martin pring’s weekly infomovie report november 7, 2013 · the center panel of this chart...

Weekly InfoMovie Report 1

Martin Pring’s

Weekly InfoMovie Report

November 7, 2013

Issue 1071

2 Weekly InfoMovie Report

US Equity Market -

Sometimes I fi nd that pretty well all of the indicators fall into place and it’s relatively easy to come to a conclusion. Unfortu-nately, this is not one of those weeks. For example, this chart shows that the intermediate KST for the S&P has started to hook up to the upside. In two previous instances this kind of action has been followed by a resumption of the uptrend. On the other hand, this can also be a dangerous set up if there is no follow through because the KST reversal has been followed by a small rally and subsequent sharp decline. At the moment though, the price remains above this all-important up trendline.

KST hooking up.


When we dig deeper the evidence is mixed. On the one hand, brokers typically lead the market and if trouble is brewing the Dow Jones Broker ETF, the IAI, usually heads for the exits fi rst. This chart shows that on Wednesday it reached a new high and appears to be leading the market higher.

Brokers leading the S&P higher


The center panel of this chart features the ratio between fi nancials and the bond market, the IYF to the TLT. Normally we like to see the ratio move in gear with the S&P in the top panel or at bottoms move ahead as it’s a kind of confi dence ratio. So far it has not confi rmed the latest S&P high, but it might be about to. The KST is offering no clue as it has gone fl at right at its moving average. The stakes are raised because a reversal to the downside would also violate this key up trendline. Clearly this is another fi nely balanced relationship.

Flat.

Back to the previous high


So too is the A/D Line, has gone completely fl at, after having previously confi rmed the new S&P high. The ratio in the bot-tom panel is actually below its MA, but this is not yet a decisive sell signal. I continue to watch two lines this one for the breadth indicator and this one at 1670 for the S&P, as long as they are both are intact we should assume a rising trend.

25-day ratio has started to edge lower.

New high

Line is at 1670


When cast a wider geographical net we see that the net new high indicator for the world Stock ETF, the ACWI, has turned down again from the same level as the two previous peaks yet the S&P has moved higher. As always, there is no reason why these divergences cannot be cleared up, which is why this looks bearish but isn’t; until confi rmed by the price. In this case, that would be a break of this line which is now at $52.50. Until then, assume the trend is positive.

Peaked out again.

Key line now at $52.50


This chart compares the S&P with two diffusion indicators monitoring European and Emerging market ETF’s in a positive trend. They have both started to weaken and these arrows show that’s not generally a good thing.

Both are turning


One more thing before we leave equities. This chart of the Nikkei may provide a clue as to what happens elsewhere as the Index is about to break out of this trading range. The Special K has tentatively and very marginally violated this trendline and its KST is slightly bearish. This suggests that a break below 14,000 is more likely than an upside resolution of the trading range with a daily close above 14,800.

Bearish

Slight penetration


Credit Markets -

So far the recent bond rally has presented itself as a test case of a bear market rally. First we saw this pattern breakout to the upside. This week the price violated the up trendline joining the head with the right shoulder and now both momentum se-ries have gone bearish. Note that since the bear market began in 2012, the smoothed RSI has been unable to better its 70 over-bought zone, yet has had no diffi culty in falling below or touching its oversold level. Classic bear market momentum activity if ever I saw it.

Bearish

Breakout


Currencies -

There is no change in my view that this trendline break signals an overall bearish environment for the Index, but that these bullish momentum indicators offer some hope for a rally or trading range until the full bearish effect of the trendline break can be worked off.

Bullish


Precious Metals -

The two numbers $30.50 and $137.50 register in my mind for they represent the daily closing breakout points for the Gold Share ETF, the GDX and the Gold Trust ETF, the GLD, respectively. Since both KSTs are still bullish and not overextended, that’s still a possibility but they had better hurray.

Bullish


Commodities -

The commodity markets are very oversold as you can see from this net new high indicator. These two arrows show that when the DJP has touched such a level in the past, a rally of some kind has usually followed.

Oversold


The stock market is offering a mixed picture because our ratio of infl ation to defl ation sensitive stocks has experienced a small upside breakout favoring infl ation. On the other hand, the breakout in the ratio between the IGE and the XLP has recently been pulling back. Note that, in an unusual pattern, both KSTs are moving in different directions.

Conflict


The bond market is pointing in an infl ationary direction as the ratio between infl ation protected and regular bonds the TIP to the TLT, is continuing to hold its breakout and the KST has actually started to reverse to the upside.

Reversing

Inflationary

Deflationary


Commodities had better rally soon, otherwise this tentative break in the CRB Composite will turn out to be something far more serious. At this point, the technical evidence, though mixed, marginally favors such an infl ationary scenario.

ReversingTentative break


In Summary:

1. The technical evidence in the equity market is very fi nely balanced. Assume the trend is positive until evidence to the

contrary turns up.

2. The technical position of bonds is deteriorating.

3. Commodities have fallen to a critical level.

martin pring’s weekly infomovie report november 7, 2013 · the center panel of this chart...

Documents