Oil and Energy Diverging
It seems like the energy sector debacle has received very little attention among the mainstream media this year. Even the financial media don’t really care. I am guessing that’s because crude oil has somewhat bucked the bearish trend the stocks have been on as you can see below. Oil has been very volatile and mildly lower. The stocks have been downright ugly. This has been an unusually long period of behavior like this. In the past, the stocks have usually […]
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Date: August 24, 2017
Bounce Coming But Pullback Still Secure
While the short-term pullback continues, stocks are seesawing back and forth and are “supposed” to bounce here. For the past two trading days, the bears were unable to follow through from Thursday’s decline and fought the bulls to a draw. Unless we are looking at something bigger on the downside than I expect, we should see the bulls step up in a small way. It will be interesting and perhaps telling to see which of the major indices lead and […]
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Date: August 22, 2017
As Expected, Pullback Continues
All month I have been writing about a short-term pullback for stocks. Nothing huge. Just your garden variety 3-5% bout of weakness which could overshoot. This coming from someone who has been bullish all year on stocks. I won’t reanalyze what I have already written several times, but here are a few reasons. The Dow Industrials were off on their own island of strength while the mid and small caps were in decline. Dow Transports were even weaker. Sentiment surveys […]
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Date: August 18, 2017
Market Like 1987 Again?
With Thursday being a downside rout that closed near the low for the day, stocks normally see two way action during the next morning before the opportunity for a stronger move comes after lunch. When markets are in the throes of a decline and I would hesitate to call this a decline of significance at this point, many of us turn to history for price analogs. The crash of 1987 really began to unravel the week before which was options […]
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Date: August 18, 2017
Energy Collapse. An Opportunity?
Stocks continue to bounce after the tensions with North Korea have quieted for now. As I have written about before, I think the stock market used North Korea as its catalyst or excuse to pullback. The underpinnings were a little weak and a little decline was coming regardless. My thoughts remain the same that the pullback is not over and the major indices will need to step it up sooner than later to revisit the old highs. Every now and […]
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Date: August 17, 2017
Big Day for the Bulls But No All Clear Yet
Stocks bounced very strongly on Monday led by banks, semis and transports which just happen to be three out of four of my key sectors. That’s one for the bulls. The beaten down Russell 2000 index of small caps led the major indices higher and that’s another good sign for the bulls as the Dow Industrials definitely lagged the rally. While participation was decent, the number of stocks hitting new highs and new lows was not encouraging as they were […]
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Date: August 15, 2017
Stocks to Bounce But Pullback Not Over
In part II of the piece I started last Friday, I turn to the market evidence supporting the 3-5% pullback I have been discussing all month. While tensions with North Korea have quieted down over the weekend and global stocks are sharply higher, I do not believe the pullback is over. Now, if the five major indices scream right back to new highs and sector leadership is strong, I will clearly be wrong in this call, but I am willing […]
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Date: August 14, 2017
North Korea was the Excuse
While North Korea is now front and center in the mainstream news as well as the financial news and the financial markets are now fixated on North Korea, the stock market was already positioned to retreat for the past few weeks. It was just looking for a catalyst. I started writing about the likelihood of a pullback beginning in late July as you can read, HERE, HERE, HERE and HERE. As you know, I have been resoundingly bullish all year and […]
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Date: August 11, 2017
Short-Term Pullback in Motion
Over the past week or so, I have gone from a trading range view with perhaps a slightly upward bias to a mild pullback of 3-5%. That’s where I stand today. Stocks sold off very hard on a relative basis from noon to the close on Tuesday as the saber rattling between the U.S. and North Korea continued. President Trump kicked it up a notch. Regardless of the news, the markets were already in a position to pullback as I […]
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Date: August 9, 2017
Economy Good. Markets Less So.
On Friday, the Department of Labor reported that the economy created 209,000 new jobs, which was 26,000 better than expected. The unemployment rate fell to 4.3%, the lowest level in 16 years. This is just another statistic that supports my thesis that economy is in better shape than the masses realize. You wouldn’t conclude this if you spent your day watching TV. Reality over rhetoric. I don’t care if this is coincidental, Trump’s doing or lack of doing or Congress. […]
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Date: August 8, 2017
Growing Concerns
As the title suggests, I am more worried now than I have been in a while, however, it needs to be taken in context. I really haven’t worried at all lately and I absolutely do not believe the bull market is over or close to being over. I don’t even believe the stock market is starting a 10%+ correction. My theme of late has been that of a trading range environment, but I now think that it may morph into […]
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Date: August 3, 2017
Q2 GDP Frustrates Bears. Bezos Still Rich?
