Archive for the ‘Market Update’ Category

Seven Quarters

Despite today’s weakness, which may include some follow-through on Friday, the Dow Jones Industrial Average is headed for a solid second quarter gain.  It will be the major indexes seventh straight quarterly gain.  A run of this length is pretty rare, its been over 20 years since the last one and there have only been seven such streaks ever. 

Key bit from Schaeffer’s Research:  Currently, the Dow is pacing for a seven-quarter gain of about 30.71%, which will mark the smallest of all similar win streaks. The last time the DJIA rallied for seven quarters or more was in the mid-1990s, with its record streak of 11 positive quarters finally coming to a halt in September 1996. Prior to that, you’d have to go back another 32 years for a signal, to 1964, according to data from Schaeffer’s Senior Quantitative Analyst Rocky White.


What happens next?   After seven-quarter win streaks — which have happened just seven other times ever — the Dow Jones Industrial Average has gone on to average a loss of 1.95% over the next quarter. However, it should be noted that the last time one of these streaks ended at seven quarters was in March 1951, 66 years ago. If you look at the next-quarter returns after the last three signals, the Dow has averaged a gain of 5.08%. That’s compared to an anytime average quarterly gain of 1.92% for the Dow, since 1923.

More here from Schaefer’s Research:



It’s Peaceful Out There

Near zero fear of late.  10 of the 20 lowest VIX readings in history have occurred over the last two months.  An Incredible run for the most peaceful market in history:


From Investopedia:   VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking, is calculated from both calls and puts, and is a widely used measure of market risk, often referred to as the “investor fear gauge.”

Hat tip Charlie Bilello

Missed It By That Much

Just how bad was the Obama administration at projecting economic growth?  This bad…


Despite adding nearly $10 trillion to the national debt Obama’s post recession(2008/2009)recovery has been the weakest in history.  In addition Obama is the only President in U.S. history to not have a single year of over 3% GDP growth:

And now, the same brilliant economic minds that provided the Obama growth forecasts are telling us Trump’s expectations can not be met. 

From Stephen Moore:  Almost all of the economics profession — with a few, ahem, exceptions — bought into the Keynesian idea that what would revive the economy after the Great Recession of 2008-09 was massive government spending “stimulus.” The trillions of dollars of government borrowing here and abroad created a decade-long anemic recovery. The number of jobs created under the Obama stimulus turned out to be fewer than the number we would have had if the government had done nothing — according to the Obama White House’s own analysis. So we got $9 trillion of debt with almost nothing to pay for it.

Amazingly, every Obama budget forecast that annual growth would reach 3.5 to 4.5 percent. Bullish growth was just around the corner (remember Joe Biden’s “Summer of Recovery” tour?) The chart shows the Obama forecasts versus reality.

We never got growth above 3 percent under President Obama and the average growth was 2 percent ending at 1.6 percent. Reality was about 1.5 percentage points below projection, which was about an 80 percent overestimate of growth. Maybe we should have just hired the gypsies with tarot cards. Their predictions couldn’t have been any worse.

So now the very people who made these preposterous forecasts are telling us 3 percent growth is a fantasy under President Trump. Under their model, tax increases create 4 percent growth, but tax cuts can’t get us to 3 percent growth.

The major reason we are told we can’t get growth is that we have so many millions of baby boomers retiring. But we have 100 million people over the age of 16 outside the labor force today or unemployed, and that’s a giant labor pool to get workers from. Most of them are young, not old. This is a gigantic pool of workers to tap into if Washington would stop spending $1 trillion a year paying people not to work.

Read the whole thing:


The Streak Continues

Unless the unthinkable happens today the Nasdaq 100(QQQ)will extend its streak of above 50-day moving average trading to a new record of 137 days. 


This smack in the face of rather weak seasonal patterns.  Historically June is the weakest month of the year and the second half of June is the weakest part of the month.  There are five trading days left. 

Hat tip Charlie Bilello

The Busiest Day Of The Year


It’s Russell re-balancing day.  Key bit: 

“Today will certainly be one of the heaviest trading days, if not the heaviest of the entire year. An estimated $3.8 trillion in assets track the Russell indices; 43 names will head from the Russell 1000 into the 2000; 31 companies will go the other way. Just within the 2000, there will be 186 additions and 107 deletions. There will also be 10 additions to the 1000. Between $1.5 billion and $1.8 billion are expected to flow into both the energy and tech sectors, while financials should see outflows of more than $2.6 billion.”

Hat tip Stephen Guilfoyle of

IEF (Weekly)

Screen Shot 2017-06-21 at 10.08.15 AM

Embrace The Decline


Great stuff from Pension Partners today.   The smallest intra-year drawdown since 1928 took place in 1995(-2.5%).  So far this year the maximum drawdown has peaked at 2.8%.  Over the last 90 years there has only been one year with a smaller than 3% drop.  Will 2017 be the second?

The Least Likely Week

It certainly hasn’t started it out that way but this week has been the least likely week of the year to finish in the green.  Since 2000 the third week of June has only finished with a gain three times.  The weakest week of the weakest month has just begun:


Hat tip Ryan Detrick

The Post Election Rally Has Been Quite Broad

Yesterday the Health Care, Industrials and Materials ETF’s all reached new all time highs.  Energy is still under-performing, dramatically:


Hat tip Charlie Bilello

Just Like 1999

So says Felix Zulauf in his last appearance on Barron’s Roundtable.  Key bit: 

In his last interview as part of the Barron’s Roundtable, from which he is retiring at the end of the year after three decades of participation, Felix Zulauf, owner of Zug-based Zulauf Asset Management had some parting words of caution.

First, in his discussion of stocks, Zulauf said “markets exhibit the signs we usually see going into a peak. My trend and momentum indicators are still bullish, but excesses are building up as stocks and sectors move too far above their moving averages. Investor-sentiment readings are getting excessive. July or August could bring an important peak in stocks.”

Comparing to previous episodes of market exuberance, Zulauf said that “today seems like late 1999. We haven’t seen the peak yet. Much depends, as noted, on whether China continues its current policies. Either way, there is a window of vulnerability in the markets. I’m not talking about a 5% setback. It could be 20% from August to November.”

As a reminder, this is what late 1999 looked like, and how it is oddly similar to the S&P tech sector currently.


We continue to expect a pullback but one in the 20% range seems very unlikely. 

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