Some Key Market Internals…

If I put some of the ‘internals’ items covered routinely in weekend reports here for public consumption once in a while subscribers can still easily reference them as well. This allows me to shorten the Market Internals segment, leaving more room for market strategy type stuff in the report. And with yield dynamics and USD in play, it’s time to increase the strategy stuff, whether long, short or avoid across various assets, markets and global locations.

In short, in NFTRH 468 we’ll simply review what is and is not actionable or relatively bullish/bearish by comparing various US sectors relative to the S&P 500 and to each other, and comparing global markets vs. each other and vs. the SPX.

We have been tracking a 2007 analog (with a fairly low priority, given the spotty history of analogs like the ‘1929 crash analog’ that made the rounds a few years ago) of Consumer Discretionary vs. Staples by the long-term monthly view. It’s still within the analog’s scope, but…

xly xlp

…true to this speculative market’s essence, the short-term message is bullish. We used the daily chart and its sideways pattern to indicate a break up from the blue = bullish and a break down from the blue = bearish. Well?

xly xlp

From NFTRH 467: Student: “Is this bullish?” Zen Master: “Is it breaking up?”

Want more good news for over frothy bulls? Palladium and copper vs. gold are still in bull trends. Weak silver vs. gold can serve to hurt the precious metals in a speculative market and positive global economic environment, but does not yet indicate any problems for Goldilocks.

pall gold ratio

Dow Theory has long since clowned itself with way too many false warnings (non-confirmations) over the last few years. I only track it for a laugh now.

dow theory

NYSE A/D is firm.

nyse advance decline

NDX has had some new highs/lows divergence lately, but… the Ascending Triangle.

ndx

Let’s insert a little dime store TA while we are on this subject. If at any time something were to happen like NDX testing but failing the breakout, that would go a long way to flipping bearish on this bloated pig of a market (sure, I guess I betray my bias; I just try not to act on it until given reason).

SPX had a much more minor divergence in new highs/lows, but it’s really a non-issue now, if it ever was one.

spx

Finally, this indicator that I found by way of Dana Lyons at StockTwits. The “middle” stock of about 1700 of them has finally done what the S&P 500 did back in 2013, in breaking to all-time highs. That’s about as positive a breadth signal as you can get.

xvg

Question from student: “What do you make of this?” Answer in the form of a question from the Zen Master: “Is it bullish?” “Yes”. “Well then, that is what I make of it.”

Bottom Line

What’s it all mean? Well Beuller, you know as well as I do that change can come out of nowhere. Like in 10 seconds. It can also come in 10 days, sometime in my Q4 potential top window or 10 months from now. That is why we have indicators and their signals; not to religiously assign deity status to any single would-be market god, but to refine probabilities while keeping balanced and sensible. You know…

This is a momentum-driven, speculative market that has not stopped yet. It will stop when it stops. But the stronger it is now, the worse the post-stop thing is going to be. Meanwhile, we just follow the yellow brick road as Tom McClellan notes that the indicator with his name on it is flashing high risk.

mclellan

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