Tech Talk for Thursday December 27th 2018

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Observation

Another wild day, this time in a bullish way! The Dow Jones Industrial Average advanced 1,086.25, an all-time record daily point gain. U.S. equity index shook off early weakness with a gain of 5%.

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Strongest sector/subsector was energy thanks to an 8.68% jump in the price of WTI Crude Oil

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StockTwits Released Yesterday @EquityClock

Technical action by S&P 500 stocks to 10:00: Quietly bearish. No intermediate breakouts. Breakdowns: $ECL $AEE $NEE

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Editor’s Note: Equities moved lower until 11:00 AM EST before launching higher. Additional breakdowns between 10:00 and 11:00 AM EST included LEG, OMC, CVS, RE, CB, CBOE, MAS, AMD, ECL, GRMN, AVB, PSA, AEE, CMS, AWK, NEE and DLR.

Silver $SILVER moved above $14.95 and its ETN $SLV moved above $14.02 completing a double bottom pattern.

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‘Tis the season for strength in $Silver from Mid-December to at least the end of February. $SLV

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Silver stocks and their related ETNs $SIL continue to outperform Silver $Silver $SLV.

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Utilities SPDRs $XLU moved below $50.91 extending an intermediate downtrend. Individual S&P utilities breakdowns: $AEE $CMS $AWK $NEE

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for December 26th 2018

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for December 26th 2018

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for December 26th 2018

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Green: Increase from previous day

Red: Decrease from previous day

 

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http://www.equityclock.com/about/seasonal-advantage-portfolio/

 

S&P Momentum Barometer

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The Barometer dropped 5.00 to 1.20 yesterday, forth lowest level reached in the history of this indicator. After the Barometer dropped to 0.20 in July 2002, the S&P 500 Index gained 24.4% during the next two months. After the Barometer dropped to 1.00 in November 2008, the S&P 500 Index gained 24.4% during the next two months. After the Barometer dropped to 0.40 in August 2011, the S&P 500 Index advanced 11.8% during the next month. A word of caution! Lows set by the S&P 500 Index on those dates subsequently were broken on the downside. The ultimate lows for the cycle (e.g. March 2009) were set several months later. The bottom line: Play the trade on the upside that could last until spring, but expect the lows set midday yesterday to be tested in 2019.

Following are charts showing S&P 500 performance during the periods indicated:

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Disclaimer: Seasonality and technical ratings offered in this report and at

www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed

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20 Responses to “Tech Talk for Thursday December 27th 2018”

  1. Larry/ON Says:

    Pullback – Why is there no follow through after yesterday? No one’s jumping on the bandwagon.

  2. rick Says:

    Larry/ON ,

    consumer confidence index dropped significantly this morning ,this a forward indicator .

    what FED is doing :
    1.fed funds up = flat yield curve = no profits for banks = no credit for economy from banks = lower growth in economy = lower profits = stock market down = negative wealth effect = lower spending = recession = unemployment= lower spending = lower life quality
    2. QT = long term US bonds yield going up = higher interest for mortgages = less buyers = lower real estate prices = negative wealth effect = lower spending = recession = unemployment = lower spending = lower life quality

    so negative wealth effect is showing in future consumer confidence index .
    Is FED taking notice ? apparently not .

  3. Ron/BC Says:

    The Dow broke its 3 year uptrendline after forming an “M” pattern. Breaking that 2018 low to high range projects a selloff to 20,000 which is the “10 year” bull market uptrendline from the major 2009 low. So even “IF” this long and historically very old bull market is still intact, a test of its 10 year uptrendline would be typical and expected. Note the long term Modified MACD that shows the 50ema/200ema relationship has just turned negative on this Weekly chart. Note the history of what happens on these crossovers. Each cross over down tends to see a falling Dow for a year or more. Bottom line: Don’t drink the cool-aid…………….

    https://stockcharts.com/h-sc/ui?s=%24INDU&p=W&yr=20&mn=0&dy=0&id=p0535647903c&a=580429410

  4. Ron/BC Says:

    Rick

    RE:#2
    Very well explained……………If I owned a stock I’d sell it,lol……….

