3-25-18 Market Commentary


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Market Breadth: With this past week’s market decline, our Bull/Bear Point and Figure Ratio at 0.41 fell from 0.92 last week, declining within bearish territory. The total count of securities in bullish or bearish patterns increased 8% to 2833. The count of bearish stocks increased 47%, while the count of stocks in bullish patterns decreased 35%. The Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market now eight 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 122 points for the twelfth decline in 23 weeks. At a positive 158.91 points, it has fallen below the July 2017 top,  continues below all remaining eight tops in the last 30 months, and continues above all five bottoms below -100 in the last 30 months. 

Volume Analysis: In this week’s volume analysis, the NASDAQ Composite Index ended in Distribution mode with average daily volume lower than the prior week. In the last two weeks the NASDAQ had two (2) Accumulation days 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, the NASDAQ ended Accumulation mode on higher average daily volume.

Momentum: Following last week’s successful Long trade simulation, the CCI(20) at -206.82 is down from +79.14 last week. It has 5 days below zero for a likely change of Woodie’s direction to Down at Monday’s close.
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-nine weeks ago, while the Daily CCI(20) began a Woodie’s up trend three weeks ago.
The CCI(20) weekly declines to 13.03 from +132.79 last week, now within the +/-50 range for a new ZLR Long entry signal if rises next week.
Industry Rotation the last two weeks: Two of the top five industries are  positive and all of the bottom five are negative. Summary: Gold and Siver, Oil, and Oil Services on top; KBW Bank, Brokers, and some Tech on the bottom. Bullish: None.  Bearish: KBW Bank continues in the bottom five. Brokers has entered the bottom five. Oil and Oil Services have entered the top five. Semis PHLX, Disk Drives, Networkers, and Computer Hardware have left the top five. Gold & Silver has left the bottom five and entered the top five.
Focus this week: From www.commoditytrademantra.comChina’s Death Blow to the Petrodollar just a few day’s away – Watch Gold Benefit“. The following are some key points and a chart.

  • on March 26 China is set to become the intruder that may very well deal a death blow to the dollar.
  • On March 26 China will finally launch a yuan-dominated oil futures contract. Over the last decade there have been a number of “false-starts,” but this time the contract has gotten approval from China’s State Council.

    With that approval, the “petroyuan” will become real and China will set out to challenge the “petrodollar” for dominance. Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), already warned last year that China launching a yuan-denominated oil futures contract will shock those investors who have not been paying attention.

  • This could be a death blow for an already weakening US dollar, and the rise of the yuan as the dominant world currency.
  • The petrodollar is backed by Treasuries, so it can help fuel U.S. deficit spending. Take that away, and the U.S. is in trouble.

    It looks like that time has come…

    A death blow that began in 2015 hit again in 2017 when China became the world’s largest consumer of imported crude…

    Petroyuan graph

    Now that China is the world’s leading consumer of oil, Beijing can exert some real leverage over Saudi Arabia to pay for crude in yuan. It’s suspected that this is what’s motivating Chinese officials to make a full-fledged effort to renegotiate their trade deal.

  • Once the oil markets are upended, the yuan has an opportunity to become the dominant world currency overall. This will further weaken the dollar.
  • Amongst all the trouble ahead for the dollar, there are some good news too. The U.S. might have ditched the gold standard in the 1970’s, but with gold making a return to world headlines… we could see a resurgence.
  • A reintroduction of gold to the global economy could result in a notable rise in gold prices. It’s safe to assume exporters are more likely to choose a gold-backed financial instrument over one created out of thin air any day of the week.

    Soon after, we could see more and more nations jump on the bandwagon, resulting in a substantial rise in gold prices. – Brandon Smith

–Donald Pirl www.s2pmarketsignal.com

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