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June 16, 2018 – Weekend Market Comment

June 16, 2018 – Stocks slashed losses to close well off the lows of the day on Friday as the "BTFD - Buy the Dip" crowd shrugged off worries about higher interest rates and a U.S.-China trade war. Traders are living the "Hakuna Matata" mantra as America picks fights with its allies and makes meaningless packs with its enemies.  But hey... we all got jobs building McMansions for a while. 
The Dow Jones industrial average closed 84.83 points lower at 25,090.48, with Caterpillar as the worst-performing stock in the index. The S&P 500 fell 0.1 percent at 2,779.42 — after briefly turning positive — with energy lagging. The NASDAQ composite slipped 0.1 percent to 7,746.38.

100 Series: In Market? Aggressive or Defensive?   
CLICK HERE: View 100 series charts

101 Bull Bear
Bull market (dark green over red)  the dark green 50-day average is in an upward trend. Also the current price is well above the 50-day moving average. Notice the second window, the slope crossed over zero decisively. That means we can expect good things to come. Splendid!  BULLISH Bull market -- expect bullish outcomes.

103 NYSE 52-week high low market forces
Breadth positive. Looks like steady improvement.  February dip below 400 on the second window, is not great but looks like we are getting past that danger, I would like to see second window break 200 for real enthusiasm. BULLISH
105 Aggressive Defensive
Aggressive but TSI (first window) warned possible switch is coming soon?   BULLISH

Long-term Investors: Stay the course it is still a bull market.
Swing Traders: Remain aggressive. The path of least resistance is up.

100 Canadian Series: In Market? Aggressive or Defensive?   CLICK HERE: View 100 Canadian series charts  

200 Series: Market Health   CLICK HERE: View 200 series charts

201 Renko
Many Up Bricks. BULLISH

203 OBV
OBV (red line) rejoined the market then got a bit shy. The big boys have faith. BULLISH

207 VIX
VIX stuck near 12. 
209 VIX Evaluator
Down (good thing) in general. BULLISH

211 S&P500 over 50-day
70% of stocks are above their 50-day MA, above last week when it was 68%. Wow this is overly strong!  BULLISH

213 NASDAQ Summation
Breadth is strong. NASDAQ is on fire, but looks toppy? BULLISH

215 Bonds vs Consumer
Bonds put in a mid-term bottom. Consumer stronger. BULLISH

217 Non-Farm Payroll
Lots of jobs! But beware this is lagging indicator. The smart money is gone before this turns down. BULLISH

219 Industrial Production
Strong industrial production. But beware this is lagging indicator.  BULLISH

300 Series: Market Segments   CLICK HERE: View 300 series charts

301 Bond Direction
Long-term bonds rising. CAUTION 

303 Sectors
NASDAQ and consumer rule, but notice an uptick in defensive and utility stocks. CAUTION

305 Nations
Emerging hurting -- first world does better.

307 Major Sectors
Commodities SPLAT! Gold is weak under this strong market and rising dollar. Emerging is weak. Only USA strong.

! = Pay attention this chart is important this week.

The Warning
If you have not yet please read my post from last August: "The Warning of 2017"

Put Call Ratio
The Put Call Ratio is good gauge of investor sentiment, In this chart are 3 of them (bottom three windows) as the painted zones hit the bottom it means maximum investor bullish behavior. Of course when you run out of buyers all that is left is sellers, so that could be what we get next.  

Also the NAAIM Pro Participation index is very high -- again out of buyers soon. 

So Unfair or Is It?
A few think America gets the raw deal in the G7 partnership  -- but the numbers don't bear that out. 

Infographic: How Does America Compare to Other G7 Countries? | Statista You will find more infographics at Statista

Shop Until Ya Drop!
The U.S. consumer is key to American economy, in fact, chart 215 boils the economy of the U.S. into two lines, bonds in relation to the market -- show fear and the consumer in relation to the market -- shows the economic engine. 

