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August 05, 2017 – Weekend Market Comment

August 5, 2017 – Dow rises to 8th straight record close after much stronger-than-expected jobs report. The Dow Jones industrial average hit a record high and closed 66.71 points at 22,092.81. Goldman Sachs contributed the most gains. The index also posted its eighth straight record close.

The S&P 500 gained 0.19 percent to close at 2,476.83, with financials rising 0.72 percent to lead advancers. The Nasdaq composite closed 0.18 percent higher at 6,351.56.

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 flattening uptrend.  NOTICE THE SLOPE (second window), we might be starting another long ride up, with a short term pull back.  Bull market -- expect bullish outcomes.
103 NYSE High Low Market Forces
Breadth lines nothing but strength.

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 stronger industrial production. All hail the Trump Bump. BULLISH
115 Renko
Down Brick CAUTION

203 OBV
OBV (red line) is sorta near the market. 

207 VIX
Fear is way low, but could turn here.

209 VIX Evaluator

211 S&P500 over 50 day
Now about 63% of stocks are above their 50 day MA,  down from last week when it was 66%. CAUTION

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

301 NASDAQ Summation
Nasdaq breadth is falling. Pay attention -- could be volatile.
303 Aggressive Defensive
Very defensive. CAUTION

305 Consumer Bonds vs Equities
Bonds rise consumer flat. CAUTION

307 Bond Direction
Bonds flat! 

309 Sectors
Consumer toast, caution rising utilities.

311 Nations
China and emerging rule.

313 Major sectors
China and emerging rule.

! = Pay attention this chart is important this week.

What I Find Interesting

This week I find ME interesting
I have been mentioning in bits here and there, what can go wrong with the market in the near term. This week I read a letter from Howard Marks that was very in line with my thinking on the current market. We both are known for seeing things "via telescope" so this maybe way early, but when the market falls apart in a year or two I bet you will see we nailed it. So for the next while I will be listing this CME4PIF Thoughts article for general reference, so I don't need to repeat myself here. Please click here to read Howard Marks and the Warning of 2017. Don't forget the sky is probably not falling now, this is a bull market. Going forward as you see the problems mount, you will understand why you should curb your enthusiasm.

The price of West Texas Crude broke $50 this week... The world is awash in oil and I can only think of two reasons for the price to rise... Summer driving season and a Republican President? For proof you will notice representatives of some OPEC and non-OPEC nations (read as USA puppet nations) will meet in the United Arab Emirates capital on Aug. 7-8 to discuss why some of them aren’t fully implementing their commitment to cut output, according to an OPEC statement.

Home Sales Drop 40% in Toronto
According to a press release from the ever optimistic  Toronto Real Estate Board, Although home prices are still stuck in the $1Million average price in Toronto the pace of sales has almost halved, can price drops be far behind?

Consider Toronto in the late 80's when the average home cost $273,698, then a 30-year high. Five years later, that average had bottomed at $198,150. That looks cheap compared to the $900,000+ that Toronto house now sells for. If we see a 1/3 drop this time, a lot of people will be $300,000 underwater on their mortgage, Yousers!

The economy in Canada has been addicted to residential construction jobs. According to an article on the CBC website. The nearly one million housing sector jobs now far outstrip those in oil and gas extraction and mining combined and approach the size of the manufacturing sector, economists brace for a painful reckoning if the housing slowdown turns into a long correction.

What Works Now
Emerging markets are doing very well, previously we looked at India, now lets see South Korea 3X. (Ticker: KORU)

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.

This is a bull market -- just this week the Dow Gained 600 Points In 9 Days and hit a new record high. Anytime you see that strength you know not to get to gloomy.

That said, the apatite for risk is down. You will notice in the grid above many short term indicators in the 200 series say CAUTION. My 301 chart on Nasdaq breadth show that investors are doing what told you I started 2 weeks ago,  lightning up on risk. As tech stock look headed lower big firms like the DOW stocks do better. A trader I know is short semiconductors after their recent run up and I see why. The FANG Stocks suffered their worst week since June. But really is it a dip or sell off? For now I would say dip, because on Friday Gold dropped 1% in a day -- its worst day in a month. Also emerging markets are doing very well, I think that is over done too. So conservative yes, but is the sky is falling? not yet.

However, the "not yet" is probably coming in under a year, could be this fall or spring of 2018, who knows. Trees don't grow to the sky and this bull run has been going on a long time.

This market is priced to perfection as I detailed in my thoughts blog. The insiders are right to load up on conservative plays, because I do hear very very distant thunder.

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