The collision of global markets and social mood

Friday, July 17, 2015

Friday -- July Op-Ex & The Most Important Chart Lately

ES Futures:
Flat in what appears to be a triple top overnight.

Google beat estimates and the stock ripped after the close -- obviously no one wants to contemplate what accelerated cost-per-click erosion may mean. Last quarter was down 7%; this quarter down 11%.

Advertising is often the best leading indicator of business conditions. In this case it shows slowing demand may be starting.

Housing starts (+9.8%); building permits (+7.4%), CPI (teenie bit hotter), and U of Michigan sentiment at 10am Eastern round out the news today.

Great numbers in housing, yes, but Bloomberg is out with some cautionary new--

Similar to slowing cost-per-click as an advertising warning, slowing high-end homes is a real estate warning, especially when the "help" from shadow lending doesn't seem to be helping.

Elsewhere, an excellent article by Jeffrey Snider at Alhambra Investment Partners appeared on Zero Hedge concerning a slowdown in stock buybacks --

The article had possibly the most important chart I've seen in a while. With the S&P now pushing highs and buybacks diverging, this chart is another reason why new all-time highs are a sell in my opinion.


Still thinking 2s-30s want lower prices before possibly running to new price highs. Charts have not improved.

WTI crude flat. NG has not made 2.955 yet.

Gold 1143s.

S&P Outlook:
Got what I wanted: a rally into July op-ex. I don't care how it got here, just that it did.

Actually, the internals have shaped up quite a bit since I referred to them as pathetic the other day.

From June 16th --

Today --

Not perfect but not a bad road map. The wave 4 low was very tricky. Thinking 5 may take more time.

Hope so. Because remember after July op-ex can sometimes get bumpy. As a refresher, here is 1998.

And 1999.

With the market still in a 90s-style party mode, these may make prudent road maps too.

Still favoring a small pullback from current levels and then a final ascent, possibly into August op-ex, for the final leg of wave 5.

How deep? There is a volume shelf around 2077 that also coincides with the 61.8% retracement of the rally from 2044.02. That would be as far down as would feel comfortable at this point, unless the "complex ABC" scenario is still waiting in the wings. Doubtful but possible.

Gearing up for a vacation back in New England a week from tomorrow during which time I'll not be trading much at all. Hoping for benign summer trading conditions.

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