04/16/2016 Weekend Update

[Cobra]

Institutional buying and selling chart from stocktiming shows more accumulation than distribution. So the last week's bearish signal was a false alarm. Overall though, for now, accumulation is down while distribution is up, so it's a topping phase which may take awhile before the actual top.

• When accumulation and distribution are down means we're in trending phase.

• When accumulation is up, distribution is down, it's a bottoming phase.

• When accumulation is down, distribution is up, it's the topping phase.

[Cobra]

Smart money is selling but not extreme so it's not condition 1.) yet, should be more up ahead.



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.

[Al_Dente]

Good preview of Sunday’s OPEC meeting:
Scroll down to “Bloomberg Q&A”
http://www.zerohedge.com/news/2016-04-1 ... about-doha

13 members of OPEC are:
Algeria
Angola
Ecuador
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Quatar
Saudi Arabia
UAE
Venezuela

[Cobra]

summary of the week's stock picks. very good week.
viewtopic.php?f=10&t=2001&p=220357#p220357

[Cobra]

Good preview of Sunday’s OPEC meeting:
Scroll down to “Bloomberg Q&A”
http://www.zerohedge.com/news/2016-04-1 ... about-doha

13 members of OPEC are:
Algeria
Angola
Ecuador
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Quatar
Saudi Arabia
UAE
Venezuela

Even there's a deal, it's just no increase, won't solve more supply than demand problem. Iran won't freeze anyway.

[josephli]

Good preview of Sunday’s OPEC meeting:
Scroll down to “Bloomberg Q&A”
http://www.zerohedge.com/news/2016-04-1 ... about-doha

13 members of OPEC are:
Algeria
Angola
Ecuador
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Quatar
Saudi Arabia
UAE
Venezuela

Even there's a deal, it's just no increase, won't solve more supply than demand problem. Iran won't freeze anyway.

and since when Russia honor a deal?

[Cobra]

The stock picks for the next week are here:
viewtopic.php?f=10&t=2008&p=220361#p220361

[Al_Dente]

Not a great news week for defaults, banks and junk:
4/13 Historic bankruptcy of the world's largest coal miner Peabody Energy
4/14 Energy XXI filed for a prepack Chapter 11
4/14 Gulf Keystone announced it would delay about $26 million of bond payments due next week
4/14 Wells Fargo revealed its energy exposure is $32 billion in junk-rated oil and gas companies

In the first quarter of 2016, already 21 companies have defaulted with debt totaling $31.4bn ($24.1bn in bonds and $7.2bn in loans)

4/14 BAC missed earnings estimates, and boosted its set-aside for sour energy loans (boosted by $525 million from the end of last year to $1 billion as of March 31)
4/15 The FED sent a nasty letter to JPM questioning their liquidity (they have a derivatives portfolio that encompasses $51 trillion notional amount as of December 31, 2015), and asking for a narrative describing a pathway “for winding down the derivatives portfolio.”
Three of the five largest U.S. banks (JPM, BAC and WFC) have now had their wind-down plans rejected by the Federal agency insuring bank deposits (FDIC) and the Federal Reserve. The banks have until Oct. 1 to rewrite their so-called “living wills” or be subjected to more capital or liquidity constraints.
4/15 Goodrich Petroleum Files Chapter 11. Bloomberg adds: “…since the start of 2015, about 50 oil and gas producers have gone bankrupt, owing more than $17 billion...”

On the daily charts below, only WFC is (almost) below its 10ma (cyan)

[pezhead9000]

Northman Trader: "The Big Move". Interesting read.
Bull: Money supply is increasing
Bear: Earnings

Is the market expecting better earnings post Q1? If so, potential 15% breakout to the upside
If not, watch out below

https://northmantrader.com/2016/04/16/the-big-move/

[pezhead9000]

US Macro:
"While the industrial recession has deepened (see industrial production), the improvement in the long and short leading indicators argues that we are near the bottom, and a rebound should begin shortly. The longer term issue remains that 2 of the long leading indicators, interest rates and corporate profits have failed to make new lows for a long enough time to be considered negatives, although interest rates are close enough to those lows to be positive for the shorter term "now-cast."

