9-24-17 Market Commentary

 

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Market Breadth: With this past week’s market advance, our Bull/Bear Point and Figure Ratio at 1.21 fell slightly from 1.28 last week, maintaining its bullish territory. The total count of securities in bullish or bearish patterns increased to 2964. The count of bearish stocks increased 6%, while the count of stocks in bullish patterns increased fractionally. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now 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 174 points for the fourteenth advance in twenty-two weeks. At a positive 320.63 points, it has risen above the July 2017 high and continues below the five remaining tops above +100, and 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 lower than the prior week. In the last two weeks the NASDAQ had three (3) 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 Accumulation mode on higher average daily volume.

Momentum: The CCI(20) daily in a Woodie’s Up trend is now at +28.36, down from +85.90 last week. The CCI(20) daily is now within the +/- 50 range for a ZLR (Zero Line Reject) Long entry signal, should it rise next week.
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 seventy-three weeks ago, while the Daily CCI(20) began a Woodie’s up trend two weeks ago.
The CCI(20) weekly has fallen to +127.77 from +148.67 last week after forming a ZLR (Zero Line Reject) Long entry signal for Tuesday 9/5 open. Our rule is to stay in the trade until the CCI(20) drops below +100. We will continue to follow the result of this trade simulation in next week’s commentary.
Industry Rotation the last two weeks: All of the top five industries are  positive and all of the bottom five are negative. Summary: Oil Services, Oil, KBW Bank, and Brokers on top; Gold & Silver, REITs, and some Tech on the bottom. Bullish: KBW Bank and Brokers have entered the top five. Gold & Silver PHLX has entered the bottom five. Networkers have left the bottom five. Bearish: Comp Tech continues in the bottom five. Computer Hardware has entered the bottom five.
Focus this week: From www.zerohedge.comAn Insider’s View Of The Bitcoinization Of Venezuela“. We recommend you view the short video at the zerohedge.com link. Some key points are the following.

  • With Venezuela ‘almost’ defaulting on their government debt this week, Daniel Osorio, of Andean Capital Advisors, has had a front-row seat in the collapse of the socialist utopia, spending at least a week every month in the almost-failed state.

    In a brief but fascinating interview on CNBC, Osorio discussed the fact that as Washington unleashes ever tougher sanctions on Maduro, China and Russia are all that’s left for the country with the largest proven oil reserves in the world.

  • “Venezuela was one of the richest per-capita nations in the world… but now, hyperinflation is a very difficult thing to understand until you have to buy lunch…

    The country has not yet dollarized…  but there’s not enough dollars in Venezuela for that to have happened…” 

    “Venezuela is becoming a cashless society… we are starting to see in Venezuela, the first bitcoinization of a sovereign state.”

  • …as oil prices continued their descent and Maduro’s mismanagement of the country’s economy intensified, Venezuelans chose a new way to protect themselves financially.
     
  • Between 2014 and 2016, the number of users on just one Venezuelan Bitcoin exchange skyrocketed from just several hundred to over 85,000 users. Cheap, subsidized electricity and a failing currency pushed a number of young entrepreneurs to build their own mining operations.
     
  • Noel Alvarez, former president of the Venezuelan Federation of Chambers of Commerce, stated that “A maximum of one per cent of the population has access to it, but it is very useful in our situation.”
     
  • Bitcoin’s popularity in Venezuela continued to grow. It became the country’s leading parallel currency. Some vendors even begun accepting Bitcoin exclusively.
     
  • The Venezuelan government began to crack down on the Bitcoin community, with police extorting citizens for “misusing electricity” or undermining the country’s economy.
     
  • On July 31st, in a highly controversial election, Venezuela voted for a new constituent assembly giving President Nicolás Maduro even greater control in the country on the brink of civil war. The new pro-Maduro constituency will now have the power to re-write the country’s constitution.

    Critics of the election have suggested that the vote was manipulated. National Assembly President Julio Borges tweeted the vote was “the biggest electoral fraud in our history.”

    Following the election, Maduro set his sights on opposition parties. At midnight on August 1st, two opposition leaders, Leopoldo Lopez and Antonio Ledezma, were pulled from their homes by teams of heavily armed guards.

    U.S. President Donald Trump announced in a statement “The United States holds Maduro – who publicly announced just hours earlier that he would move against his political opposition – personally responsible for the health and safety of Mr López, Mr Ledezma and any others seized.”|

  • With the collapse of the economy, Venezuelans are running out of options. Bitcoin could come as a saving grace to many people. It has kept food on the tables of families, helped Venezuelans escape the distraught nation, and acted as a voice of rebellion against the oppressive government. But how Maduro’s regime will proceed remains to be seen.

–Donald Pirl www.s2pmarketsignal.com


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