4-16-17 Market Commentary

 

 

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Market Breadth: With this past week’s market decline, our Bull/Bear Point and Figure Ratio at 1.27 fell slightly from 1.34 last week, continuing within bullish territory. The total count of securities in bullish or bearish patterns decreased 1% to 3037. The count of bearish stocks increased 2%, while the count of stocks in bullish patterns decreased 4%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now twenty-two 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 zero (0) 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 neither Accumulation nor Distribution mode on lower average daily volume.

Momentum: Now at -101.23, down from +8.17 last week, the CCI(20) daily formed a ZLR (Zero Line Reject) Long entry signal at Monday 4/10 close. However, the next day, at Tuesday 4/11 close, the CCI(20) daily dropped below the ZLR pivot, so we exit the trade at Wednesday 4/12 open. The result of the trade was a loss of 7.57 points on the NASDAQ or $0.04 per share of QQQ. There are now 3 consecutive days of the CCI(20) daily below zero.
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 fifty weeks ago, while the Daily CCI(20) began a Woodie’s up trend twenty-one weeks ago.
The CCI(20) weekly has fallen to +66.51 from +92.59 last week. We await the return of the CCI(20) weekly to the +/-50 range for another trade.
Industry Rotation the last two weeks: Four of the top five industries are  positive and all of the bottom five are negative. Summary: Gold & Silver and REITs on top; Banks, Brokers, some Tech, and Oil Services on the bottom. Bullish: REITs continues in the top five. Oil Services PHLX has re-entered the bottom five. Bearish: KBW Bank, Brokers, and Networkers continue in the bottom five.  Semis PHLX has entered the bottom five. Gold & Silver PHLX has re-entered the top five. Computer Hardware and Disk Drives have left the top five.
Focus this week: From www.macromon.wordpress.comWhy the Equity Bull Market Must Continue“. The following are some key points and charts.

  • …the last time Private and State & Local Government Pensions were fully funded was at the end of the stock market bubble in 2000.
  • …even with stocks making new highs,  these pensions remain $2.33 trillion, or 27 percent of their assets,  underfunded at the end of 2016.
  • One would think the slope should be headed south as stocks rise, no?  Just as it was from 1995 to 2000.   On the contrary,   unfunded entitlements are heading parabolic north.

  • Could [the cause] be a combination of an under-allocation to equities since the dot.com and financial crash (see charts) and rising pension entitlements,  mainly in state and local government retirement funds?   Probably more the result of the later.

  • It seems the only way out of the pension mess — other than massive contributions, tax increases, or defaults — is a humungous equity bull market with pensions appropriately positioned.
  • Will Janet Yellen and President Trump do “whatever it takes to preserve” the pensions?   And will it be enough?

–Donald Pirl www.s2pmarketsignal.com


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