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BWC Market Update - December 4, 2018

Economic Comment

Last week Wednesday, Fed Chairman Powel, made some dovish comments and the US Equity markets soared. This week we will get the unemployment report for the month of November. It will be interesting to see if that shows a strong labor market beginning to cool off. After a wild October and November, it is time to review our indicators and see what they have to say about what could happen in December!

Bullish Percent’s, (Data source: Dorsey Wright, see definitions at the end of this report.)

10 Week- Bullish Percent (Short-term): Wild couple of weeks for this short-term indicator. After hitting a low in October of 12%, it proceeded to rally to 38%, back off to 24% and now is at 38% again. This is still short-term oversold. (Source: Dorsey Wright 11/30/2018)

Optionable-Stock Bullish Percent (Intermediate term): Not good news here. After hitting 28% in October and reversing back to OFFENSE on November 2nd, this indicator is now back to DEFENSE. (Source: Dorsey Wright, 11/30/2018)

NYSE Bullish Percent (NYSEBP) (Longer-term): As of November 6th, this indicator is back on OFFENSE. Not much movement here and currently at 36%. It would only take a move under 32% to get this indicator back to DEFENSE. We repeat something we previously said, “We have seen this longer-term indicator move back to offense after a sharp decline, only to reverse course and go back to DEFENSE. We aren’t positive that the “all-clear” signal has been sounded.” (Source: Dorsey Wright, 11/30/2018)

Point and Figure Charts (Source: Dorsey Wright, 11/30/2018)

S&P 500: The sell-off in October has seen a sharp rally in November back to 2810 only to sell off again down to 2640. This level was tested twice, and the S&P 500 has rallied back to 2750. However, there is now a solid downtrend line in place that will act as resistance to any further rallies. Until that downtrend line is broken, at best the S&P 500 can trade sideways. (Source: Dorsey Wright Website 11/30/2018)

S&P 500

SP500 12.4.18

NASDAQ: Much more damage done to the NASDAQ. So far, a series of lower highs and lower lows. (Source: Dorsey Wright Website 11/30/2018)

NASDAQ

NASDAQ 12.4.18

US 10-Year Treasury Note: Maybe, the dovish tone of the Fed is finally helping the 10-year to get under 3%. It looks like the 3% level is important to watch. Below 3% could mean the economy is slowing down, above 3%, everything is okay. (Source: Dorsey Wright Website 11/30/2018) 

10-year Treasury

10yearTreasury 12.4.18

Crude Oil, Continuous: The pullback for crude oil has continued in November. The magnitude of the drop is stunning. From the high of $76 per barrel to the current level of $50 per barrel, oil is down 34%. In 2016 and 2017, oil traded between the low end of $40 and the high end of $50, until late 2017 when it broke out. It now seems to want to stabilize at the $50 level for the time being. Much technical damage has been done and we don’t see an uptrend resuming anytime soon. (Source: Dorsey Wright Website 11/30/2018)

Crude Oil, Continuous

CrudeOil 12.4.18

Conclusion

As we said in our last note, the month of October hammered many of our risk indicators to levels not seen in years. This is a good thing. Our risk indicators are improving. However, just like the Optionable Stock Bullish Percent has turned negative again,it would not surprise us if the NYSE Bullish Percent turns negative one more time. We are beginning to see opportunities in US Equity market, especially in the value sector. This market could be shaping up like the 1999-2004 market. During that period of the .com bust, investors went back to companies that had reasonable valuations and paid a dividend. With the FAANG wreck the last two months, we could see history beginning to rhyme. Although we are not wholesale buying at this point, pullbacks are beginning to be buying opportunities. One again, we are not sounding the “all-clear” yet, but the investment environment is improving.

Have a great rest of the week.

PS. Don’t forget to follow us on Facebook and Twitter @CEnglebertRIA

Download my App by texting chrise to 36260,

Bullish Percent Definitions

10-week Bullish Percent is a short-term indicator and is calculated on 10 weeks’ worth of NYSE price data.

Optionable-Stock Bullish Percent is calculated off the index of all optionable stocks on the NYSE.

