Today’s Market Comments:
Before we get into the markets, we want to cover the alarming employment report the Bureau of Labor Statistics pumped out on Friday, August 3rd. They reported that new non-farm payroll jobs rose 157,000 in July. However, they also reported in their latest CES Birth/Death report that 146,000 of those 157,000 were a complete fabrication, an estimate, a guess, that of the 157,000 jobs they hope the U.S. economy created, they had to fudge the number up by 146,000 they hope came from new businesses that they think may have started up in July, net of jobs lost from business closures in July. This is a disastrous report on the state of the U.S. economy. In essence, the U.S. Economy generated a paltry 11,000 new non-farm payroll jobs in July. Can you imagine that! We need to create at least 150,000 to cover reported legal population growth. This is a dangerous sign for the U.S. economy.
Now, further, what this means is that 7 months after a massive tax cut giveaway granted to large corporations, a 40 percent tax cut, that was justified on the basis that they would generate massive new high paying jobs for the U.S. with the extra cash, we find that is not happening. What a waste! The large corporation tax cut was an opportunity theft from the middle class and small businesses. It should be no surprise to anyone who understands economics, as 70 percent of all new jobs historically come from small businesses, not large corporations.
So what did large corporations do with the windfall? Try a massive buyback of their own shares, likely at prices near the top of the Bull market. Some estimates suggest the tally could reach $2.5 trillion this year, an all-time record. What a wasted opportunity for our economy. The inevitable consequence is in, the large corporation giveaway failed. Nothing was done for the middle class or small businesses to deal with insane health insurance premiums. So once again, the middle class and small businesses are the sacrificial lambs for the big dogs. Tax cuts were a great and necessary idea, but the redistribution to large corporations at the expense of the Middle class and small businesses was nothing short of misappropriation. 11,000 new jobs in July? Seriously? And the Fed is tightening the money supply aggressively while non-farm payroll growth is stunted? This is a formula for the next Great Recession.
Stocks rose Friday, August 3rd, with the exception of the small caps. The recent rally is taking stocks to new highs as wave v-up unfolds. This is a large degree upside move within a large rising trend-channel from August 2015. Once complete, the Bull market will be over. The S&P 500 sits within 34 points of a new all-time high. We got a new Buy signal in our Blue Chip Purchasing Power Indicator Friday. The odds suggest they will exceed that level over the next several weeks.
As our Weekend Global markets report noted, a world-wide recession is approaching. A slowdown is already starting in the U.S. in the employment picture. Patterns are warning trouble is coming.
Our Blue Chip key trend-finder indicators moved to a Sideways signal July 30th, 2018 and remain there Friday, August 3rd. The Purchasing Power Indicator component triggered a Buy signal Friday, August 3rd. The 14-day Stochastic Indicator generated a Sell on July 30th, and the 30 Day Stochastic Indicator generated a Buy on July 9th, 2018. When these three indicators are in agreement, it is a short-term (1 week to 3 months’ time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral (Sideways) key trend-finder indicator signal.
Our intermediate term Secondary Trend Indicator generated a Buy signal Tuesday, July 3rd, and remains there Friday, August 3rd, rising 4 (out of a possible 9 points), positive + 26, needing to fall below the negative – 5 threshold for the new Sell.
Demand Power rose 1 to 394 Friday while Supply Pressure fell 3 to 378, telling us Friday’s rise in Blue Chips was mild. This DP/SP Indicator moved to an Enter Long Signal Friday, July 6th, and remains there Friday, August 3rd, 2018.
The Plunge Protection Team Indicator moved back to an “OFF” signal on March 21st, which means the PPT is not as likely to support the markets while this indicator remains on an “OFF.” This means there is not likely to be significant government intervention at this time, or if there is it will not be effective. This indicator is designed to identify high probability periods where the PPT will be supporting, or buying the stock market (when it is on an “On” signal) and when it moves to a Neutral or Off signal (formerly called Sell), it does not mean the stock market will decline, it means the PPT’s interest in buying the market is off rather than on, and market forces outside the PPT are more likely to determine stock trends up or down. In other words, a Neutral or Off signal means the odds are higher that the PPT stands down or has little influence on price trends.
Caution: I would not bet the farm on a Crash. Crashes are rare and maybe the pattern will morph into something we presently do not see that is less ominous. Risk must be managed. Maybe the Fed buys the entire stock market, who knows given their track record. Maybe a black swan event is postponed several months.
Gold, Silver and Mining stocks rose slightly Friday, August 3rd. They generated a Sell signal Friday, July 13th, as the HUI 30 Day Stochastic triggered a Sell signal July 13th, and our HUI Purchasing Power Indicator generated a Sell on June 15th. When these two indicators are in agreement, it is a directional signal, and when at odds with one another, it is a combination neutral signal. On May 29th, the HUI Demand Power / Supply Pressure Indicator moved to a Short signal. On Friday, August 3rd, Demand Power rose 5 to 385 while Supply Pressure fell 4 to 410, telling us Friday’s HUI rise was moderate.
DJIA PPI Rose 2 to + 77.05, on a Buy
DJIA 30 Day Stochastic Fast 60.00 Slow 55.33 On a Buy
DJIA 14 Day Stochastic Fast 66.67 Slow 63.89 On a Sell
DJIA % Above 30 Day Average 60.00
DJIA % Above 10 Day Average 63.33
DJIA % Above 5 Day Average 60.00
Secondary Trend Indicator Up 4 to Positive + 26, On a Buy
Demand Power Rose 1 to 394, Supply Pressure Fell 3 to 378 Buy
McClellan Oscillator Rose to negative – 39.09
McClellan Osc Summation Index + 2318.46
Plunge Protection Team Indicator -0.53, on an “OFF”
DJIA 10 Day Advance/Decline Indicator + 67.6 on a Buy
NYSE New Highs 113 New Lows 31
Today’s Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators generated aSideways signal Tuesday, July 24th, 2018, and remain there August 3rd, 2018. The NDX Purchasing Power Indicator generated a Buy on August 2nd, the NDX 14 Day Stochastic triggered a Sellsignal on July 24th, 2018 and the 30 Day Stochastic triggered aBuy signal on July 6th. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal.
The NDX Demand Power / Supply Pressure Indicator moved to anEnter Buy positions signal Friday, August 3rd and remains there August 3rd. On Friday August 3rd, Demand Power fell 1 to 425, while Supply Pressure fell 2 to 415, telling us Friday’s rise was mild.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Sell signal July 27th, 2018, and needs to rise above positive + 5.0 for a new Buy. It rose to positive + 4.0 on Friday, August 3rd.
NDX PPI Rose 2 to + 268.69 On a Buy
NDX 30 Day Stochastic Fast 60.71 Slow 58.33 On a Buy
NDX 14 Day Stochastic Fast 53.57 Slow 46.90 On a Sell
NDX 10 Day Advance/Decline Line Indicator + 4.0 On a Sell
NDX Demand Power Fell 1 to 425, Supply Pressure Fell 2 to 415 Buy
RUT PPI Fell 2 to + 188.29 on a Buy
RUT 10 Day Advance/Decline Line Indicator – 137.70 On a Buy
Today’s Mining Stocks and Precious Metals Market Comments:
Our HUI key trend-finder indicators moved to a Sell signal July 13th, 2018.
HUI PPI Up 1 to 173.09, on a Sell
HUI 30 Day Stochastic Fast 25.00, Slow 21.67 on a Sell
HUI Demand Power Up 5 to 385; Supply Pressure Fell 4 to 410, Sell