Reality over Rhetoric
The markets begin the week with little changed from last week. Volatility remains absurdly low, but remember, regardless of what you hear on the financial shows, markets do not go down just because vol is low. And bull markets do not end with vol so low. The major stock market indices are not in sync. The Dow continues in its range but looks to be testing the top of it. The S&P 500 should try to poke above its range […]
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Date: May 15, 2017
Lines in the Sand Drawn
We saw a fairly strong selling wave on Thursday during the first hour of trading. However, by mid afternoon, the bulls stepped right back up and recouped all of the losses before closing modestly lower. Their resilience continues. Given how most of the major indices are positioned, the bulls need to score new highs sooner than later to reset the clock. On the bears’ side, a close below Thursday’s low should set a deeper pullback in motion. That’s the one […]
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Date: May 11, 2017
Bulls Still in Control Over Long-Term
Let’s continue on the same theme I started the other day, risk versus reward. While I firmly believe that the bull market remains alive and fairly healthy, I do not like the risk/reward right here. My view is that Dow 21,600 is the upside ceiling while downside risk looks to be 20,000 or even a little lower. That’s just not the set up you want over the long-term and I think pruning and protecting is the right call here, whether […]
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Date: May 10, 2017
Sell The News
Not much has changed in the stock market since last week as volatility continues to be historically low. While the S&P 500 poked above the recent range on Friday, the rest of the major indices weren’t exactly in line. That’s not a big deal. Small caps looked like they were getting ready to step up, but we haven’t seen signs of confirmation just yet. Two things I did find interesting were the April employment report, released on Friday as well […]
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Date: May 8, 2017
Looking for Mr. Volatility
Greetings from 39,000 feet as I am on my way home from the west coast. A quick visit in Scottsdale followed by my annual industry trade association conference in San Diego and I cannot wait to get home! If all goes well, that was my last trip to CA this year. It’s just brutal getting there from Hartford these days and the NY airports are a mess and awful to get to. The Fed concluded their two day meeting today […]
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Date: May 3, 2017
The Bears Are Wrong
With the French elections going the way of the Euro bulls and corporate earnings continuing to exceed expectations and the high level details of Trump’s tax plan released, the stock market had itself a nice little run on Monday, Tuesday and half of Wednesday before getting a little tired. What a difference a week makes. The bulls made some solid ground with NASDAQ 100 and Russell 2000 seeing all-time highs and the S&P 400 only a whisker away. The Dow […]
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Date: April 27, 2017
Reality over Rhetoric. Bulls are Large and in Charge
I have long said and continue to reiterate on a regular basis that it’s not so much what the news is, but rather how the markets react. Clearly, the markets celebrated the French election results as the two main political parties were cast aside. Independent, Emmanuel Macron and nationalist, Marine LePen will face each other in a runoff on May 7. It doesn’t matter if you love or hate either candidate nor what they stand for, much like we saw […]
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Date: April 25, 2017
Dow’s March Low Breached But Bulls Getting Ready
There is not a lot different from what I wrote two days ago. Stocks continue to digest, pullback or whatever else you want to call this current pattern of behavior. The only difference on Thursday morning is the one of the major stock market indices, the Dow 30, breached its March low as IBM’s poor revenue number took the stock down almost $10. The S&P 500 is hanging in, but the S&P 400, Russell 2000 and NASDAQ 100 are all […]
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Date: April 20, 2017
Getting Closer to a Bottom
Stocks begin the week on their heels after a relatively ugly day on Thursday. The pullback and selling are not over just yet, but the market is certainly closer to the end of the decline than the beginning. With Thursday’s price action closing at the low of the day and the March bottom only a few points away, I would think that the major indices are heading for a quick trip below the March lows before the bulls put up […]
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Date: April 17, 2017
Banks Looking for a Bottom Amid General Market Strength
With earnings season in full swing and estimates ramped up by Wall Street, companies will really need to impress for stocks to get a boost. Banks are front and center right now. With the banking index down 10% since the early march peak, I am looking for a bottom in this sector and revisiting of the old highs later this quarter. However, the most important hurdle will be for this group to close above the 93 level, which will effectively […]
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Date: April 13, 2017
Two Favorite Canaries Looking Fine
