12/17/2016 Weekend Update

[Cobra]

Smart money starts to short, not extreme yet so should still be some up rooms.


How I use the chart:

I don't care what's the logic behind the chart. I found it works in the following two cases:

1.) When market up huge, if I see smart money huge short, best if new record short, then I know a short-term pullback is due soon.
2.) When market down, if I see smart money suddenly rises sharply from very negative value, then I know the pullback was over.

So I only use this chart for the above 2 cases. Besides those 2 cases, it means nothing to me. i.e. the absolute value of this chart means nothing to me, I only care if it rises sharply or drops sharply.

[Cobra]

please don't forget our weekly sentiment poll here: viewtopic.php?f=9&t=2295

[Cobra]

Summary of the week's stock picks:
viewtopic.php?f=10&t=2286&p=234632#p234632
Not a bad week.

[Cobra]

The next week's stock picks are here:
viewtopic.php?f=10&t=2297

[Al_Dente]

[Trades with cats]

PBS News hour interviewed an ancient ivy league professor who's model once again called the election correctly. It is based 100% on economic conditions, no surveys, no polling.
Last week someone published a piece showing economic conditions now and when Reagan was elected with there point being things are a lot more extreme (interest rates, debt etc.).

My point is nothing is different this time in general, but of course it is in detail. So Mr. Gundlach is correct in general, but I think no one has the actual timing down on this because things are out there at extreme's everywhere you look.

[Al_Dente]

Barry Ritholtz predictions for 2017

[Trades with cats]

Black Gold- Nothing much to say. The media has been beating on the OPEC NOPEC deal with every story. Zerohedge, ever the model of restraint, even had a forecast that Saudi Arabia was going to break apart into civil war. My take, which is of course as good as you can get at any local pub .

1. Critical to note that Saudi has already won big for everybody. They are selling max output of oil for 7 or so to maybe 15 a barrel over where it should be and those dollars are up how much from a year ago. The price they have paid so far is nada, goose egg, the big zero. Well the deal says they will have to cut in January. They usually start cutting in November and by mid winter are down by a half million barrels a day just about every year because demand falls during northern hemisphere winter. Don't forget the big lunar new years shut downs all over Asia as well. Of course come spring they will have to continue the lower output but so what with billions in IPO money as the prize.

2. NOPEC agreed to call normal decline from existing wells as their share of the cut. Oh, they are all broke so if they don't drill the wells they didn't have the money for they keep to the deal. Again, someone show me where President Maduro of Venezuela has the money to expand capacity.

3. Iraq, Iran and a couple of others who are trying to make up for years of no investment either have an explicit pass or are writing their own. I can only guess this is because the press wanted to hear "we have a deal" and really didn't care about the details. The big problem is that Harold Hamm and Da Boyz in the shale patch aren't part of the deal. We will find out after quarterly filings just how much of 2017 production they sold forward but those who read the COT say it is a record. Of course the shrill weekly call out on rig count and that chart showing US production are not good for bull attitudes.

So has anything changed? Not really. There is too much oil but a whole lot of people decided that they need to be long anyway.

What I am confident of is that the big trading houses will make some really nice short term profits in counter trend trades. As always they will seize the opportunity when the dumb money is leaning against the seasonal winds or when the dumb money decides to play the seasonal trend and it blows up, like last winter. If you remember we hit 30 or so then all of a sudden two major suppliers stopped shipping and the big boys squeezed the heck out of the shorts. Mark Twain said something along the lines of "it isn't what you don't know, it's what your sure of that isn't". As I have said before this market is easily manipulated for a few weeks by the trading houses so you can count on some tanker fun and games when they need to make sure the weekly numbers are to their liking. You can also count on OPEC cutting production in January, because they always do. What you can not count on is how the market is going to read it. Should be an interesting winter. And good luck to anyone brave enough to trade this market.

[kongen]

Thank you for that, Al Dente.

[DellGriffith]

Gold has a buy signal.

On 12/15, NUGT gapped down huge on its biggest volume day EVER.

NUGT last did this on 11/11 and actually had a nice 15% rally.

[MrMiyagi]

spyX

[TraderJoe]

The current post election rally is the largest on record for 28 days after the election. The S&P up 8.7% at Tuesday's close and the Dow up 11.3%. In modern history, there were only five rallies of 5% or more post election. Of those, four went on to gain another 10% over the next six months.

Does history repeat?
As one analyst put it, "starting in January there is going to be a tectonic shift in asset allocation." Stocks that have worked over the last 8 years are going to be kicked to the curb in favor of stocks expected to work over the next four years.

Some stocks are grossly overbought. However, most portfolio managers are not going to completely restructure their portfolios in the six weeks before year-end. There are too many variables including peer performance, bonuses and tax planning just to name a few. Most managers will wait for January and the start of a new year for performance measurement and taxes before making wholesale changes. Did they buy some of the hot stocks over the last five weeks? Absolutely but they will buy more once the calendar turns over and they can liquidate existing positions.

We may see significantly higher highs in 2017 but probably not in January. If you remember January 2016, it would be hard to tiptoe blissfully ignorant into 2017. There was no warning and the selling started on December 30th. The Dow fell -14.7% at -2,270 points to hit a low of 15,540 on January 20th. The Nasdaq fell from 5,107 to 4,209 or -21.3%. The Russell 2000 fell from 1,160 to 943 or 23.0%. Given the gains in recent weeks, we could repeat that decline.

The Dow is clearly in distribution with solid resistance at 19,950 and big intraday declines. Thursday the Dow closed 100 points below the intraday high and Friday was an 80-point decline intraday. Short-term support has formed at 17,760 giving us about a 200-point range to watch for a breakout or a breakdown.

The Russell 2000 Index closed with a -2 point loss but that was -15 points below the intraday high. The Russell was the largest gainer in the rally at +20.1% and that suggests it could be the biggest loser in any future decline.

[fehro]

Weekly Daily Candles. Weeklies a tad toppy.

[fehro]

Industry % Weekly

[fehro]

T2 http://www.worden.com/TeleChartHelp/Con ... rs_T2s.htm

Some weakness, and toppy action to the swing buy signal

[fehro]

T2 Channels % Stocks 1+2 Channels ><200d Weekly ><40d Daily

[fehro]

Yields

[fehro]

Yields v2.0