3-19-17 Market Commentary



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Market Breadth
: With this past week’s market fractional advance, our Bull/Bear Point and Figure Ratio at 1.46 was up from 1.19 last week, gaining strength within bullish territory. The total count of securities in bullish or bearish patterns increased 2% to 3258. The count of bearish stocks decreased 10%, while the count of stocks in bullish patterns increased 11%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now eighteen 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) fell 57 points for the ninth decline in eighteen weeks. At a positive 20.46 points, it continues below all seven 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 Accumulation mode with average daily volume higher than the prior week. In the last two weeks the NASDAQ had five (5) Accumulation days and one (1) Distribution day. (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 +154.81 up from +60.83 last week, the CCI(20) daily after signaling a valid ZLR (Zero Line Reject) Long entry for Monday 3/13 open on Friday 3/10 continues in the trade. At Tuesday 3/14 close, the CCI(20) fell, but not below teh ZLR pivot, so we remained in the trade. We will follow the results of this trade simulation in next week’s commentary.
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-six weeks ago, while the Daily CCI(20) began a Woodie’s up trend seventeen weeks ago.
The CCI(20) weekly has fallen to +119.08 from +122.02 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 and Gold & Silver on top, Oil, Oil Services, Banking, and REITs on the bottom. Bullish: Semis PHLX and Disk Drives continue in the top five. Computer Hardware has entered the top five. Oil Services PHLX continues in the bottom five. Oil has entered the bottom five.  Bearish: REITs continues in the bottom five. KBW Bank has left the top five and entered the bottom five. Comp Tech has left the top five. Gold & Silver PHLX has left the bottom five ad entered the top five.
Focus this week: From www.dailyreckoning.com “More Proof of Janet Yellen’s Idiocy” by David Stockman. The following are some key points.

  • Traders understandably believe that this monetary farce can continue indefinitely, and that our Keynesian school marm’s post-meeting presser was evidence that the Fed is still their friend.

    No it isn’t!

  • Janet Yellen’s sing-song gibberish was the equivalent of a monetary DEFCON 1, alerting all except the most addicted Kool-Aid drinkers to get out of the casino.
  • But once it begins to withdraw substantial amounts of cash from the canyons of Wall Street as per its newly reaffirmed “normalization” policy, the whole house of cards is destined to collapse.

    There will be a stock market implosion soon, and that will in turn generate panic in the C-suites as the value of stock options vanish. Like in the fall of 2008 — except on an even more sweeping and long-lasting scale — corporate America will desperately unload inventories, workers and assets to appease the robo-machines of Wall Street.

    But there is nothing left to brake the casino’s fall.

  • …the market is priced as if the business cycle has been outlawed and as if the feckless band of Keynesian pretenders who have seized control of financial markets have ushered in the Nirvana of permanent full-employment. World without end.

    Needless to say, they haven’t because they haven’t repealed the law of supply and demand. That is, if the Fed plans to keep raising until rates until they reach 3.0% by 2019, it will have to suck massive amounts of cash out of the financial markets.

  • At the peak level of its cash hoard on October 24, the U.S. Treasury was sitting on $482 billion of cash.

    But as of Wednesday, the Treasury’s cash balance stood at just $77 billion, meaning it burned through $305 billion of cash in just 51 calendar days since the inauguration, and nearly $360 billion since the October 24 peak.

    But now that the debt ceiling is again frozen into place, an explosive political crisis is coming soon.

    There is simply no pathway to a Congressional majority to raise it until Washington reaches the brink of political crisis and has gone beyond.

  • This time there will be no timely compromise.

    That’s because the Deep State and its Democratic shills are attempting to re-litigate the election, while the Donald has declared war on them in turn — compounded by his aggressive actions on the immigrant ban, deportation of illegals and the erection of provocative controls and walls at the Mexican border.

    The fact is, as a political matter, Hispania is the 51st state, and the channel through which the Democrats hang on to power. They will not support a debt-ceiling increase unless Trump throws in the towel on Obamacare and his anti-immigrant dragnet.

  • Again Wednesday she [Yellen] professed to see no bubbles anywhere, while floundering incoherently when asked about the timing of the Fed’s belated normalization campaign. A questioner wondered why the Fed is now raising rates just as the U.S. economy shows signs of gathering weakness and the global economy — centered in China and its supply chain — lurches forward in a slow-motion train wreck.

    Anyone buying stock based on confidence that the Fed has their back notwithstanding Wednesday’s action surely deserves the pounding just ahead. What Yellen had to say doesn’t even reach the status of babbling; it was flaming incoherence:

    Well, look, our policy is not set in stone. It is data-dependent and we’re — we’re not locked into any particular policy path. Our — you know, as you said, the data have not notably strengthened. I — there’s noise always in the data from quarter to quarter. But we haven’t changed our view of the outlook. We think we’re on the same path, not — we haven’t boosted the outlook, projected faster growth. We think we’re moving along the same course we’ve been on, but it is one that involves gradual tightening in the labor market.

  • When it finally pops Yellen and her posse of Keynesian money printers will be incoherent, speechless and finished.

    And that pop could come awfully soon.

–Donald Pirl www.s2pmarketsignal.com

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