The final two canaries are probably my favorites because I believe they are the most powerful and predictive. In every bull market of the modern investing era, both of these canaries gave 3 to 21 months notice that trouble was brewing. However, that doesn’t mean that every time these canaries warn, bear markets occur. It just means that they haven’t missed any. The first chart is that of New York Stock Exchange’s Advance/Decline Line which simply measures participation in the […]
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Date: April 12, 2017
Sector Canaries Healthy with Some Small Wounds
Turning to the four key sectors I follow, we don’t have as strong a picture as the major indices, but they are still okay. Semis are first and they have been the strongest for some time, almost too strong, but that’s a topic for a different piece. While they have yet to eclipse their Dotcom bubble high from 2000, they continue to make new highs for this bull market. Banks are next and after a dizzying pace following the election […]
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Date: April 11, 2017
Bulls Not Ready Just Yet
As we head into the holiday shortened week, the bulls don’t seem ready just yet for that next assault higher. Last Wednesday’s reversal still looms and there are small wounds that need to be healed. Don’t forget that our markets are closed on Friday for Good Friday and liquidity may be a touch lower because of the first two nights of Passover on Monday and Tuesday. All of the major stock market indices experienced sharp reversals last Wednesday and while […]
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Date: April 10, 2017
Index Canaries Breathing Nicely
It has a been long while since I last updated the Canaries in the Coal Mine, a semi-regular piece which has a very long-term focus on the health of the bull market. The analysis is only relevant at or near new bull market highs as I look for divergences in the major stock market indices, sectors and two other indicators. While helpful, it does not insulate bull markets from corrections; it just says that the final high hasn’t been made […]
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Date: April 10, 2017
Little Tantrum Beginning
The bulls began Wednesday with high hopes (and higher prices). By lunch time, it looked as if the market was ready to test its early March, all-time highs although the NASDAQ was already at new highs. But a funny thing happened on the way to Dow 21,000; the Fed released their minutes from the last meeting and the market did not like what they had to say. In essence, the Fed was preparing to test the markets on unwinding their […]
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Date: April 5, 2017
Q2 Begins with Higher Expectations
Stocks closed the first quarter without much fanfare and they head into Q2 with a strong seasonal tailwind. The major stock market indices are still not all in gear to the upside, but I expect that to correct itself this quarter with new highs across the board. Semis and discretionary are still very strong and I expect transports and banks to reassert themselves. Junk bonds had a very strong close to the quarter and they will need to continue that […]
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Date: April 3, 2017
Bulls Put Up A Stand
Yesterday, I wrote about the pullback getting a little old and the opportunity for stocks to find a low and rally. I offered that Dow 20,200 to 20,400 could provide some cushion. The Dow hit 20,400 yesterday morning and rallied nicely into the close with some follow this morning. Was that it? Pullback over? I am not certain, but we did do some buying yesterday to take advantage of the biggest bout of weakness this year. And it wasn’t much. […]
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Date: March 28, 2017
Pullback Getting Long in the Tooth
Stocks are set to open sharply lower today as the media and pundits assign blame to the GOP’s failed healthcare bill. I am not sure I really buy that notion as the bill was confirmed as dead during trading hours on Friday, but really, stocks began pulling back four weeks ago and accelerated lower as healthcare reform seemed less and less likely. Remember, it’s not the actual news, but rather how markets react. As I have been writing about this […]
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Date: March 27, 2017
Two Vital Canaries
After Tuesday’s “big” decline, there was some short-term damage done to most of the major indices. Rather than return immediately to new highs, I think we need a period to repair, which is not the worst thing in the world. A likely scenario is to see movement in both directions, perhaps into April, before the next leg higher begins. On the key sector front, semis and discretionary escaped most of the damage and should be poised to lead again. Banks […]
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Date: March 24, 2017
Teeth of the Pullback
As you know, for the past few months I have written about this overdue pullback to refresh the stock market. While I have written much about it, I am certainly not taking credit for getting the timing correct as I started discussing it many weeks before it began. Until Tuesday, the pullback, which began three weeks ago, has been about a shallow and mellow decline that has just gone sideways in consolidation mode. Tuesday was the ugliest day of 2017 […]
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Date: March 22, 2017