NYSE Bullish Percent: This is a major market indicator, which tells us whether to be on the offense or defense. It is calculated by dividing the number of NYSE stocks trading on point and figure buy signals by the total listed on the Exchange. The percent of stocks on buy signals in is then plotted on a grid from 0% to 100%, where each box equals 2%. Levels above 70% are generally considered overbought, and below 30% are considered oversold. The best buy signals come when the NYSE Bullish Percent goes below 30% and then reverses up (must reverse 6%). The best sell signals come when the indicator moves above 70% and then reverses below 70%. The most important concept to keep in mind is field position and what team is on the field. When the NYSE Bullish Percent is in X's, the offensive team is on the field and wealth accumulation strategies are the focus. Conversely, when the NYSE Bullish Percent is in O's, the defensive team is on the field and wealth preservation strategies are the focus.

The Bullish Percent can also be calculated on various indices.


Asset Indexes

An index is unmanaged and not available for direct investment.
S&P 500 Index is a capitalization-weighted index calculated on a total-return basis with dividends reinvested. The index includes 500 widely held U.S. market industrial, utility, transportation and financial companies.
Nasdaq is the market capitalization weighted index of over 3,300 common equities listed on the NASDAQ stock exchange.

A 10-year treasury note is a debt obligation issued by the United States government that matures in 10 years. A 10-year Treasury note pays interest at a fixed rate once every six months and pays the face value to the holder at maturity.

The Crude Oil Continuous price is showing chart data presented in such a way that the expiring contract, i.e. the present front month, “feeds into” the next contract month. This is repeated monthly to get a “continuous price”.
Historical Futures Prices: Crude Oil Futures, Continuous Contract #1. Non-adjusted price based on spot-month continuous contract calculations. Raw data from CME. For more on the roll algorithm used please see this page: https://ww.quandl.com/collections/futures/continuous.

https://www.quandl.com/data/CHRIS/CME_CL1-Crude-Oil-Futures-Continuous-Contract-1-CL1-Front-Month


About Beirne Wealth Consulting Services, LLC
Beirne Wealth Consulting Services, LLC (“BWC”) is a growing, privately owned, SEC Registered Investment Advisor with offices in Connecticut, Pennsylvania and Florida. BWC provides independent, fee-based investment management services and customized financial planning solutions. Our institutional business provides consulting expertise to defined benefit and defined contribution plans, endowments, foundations and non-profit organizations. Our private clients include high net-worth individuals and prominent families, many of whom bring complex wealth management challenges and multigenerational planning needs. For more information, please visit www.beirnewealth.com or give us a call today at 888-231-6372.

*Registration does not imply a level of skill or training.

© 2018 Beirne Wealth Consulting Services, LLC (BWC). All rights reserved. Reproduction or Use without permission is prohibited.

This market update is not intended to be a client‐specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this update as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.
Information contained herein has been obtained from a range of third party sources. While the information is believed to be reliable, BWC has not sought to verify it independently. As such, BWC makes no representations or warranties as to the accuracy of the information presented and takes no responsibility or liability (including for indirect, consequential or incidental damages) for any error, omission or inaccuracy in the data supplied by any third party.

