Commentary: Paul Ebeling on Wall Street

Commentary: Paul Ebeling on Wall Street


Earnings are for the most part over.

This market has leadership, and this market has headwinds including the time of year and the number of Wall Street’s big names turning Bearish, the Dog Days of August.

It is historically tough for the market to make headway in late Summer. This rally is seen by many, including me, as being on borrowed time and the fear of heights on little conviction (volume).

New highs are not bad in and of themselves, but you do have to factor in time of year and how that plays with momentum. The indices are maintaining their uptrends, but the move has lost momentum even as some groups hit higher highs.

This weekend  Citigroup talks of the “7 signs of a deeply dysfunctional market” and  warns of “surprising, sudden, intense” selloffs.

Morgan Stanley told its clients “this is the most dangerous time as hope and greed overtake fear and loathing.”

An notably History, something I like: S&P earnings are down 4 Quarters running. and that equity Bear markets follow such protracted declines.

Historically, the market leads the news.

But now the US Fed’s activity is extraordinary and it has kept markets propped up even as fundamentals such as earnings decline.

The Big Q: Why is this time different?

The Big Q2: Does all the big Wall Street brokerages and billionaires turning negative means the Top is in or are they just a sign that this hated rally is still hated and thus still has that inverse sentiment driver?

The Big A: Bullish sentiment is tapping at the 60 mark and that has preceded all of the selloffs in this long Bull market.

But so far seeing nothing collapsing in here, but the leaders do hang on until the start to rollover. So, with the indications of slowing momentum, when a few of the big Wall Street names started to show some signs of slowing and struggling with near support it signals the time start closing some positions and taking a lot more gain off the table.

That is simply prudent business. There will always be another trade and cash is an asset.

Pay close attentions because a lot of stocks are not in downtrends now so many of the Southside plays are more short term with targets more along the line of near term pullbacks.

If you are playing this market, caution demands that you keep watching the Wall Street leaders while you play, if they show the moves, and if the leaders start breaking their patterns, then you move toward them as well as those drops can happen fast, very deep and painful when the momentum leaves.

Remember, always take what the market gives, and there will always be another trade, cash is an asset.

The Bulls Vs The Bears

Sentiment Indicators

VIX: 11.34; -0.09
VXN: 13.42; -0.73
VXO: 10.32; -0.07

Put/Call Ratio (PCR) CBOE: 0.84; -0.02 ; 26 of 30 below 1.0, 18 of last 47 over 1.0. One 1.0+ read last Tuesday, then the put action died again.

Again last week, the Bulls higher, the Bears lower.

Note: Wall Street action is getting very close to those complacent marks where the market Tops. Some room left up to 60ish for Bulls, but not much room to play. So, watch other indicators, particularly the leaders to see if the market is setting up to roll over.

The Bulls are at 56.2 Vs 54.3 last

The Bears are at 20.0 Vs 20.9 last


Support and Resistance

DJIA close: 18,552.27

18,595 the Jul 2016 high

The 20-Day EMA: 18,492
18,351 the May 2015 high
18,288 the Mar 2015 high
The 50-Day EMA: 18,272
18,247 the Aug 2016 low
18,168 the Apr 2016 high
18,100 the Dec 2014 high
18,016 the Jun 2016 high
17,978 the Nov 2015 high
The 200-Day SMA: 17,512


S&P 500 close: 2183.87

2194 the Aug 2016 all-time high

2175 the Jun 2016 high
The 50-Day EMA: 2145
2135 the May 2015 high
2130 the Jun 2015 high
2126 the Apr 2015 high
2120 the Jun 2016 high
2104 the Dec 2015 high
2094 the Dec 2014 high
2079 the Nov 2014 high
2062 a Jan 2015 high
The 200-Day SMA: 2050


NAS Comp closed: 5238.38

5271.36 the Aug 2016 all-time high

5232 the 2015 high
The 10-Day EMA: 5222
5176 the Dec 2015 high
5100 the Apr 2016 high
The 50-Day EMA: 5068
5042 the Mar 2015 high
5009 a Mar 2015 high
4999 the Oct 2015 upper Gap mark
4980 the Jun 2016 high

Have a terrific week.

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