4-30-17 Market Commentary



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Market Breadth: With this past week’s market advance, our Bull/Bear Point and Figure Ratio at 1.51 rose from 1.33 last week, advancing within bullish territory. The total count of securities in bullish or bearish patterns decreased 5% to 3150. The count of bearish stocks decreased 3%, while the count of stocks in bullish patterns increased 10%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now twenty-four 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 193 points for the fifth advance in seventeen weeks. At a positive 120.81 points, it continues below all six 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 Distribution mode with average daily volume higher than the prior week. In the last two weeks the NASDAQ had three (3) 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 +166.18, up strongly from +101.36 last week, the CCI(20) daily Woodie’s CCI(20) daily up trend continues. We wait for the CCI(20) daily to return to the +/-50 range for a valid ZLR (Zero Line Reject) long entry signal.
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-two weeks ago, while the Daily CCI(20) began a Woodie’s up trend twenty-three weeks ago.
The CCI(20) weekly has risen to +124.62 from +76.99 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: Brokers, S&P Retail, and some tech on top; Gold & Silver, Oil Services, REITs, and some tech on the bottom. Bullish: Gold & Silver PHLX has entered the bottom five. Oil Services PHLX continues in the bottom five. Brokers, S&P Retail, Semis PHLX, and Comp Tech have entered the top five. KBW Bank has left the bottom five. Bearish: REITs have left the top five and entered the bottom five. Computer Hardware has entered the bottom five. Oil has left the bottom five.
Focus this week: From www.zerohedge.comHedge Fund CIO: What Central Banks Have Done Is “Stunning, Unprecedented”

…from Eric Peters of One River Asset Management …why what central banks are trying to do is impossible, why the trend of inflation over the past 70 years is “stunning and unprecedented” and why “volatility suppression” always eventually fails.

  • “For all of history – prior to 1955 – there was roughly equal probability of inflation or deflation in any given year,” said the economic historian.

  • “But since 1955 we’ve experienced uninterrupted annual inflation. It’s a stunning fact, unprecedented. To an economist in 1955, the coming 60yr inflation would have appeared less probable than a catastrophic meteor impact.”

  • After enduring a series of world wars, and social upheavals, policy makers conducted an experiment, removing the deflationary left-tail of our economic cycles.

  • “We created history’s greatest volatility-suppressing machine, and it delivered breathtaking stability.” Of course, we endured volatile periods since 1955. But life is short. And we thus lack the reference points to compare our minor wobbles to the wild booms and busts of our great grandparents.

  • “Minsky taught us that stability begets instability. And it stands to reason that our volatility-selling machine will break one day. We saw a glimpse of this in 2008-09.”

  • Perhaps the only thing more surprising than the severity of that crisis was the response of our body politic. “In 2007 if you had shown the top 100 economists a list of the extraordinary measures that central banking and economic elites would unleash in the coming decade, not a single one would have believed you.”

  • Politicians hate change. With very few exceptions, they stand for stasis. Our central bankers seek stability. And investors have learned to front-run them all, selling volatility into every spike using ever more complex strategies.

  • But volatility suppression at the lows is much easier in many ways than at the highs. In a crisis, our central banks simply go full-throttle. At the highs though, they seek the unattainable, which is perfect economic balance in a world that is inherently unstable – they attempt to crystallize the entire ecosystem. Which is as arrogant as it is impossible.”

And this is what central planning looks like visually:

–Donald Pirl www.s2pmarketsignal.com

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