  5. rick Says:

    Ron/BC ,

    When the clouds are getting darker and darker the only way we can survive is to smile and/or laugh :

    Two stock investors seeing godzilla=FED :

    the first one : Run ! is Godzilla !
    the second one :It looks like Godzilla but due to stocks crash mode situation is the FED !
    the first one : Still we should run like it is Godzilla !

    https://youtu.be/Fu62k4K4sQ4

    maybe we should invest in gold(member) !

    the first investor is Dr.Choi from Chicago Med
    the second investor is Dr.Max from Hawaii Five-o

  6. Larry/ON Says:

    I blame it all on Tariff Man. All he had to do was nothing and the world economy would have continued growing. Even his tax cuts were counter-productive because they forced the Fed to raise rates even more. Trump needs to go.

  7. Sherri Says:

    Armstrong on the DOW yesterday:

    “We elected several Weekly Bearish on Friday warning that as we entered the week of the 24th, which was a Panic Cycle target, the market should decline sharply into the 26th. Often the bulk of a decline will unfold the day BEFORE the market closes. This is typically as natural human response of the fear of the unknown after the market reopens.
    Our primary support began at the 21600 and 21495 levels. After that, the next support comes into play at 20795 with another big gap down to the next support level 19780 and 19135 followed by the big gap to 17710 and 17200. Our model would define a bear market only if we see a monthly closing below 17210. Otherwise, we are still within a correction that is so necessary in order to create the slingshot to the upside.

    e closed on Friday below the Breakline from the January 2018 high as well as the Breakout Line from the first major reaction low. This points to the technical support in the 19585 area.. So keep in mind that a low is NOT due until after the New Year. This week is ALSO a Panic Cycle which means we get (1) either a dramatic collapse in one direction, or (2) we get a dramatic move in both directions.

    This suggests that holding the 21600 or 21495 level this week would imply that a low today that holds tomorrow suggests a bounce into next week before a resumption of the decline. We also have a Weekly Bearish at 20795, which provides an intermediate target.”

  8. Ana Says:

    “bruce Says:
    December 26th, 2018 at 4:34 pm
    ana
    i began in 1956………point wise never but % wise i think maybe in 2008……….”

    #5. bruce,

    You began trading in 1956 or you began life in 1956?

    I was trading in 2008 but maybe should not have been trading. Except, a person has to start somewhere.

    That seems like a lifetime ago.

  9. rick Says:

    https://www.investing.com/economic-calendar/cb-consumer-confidence-48?utm_source=WMT_EC&utm_medium=Referral&utm_campaign=COM

    Go to chart , max and look at the numbers in 2007 .
    This leading indicator start to crash in fall 2007 and spring 2008 , 6-12 months BEFORE the big market crash from October 2008 .

    The big question :
    Are we going in the same direction ? or is just a temporary thing ?
    if I knew the answer ……

  10. rick Says:

    Larry/ON

    We cannot change the past .
    The question is what we can do in the present .
    I explained how negative wealth effect influence the economy and all of us .
    The japan government is buying stocks etfs in last few years .
    The chinese government did that 2 days ago .
    Is American government ( FED , Treasury ) willing to do the same ?
    Just to prevent a crash in stocks and real estate like 2008 ?
    Or they are saying : we do not care about the market volatility=
    ignoring the negative wealth effect ?

    Look at XHB home builders ETF = minus 27 % YTD !
    XHB was 40 in spring 2006 = because of FED flat and inverted yield curve = XHB dropped to 14 in December 2007 ( yes 2007 , one year before the crash ) = XHB dropped to 8 in December 2008

    Both stock market and bond market is telling to the FED = you are wrong
    But FED is too arrogant to accept that .
    Maybe FED should go !
    and FED funds yield should be 10 year bond yield minus 1 %
    2.75 % -1 = 1,75 % not 2.50 %

  11. Ana Says:

    $SPX Futures

    Monthly

    https://invst.ly/9ms9a

    Weekly

    https://invst.ly/9msaj

  12. Ana Says:

    $SPX Futures,

    Daily

    https://invst.ly/9msba

    Watch the middle of the bollinger band, if we can not get above that then another attempt at the lowly band on the monthly.

