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August 12, 2017 – Weekend Market Comment

August 12, 2017 – U.S. equities edged higher on Friday as investors weighed tensions between the U.S. and North Korea heading into the weekend. The S&P 500 gained 0.13 percent to end at 2,441.32 with information technology rising 0.75 percent to lead advancers.

The index posted its second-worst weekly performance of the year. It fell 1.43 percent for the week, the most since the week of March 24. The Dow Jones industrial average closed 14.31 points higher at 21,858.32 after briefly dipping into negatively territory, with Apple contributing the most gains. The Dow also closed out its second-worst weekly performance of the year. The Nasdaq composite outperformed, rising 0.64 percent to 6,256.56 as large-cap tech stocks rebounded. The index posted its third-worst weekly performance of the year. Stocks were coming off their worst session since May as tensions between the U.S. and North Korea linger.

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 sell off.  Bull market -- expect bullish outcomes.
103 NYSE High Low Market Forces
Breadth has hit the floor UGLY UGLY UGLY. Notice the second window HUGE RED ALERT. We had many patches like this after mid 2007. BEARISH

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
4 Down Bricks BEARISH
203 OBV
OBV (red line) is near the market. The Big boys are still with the market.

207 VIX
Fear explodes higher.

209 VIX Evaluator

211 S&P500 over 50 day
Now about 43% of stocks are above their 50 day MA,  YOWSERS Way way down from last week when it was 63%. BEARISH

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

301 NASDAQ Summation
Nasdaq breadth is falling. Pay attention -- could be volatile.
303 Aggressive Defensive
Very defensive, news could get better in a week, watch for bounce. CAUTION

305 Consumer Bonds vs Equities
Bonds rise consumer flat. CAUTION
307 Bond Direction
Bonds up!!

309 Sectors
Consumer toast, caution rising utilities and bit of a life in the Nasdaq???

311 Nations
World wide suck! Nothing looks good.

313 Major sectors
World wide suck! Nothing looks good, bit of lift in gold. BEARISH

! = Pay attention this chart is important this week.

What I Find Interesting

Conspiracies in Medicine and Sonic Waves
Remember folks just because you are paranoid, it dose not mean they are NOT out to get you...

My new pet cover-up... the government and hospitals altered death certificates to hide MRSA.. Check it out:­

My previous pet cover up, AIDS was a man made mistake cause by a rouge vaccine trial:

Read on CBC Sonic ray from CUBA targets west....

but we have advanced technology that can defeat it.

­The Warning
If you have not done so please read my rant on why the markets are set for a sell off.

The New way to sneak money out of China is Bitcoin.  Bitcoin mines have sprung up like weeds in China and Russia, two countries with sticker currency controls than most. Watch this 3 min video.

This week bitcoin hit a new all time high. The trouble with Bitcoins are, no one wants to sell you hard goods in trade for them, it is just a process of passing a bar code back and forth between speculators. Until I start seeing oil, land, cars or computers for sale in Bitcoins... it is not a currency any more than pogs.

North Korea From Space
To say North Korea is not an economic powerhouse is more than clear if you fly over the nation at night. The country has almost no electricity for the starving population. Look at the lights of China and South Korea for a stark contrast.

What Works Now

Stock Exchanges
Traders can buy or sell -- win or loose, either way the stock exchange makes commission.. Check out the Chicago CBOE the futures exchange for the whole world.

Baby Powder
Long after Tesla is only a memory and North Korea is only a glowing glass covered canyon -- young mothers in 2035 will be powdering your grandchildren's bottoms with JnJ baby powder and we all will need plenty of JnJ products like Imodium, Rolaids, Motrin, Pepcid AC and Benadryl. The move is on to safe sane and stable firms...Johnson and Johnson (Ticker:JNJ)

(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.

If you read my last two Market Comments you saw the caution signals coming. Stocks are ripe for a correction and we are in a seasonally weak period.

Stocks were hit hard this week with the EW S&P 500 ETF (Ticker:RSP) suffering its biggest decline since early November. RSP is down 2.18% over the last 10 trading days and down 1.70% this week. Even with these losses, the ETF is still less than 3% from a 52-week high and in an uptrend overall. We are definitely in a much more "Risk off" environment. More than 50% of stocks in the S&P Small-Cap 600 are below their 200-day EMA and this is net negative for small-caps.

The S&P 500 SPDR (Ticker:SPY) hit a new high on Tuesday. Finally, on Thursday the S&P500 fell 1.41%, price broke down through two support levels and closed near the day's low, below its 50-day EMA in the process. The cause of this breakdown was attributed to the tensions with North Korea, but I don't agree with that conclusion. North Korea is a contributing factor, I have no doubt, but as the charts showed for the prior two weeks, we were looking for a correction anyway.

This is the sharpest decline since May 17th and also the first time the ETF has moved more than 1% (up or down) since May 17th. Note that the decline on May 17th ended on May 18th as SPY closed back above the 50-day EMA. Yes, the gap down and gut-wrenching decline on May 17th ended the next day. Dips below the 50-day EMA are more likely opportunities than threats when the bigger trend is up and you know the trend is up because of the Bull Bear Lines. Bull Market - expect bullish outcomes is true (until it is not).

That said we have been riding the Trump bump and the momentum has come from his promises. When he can not deliver, the people loose faith in the miracle seller... and we could get our long over due recession. But for now it is STILL a bull market. Don't panic, just use the dip to accumulate defensive high-dividend equities.  

Gold has rallied 2.3% this week on the heels of renewed tension with North Korea. It is trading at its best level in two months, and is threatening to crack the $1,300 level for the first time since the day following the US presidential election.  It is a trade I have endorsed and am still in. But to be clear, I have a finger on the sell button, so if the VIX drps, I will sell my gold. Also Gold is only 10% of my portfolio so I did not say, nor would I say in a bull market, go all in on gold.   It was just sort of a no brainier with months of decline slowing and the VIX at historic lows. Sure I could play VIX futures for a more bank for buck, but also more risk. When the markets are skittish it is no time for heroics.

Deep down I mistrust this market as I said in my blog called The Warning. But I am not smart enough to predict the future, for me markets are about evidence based analysis, not hunches.  Understand as long as the Bull Bear lines are bullish, expect a revival, a recovery, it might be in November but expect it.  If there is a mushroom cloud over Guam or Seoul expect red over green on our chart.  IF the bull bear lines cross then, and only then, can we talk about getting really pessimistic and our tools will be bonds, cash and gold -- but not now (not yet).

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

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