The market is getting awesome for market junkies as it's filled with cross currents and mixed signals. The bullish earnings reactions in all of our favorite mega cap tech plays Apple, Netflix, Amazon, Google sure seem to send a positive message. At the same time, the warning signs continue to pile up and leading groups continue to thin out. No matter how big the companies, the message from hundreds of stocks outweighs that of four stocks every day of the week.
The Thursday morning low in oil stands out big time after the false breakdown of the prior low and subsequent breakout of the falling wedge pattern. It sure seems headed higher in the next few weeks, but it's only a few days worth of price action in a half year trend.
Digging into the rest of the market....
The VIX has formed a wedge over the last month in a half. A break higher sure seems absurd, but it's possible it does. I mean really, how often does the VIX move over 30?
This version of the stock to bond ratio broke down from it's year long broadening top. This chart has me wanting to buy treasuries, buy a couple of short NASDAQ and S&P 500 ETFs and go on vacation for a month. Money managers can dis-like treasuries or love stocks, but it's clearly the wrong play to do both.
During the week, I wrote this post at See It Market about the relative strength picture in many meaningful groups. I'm watching a couple of risk on groups at key levels.
Transports relative strength is testing long time trend support
Industrials relative strength is slowly drifting into an underside test of this lost support line from the 2009 lows. Is it heading sharply lower from here?
There are head and shoulders top setups popping up all over the place these days...
We've tracked the cloud computing ETF closely of late. It appears to be building a head and shoulders top with the shoulders peaking at a key resistance.
@andrewnyquist pointed out this potential head and shoulders top in Consumer Discretionary.
Yet another potential head and shoulders is forming in the home builders
There aren't many groups that are holding a clear intermediate uptrend these days. Here's a quick list that of those groups holding strong.
Gold relative to the S&P 500 has broken it's nearly one year down trend.
Gold miners relative to the S&P 500 are consolidating in a wedge. It looks headed higher.
Let's talk about high yield bonds for a moment. There's this line of thought floating around that because high yield bond ETFs like JNK and HYG are off the December lows, that it's a great sign for equities. There's a simple explanation behind the high yield bid and it's so simple it's easy to dismiss.
We're living in a yield desperate world. Nearly every investable bond, yield or not, in the developed world is getting bought relentlessly. That absolutely includes junk bonds as they have some of the most attractive yields.
Using inter-market analysis, we can get the real story behind the happenings in the bond market. The picture isn't so rosy.
The bond market risk ratios are hitting the lows. The new lows are bearish. These haven't mattered to the markets yet, but this is a doesn't matter until it does type of deal.
Hong Kong really struggled after attempting a wedge breakout.
The Philippines continues to be one of the best markets on the planet. Other than China, the Philippines ETF EPHE is the only international ETF with a significantly rising 50 day moving average.
Make no mistake, European markets are on fire, but it's a result of the gutting of the euro and U.S. dollar based ETF's just aren't responding.
Thanks for reading and have a great week!