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The Bull Thread

Discussion in 'Stock Market Today' started by bigbear0083, Apr 1, 2016.

  1. bigbear0083

    bigbear0083 Content Manager
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    Not a Triple Top Yet – Support Has Held
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    There has been a lot of chatter recently about an imminent “triple top’ for the market across the January 2018, September 2018 and recent April 30, 2019 highs. It’s not a triple top until it breaks support levels. Traders do need to be watching for support levels to be broken - which we have recently held.

    Holding support was bullish technical action. But remember this is the Worst Six Months and we expect more volatility, more testing of support and more sideways action – backing and filling – over the weaker summer months.

    We talked about these support levels on the blog a month ago as well. Here’s an update to the chart from that May 7 blog post. I added some additional support levels. S&P 500 level of 2580 at February/April 2018lows is critical support – a 12.4% correction.

    Breaking that level would bring the December 2018 lows into play, which would be bear market territory of -20% – and likely the low and a great buying opportunity. Good thing we are already in Worst Six Months Defense Mode since we shifted to market neutral after our official Best Six Months MACD Seasonal Sell signal for DJIA and S&P 500 on May 1.
     
    Onepoint272 likes this.
  2. bigbear0083

    bigbear0083 Content Manager
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    Construction Openings Surge
    Tue, Jun 11, 2019

    Yesterday, the BLS released its April Job Openings and Labor Turnover Survey (JOLTS). The JOLTS report allows for a deeper look at the labor market beyond the plethora of statistics included with the monthly Employment Situation Report (which is best known for its Non-Farm Payrolls number). Overall, the JOLTS report showed robust openings levels, cycle highs for quit rates, strong gross hiring, and very slow layoff rates -- a generally positive set of indicators for the US labor market.

    The most interesting data point in the survey came from job openings at the industry level. Opening levels in the construction industry surged 11% MoM and 40% in two months to a record level. Typically, openings levels are a leading indicator for employment numbers in the construction industry, as shown in the first chart below. The uptick in openings could represent a pending surge in construction hiring (and therefore, activity).

    On the other hand, construction openings haven't consistently led residential construction activity (as measured by housing starts -- 2nd chart below), proving a lagging indicator during the last cycle and a coincident one for most of this one.

    The same is true for construction spending numbers, which captures residential spending correlated to starts and the nonresidential sector. The surge in construction openings actually looks a bit like the mid-2000s, with modest declines in spending off peak levels taking place as openings continue to surge. While the recent explosion in openings is interesting, it's hard to be sure whether it's a positive or negative sign for the construction industry.

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  3. bigbear0083

    bigbear0083 Content Manager
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    June’s Boon – 5% DJIA Gain Already
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    Nearly two weeks ago we examined the history of June market performance after a down May following a strong January to April. That analysis suggested that this June could produce above average market gains. Thus far, the market has not disappointed. As of today’s close, DJIA is up 5.03% already this June. NASDAQ is second best, up 4.96%. S&P 500 and Russell 1000 are 4.89% higher. Russell 2000 is the laggard of the group, higher by a still respectable 3.96%. The true test for the market will arrive in the second half of the month as the end of the quarter nears. Historically, the second half of June has not been great for the market.
     
  4. bigbear0083

    bigbear0083 Content Manager
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    Small Business Sentiment Surprises to the Upside
    Tue, Jun 11, 2019

    Small business sentiment saw a big upside surprise for the month of May. While economists were expecting the headline NFIB Small Business Sentiment Index to fall to 102.0 from last month's reading of 103.5, the actual reading went the other way, rising to 105. That makes it four straight monthly gains after five straight months of losses from last August's record high of 108.8.

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    As we do each month, we wanted to highlight which issues are currently the biggest problems for small businesses. Leading the way once again this month, Quality of Labor is the biggest problem for businesses, impacting a quarter of all those surveyed. Behind Labor Quality, Taxes and Government Red Tape take up the number two and three spots, but both are well off their historical highs and Red Tape is now only cited by 12% of small businesses as their most important problem. That's tied for the lowest reading since 2010!

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    Along with Labor Quality, which was cited by 25% of all small business owners, another 8% cited the Cost of Labor as their most important problem. In other words, on a combined basis, labor issues are the biggest problems for one-third of all small business owners! In the history of the survey, there has only been one other month where the combined reading was as high as it is now (August 2018) and only a handful of other periods where it was above 30 (1998 - 2000 and since the second half of 2018). We just published a report looking at an interesting trend from this month's NFIB Small Business Sentiment survey and what it means for the market going forward.

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  5. bigbear0083

    bigbear0083 Content Manager
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  6. bigbear0083

    bigbear0083 Content Manager
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    Bulls Slowly Return
    Thu, Jun 13, 2019

    With equities pulling back in May, investor sentiment has held a bearish bias over the past few weeks. Last week's rally has reversed this build-up of bearish sentiment to a small degree as the percentage of investors reporting as bulls in this week's AAII survey grew to 26.84% from 22.53% last week. While this is an improvement, investors have been hesitant to rush back as bullish sentiment remains low relative to history. This week's reading is still over one standard deviation below the historical average of 38.19%. This is a bit of a contrast to the Investors Intelligencesurvey of newsletter writers, which saw bulls come surging back with the largest increase in the number of respondents reporting as bullish since the first weeks of 2019.

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    Bearish sentiment, on the other hand, saw a sharper move, falling to 34.2% versus 42.58% last week. That is the largest decline in bearish sentiment since February 7th of this year when it had fallen just under 9% from 31.76% to 22.78%. Similar to bulls, while this is an improvement, bearish sentiment remains elevated above its historical average. Additionally, the bull-bear spread has favored bears for five weeks in a row now. The last time the spread had a streak like this (also five weeks long) was in May of 2016.

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    More than anything, investors appear to be hesitant on the current market as neutral sentiment is the predominant sentiment this week. Neutral sentiment is up ~4% this week to 38.96%. While higher than average and elevated, as it has been most of this year, this is not at any sort of extreme reading.

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