11-12-17 Market Commentary

 

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Market Breadth: With this past week’s market fractional decline, our Bull/Bear Point and Figure Ratio at 1.21 declined from 1.52 last week, yet remaines within bullish territory. The total count of securities in bullish or bearish patterns decreased fractionally 3188. The count of bearish stocks decreased 13%, while the count of stocks in bullish patterns decreased 10%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now eleven 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 166 points for the twelfth decline in twenty-nine weeks. At a positive 140.70 points, it has fallen below the July 2017 top, and continues below remaining tops in the last 30 months, and continues above all five bottoms in the last 30 months. 

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 four (4) 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 also, the NASDAQ ended in neither Accumulation nor Distribution mode on higher average daily volume.

Momentum: The CCI(20) daily in a Woodie’s Up trend is now at 70.98, down from +159.19 last week. At Thursday 10/26 close, the CCI(20) daily was within the +/- 50 range for a ZLR (Zero Line Reject) Long entry signal at Friday 10/27 close. The CCI(20) fell below +100 at Thursday 11/9 close, so we exit the trade. The result of this trade simulation was a gain of 42.62 points on the NASDAQ or $2.20 per share of QQQ.
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 eighty weeks ago, while the Daily CCI(20) began a Woodie’s up trend nine weeks ago.
The CCI(20) weekly at +152.73 fell from +175.51 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: Some tech, Oil, Oil Services, and REITs on top; KBW Bank, and Gold & Silver on the bottom. Bullish: REITs has entered the top five. Gold & Silver PHLX continues in the bottom five. Computer Hardware has left the bottom five.  Bearish: KBW Bank has entered the bottom five. Oil, and Oil Services has entered the top five. Semis PHLX, Comp Tech, and S&P Retail have left the top five.
Focus this week: From www.peakprosperity.comIf The Saudi Arabia Situation Doesn’t Worry You, You’re Not Paying Attention“. We won’t attempt to boil down this highly significant geopolitical article, but merely explain its scope and point out that the international oil trade landscape is rapidly changing. Both parts of this two part article are well worth reading so as to be able to navigate the coming turbulent waters. The following key points are listed in the beginning of the article.

So much is currently in flux, especially in Saudi Arabia, that nearly anything can happen next. Which is precisely why this volatile situation should command our focused attention at this time.

The main elements currently in play are these:

  • A sudden and intense purging of powerful Saudi insiders (arrests, deaths, & asset seizures)
  • Huge changes in domestic policy and strategy 
  • A shift away from the US in all respects (politically, financially and militarily)
  • Deepening ties to China
  • A surprising turn towards Russia (economically and militarily)
  • Increasing cooperation and alignment with Israel (the enemy of my enemy is my friend?)

Taken together, this is tectonic change happening at blazing speed.

Article Part 1 subheadings are the following.

  • A Quick Primer (on Saudi history and the Petrodollar)
  • Then Things Started To Break Down (from 2015 on)
  • Pivot To China (by the Saudis)

The Part Two can only be read in full with a “Peak Prosperity” account, but the Executive Summary is as follows.

  • China’s imminent peak in oil production
  • The final key player in this story: Russia
  • How to prepare before oil becomes a LOT more expensive
  • What to prepare for? Higher prices (for everything real), lower prices (for everything paper), and more wars…

–Donald Pirl www.s2pmarketsignal.com


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