June 4, 2017 Market Commentary

 

 

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Market Breadth: With this past week’s market advance, our Bull/Bear Point and Figure Ratio at 1.41 rose from 1.30  last week, advancing further into bullish territory. The total count of securities in bullish or bearish patterns decreased 1% to 3093. The count of bearish stocks decreased 6%, while the count of stocks in bullish patterns increased 2%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now one week 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 25 points for the fourth advance in six weeks. At a positive 118.35 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 neither Accumulation nor Distribution mode with average daily volume higher than the prior week. In the last two weeks the NASDAQ had one (1) Accumulation day 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 +196.40, up from +177.35 last week and without dropping below +100 for the week, the CCI(20) daily Woodie’s CCI(20) up trend and ZLR Long trade simulation continues. At Friday 5/19 close after 2 days below zero, it formed a valid ZLR (Zero Line Reject) long entry signal for Monday 5/22 open. We will continue to follow this trade simulation in next weeks 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 fifty-seven weeks ago, while the Daily CCI(20) began a Woodie’s up trend twenty-eight weeks ago.
The CCI(20) weekly has risen to 175.91 from 161.57 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 on top; Oil Services, Oil, Gold & Silver, and Banks on the bottom. Bullish: Semis PHLX, Disk Drives continue in the top five. Networkers have entered the top five. Gold & Silver PHLX has entered the bottom five. Oil and Oil Services PHLX continue in the bottom five.  Bearish: KBW Bank continues in the bottom five. REITs have left the top five. 
Focus this week: From www.internationalman.comThey Killed Bitcoin 129 Times; Each Time, It Came Back Even Stronger” by Doug Casey. The following are some key points.

  • At a recent investor’s conference in Miami, I heard a presentation about this little-known market from a former hedge fund manager named Teeka Tiwari.

    Teeka is extremely well-connected in this market, traveling all over the world meeting with experts.

    He explained that over the past year, this market has taken off. Dozens of “cryptos” have shot up 1,000%, 5,000%… even 10,000% or more.

    This got my attention.

    I know a bull market when I see one… It seems to me that a marvelous bubble is building up in this area. And it’s one that I would like to take advantage of.
     

  • On June 20, 2011, Forbes wrote “So, That’s the End of Bitcoin Then.”

    On January 16, 2015, USA Today wrote “Bitcoin Is Headed to the ‘Ash Heap.’”

    On May 5, 2017, The Daily Reckoning wrote “The Death of Bitcoin.”

    Since 2011, bitcoin’s been declared dead at least 129 times.

    Newsletter writers, journalists, and academics have called it a “Ponzi scheme.”

    Others like the idea in theory but have doubts. They are convinced the government will shut down bitcoin and render it worthless.

    If it were 2013, I would have agreed with them.
     

  • From 2009–13, bitcoin rallied from a fraction of a penny to over $1,100… and then spectacularly crashed 85% to $185.

    It looked like a classic “pump and dump” to me. That’s why I ignored it.

    But then something very interesting happened.

    Instead of collapsing back to pennies, bitcoin found support in the $200 range. Even after the bubble popped, bitcoin was still worth billions.

    This intrigued me because true Ponzi schemes have zero value when they crash.
     

  • In the depths of the dot-com hatred, Amazon started quietly climbing in price. Back then, I made the mistake of dismissing this action.

    My error was buying into the prevailing belief that dot-com stocks were dumb and worthless.

    I listened to the narrative instead of digging deeper into the Amazon story.

    That was a mistake of lazy thinking.

    So when I saw the same thing happen with bitcoin, I decided to do something different.
     

  • Just as important, I wanted to know what would stop the U.S. government from banning it.

    How would the currency outgrow its widespread reputation as a form of “black money” used by criminals?

    What I found out was this: At its core, bitcoin is just a way to send and receive value without the need for a trusted middleman.

    Bitcoin has no central location. That means no government (including the U.S. government) can ever shut it down.

    In fact, several countries have already tried to ban bitcoin and found that it was impossible.

    At least two of them (Russia and India) have decided to recognize bitcoin as money.

    Governments are realizing that it’s better to have a hand in how bitcoin is shaped and regulated than try to destroy it (which
    they can’t).
     

  • The real strength of bitcoin is the underlying network of highly secure computers that support it (called the blockchain).

    This is where much of the value creation will come from.

    As I write, software developers across the world are building applications designed to piggyback off this network.

    Over the next three years, we’ll begin to see a slew of new applications emerge for bitcoin and the network that supports it.

    They will support everything from asset tracking to recording land registries.

    And much more that we can’t even think of yet.

    That’s why bitcoin will continue to grow in value.

    Since those obituaries started popping up in 2011, bitcoin has rocketed from a low of 75 cents to as high as $2,770—an astronomical 369,223% gain.

    The next time you find yourself being scared out of owning bitcoin by a negative article, do yourself a favor… Read the last 129 times bitcoin was declared dead.

Additional recommended reading: “Bitcoin And Ether Cruise Past $61 Billion Valuation” by David Seaman

–Donald Pirl www.s2pmarketsignal.com


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