US - Market Direction 40 (May 17 - Feb 18)

Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Sun Aug 13, 2017 9:56 pm

THIS WEEK

Given the index setups, this could actually be a week that decides some direction. As noted earlier, the volume was not such that would indicate the algorithms decided it was time to dump all stocks in a sell the rally move.

Therefore, as we are not, as some seem to believe they are, omniscient with what the self-thinking algos are going to do, we just prep for what can happen off this selling.

That raises a very interesting point. When ETF's started to gain popularity, I believed that was the start of the destruction of the markets. Not that ETF's were the problem themselves, they were just part of the preparation for market demise.

They allow lazy investing, and the irony is, they do not reflect the dollar for dollar moves of the stocks that comprise the ETF. That is up to the ETF management, within certain limits of course.

As ETF's grew in popularity, you started to see market distorting movements. Stocks would move intraday, but the ETF's would not follow. Then, in the last hour, large index price moves occurred as the ETF's were brought more in line with the days' trading action.

Now the next step is in place: algorithms running some very large funds and thus lots of money, coupled with smaller robot advisors that tell investors what ETF's to place their money. Then it is all turned over to the machines. People playing the ETF game get unmercifully whipsawed as they are rebalanced in sudden moves. It is like a mini expiration session every session.

If you pay attention to how the algos trade you, how they accumulate shares, etc., you recognize the tracks just as always, regardless of who manages the money. That is why the false breakdown proved to be such a good entry for us: program trades and algos were taught to buy those, and they have dutifully done so for years. Thus, what does the current situation on
NASDAQ, SP500, and SOX show? Another break of support that could be a false break.

In any event, this is going to lead to the destruction of any real price-finding market. When the machines take over most of the action, that will be the day the market ceases to reflect what markets have always shown, e.g. the belief of investors as to the economic future, and will instead reflect only the reactions of each algorithm and program to the headlines that appear in the news ticker.

That puts a whole new angle on 'fake news' does it not? You have seen how a planned rumor can move a stock, even the market. Just think what happens when hundreds, even thousands, of headline-reading programs react to each headline, and then what happens when the ETF's are then 'balanced' at the wnd of the session to reflect the latest headlines? Destruction of markets.

Source: Investment House
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Sun Aug 13, 2017 10:16 pm

THE MARKET

The stocks indices, again, fall into two categories. Okay, with the DJ30 thrown in it is three categories. It is just that the roles have changed.


Category 1: The Dow

DJ30: This index is in another world from the other indices. Sure, it sold last week, but it was abnormally normal in its orderly test of an impressive string of consecutive new highs.

Holding at the 20 day EMA Thursday after the selloff, again with a doji at the 20 day. Juxtaposed to the other indices, quite abnormally normal.


Category 2: SP500, NASDAQ, SOX

This category contains indices that broke hard lower, broke next support, nd as of Friday are still problematic.

SP500: After spending three weeks riding along the 2009 upper channel line SP500 tested. Then Thursday it dove lower, breaking the 50 day MA's. Higher but not huge volume. Not even above average. It was not a massive selloff.

There was more downside volume in mid-May on that break of the 50 day MA's, but we all know that bounced right back after closing for a second session below the 50 day MA. What am I saying? This is nothing that hasn't been seen and overcome before. The selling was ugly, just as it was in May.

The question remains: will the algorithms buy on this dip or will they keep selling the SP500 new high that reversed ahead of the Thursday selloff. That said, the Friday bounce was NOT strong and sets up the potential to fail at the 50 day MA and continue lower.


NASDAQ: After spending over a week working laterally over the 20 day EMA and holding the June prior high, NASDAQ broke higher Tuesday but reversed.

Thursday it too dove below the 50 day MA's. It also broke the early June prior high. Friday it recovered some ground but closed below the 50 day MA's.

Unlike SP500, NASDAQ volume jumped above average on the selling. Still not huge trade, but above average. As with SP500, we have seen this move before. NASDAQ also ripped lower in mid-May on volume but rebounded.

In June it broke the 50 day MA. It recovered to higher highs each time. Indeed, NASDAQ can still give some ground and hold its uptrend. Sure Thursday was ugly, but been there before and lived to tell about it. As with SP500, the question is will the algorithms buy this dip or keep selling that last new all-time high? That said, NASDAQ is just like SP500, and the Friday rebound sets up a fade.


Category 3: SP400, RUTX


These two indices were leaders -- in the selling.

