Market Light Weekly Update September 19th, 2017: We’re Not Toying Around Anymore

John Dupriest Market Light

64,000 employees. Those are the jobs at risk with the bankruptcy filing of Toys Backward “R” Us filed today. Looks like they got more than just the “R” backward. Bain, KKR, and Vornado stand to lose over a billion dollars even after their (rather significant) fees are considered. It’s a sign of the times that it is easier to shop on line than go into a retail outlet and find your toy isn’t in stock or that the box has been opened and the toy’s been used/then returned. Bummer. That, and the nature of toys themselves is changing. Gone are the days of Roy Roger’s Chaps and a Daisy Red Ryder BB Gun. The days of browsing through the overstock counter at the Denver Dry Goods is a distant memory. You can have perfect delivery of the perfect product at your doorstep in 48 hours or less.

 

The Market Light has returned to Green. The upward march is relentless and nearly unwavering. Below our normal daily chart of the Dow there is a monthly chart, going back to 2007. They look almost indistinguishable. On top of that, our short-term Technical Tea Leaves are seeing things green, too: The market has closed above the 3.5% upper trading band for the last four days.  In a strong market, this is a strong bullish signal indicating that  the current upward price movement could continue. 

The new high/new low indicator has reversed to the upside.  This is a reliable bullish signal that is often followed by an upward movement in prices. In this strong up-trending market prices could continue in this direction.

 

The Market’s resiliency is impressive. Sure, there’s lots to worry about, but it seems nobody is. It is like playing with the Jell-O salad at Sunday dinner. Every time you poke something down, something else pops up on the other side of the plate. We are more than halfway through September already and there has been almost no seasonal stumbling block. Here’s an example (Bloomberg): “You may have missed it, but the FANG block — Facebook Inc., Amazon.com Inc. Netflix Inc. and Google parent Alphabet Inc. — dropped almost 7 percent during the August selloff, while Apple Inc. was down 3.5 percent from its 2017 peak at its worst point. But even with all the carnage, the S&P 500 kept going up, climbing above 2,500 for the first time.” [Emphasis added.]

 

Recent top relative-strength sectors are: Rare Earth Metals (REMX), Lithium (LIT), Brazil (EWZ), Solar (TAN), and China/India (FNI). Among the weak sectors were Oil & Gas Services (XES), Telecommunications (IYZ), Natural Gas (FCG), Livestock (COW), and Regional Banks (IAT).

 

Daily Dow Chart

 

Monthly Dow Chart