Consumer discretionary rules this June!  The (Ticker: XLY) consumer discretionary ETF has posted gains every day in June, and it also closed above its open every day.  When was the last time we saw that?

Apple Targets the Couch
According to Apple P.R. department, Apple is signing up with Oprah Winfrey to develop TV content for Apple TV. Apple has not said how it plans to distribute its programming, to which it has committed an initial $1bn.
The partnership is the biggest original content deal struck by Apple so far as it aims to compete with Netflix Inc, Inc and Time Warner Inc’s HBO.

As I predicted back in 2013, in The Future of Zombietown, today's tech giants are gearing up for an epic content war as they battle to take over the entertainment business. 

In other news, readers were surprised when again, this months cover of O magazine featured a picture of Oprah Winfrey.

Beware SIFI Droop
I have been talking about the large banks around the world in trouble. The Financial Stability Board rates firms and selects ones that are "Too Big to Fail" these represent a systemic risk to the global financial system. The term is Systemically Important Financial Institutions (SIFI). According to Ian Hartnett, at Absolute Strategy Research --  The FSB says there are 39 SIFIs, of these 39 SIFIs, these are the 16 in bear market territory: Deutsche Bank, Nordea, ICBC, UniCredit, Crédit Agricole, ING, Santander, Société Générale, BNP Paribas, UBS, Agricultural Bank of China, AXA, Mitsubishi UFJ Financial Group, Bank of China, Credit Suisse and Prudential Financial. Also not looking great you can add Goldman Sachs.

WTF Friday?
We sure went all over the place on Friday, as I warned you last week it was Quadruple Witching and the market bounced around. If you don't know what Quadruple Witching means CNBC has a quick 40-second video.

What you need to know about 'quadruple witching' from CNBC.

From Luxury to Dive
According to the New York Times, a former Macy's store in Virginia has been converted into a homeless shelter. It even has a former Macy's employee as a resident. Providing 60 beds and hot meals to the people who once worked and thrived in this community. I find this symbolic of how American urban centers and shopping habits have changed. 

Ha Ha

RingCentral is larger than the post-merger Mitel business and the stock has been on a roll in 2017 with a 90% year-to-date market return. Basically, they outsource your phone system to a web system. On the other hand, the company is unprofitable and difficult to value by any other metric than pure revenue growth. (ticker: RNG)

The IBD 50
Investors Business Daily is a newspaper by William O'Neil,  that publishes figures used to pick momentum stocks the way Bill did in his book "How to Make Money in Stocks". The system is called CANSLIM. You can ditch the Newspaper and all that work and just buy this ETF that does all the for you. (Ticker: FFTY)

U.S. Tech Stocks
Why just own FAANG when you can own 138 great technology companies in one investment? The iShares U.S. Technology ETF offers exposure to the U.S. Technology firms -- tracking a diversified, market-cap-weighted index.  It trades well, with tight spreads. A well-run with a competitive expense ratio of less than 1/2%. (Ticker: IYW)

Canadian Momentum
Mentioned previously, this ETF finds what works now in the Canadian stock market and holds it. (Ticker: WXM)

If you want to put a segment of your funds outside of US let's look at some top performing nation based ETFs. 

Here are my picks for June buy on last day of May.
50% EIRL Ireland (they are not in the news now)
35% EIDO Indonesia 
15% KSA Saudi Arabia (they have oil)

I think we are in a near record long, secular bull market (since early-2009).

The market has done a good job of whistling past the graveyard when it comes to trade policy, the full effect we are yet to see. The Fed raised rates and no one gave a hoot. 

It is a bull market and of course with some concerns. I look at chart 105 and it looks like it might go defensive soon, that could mean it is a bad time to get overly aggressive. I also see on chart 303 that momentum is building in utilities, so we might be late to be putting new money to work. Also some key defensive stocks like Archer Daniels are breaking out after a long slumber -- that is concerning too. But we have NOT got a defensive market signal yet, so stay long and the party is still on for now.  

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