2-11-18 Market Commentary


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Market Breadth: With this past week’s market decline, our Bull/Bear Point and Figure Ratio at 0.44 fell from 0.75 last week, declining further into bearish territory. The total count of securities in bullish or bearish patterns decreased 13% to 3090. The count of bearish stocks increased 6%, while the count of stocks in bullish patterns decreased 38%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now two weeks in bearish 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 376 points for the tenth decline in 17 weeks. At a negative 137.40 points, it continues below all eight tops in the last 30 months, has fallen below the April 2017 bottom, and and it continues above all four remaining bottoms below -100 in the last 30 months. 

Volume Analysis: In this week’s volume analysis, the NASDAQ Composite Index ended in Accumulation mode with average daily volume higher than the prior week. In the last two weeks the NASDAQ had three (3) Accumulation days and five (5) 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 Distribution mode on higher average daily volume.

Momentum: With 6 days below zero at Friday 2/9 close, the CCI(20) daily is now in a Woodie’s Down trend at -202.42, down from -21.86 last week. We await its return to the +/-50 range for a ZLR Short 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 ninety-three weeks ago, while the Daily CCI(20) began a Woodie’s down trend this past week.
The CCI(20) weekly at +13.8 is down from +137.18 last week after forming a ZLR (Zero Line Reject) Long entry signal for Tuesday 9/5 open. With the CCI(20) dropping below +100, we exit the trade at Monday 2/12 open. We will report the result of this trade simulation in next week’s commentary.
Industry Rotation the last two weeks: None of the top five industries are  positive and all of the bottom five are negative. Summary: Brokers, REITs, and some tech on top; Oil Services, Oil, Gold & Silver, and some tech on the bottom. Bullish: Oil Services and Oil continue in the bottom five. Brokers, Networkers, and REITs have entered the top five. Gold & Silver continues in the bottom five. Bearish: Computer Hardware has has entered the bottom five. S&P Retail, KBW Bank have left the top five.
Focus this week: From Global Macro MonitorWeek In Review: JP And The JFK-Trump S&P500 Analog

  • We do think markets are in for a bounce for a few days, but we believe we are far from out of the woods.  Credit spreads are starting to wobble.

  • Historic Volatility Spike

    Only three times since 1950 has intraday volatility jumped so high as measured by a modified version of the Average True Range:  1) September 1955 after an extraordinarily period of calm the S&P500 tanked on September 26th when markets opened after President Eisenhower’s heart attack on the 8th hole of Cherry Hills Country Club over the weekend. The market quickly recovered; 2) January 1962 when the “Kennedy slide” began to accelerate; and 3) the October 1987 stock market crash.

  • Kennedy-Trump S&P500 Analog

    This market is starting to look very similar to the JFK post-election rally, top, and bear market, which eventually bottomed when Khrushchev backed down during the Cuban Missile Crisis.

    JFK_Trump S&P500_Analog

–Donald Pirl www.s2pmarketsignal.com

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