7-30-17 Market Commentary

 

 

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Market Breadth: With this past week’s market decline, our Bull/Bear Point and Figure Ratio at 1.36 fell from 1.54 last week, continuing within bullish territory. The total count of securities in bullish or bearish patterns increased fractionally 2870. The count of bearish stocks increased 8%, while the count of stocks in bullish patterns decreased 5%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now nine 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 4 points for the tenth advance in fourteen weeks. At a positive 244.92 points, it continues above the February 2015 top and continues below the five remaining 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 four (4) 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 higher average daily volume.

Momentum: The CCI(20) daily is now at +55.79, down from +123.59 last week. At Wednesday 7/19 close, the CCI(20) daily had 6 consecutive days above zero for a change in Woodie’s trend to Up. We wait for the CCI(20) daily to return to the +/-50 range for another ZLR (Zero Line Reject) 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 sixty-five weeks ago, while the Daily CCI(20) began a Woodie’s up trend one week ago.
The CCI(20) weekly has risen to +133.27, up slightly from +132.81 last week. We await the return of the CCI(20) weekly to the +/-50 range for another CCI(20) weekly trade.
Industry Rotation the last two weeks: All of the top five industries are  positive and all of the bottom five are negative. Summary: Gold & Silver, Some Tech, and Oil on top; Some Tech and Banks on the bottom. Bullish: Networkers has entered the top five. Brokers has left the bottom five  Bearish: Gold & Silver PHLX continues in and now leads the top five. KBW Bank continues in the bottom five. Computer Hardware, CompTech, and Disk Drives have left the top five. Computer Hardware and Disk Drives have entered the bottom five. Oil has left the bottom five and entered the top five.
Focus this week: From www.TheAntiMedia.org The Feds Are Terrified of Cryptocurrencies — but They’re Powerless to Stop Them. The following is the short, but important article in full.

(ANTIMEDIA Op-ed)  — The federal government is no match for innovation. This is something lawmakers have always known, and it is the reason state and federal regulations exist. But innovation, by its very nature, will always find a way around those regulations, resulting in the implementation of more regulations for creative minds to learn to evade — which they will. This results in the over-regulation we see in America today.

Nothing scares the government more than something it can’t control, and the Securities and Exchange Commission (SEC) revealed this week that it is terrified of cryptocurrencies — as well it should be. See, all those lawmakers and bureaucrats sitting around regulating everything depend on taxpayer money to pay their salaries so they can keep writing regulations. Since cryptocurrencies allow people to keep all of their money, this is a big problem for the lawmakers. Soon, people may even start to realize they can buy, sell, and trade freely without any government intervention. The horror.

So the SEC recently got together to write up even more regulations to try to scare people away from using cryptocurrencies and the blockchain by targeting Initial Coin Offerings, or ICOs. Initial Coin Offerings have become very popular recently as a way for crypto start-ups to raise funds for their ventures using digital tokens (cryptocurrency) like Bitcoin or Ethers. They operate on a blockchain, which is a decentralized digital ledger of publicly and chronologically-recorded cryptocurrency transactions. Investopedia gives a wonderfully detailed breakdown of how ICOs work. You can read it here or watch an explanation by technologist and author of The Internet of Money and Mastering Bitcoin Andreas Antonopoulos here.

Basically, with the birth of the ICO came the emergence of a whole new market — one with a great deal of money floating around that the federal government couldn’t take by force. Naturally, this had to be investigated, and on July 25, the SEC released a Report of Investigation under Section 21(a) of the Securities Exchange Act of 1934. The investigation zeroed in on the DAO, a distributed autonomous organization that set the record for the largest crowdfunding campaign in history, raising over $150 million in ether in 2016. According to the report published by the SEC:

The Commission applied existing U.S. federal securities laws to this new paradigm, determining that DAO Tokens were securities.  The Commission stressed that those who offer and sell securities in the U.S. are required to comply with federal securities laws, regardless of whether those securities are purchased with virtual currencies or distributed with blockchain technology.”

Or, as crowdfunding lawyer Amy Y. Wan explains, the press release amounts to the SEC saying: “For those of you out there doing ICOs, we’re here to warn you that U.S. securities laws might apply. When we say might, we mean just that — sometimes securities law will apply, sometimes it won’t. It depends on the specific facts of the ICO.”

Okay, so the government wants to regulate virtual tokens, aka cryptocurrency. Good luck. As blockchain engineer Elaine Ou pointed out on Twitter, ICO’s are “Untraceable, international, [have] no central authority, [and] funds can’t be frozen. The SEC ICO warning is the best ad for ICO’s.”

So while the government can — and will — continue to make the lives of innocent people miserable using weapons like civil asset forfeiture, crypto regulations, web-provider takedowns, and the war on drugs, these are all last ditch efforts by a desperate ruling class on its death bed.

The creativity and resilience human beings possess do not exist within the jurisdiction of the government – no matter how hard it tries to convince us otherwise.

–Donald Pirl www.s2pmarketsignal.com


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