With an SPX close of 2066.66, we had a devil of a good up day today! Market participation was broad and inclusive. The NYAD line posted a +1550, NASADAQ line a +1212. The Transport and Utilities sectors were the notable exception. My guess is that they are being negatively impacted by higher oil prices at this time. However, they did perform well earlier this year during the upward phase of the oil price action. So far, the overall market still appears to need a rising oil price in order to continue it’s uptrend. I remain moderately convinced that that dynamic may change soon, but, even if it doesn’t, I believe the bull market will still resume intact. However, I think we could yet see another little downleg to complete a micro ABC pattern on the $NYAD.
http://stockcharts.com/freecharts/gallery.html?$NYAD
Thursday, April 7, 2016
Monday, April 4, 2016
April 3 Technicals & Fundamentals
The McClellan Oscillator needs to have some sharp up days to snap out of it's correction. When that happens, this market will surge towards ATH's. The breadth of the market is harder to pull up than the large caps in and of themselves. Therefore the strong A-D days that it will take to get the McOs rising sharply again will energize all the price indexes to the upside. 1977 and 2008 are the only times that I know of that the A-D line was in a strong uptrend while the Dow declined. And I am not even sure 2008 was a strong A-D uptrend or not. I wish someone with access to better charts than I have would post the A-D line and the DJIA for the 2008 time period and even the 1977 example.
The positive correlation that the oil price has had with the stock market may not continue. For the last year and a quarter the market has been discounting the negative effects of lower oil and gas prices on energy-related companies. The market may again start discounting the benefit of lower oil and gas on companies and individuals who consume them. In fact, it probably already started in Dec 2015 with the beginning of the Utility sector rally, although low interest rates have helped. But low interest rates are also an effect of low energy prices. This dynamic may cause different industry sectors to be leaders in the next segment of the bull market.
http://stockcharts.com/freecharts/gallery.html?s=%24NYAD
http://stockcharts.com/freecharts/gallery.html?$NYMO
The Transports rose steeply a couple of weeks ago but since then have declined much more sharply than the Industrials. They are a sector, like the Utilities, which obviously benefits from lower energy prices. I am expecting the Transports to be co-leaders with the Industrials and NASDAQ in the next rally phase, if not to surpass the Industrials. The mid-cap growth sector, which is not an industry group, but a size and style group, have started to gain in relative strength. I am particularly interested in that market segment because I own a couple of mutual funds of that type,
There is much incredulity about the logic of a bull market continuing amid so many economic, financial, and geopolitical stresses. Being a bull does feel a little like going "over the top" of the trenchline into no-man's land with shells bursting all around and then climbing the wall of the enemy's fortifications in the face of machine-gun fire."Climbing a wall", yes, that is what we bulls must do: Climb a Wall of Worry. And "Climbing a Wall of Worry" is what sustainable bull markets do as well.
The positive correlation that the oil price has had with the stock market may not continue. For the last year and a quarter the market has been discounting the negative effects of lower oil and gas prices on energy-related companies. The market may again start discounting the benefit of lower oil and gas on companies and individuals who consume them. In fact, it probably already started in Dec 2015 with the beginning of the Utility sector rally, although low interest rates have helped. But low interest rates are also an effect of low energy prices. This dynamic may cause different industry sectors to be leaders in the next segment of the bull market.
http://stockcharts.com/freecharts/gallery.html?s=%24NYAD
http://stockcharts.com/freecharts/gallery.html?$NYMO
The Transports rose steeply a couple of weeks ago but since then have declined much more sharply than the Industrials. They are a sector, like the Utilities, which obviously benefits from lower energy prices. I am expecting the Transports to be co-leaders with the Industrials and NASDAQ in the next rally phase, if not to surpass the Industrials. The mid-cap growth sector, which is not an industry group, but a size and style group, have started to gain in relative strength. I am particularly interested in that market segment because I own a couple of mutual funds of that type,
There is much incredulity about the logic of a bull market continuing amid so many economic, financial, and geopolitical stresses. Being a bull does feel a little like going "over the top" of the trenchline into no-man's land with shells bursting all around and then climbing the wall of the enemy's fortifications in the face of machine-gun fire."Climbing a wall", yes, that is what we bulls must do: Climb a Wall of Worry. And "Climbing a Wall of Worry" is what sustainable bull markets do as well.
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