4-9-17 Market Commentary



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Market Breadth
: With this past week’s market fractional decline, our Bull/Bear Point and Figure Ratio at 1.34 rose slightly from 1.31 last week, gaining strength, continuing within bullish territory. The total count of securities in bullish or bearish patterns increased 3% to 3083. The count of bearish stocks increased 1%, while the count of stocks in bullish patterns increased 4%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now twenty-one 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 39 points for the twelfth decline in fifteen weeks. At a negative 33.95 points, it continues below all seven tops above +100, and it continues above all four 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 two (2) Accumulation days and two (2) 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 Distribution mode on lower average daily volume.

: Now at +8.17, down from +121.64 last week, the CCI(20) daily is now within the +/-50 range for a valid ZLR (Zero Line Reject) Long entry. The Woodie’s trend remains Up.
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-nine weeks ago, while the Daily CCI(20) began a Woodie’s up trend twenty weeks ago.
The CCI(20) weekly has fallen to +92.59 from +94.86 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 four of the bottom five are negative. Summary: Some Tech, Oil and REITs on top, Some tech and Brokers on the bottom. Bullish: Computer Hardware continues in the top five. REITs continues in the top five. Disk Drives has re-entered the top five. Gold & Silver PHLX has left the top five. Bearish: KBW Bank and Brokers continue in the bottom five.  Networkers has entered the bottom five. Oil Services PHLX and Oil have left the bottom five.
Focus this week: From wolfstreet.comGreat Debt Unwind: Consumer Bankruptcies Jump, First since 2010. Commercial Bankruptcies Spike“. The following are some key points and charts.

  • Don’t blame the oil bust… Commercial bankruptcy filings skyrocketed during the Financial Crisis and peaked in March 2010 at 9,004. Then they fell sharply until they reached their low point in October 2015. November 2015 was the turning point, when for the first time since March 2010, commercial bankruptcy filings rose year-over-year.

  • At first, they blamed the oil bust. But now the price of oil has somewhat recovered, banks have reopened the spigot, Wall Street has once again the hots for the sector, new money is gushing into it, and oil & gas bankruptcy filings have abated.

  • So now they blame brick-and-mortar retail which is in terminal decline, given the shift to online sales, but brick-and-mortar retailers include countless smaller operations and stores that no ratings agency follows because they’re too small and can’t issue bonds, and many of them are even more distressed. Businesses file for bankruptcy protection because they have too much debt. Even brick-and-mortar retailers with little debt can get by just fine. Their sales might decline, and they might not make much money, but they can keep going. However, brick-and-mortar retailers with large amounts of debt are toast.

  • Total US bankruptcy filings by consumers and businesses in March spiked 40% from February and rose 4% year-over-year to 81,590, the highest since March 2015:

  • The Fed’s monetary policies have purposefully encouraged businesses and consumers to borrow. But debt doesn’t just go away. It accumulates. By now, an increasing number of businesses and consumers are suffocating under this debt overhang in an economy that never developed the “escape velocity” needed – and hyped by Wall Street for years – to outgrow this debt. 

  • The irony is thick: In all major sentiment surveys, economic confidence has soared since November: consumers, owners of small businesses, and corporate executives are riding high on their own ebullience. But the economic reality is tough for businesses and consumers struggling under the hangover from eight years of ultra-low interest rates.

–Donald Pirl www.s2pmarketsignal.com

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