SP400: Broke the 50 day MA's to start August, moved laterally, then plunged Wednesday to Thursday. Gapped down to the 200 day SMA Friday, rebounded to positive.

A clear trend break, breaking the December 2016 to August 2017 trend. The last time SP400 visited the 200 day was in November 2016. It held. Thus, SP400 may have shifted from downside market leader to ready to help lead a bounce upside.


RUTX: Same action as SP400, working laterally below the 50 day MA after breaking that level to start August, then bombing lower to the 200 day SMA on the Friday open. RUTX bounced off the 200 day and closed with a modest gain and a doji. That doji suggests it is ready for a relief bounce.

Last time at the 200 day SMA: November 2016. As with SP400, ready to turn from a loss leader to a new upside leader?


IN SUM, the market was bifurcated as the small and midcaps broke support. The other indices, sans DJ30, caught down to those two indices. Now those two loss leaders are at the 200 day SMA and, just as they did in November 2016, can rebound in some more upside and perhaps lead a move higher.

Stranger things have happened of course, particularly in this Fed and plunge protection dominated market. The swing vote, the key vote, is still the algorithms and whether they buy the dip or just keep selling. Volume is not that heavy on this drop so it does not look that the algorithms all threw in to the downside.

Source: Investment House
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Mon Aug 14, 2017 9:28 am

These Two “Signposts” Are Your Key to Navigating a Narrative in Transition

by D.R. BARTON

Narrative Signpost No. 1 – How Does the Market Digest Important Economic News?


Narrative Signpost No. 2 – How Does the Market React to News About the Trump Administration or Congress?


Source: 10 Minute Millionaire

https://10minutemillionaire.com/2017/08 ... ransition/
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Mon Aug 14, 2017 8:41 pm

NEW HIGHS OF NOTE LAST WEEK

Raytheon (RTN)... "offense" contractor
Lockheed Martin (LMT)... "offense" contractor
Caterpillar (CAT)... heavy equipment
Deere (DE)... tractors
Alcoa (AA)... aluminum
Office Depot (ODP)... office supplies
Wal-Mart (WMT)... big-box retailer
Best Buy (BBY)... big box retailer
Procter & Gamble (PG)... household goods
NVR (NVR)... capital-efficient homebuilder
Morgan Stanley (MS)... financial-services giant
Travelers (TRV)... insurance
Cigna (CIG)... health care
Weight Watchers (WTW)... weight loss
Visa (V)... Americans are spending money
Royal Caribbean Cruises (RCL)... cruises
Carnival (CCL)... cruises
Apple (AAPL)... iPhone maker
Nvidia (NVDA)... computer chips
JD.com (JD)... China's Amazon

Momo (MOMO)... Chinese social media


NEW LOWS OF NOTE LAST WEEK

Chipotle Mexican Grill (CMG)... troubled burrito maker
SeaWorld Entertainment (SEAS)... troubled theme park
Macy's (M)... troubled retailer
JC Penney (JCP)... troubled retailer
Schlumberger (SLB)... troubled oil services company

Source: Daily Wealth
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Tue Aug 15, 2017 6:47 pm

My Chart Shows When to "Worry" About a Correction on the S&P 500

By D.R. BARTON, JR.,

As long as the S&P 500 stays above the 2400-2410 zone, there is absolutely no change in the "tone" of the market.


Source: Money Morning

https://moneymorning.com/2017/08/15/my- ... he-sp-500/
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Fri Aug 18, 2017 8:59 pm

Vested in RWM (Russell 2000 Inverse 1x)

Russell 2000 falls below 200-day moving average for first time in 14 months

By TOMI KILGORE

The Russell 2000 index of small capitalization stocks RUT, -1.78% fell 0.9% in afternoon trade Thursday, to peek below the widely-watched 200-day moving average (MA) line for the first time in nearly 14 months.

The 200-day MA is viewed by many chart watchers as as dividing line between longer-term uptrends and downtrends.

The Russell 2000 was last below that line intraday on June 29, 2016, but last closed below the line on June 28.

The 286-session stretch that the index has closed above the line would be the longest since the 363-session stretch ending May 5, 2014.

The Russell 2000 is seen by many as a leading indicator for the larger cap indexes, as small cap stocks tend to be less liquid than large caps so they tend to underperform during market declines and outperform during market rallies.

