
Bonds look ready to rebound. Consumer flat. CAUTION

307 Bond Direction
Bonds flat! 
!
309 Sectors
Nasdaq and banks falter, new bounce up in utilities. CAUTION

311 Nations
China and emerging still on top.

313 Major sectors
New life in commodities.


! = Pay attention this chart is important this week.



What I Find Interesting

$2 Million Flushed in NYC

The New York Public Library is famous for the street people who sleep under tarps and mumble to themselves on the front steps each night. Now thanks to 2 million dollars in tax-payer funds, the public washrooms behind the building will feature an upgrade complete with attendant staff, directional lighting, original art, soft music, imported high end fixtures and fresh flowers. Looks like they thought of everything, except maybe a stylish nouveau-chic sharps container for the junkie needles that will get used in there.


Transports Plunge
Thursday the transport index was in free-fall. Those who follow the DOW Theory believe the index is the predictor of the strength of the economy, since goods must be moved before they can be sold. The idea is trouble at FedEx or Railroads, signals lower sales coming at Walmart.



What Works Now

GOLD
Gold was recommended here a few weeks ago. The metal has been on a steady climb for the last 10 days as concerns have been raised about a weak US dollar and a way low VIX index. (Ticker:GLD)


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.


As you know our charts move from the long-term view to the short-term view. As you can see above, long-term is way strong but short term is starting to look over-done with many yellow caution warnings above. 

The earning season so far has been great with tech firms posting great profits. But the smart money knows this is case of "Buy the Rumor Sell the News". Tech has already priced in expected great results and the time for profit taking by the guys who know is here. Everyone can see the VIX is really low and PE ratios are stretched, that is over optimism. It is not a case of is the economy strong, because it is, it is a case of can these high stock prices continue. If you want to "buy low and sell high" you should not be really excited to hear the market made new highs.

As I warned last week, I continue to take high flyers off and replace with defensive choices. The super low VIX, gold raising, utilities rising and the NASDAQ (especially semiconductors, Apple and Google) falling all look like a short-term pull back began Thursday this week. 

It is still a bull market and I am not in cash and not short, but I am conservative... because the air is thin up here. 





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