“Key” Reversals. Junk Bonds Still Stink
Let’s start with junk bonds. While they don’t really stink, they are not participating at all in the stock rally. As I mention time and time again, that has little value in the short-term and no predictive power. However, it does matter, and sometimes a lot, over the intermediate-term. My fear, well I am really not scared but rather concerned, is that the final peak in high yield bonds has already been seen. If that’s the case, it doesn’t bode […]
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Date: May 23, 2018
Pause Ending?
With news out that Trump Tariff Tantrum has been delayed, stocks around the globe are rallying roughly 1%. That’s the expectation when trading begins for the new week. It will be telling to see if all five major stock market indices can score new highs for the month which would give the bulls more credibility. I would really like to see another index besides the Russell 2000 see all-time highs right now. Additionally, on the far right side of the […]
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Date: May 21, 2018
Small Caps Still Leading But…
The mild pullback/consolidation continues although you wouldn’t know from watching the Russell 2000 small cap index below. This index sits at all-time highs as seen above the dark blue horizontal line as well as breaking higher above the light blue line which has contained price since the early Q1 correction. On the surface things look really good for small caps as they are leading. However, I do think their leadership is close to ending with the other major indices about […]
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Date: May 18, 2018
Pause to Refresh. Transports Looking Juicy
It looks like Monday’s failure by the bulls put in a short-term peak and stocks will either trade sideways for a bit or pullback below Tuesday’s low. There shouldn’t be too much price deterioration. We have some overbought readings in the major indices so if stocks can resist much weakness, that could speak volumes about the next move which should be to new highs. On the key sector front, banks and discretionary are quietly stepping up while semis appear to […]
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Date: May 16, 2018
Nothing Sexy But Still Higher Prices
Since May 3rd, the path of least resistance has been up in the major stock market indices. That is supposed to continue although I will soon be on the lookout for a short-term pause or minor pullback. With the small cap Russell 2000 leading, there has been little to complain about lately, at least for the bulls. While none of the four key sectors are knocking it out of the park, they all look poised to head higher. Energy has […]
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Date: May 13, 2018
Bull Markets Do NOT End This Way
*NOTE: I began this piece as my regular Friday blog post as a follow up to a tweet I sent last night. The more I wrote, the more I wanted to say. That turned into more of an Analysis 101 piece which I am distributing to everyone. It’s also one very important piece in my canaries in the coal mine which I hope to have out next week. One of my favorite long-term indicators scored an all-time high on Thursday, […]
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Date: May 11, 2018
Stock Market & Economy Yawn as Trump Terminates Iran Deal
I have to laugh when I hear so many pundits surprised that Trump withdrew from the Iran nuclear deal. It was one of his many campaign promises. Most members of his revolving door administration were squarely against the deal’s continuation. What was so surprising? While my interview was 5 minutes, only a few comments made the segment on WTNH (ABC in CT) last night. I don’t think the Iran news will have any economic impact at all. It’s been fairly […]
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Date: May 9, 2018
Friday was Constructive but More Work to be Done
Last Thursday, I wrote about green shoots in the stock market. Until former Fed chair Ben Bernanke used that phrase on 60 Minutes in March 2009, I had absolutely no idea what it meant. Later I learned that after a forest fire burns everything to the ground, the landscape becomes incredibly rich with nutrients and these little “green shoots” spring up as the first sign of new life. Eventually, these shoots become trees that grow very tall over time. Of […]
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Date: May 7, 2018
Green Shoots for the Bulls After Fed Selloff
As expected by almost everyone, the Fed stood pat on Wednesday. I was shocked to hear some pundits predicted a rate hike. That’s one of the dumbest forecasts I have heard in an awfully long time as the Fed has become almost too transparent and too accommodating to the markets. A rate hike out of nowhere?!?! That made me laugh out loud. Stocks sold off after the announcement for the second straight Fed meeting, in direct contradiction to one of […]
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Date: May 3, 2018
***SPECIAL Fed Update – Fed’s Arrogance & Pomposity Leading to Recession Watch***
Stock Market Behavior Models 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. Over the past few meetings, many of the strongest trends were muted. As with most statement days, the model for the day calls for stocks to return plus or minus 0.50% until 2:00 PM. There is a 90% chance […]
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Date: May 2, 2018
Crosscurrents Abound in May but Fraught with Risk