The Dow Jones Industrial Average DJIA, -1.24% is currently 1,286 points, or 6.3% above its 200-day MA, while the S&P 500 SPX, -1.54% is 4.2% above it and the Nasdaq Composite COMP, -1.94% is 6.8% above it.

Source: Market Watch

http://www.marketwatch.com/story/russel ... yptr=yahoo
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Fri Aug 18, 2017 9:10 pm

vested RWM (Russell 2000 Inverse 1x)

Here’s the shocking truth about the Russell 2000’s P/E ratio

Glaring omission artificially lowers small-cap sector’s valuation

The PE on the Russell 2000 is 78.7.

That means that the small-cap sector is not only hugely overvalued in its own right, it is in relative terms as well.

As you can see from the chart below, the Russell 2000’s true P/E today is higher than it was at either the top of the internet bubble or the 2007 bull market peak.


What neither FTSE Russell nor iShares take into account when calculating the index’s P/E, are companies with negative earnings.

Since nearly a third of the companies in the Russell 2000 index are losing money, this omission has huge consequences.


Source: Market Watch

http://www.marketwatch.com/story/heres- ... yptr=yahoo
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Sat Aug 19, 2017 6:49 am

Bad news for the stock market: The Hindenburg Omen is back

Strategist alarmed by frequency of technical pattern in recent days

By SUE CHANG

The dreaded Hindenburg Omen is back.

Even as the S&P 500 SPX, -0.18% and the Dow Jones Industrial Average DJIA, -0.35% rose Wednesday, there were more stocks hitting 52-week lows than 52-week highs on the New York Stock Exchange — something the market hasn’t seen since July 2015, according to Jason Goepfert, president of Sundial Capital Research,

And this divergence has triggered a Hindenburg Omen on the S&P 500 for five out of the last six sessions.

“It is a serious signal that highlights times of decoupling within an index or exchange. The S&P hasn’t suffered five signals so tightly clustered since 2007, and 2000 prior to that,” he wrote in a report.

Such clusters typically lead to poor returns in subsequent days and the last time a similar trend emerged, in November 2007, stocks fell by 1.6% in the following week and 2.3% two weeks later.

A year later, the S&P 500 was about 40% lower.

The 2008 Financial Crisis: Explaining the Start

This year, the pattern has been popping up more often in all four main indexes, including the Russell 2000 RUT, -0.08% Goepfert has counted 74 omens so far in 2017, second only to 78 recorded in November 2007.

“In 2000, it only got up to 57, and in May 2015, it got up to 54. Both led to poor returns for late buyers as the indexes finally gave up and followed those lagging sectors lower,” he said.

The Nasdaq COMP, -0.09% is also experiencing a split where less than half of the components traded above their 50-day and 200-day moving averages even as the index hovered near a record. That has only happened twice in the past 17 years, in 2007 and 2014, the strategist said.

These warnings aren’t necessarily a signal to bail out of the market immediately as they sometimes turn out to be false alarms as was the case in May 2015.

Still, that they are manifesting in several indexes and forming so frequently are good reasons to brace for weakness, according to Goepfert.

As if on cue, the stock market fell sharply on Thursday and is poised for its second weekly loss in a row Friday as doubts mounted over President Donald Trump’s pro-growth agenda after he was forced to dismantle two business advisory councils following the defection of several corporate executives.

Source: Market Watch

http://www.marketwatch.com/story/bad-ne ... yptr=yahoo
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Sat Aug 19, 2017 8:08 am

Traders Might Be About to Get a Big Buy Signal for U.S. Stocks

by Luke Kawa

Historically, the end of periods in which the index has gone at least 150 sessions without entering oversold territory has marked a good short-term entry point for stocks.


"We continue to treat the current pullback as more of a seasonal thing than anything else, given the market’s historical tendency to do poorly in August and September."


Source: Bloomberg

https://www.bloomberg.com/news/articles ... yptr=yahoo
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Sat Aug 19, 2017 8:11 am

Goldman: These 10 stocks most loved by hedge funds are crushing the market

Goldman's "Hedge Fund VIP" list is up 19 percent this year through Aug. 14 versus the S&P 500's 12 percent return.

The bank's list consists of the 50 stocks that "appear most often among the top 10 holdings of fundamentally driven hedge fund portfolios" for the June quarter.

Popular technology stocks such as Facebook, Amazon, Alibaba and Apple are among the top names in the basket.

by Tae Kim

Source: CNBC.com

https://www.cnbc.com/2017/08/18/goldman ... yptr=yahoo
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