2-19-17 Market Commentary



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Market Breadth: With this past week’s market advance, our Bull/Bear Point and Figure Ratio at 1.78 rose slightly from 1.72 last week, continuing within bullish territory. The total count of securities in bullish or bearish patterns increased 3% to 3208. The count of bearish stocks increased 1%, while the count of stocks in bullish patterns increased 5%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now fourteen weeks in bullish territory. Paid subscribers have access to the OpenOffice Calc data from which the chart is generated.

The well known market breadth indicator, the NASDAQ McClellan Summation Index (NASI) rose 137 points for the eighth advance in fourteen weeks. At a positive 324.87   points, it has risen back above the the November 2014 top, and the March 2015 top, but continues below the December 2016, April 2016, May 2016, and August 2016 tops above +100, and it continues above all five bottoms below -100 in the last 3 years. 

Volume Analysis:
In this week’s volume analysis, the NASDAQ Composite Index ended in neither Accumulation nor Distribution mode with average daily volume higher than the prior week. In the last two weeks the NASDAQ had four (4) Accumulation days and no (0) Distribution days. (Accumulation days are counted when the index closes up on higher volume than the prior day while Distribution days occur when the index closes down on volume higher than the prior market day.) Last week the NASDAQ ended in neither Accumulation nor Distribution mode on lower average daily volume.

: Now at +149.62 up from +145.52 last week, we wait for the CCI(20) daily to return to the +/- 50 zone for a new trade.
In Woodie’s CCI trading system, six consecutive bars above or below zero are required for a change of trend. The Weekly CCI(20) of the NASDAQ Composite Index began a Woodie’s up trend forty-two weeks ago, while the Daily CCI(20) began a Woodie’s up trend thirteen weeks ago.
The CCI(20) weekly has risen to +172.97 from +156.90 last week. We await the return of the CCI(20) weekly to the +/-50 range for another trade.

Industry Rotation the last two weeks:
All of the top five industries are  positive and all of the bottom five are negative. Summary: Some Tech, Retail, and Banking on top, Gold & Silver and Oil on the bottom. Bullish: KBW Bank and S&P Retail have entered the top five. Gold & Silver PHLX has entered the bottom five. Computer Hardware continues in the top five. Oil continues in the bottom five. Semis PHLX has left the bottom five. Oil Services has re-entered the bottom five. Bearish: Brokers and Networkers have left the top five.

Focus this week: From www.zerohedge.comWhat’s Wrong With This Picture?” The following are some key points and charts.

  • Turn on any mainstream business channel (or President Trump’s tweet stream) and you will be told how ‘awesome’ everything is going to be… look at stocks, look at sentiment surveys, look at consumer confidence, look at small business optimism.

    There is two small problems with all of this…

    1) The ‘hard’ data is not confirming the ‘soft’ data at all…

    Philly Fed beating by 10 standard deviations, NFIB small business optimism at record highs, but Industrial Production is dropping, real wages are shrinking, and the housing market is imploding.

    And 2) Earnings Expectations are declining

  •   As Factset notes, the S&P 500 forward P/E is at its highest since 2004
    Back on December 31, the forward 12-month P/E ratio was 16.9. Since this date, the price of the S&P 500 has increased by 4.8% (to 2349.45 from 2238.83), while the forward 12-month EPS estimate has increased by only 0.5% (to $133.49 from $132.84). 

    Thus, the increase in the “P” has been the main driver of the increase in the P/E ratio to 17.6 today from 16.9 at the start of the first quarter.

–Donald Pirl www.s2pmarketsignal.com

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