The month of May begins today. It’s supposed to be spring although you wouldn’t know it in New England on Monday as folks had on hats, gloves and down jackets. The weather is finally looking up in CT as the forecast calls for 70s and 80s this week. I think the bulls are hoping their forecast heats up this week as it’s been cold for stocks of late. As you know from my blog posts since April 18 I have […]
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Date: May 1, 2018
Huge Week Ahead. May 1st VERY Bullish
Stocks begin the new week with the bulls on the optimistic side. Yes, the tariff deadline looms, but we also have the Fed on Wednesday, employment report on Friday and earnings scattered throughout the week. Lots going. Lots of ammunition for the bulls, or so they say. I am not as encouraged for the same reasons I discussed last week and the week before. Lower before higher although I am sure I will feel squeezed if stocks break out to […]
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Date: April 30, 2018
Don’t Let the Bulls Fool You; Bears are in Control
Turnaround Tuesday didn’t work out so well for the bulls, but they did muster up some strength to rally on Wednesday and Thursday. Still, we don’t have a single day where 90% of the volume was in stocks going up. That’s sorely lacking to give the bulls some comfort. Lots of folks were crowing on Thursday about the NASDAQ 100’s regaining leadership with Microsoft, Facebook and Amazon blowing out earnings to the upside. However, let’s not forget that the market […]
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Date: April 27, 2018
Turnaround Tuesday, Semis & 3%
Just a quick comment regarding the short-term state of the market. With the current pullback lasting through Monday, there is a possibility for a rally beginning on Tuesday, also known as Turnaround Tuesday. This scenario is usually more important and prominent when stocks are in the throes of a more significant decline and momentum is strong. We do not have that now. I bring up Turnaround Tuesday not so much because I think stocks are at important bottom, but because […]
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Date: April 24, 2018
Bears in Charge as Bond Yields Rise Again
The bears certainly won the day on Friday to end the week. While stocks did close off the lows with the typical late day buying into the bell, stocks fell back into the equilibrium level we have seen of late. The bears have the upper hand to a small degree. While the transports, banks and discretionary are hanging in nicely for now, semis continue to be under severe pressure. They are now at risk of breaking the April, testing their […]
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Date: April 23, 2018
Short-Term Remains Murky But Dow 27,000 on Tap for Summer
Almost like clockwork when I wrote about the bears giving up which caused me to be concerned, stocks declined. However, given the elevated level of volatility a few day pullback isn’t going to raise many eyebrows. With stocks closing off of the lows on Thursday after yet another nonsensical piece of information leaked regarding the Mueller investigation and Trump, the bulls should an opportunity on Friday. If the major indices close at their highs for the week, we will likely […]
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Date: April 20, 2018
Bears Starting to Throw In the Towel
Over the past week or so, I have written about some price levels I wanted to see exceeded to turn the picture a little more bullish. Since then, all five major stock market indices have closed above those levels. After that I wrote about the “key” reversal last Friday that had some analysts calling for the end of the bull market. The market immediately rejected that rejection. Then the bears hung their hopes on the “magical” 50 day moving average. […]
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Date: April 18, 2018
“KEY” Reversal and the 50 Day Moving Average Boogeyman
On Friday, the major stock market indices saw yet another “dramatic” reversal as strong early gains were not only given back but also turned into losses during the afternoon before closing off the lows. People who look at charts usually forecast further weakness ahead with some even using the one day pattern to call for the end of the bull market. I think you have to take these kinds of days in context. One day doesn’t end a bull market […]
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Date: April 16, 2018
Bulls Looking Up. The Absurdity of Exact Price Levels.
Yesterday, I wrote about some “key” price levels to watch. I put quotes around it and chuckle because there is some level of absurdity with getting too cute about a given exact price. That’s one of the many flaws of analysis. S&P 500 2675 is “vital” but not 2674 or 2676? Technicians get way too caught up in exact numbers rather than small ranges which makes a whole lot more sense. And remember, the market will always do its best […]
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Date: April 13, 2018
All Time Highs on Tap. A Few Key Prices to Watch
Let me begin by answering a few emails after my last couple of updates. Yes! I continue to believe that fresh all-time highs are ahead for stocks with the Dow hitting at least 27,000 in spite of the increase in pundits calling for the end of the bull market. Stocks seem to be in the second half of the bottoming process, regardless of whether we see Dow 23,000 or a move above 24,700. The major stock indices continue to thrash […]
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Date: April 12, 2018