The government released its first look at Q2 economic output and the economy grew by 2.6% at first glance. While I would have been happier with more, it’s the second straight quarter that seems to be falling in line with my forecast. Earlier this year, I offered that Q1 GDP would come weak and below expectations with Q2 much stronger. That’s certainly the case today. I am also looking at Q3 to be stronger than Q2 with a shot at […]
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Date: July 28, 2017
Boring Fed Day On Tap
Model for the Day As with every Federal Open Market Committee (FOMC) statement day, there is a model for the stock market to follow pre and post announcement. Certain environments have very strong tendencies while others do not. Six meetings ago was one of the rare times where the models strongly called for a rally on statement day which was correct as well as a decline a few days later which was also correct. Today, as with most statement days, […]
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Date: July 26, 2017
1996 Flashback
July 23rd marked the 21st anniversary of what I dubbed, the “Garzarelli Bottom”, which turned out to be one of the better stock market calls I made, especially earlier in my career. At that time, stocks hadn’t seen any real downside since 1994 and that year with littered with rolling 5-9% pullbacks. After the bears tried three times to take stocks lower in March, April and May, the bulls powered to yet another new high. After peaking in early June, […]
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Date: July 25, 2017
Trading Range Continues But Lots Beneath the Surface
Stocks fared fairly well last week in the face of overbought conditions and a few tiny cracks in the pavement. As I continue to offer, I believe the bull market is alive and reasonably healthy, especially for one 9 years old. However, my shorter-term view is that stocks are in a trading range with perhaps a slightly upward bias for the time being. The stock market just doesn’t seem like it wants to launch a fresh leg towards my next […]
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Date: July 24, 2017
Stocks Tired. Energy and Transports of Interest
It’s been nothing short of amazing how many people keep calling for a bear market, correction or even single digit pullback. On top of that, we are now hearing calls that the VIX (volatility indicator) is either broken or no longer works. Lots of sour grapes out there! The bottom line is that the ingredients for a major decline are not present and have not been present for a long while. That’s going to change, but it will take some […]
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Date: July 21, 2017
Bears Move to VIX as Indices All See New Highs
The bears tried to put up a little fight on Tuesday, but that only lasted a few hours and it wasn’t much of a battle. On Wednesday, the bulls came right back with the big guns and a headline close that saw all of the major stock market indices see fresh all-time highs along with high yield bonds. While I had been looking for the Dow, S&P 500, S&P 400 and Russell 2000 to see these levels, I did not […]
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Date: July 20, 2017
Bulls Don’t Want to Quit, But…
The bulls had another strong day on Friday with now the S&P 400 and Russell 2000 on the verge of fresh all-time highs. Semis continue to bounce back. Transports remain strong and discretionary and banks are behaving constructively. Materials and industrials are quietly in high gear and long depressed energy is ticking higher. High yield is also picking up again and you know my feelings on that along with the broad participation seen on the NYSE. Just keep in mind […]
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Date: July 17, 2017
Another Good Day for the Bulls
After a number of short-term victories for the bulls over the past week, the Dow Industrials and Dow Transports scored new all-time highs together, triggering a Dow Theory confirmation or buy signal on Wednesday. While the Dow Industrials were the lone major stock market index to see fresh highs so far, I expect the S&P 500 to follow suit shortly. The S&P 400 and Russell 2000 should not be far behind which would add even more credence to my forecast […]
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Date: July 14, 2017
Dow Theory Says to BUY
After staving off early morning selling on Tuesday, the bulls followed through with a nice little day on Wednesday. As I have discussed, the NASDAQ 100 continues to bounce back and resume leadership. That’s an intermediate-term positive, especially if the index does not lead on the downside during the next pullback. While the Dow was the only major index to score an all-time high on Wednesday, the Dow Theory crowd will point to the transports also hitting an all-time high. […]
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Date: July 13, 2017
