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Replies to post #70801 on Abet Chichi2 (Chichi2)
07/31/17 9:46 AM
There have been five downside bursts like last Thursday’s over the past few weeks with only one of them closing near the lows of the session. The other four such bursts saw “buyers” show up leaving the averages little changed on the day. Andrew and I think there is a market message there in that those participants waiting for a large pullback are going to continue to be disappointed. Our work still suggests the equity markets should push higher this week. Moreover, there is a potential sea change at hand, for as the keen-sighted Jason Goepfert (SentimenTrader) writes:
Both stocks and copper futures hit new highs this week [Chart 1], which is widely considered to be a sign of global economic growth, at least according to investors. By no means has it been a slam-dunk sign of future positive returns, but the S&P 500 did see further gains over the next 6-12 months almost without exception. Blame the dollar [because] a weak U.S. dollar is usually good for copper, so it's not a big surprise that copper is near a 52-week high [Chart 1] while the dollar has sunk to a 52-week low [Chart 2]. The correlation between the dollar and stocks is not nearly as strong. When stocks have been at a high and the dollar at a low, once again the S&P 500 showed a positive return over the next 6-12 months almost without exception.
Meanwhile, the Advance/Decline Line continues to point the way higher [Chart 3] and reporting companies continue to beat earnings estimates at a +63.2% “beat rate” for the 2Q17, while revenue beats tag a +63% rate. Indeed, the secular bull market has transitioned to an earnings driven secular bull market from an interest rate driven secular bull market. And that is the way it is as we write at 3:00 a.m. from the West Coast. And the tweet of the weekend from DJT:
I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet . . . they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!
