View From The Hill (Jan-6-2016): Go and Expect More Pain Before Gain!

Posted on Posted in Views From The Hill

Commentary

go-gameWhen the market delivers equity investors brutal combination punches of Volatility, Gold, Yen and Bonds, then you know something is amiss with the geopolitics. North Korea’s hydrogen-bomb announcement could not have been more ill-timed as the markets still haven’t recovered from the body blows of China’s weak manufacturing report and serious tensions between OPEC giants, Saudi Arabia and Iran. Kim Jong Un was the butterfly flapping its wings today and I think this time we should not be so dismissive of him.

Here’s the raw deal: If “Holy MF-NK” really has a a bomb, then it’s a game changer.  We’re not playing checkers or even chess for that matter anymore. Incidentally, North Korea never has. Instead this is Go (one of my favorite board games) and to be skilled at it, you must have a cunning and treacherous mindset, along with the ability to consistently deceive and keep your opponents off-balance. This is exactly what Kim Jong Un has done  with not only the West, but China as well. I don’t like the bastard, but I must admit it was a brilliantly played move and deserving of the utmost Machiavellian respect.

Some of you may opine that geopolitical issues are not germaine to investment market commentary. If so, I respectfully disagree. Anything that affects money in terms of risk exposure should never be ignored. No further comments…

 


Performance Summary

*Trends: ST = short-term; MT = Intermediate-term; LT = long-term

vfth-performance-1-6-2016
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Market Condition

bulls-and-bears4As stated yesterday, the market internals are weak and therefore the resumed acceleration in bearish momentum was more or less expected. Before continuing, I forgot to mention the obvious crossing of the 22-day moving average below the 55-day average. Considering such, today’s violation of key support levels was not a surprise either. If we get another failed rally, then our next stops before descending to Hades are 1965 and 1920 levels on the SP-500.

Okay, that’s the bad news for now. The good news is that PVA (price-volume-analysis) indicators are flashing early signs of capitulation. Whether you rip the band-aid off slowly or suddenly, it still hurts. Expect more pain before gain!

Hillbent on the Market Direction…

 

Daily Chart Technical Analysis
sp500-daily-chart-1-6-2016
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SP-500 Market Breadth
Advancers 70 Decliners 432
New 5-day highs 22 New 5-day lows 322
New 52-week highs 5 New 52-week lows 49
Bullish reversals 35 Bearish reversals 23

 

SP-500 Market Momentum
% > 20 M.A. % > 50 M.A. % > 100 M.A. % > 200 M.A.
22% ↓ 31% ↓
35% ↓
36% ↓
↑ = positive momentum; ↓ = negative momentum; and ↔ = neutral momentum

 


Volume Radar Alerts

  • Vol % = volume percentage greater than average volume
  • SIR = short interest ratio or days to cover
vfth-volume-radar-1-6-2016
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Disclaimer

Hillbent does not provide individualized market advice. The information we publish regards securities in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification. Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements. Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

 

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