  13. Ana Says:

    $SPX Futures,

    https://invst.ly/9msd0

  14. Mary Says:

    I noticed both of these analyst predicting DOW 16000+. Lets see if they are right. I have read their articles from time to time but never buy/sell based on their recommendation.

    Sovereign Debt Crisis by Armstrong

    The total global debt hit a record $184 trillion, which is the equivalent to more than $86,000 per person. That is actually more than double the average per-capita income. People ask me will our solution work? Can we really just end government debt and convert it to cash restricted to investing in domestic companies? I will put it this way. There is absolutely NO OTHER CHOICE!!!!

    We either default, which will result in civil war and revolution, or you inflate your way out like Venezuela so your Social Security check will not even buy a cup of coffee. A default will result in war. People will then be demanding they have been cheated. Inflating the way out is completely different. You paid them what was promised. It’s their fault it buys nothing.

    To inflate the way out requires a completely different set of patterns. Right now, the theory is that WE THE PEOPLE are the problem. If we all paid what the government thinks we should then they will be fine. They increase taxes and increase enforcement and believe it is their divine right of kings to act in this manner. What we are witnessing so far is not the inflation path – but the hardline path that leads to only violence as we are witnessing in France.

    Why Dow 16000 by Hamilton EW

    Dow again, December 24, 2018

    My educated guess is that we are today at the midpoint of wave 3 of 3 which means that we are also at the midpoint of the whole thing, that is what will probable shape out to be wave A of a large A-B-C correction or just wave A of a large triangle that itself starts with an A-B-C. We closed at 21792 and started from a peak of, I believe, 26952 on Oct the 3d. so 5160 points so far. If this is the midpoint we should get about the same number of points below today’s level. 21792-5160=16632 which does not take into account a possible gap!

    All the Trump gains in the stock market are now gone and I have no doubt that he and Mnuchin will be able to erase much of the rest as well.

    Note ; wave 4 of A is more likely to be a zig-zag that goes much higher than the triangle shown. This because of alternation between waves 2 and 4. @ is a flat so 4 might become a zig-zag.

  15. Ana Says:

    “Mary Says:
    December 26th, 2018 at 4:42 pm
    Ana
    Santa came out of the chimney.Hamilton EW predicting DOW 16000. Wonder if that will materialize”

    Seems reasonable to me, Mary!

  16. Ana Says:

    Futures,

    These lines are so difficult to draw in, but hopefully, you get the picture.

    Temporary target is middle of daily bollinger band, subject to change.

    https://invst.ly/9msjp

  17. bruce Says:

    thanks Ana Sherri and Mary…….Ana, i began with a Toronto broker in 1956 and moved on to American firms for 40+ years…….retired 20 years ago…….for all my experience I should be a whole lot smarter……

  18. Bernie Says:

    bruce,

    Good to hear from a 60+ years investor. Welcome to our forum! It would be nice to hear what has worked and what has not with you.

    Other than purchasing a small cap uranium stock in 1963 or 1964 through my bank (I was only 12 or 13) I didn’t invest a dime until I opened an RRSP in 1984. I did well with mutual funds which I picked myself until 1999 when I decided to go with a full service financial advisor. Over the next 8 years my returns roughly equaled what I paid in fees lol. Needless to say the advisor route was a mistake. I would have done much better had I stayed with the mutual funds I picked myself. I’m happy to say I’ve done more than ok, with (mostly) dividend growth stocks, since going it alone in 2008 with my RRSP and 2007 with my non-registered account. I wish I had used the same investing principles in my TFSA. My returns have been a disaster there…too many speculative trades and impatience on my part. I guess you could say my RRSP/now RRIF and non-registered account investments were run by my inner Dr. Jekyll and my TFSA by Mr. Hyde. Live and learn I suppose, hopefully I live long enough to right my TFSA ship.

  19. bruce Says:

    bernie

    rule #1 never average down…..rule #2 dont ever be surprised at how low or how high a stock can go……..lots of rules but hard to follow them…..

  20. Bernie Says:

    bruce,

    Yep, two very good rules 🙂

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