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
Going Nowhere
Well, at least last Wednesday was fun if you were a bull! The Fed raised rates by 1/4% as expected and stocks took off on the premise that there would only be two more interest rate hikes the rest of 2017. That hurt the banks and the economically sensitive sectors and gave a strong push to the defensive sectors. I remain skeptical of only two more hikes and stand by my forecast that four hikes are in the cards this […]
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Date: March 20, 2017
Fed to Hike Rates Today. Dow 23,000 Still On Track
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. Three meetings ago was one of the rare times where the models strongly called for a rally on statement which was correct as well as a decline a few days later which was also correct. Today, there is a significant upside edge […]
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Date: March 15, 2017
Pullback Remains in Place. Junk May Hold Key.
The short-term pullback I have seemingly written about for weeks and weeks remains in place although I am certainly not taking credit for calling it in a timely fashion. The Dow, S&P 500 and NASDAQ 100 have all pulled back constructively while the S&P 400 and Russell 2000 are uglier. The three stronger indices are just about to kiss their 21 day moving averages, while their weak cousins knifed right through the 21 as well as their 50 day moving […]
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Date: March 9, 2017
Bulls Remain Large and in Charge Despite Pullback
We had a lot of negative news between Friday’s market close and Monday’s open, almost all on the geopolitical front with the vast majority surrounding President Trump. Of course, Deutsche Bank finally agreeing with the markets that they needed to raise capital was icing on the cake. In a weak market, that backdrop would have yielded a 1-2% lower opening on Monday. In a strong market, we’re talking about .25-.50% lower. Stocks are due and have been due for a […]
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Date: March 6, 2017
Volatility Genie Trying to Pop Out
After what has been celebrated as this huge, epic rally on Wednesday, the major stock market indices gave back all of their post 9:30am gains and then some on Thursday. I mentioned the other day that volatility compression leads to volatility expansion and vice versa. When the volatility Genie finally gets out of the bottle, we will probably see a sustained increase. I think we’re close to that now. Please remember, volatility does not always mean decline. It means wider […]
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Date: March 3, 2017
Hot IPO, SNAP, Comes Out. Time to Buy?
“Hot” IPOs like Alibaba, Twitter and Facebook are usually very emotional, much anticipated and huge financial media events. Investors clamor for these stocks, usually throwing caution to the wind as fundamentals are trampled by greed. The media are usually camped out at the NYSE or NASDAQ with minute by minute updates as to where the stock may open. As I have discussed over and over, emotion in investing can have a very detrimental impact on your portfolio! That’s one of […]
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Date: March 2, 2017
Energy Stocks Forecasting Crude Oil Decline
Good morning! As I finish this up, I am back at the airport waiting to board an earlier flight than expected back home. I was hoping to sneak away for a few hours and race through 18 holes, but Mother Nature gave us so much rain that the golf course and driving range were closed. So rather than waste a full day, I booked an earlier flight on the always flexible Southwest Airlines. At the same time, my 8 year […]
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Date: February 28, 2017
Sector Leadership Remains Very Strong
This is going to be a quick update as I am standing at the gate in Hartford waiting for my delayed flight to board. It’s never a good sign when early morning flights are late. I am heading down to the east coast of Florida for a quick trip to visit clients and maybe even hit a few golf balls in between meetings if my back holds up. Let’s get the theme out of the way early. The short-term still […]
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Date: February 27, 2017
Short-Term Iffy But Long-Term Remains Strong
Following up from Friday’s post, stocks remain overbought and certainly stretched to the upside although the same can certainly be said all month. They are much in need of a break or at least a quick pause to refresh. However, sometimes strong momentum overpowers everything as we have seen from time to time. I closed last week by saying that the bull market is absolutely not over in my opinion. That prevented the usual emails. Look no further than two […]
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Date: February 21, 2017
Trump Top Ticking Stock Market?
As I write the next issue of Street$marts, there is a lot of Donald Trump included. Not so much from a political standpoint, but more how he is impacting the stock market and economy. It’s really been amazing that every single meeting I have with clients and prospects, the Trump question is the first one asked. As you know, when it comes to investing, I have a strong contrarian side to me. As the late Joe Granville once said, “if […]
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Date: February 17, 2017
Sector Leadership Immunizes Stock Market from Bear Market
On Friday, I wrote about the Russell 2000 and what a potential breakout could mean for the stock market. At the open today, this index hit a fresh all-time high. Before breaking out the balloons and party streamers, let’s see if it can close at new highs and not give back too much over the coming days. With the Dow closing above 20,000 for five straight days I will have a new target very shortly that looks to be several […]
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Date: February 13, 2017
Small Caps Getting Ready to Lead While Worries about Trump Persist
Yesterday, I wrote about the major stock market indices and how the Russell 2000 was finally waking up. Below is an old chart which I first offered in early January. You can see that the small caps have been in a tight trading range all year and are now trying to break out to the upside. With so many studies pointing lower, this is one index which could counter some of the negativity and give the market a little push […]
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Date: February 10, 2017
Bears Still Struggling to Make Progress
Happy snow day to those of you in the northeast! For several weeks, there have been all kinds of studies which indicate that the risk/reward for stocks is skewed to the downside over the coming weeks and few months. The same can be said of some daily studies. When I say skewed, I mean favors a typical and normal pullback of 2-5%. Yet each time the bulls look tired, they somehow prevent the bears from making any progress. In the […]
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Date: February 9, 2017
