Ian Woodward's Investing Blog

At times like these when the market soars like this from the Draghi and QE-3 stimulus, I think back to happy times with Sinatra in his prime, but sooner or later “Something’s Gotta Give!”

The Market Indexes are flying high and all but one, the NYSE though also strong, has hit New High Territory:

…And here are the Nasdaq High, Middle and Low Road Scenarios…3000 is strong support now, so watch that to the downside:

As you would expect Accumulation: Distribution Ratio is strong and is back up to 5:1 as shown in the next two slides:

It goes without saying that the Bulls are in Total Control with the Composite 2x & 3x Bears Index the lowest on record:

Now’s the time to sit up and listen…we have reached OVERBOUGHT personified with this chart…three times in 12 years!

So What say all of you?  I am no soothsayer, but at least I can take a stab at what History tells us.  I know, I know, history doesn’t always repeat itself but at least it is worth a look.  There have been only three times in 12 years of this type of history where the number in Bucket >1.0 has exceeded 40, the other two were in July/August and October/November, 2011.  One glance at the chart tells me this one now is similar to that in July/August of 2011 when we had the Euro Jitters and Crisis.  Note that the down arrows I show in the next chart are all parallel, so I am suggesting that within 15 days we should be at a hard bottom, and in between that we should see a move towards Bucket <0 within a week…between friends.

Then What?  Who knows, but for sure we will all  be on the look out for the Jobs Report a week later on October 5.  You know this is the 4th year of a Presidential Cycle, and the Market NEVER Tanks before the Election so the odds are as I show on the chart “Up, Up and Away” unless there is some extraordinary upheavel by way of worldwide chaos.  At least I have stepped up to the plate as “Fools Rush in where Angels Fear to Tread”…another of my favorite Sinatra songs.

My worldwide audience gets stronger by the week, and we have one coming to the Seminar from London and another trying to arrange his busy schedule from Australia.  See you all in five weeks time.  Let’s hear from some of you folks or are you just lookie-loos like ships that pass in the night doing whatever they fancy by scraping the latest news from their favorite blogs:

The Best of Luck to all of you in these difficult times.

Ian.

It goes without saying that the miserable Jobs Report yesterday may have spurted Helicopter Ben to pop in again, but heaven help us if he has engine trouble in not getting a consensus on doing Q-E 3 after all the hype and expectations that the press has set up for next week:

We have the so called “Draghi Plan” to thank for a supercharged boost in the Market Indexes on Thursday and for then staying up the following day, yesterday, despite the poor Jobs Report.  Now that we have all the changes in, here is the updated picture, together with my assessment of what to expect all on the chart:

It is very evident that the dire straits worldwide with all eyes on the Euro and the expected actions for the Draghi Plan gave such a strong action all around the world and certainly here in the USA with huge breakouts in two days:

Here is the five Bucket rise from a couple of days ago, which quickly drove the S&P 1500 into Overbought status:

With the %B for the S&P 1500 up at 1.30, it is no wonder that we shot up to a difference between it and the % of Stocks above 0.5 to be as high as 48.25 to drop back to 37.33 yesterday, still very strong:

The 2x & 3x Bear ETFs always give insight quickly of who is in control and it is obvious that the Bulls have it:

…And here is the ugly picture as the Bears ran for cover quickly when the Draghi Plan seemed golden:

The next two slides give you my assessment of the events of the past few days and then a third one which repeats what I said in the last blog for your convenience of the events to look out for next week:

“No Body knows the Trouble I see”, but enjoy POMO while you can if it comes next week…this chart by Fred Richards is worth remembering with his TOMO on POMO of  more than a year ago:

Enjoying the Golf while I write this…have a great weekend and many thanks to all of you for my Birthday Wishes and appreciations for my work to keep you on the right side of the market.  Understanding Fear and Greed are Key to Buy Rockets and Sell Rocks as I coined over 20 Years ago!

Best Regards,

Ian.

Forewarned is Forearmed…don’t say I don’t keep you advised well ahead of potential tricky spots in the market.  I’m busy, but I felt I should put together five charts to keep you abreast of events for the next week:

The next four charts give you the events and expectations which are self explanatory.  My Three Scenarios turned out to be right, and the one that is favored by the pundits is the Low Road Scenario.

Types 1 & 2 Get Ready to Rumble;  Types 3 & 4 Keep your Powder Dry.

Best Regards,

Ian

As we enjoy a long Labor Day Weekend with the Markets closed tomorrow, the buzz on Friday evening out of Jackson Hole was that the “Odds Tilt to a Quick QE Move” according to a headline in MarketWatch:

With the Tom-toms beating, I felt it would be of value to you to take a deeper look at the Jobs Report due this next Friday on the 7th of September and so I resurrect the chart I used a month ago.  Recall we had just come through the August report which delivered 163,000 new jobs, and having now studied the numbers in a lot more depth, this turned out to be a very commendable report, and the market promptly recovered coupled with the Braghi Comments a few days earlier.  My off the cuff suggestion was in order for this momentum to continue the Market would be looking for a further boost in the September Report to the tune of around 220,000 Increase in jobs.

You know me well enough by now that I invariably will divide complex problems into three with the High, Middle and Low Road Scenarios which was my objective with all the hub-bub about QE-3 being almost a certainty.  It may well be a boost for the Market in the Short Term, but we all know by now that if and when this economy finally turn around this indiscriminate printing of Money will eventually catch up with us, as Inflation eventually kicks in with raising Interest rates to keep things in check.  I was fortunate to come across the Untied States Bureau of Labor Statistics for the past 10+ years.  From that I plucked the month by month Jobs numbers in the next chart, so that you can see the basis for my analysis, and that the Average Increase per Month is ~133,000 new jobs, based on the last 30 months:

So it would seem this tallies with the 4.5 Million New Jobs that the Administration quotes as a statistic of its overall performance based on a low 30 months ago when the Increase/Month bottomed…looking forward for an additional five months.

Now let’s look forward for at least the next couple of months as they will certainly be an influencing factor with regard to any new Quantitative Easing that may be essential to boost the Economy and Jobs.  In the following two charts I show the pertinent data for this year, with the Statistics through July already behind us.  For August through Year-end I show the highest number increase for each month based on the past ten years of statistics, and  those for 2004 when the recovery from the Technology Bubble was well on its way by way of two stakes in the ground.  Note the very disappointing statistics for the four months prior to July, as we trotted down to just a 64,000 increase in June.  As I state on the Chart, and it is important to repeat myself in the assessment, my conclusions were startling looking  ahead:

When the number of hits on my blog are less in the United States than the rest of the world I can tell that investors are taking vacations and given up on this market until there is some exciting news one way or another to wake them up.  I say be patient as you have only ten more days to wait for fresh NEWS to jolt this market one way or another:

Still, my friends in Singapore, United Kingdom, Switzerland and Canada top the list from abroad this morning, so here is a mid week assessment of where we stand:

Here is an updated picture for the last week on %B for the S&P 1500 which shows that we are dwadling around waiting for news from Draghi, Jackson Hole and the Jobs Report:

…And here is the picture for the Accumulation and Distribution statistics, which shows more of the same:

So there you have it…can’t make a silk purse out of a sow’s ear as the saying goes, but an update is always worthwhile.

Best Regards,

Ian.