This coming week housing permits and starts will be vitally important to watch. Will the improvement in mortgage applications finally show up in an increase in housing, perhaps the single most important long leading indicator of all?"

http://community.xe.com/blog/xe-market- ... nk-edition

[pezhead9000]

WSJ TSM Block Money Flow that staged a massive comeback earlier this year has paused.

[fehro]

Daily Weekly Candles. Weeklies look bullish SPX/NDX into resistance, OIL nears 50w SMA, Dailies doji's, "possible" evening star of sorts.. iffy. TLT pressing downtrends.

[fehro]

Industry % Weekly Commodities/Basic materials & Banks seems like opposites… strong.

[fehro]

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

Put/Call drifts to the lower extreme levels this week- 0.65 or 1.25 usually a contrarian signal. Was 0.60 on Wed. Otherwise no really sell signs per se.

[fehro]

T2 Channels % Stocks 1+2 Channels ><200d Weekly ><40d Daily - A little divergence happening higher highs index, lower highs Channels on the dailies, and very low % of stocks bellow 1-2 Channels.. again as we make higher lows.

[fehro]

Yields

[fehro]

Yields v2.0

ZN1! / SPX (10yr T-note/SPX) W/D
ZB1! / SPX (30y T-bond/SPX) W/D

IRX 13- week Treasury still multi year highs, still near fall 2008 levels.

[fehro]

Point and Figure.. with long term support/resistance levels fwiw.. DXY - USdollar nears support, breaks… 92.5 could see 88.50, Then OIL could continue up.. longer term $48-55 sideways range regardless of OPEC will add another oil chart lower, Gold seems like it should go as well.. not so sure. VIX nears multi year support levels.

[fehro]

/CL - USOIL - weekly.. kinda an inverted hammer on the weekly works well with this weeks OPEC meeting, pull back to the 20w SMA 35.40 range and holds in this area.. as the USdollar "breaks" down.. look for a possible move in oil back up to the $45-55/60 range into the rest of the year, regardless of supply and demand.. it's really about us, the speculators, financial products, … not supply and demand imho. Supply and demand really ? Supply increased and demand dropped off 75% in 18 months? from Aug 2014- Feb 2016? I could be totally wrong.. but seems crazy imho.

[Trades with cats]

Just wanted to add my 2 cents to the excellent points from Al Dente and Fehro-

Media narrative is that the energy patch companies that have been liquidated so far have generated 10 to 15 cents on the dollar for creditors, which makes the banks look like they are in very serious trouble. I don't think it will be that bad as those who have gone down had to be some of the weakest. The media narrative is that the vulture funds will go 30 cents on decent secured paper hoping to get the company in a re-org action. Well banks are in first position and at the worst kept secret meeting in Dallas Fed history they were given a waver from mark to market, so I think the threat is a little overblown, That is I don't see any giant cracks in the ground swallowing the banks just yet. But the really bad news is that Goodrich and the others are claiming bankruptcy will not decrease their production, so I guess we have to wait to see how long it really takes for the wells to stop producing.

We all saw fundamentals rip apart both shorts and longs last year in the oil trade. It is sort of like a great force of nature that you can ignore for a while but eventually there will be a reckoning. Sort of like Hurricanes and Tornadoes. It is also an easily manipulated market as the big trading houses have proven time and time again. We just had the largest short squeeze in the history of that market and I would guess a big contributor was all of the money desperate for a good return (to make up for their other investments) pouring into the managed commodity funds. It was a great time for a squeeze, the refinery switch over season always brings large inventory builds then when they all light back up we get some of the highest demand of the year. Throw in the usual OPEC maneuvering and several shooting wars in the producing areas plus financing problems in other producing areas and I really don't see how anyone can know what supply and demand will look like in six months with any certainty.

Several things are clear. We have the largest inventories of everything oil related in living history. The fast drop in price lead to an increase in demand, but you can't project that to infinity. The big government agencies that issue predictions of supply and demand are about as accurate as the Federal Reserve. The big trading houses will use their media connections and stampede the new speculators and the number of oil investing letters, videos and seminars will skyrocket. In other words history never repeats but it sure rhymes a lot.

What is new is the price where they pull the corks on all those drilled uncompleted wells (the forward contracts say in the 40 to 45 range) and the higher price where they start drilling again, which Goldman says is 55. So there are your mid-term upper limits maybe.