Economic CommentLast week Wednesday, Fed Chairman Powel, made some dovish comments and the US Equity markets soared. This week we will get the unemployment report for the month of November. It will be interesting to see if that shows a strong labor market beginning to cool off.  After a wild October and November, it is time to review our indicators and see what they have to say about what could happen in December!   Bullish Percent’s, (Data source: Dorsey Wright, see definitions at the end of this report.) 10 Week- Bullish Percent (Short-term): Wild couple of weeks for this short-term indicator. After hitting a low in October of 12%, it proceeded to rally to 38%, back off to 24% and now is at 38% again. This is still short-term oversold. (Source: Dorsey Wright 11/30/2018) Optionable-Stock Bullish Percent (Intermediate term): Not good news here. After hitting 28% in October and reversing back to OFFENSE on November 2nd, this indicator is now back to DEFENSE. (Source: Dorsey Wright, 11/30/2018) NYSE Bullish Percent (NYSEBP) (Longer-term): As of November 6th, this indicator is back on OFFENSE. Not much movement here and currently at 36%. It would only take a move under 32% to get this indicator back to DEFENSE. We repeat something we previously said, “We have seen this longer-term indicator move back to offense after a sharp decline, only to reverse course and go back to DEFENSE. We aren’t positive that the “all-clear” signal has been sounded.” (Source: Dorsey Wright, 11/30/2018)    Point and Figure Charts (Source: Dorsey Wright, 11/30/2018) S&P 500:  The sell-off in October has seen a sharp rally in November back to 2810 only to sell off again down to 2640. This level was tested twice, and the S&P 500 has rallied back to 2750. However, there is now a solid downtrend line in place that will act as resistance to any further rallies. Until that downtrend line is broken, at best the S&P 500 can trade sideways.  (Source: Dorsey Wright Website 11/30/2018)        S&P 500    (Source: Dorsey Wright Website 11/30/2018  Horizontal Axis: Time (numbers represent months, for example, 1=January 2=February and so on, when you reach October, months are represented as letters, A= October, B= November & C= December). Vertical Axis: Price    NASDAQ Much more damage done to the NASDAQ. So far, a series of lower highs and lower lows.  (Source: Dorsey Wright Website 11/30/2018)  NASDAQ  (Source: Dorsey Wright Website 11/30/2018)  Horizontal Axis: Time (numbers represent months, for example, 1=January 2=February and so on, when you reach October, months are represented as letters, A= October, B= November & C= December). Vertical Axis: Price  US 10-Year Treasury Note:   Maybe, the dovish tone of the Fed is finally helping the 10-year to get under 3%. It looks like the 3% level is important to watch. Below 3% could mean the economy is slowing down, above 3%, everything is okay. (Source: Dorsey Wright Website 11/30/2018) 10-year Treasury  (Source: Dorsey Wright Website 11/30/2018  Horizontal Axis: Time (numbers represent months, for example, 1=January 2=February and so on, when you reach October, months are represented as letters, A= October, B= November & C= December). Vertical Axis: Price Crude Oil, Continuous   The pullback for crude oil has continued in November. The magnitude of the drop is stunning. From the high of $76 per barrel to the current level of $50 per barrel, oil is down 34%. In 2016 and 2017, oil traded between the low end of $40 and the high end of $50, until late 2017 when it broke out. It now seems to want to stabilize at the $50 level for the time being. Much technical damage has been done and we don’t see an uptrend resuming anytime soon. (Source: Dorsey Wright Website 11/30/2018)   (Source: Dorsey Wright Website 11/30/2018)Horizontal Axis: Time (numbers represent months, for example, 1=January 2=February and so on, when you reach October, months are represented as letters, A= October, B= November & C= December). Vertical Axis: Price     Conclusion As we said in our last note, the month of October hammered many of our risk indicators to levels not seen in years. This is a good thing. Our risk indicators are improving. However, just like the Optionable Stock Bullish Percent has turned negative again,it would not surprise us if the NYSE Bullish Percent turns negative one more time. We are beginning to see opportunities in US Equity market, especially in the value sector. This market could be shaping up like the 1999-2004 market. During that period of the .com bust, investors went back to companies that had reasonable valuations and paid a dividend. With the FAANG wreck the last two months, we could see history beginning to rhyme. Although we are not wholesale buying at this point, pullbacks are beginning to be buying opportunities. One again, we are not sounding the “all-clear” yet, but the investment environment is improving.  Have a great rest of the week. PS. Don’t forget to follow us on Facebook and Twitter @CEnglebertRIA Download my App by texting chrise to 36260, Bullish Percent Definitions 10-week Bullish Percent is a short-term indicator and is calculated on 10 weeks’ worth of NYSE price data.  Optionable-Stock Bullish Percent is calculated off the index of all optionable stocks on the NYSE. NYSE Bullish Percent:   This is a major market indicator, which tells us whether to be on the offense or defense. It is calculated by dividing the number of NYSE stocks trading on point and figure buy signals by the total listed on the Exchange. The percent of stocks on buy signals in is then plotted on a grid from 0% to 100%, where each box equals 2%. Levels above 70% are generally considered overbought, and below 30% are considered oversold. The best buy signals come when the NYSE Bullish Percent goes below 30% and then reverses up (must reverse 6%). The best sell signals come when the indicator moves above 70% and then reverses below 70%. The most important concept to keep in mind is field position and what team is on the field. When the NYSE Bullish Percent is in X's, the offensive team is on the field and wealth accumulation strategies are the focus. Conversely, when the NYSE Bullish Percent is in O's, the defensive team is on the field and wealth preservation strategies are the focus. The Bullish Percent can also be calculated on various indices.  Asset Indexes An index is unmanaged and not available for direct investment.S&P 500 Index is a capitalization-weighted index calculated on a total-return basis with dividends reinvested. The index includes 500 widely held U.S. market industrial, utility, transportation and financial companies. Nasdaq is the market capitalization weighted index of over 3,300 common equities listed on the NASDAQ stock exchange.  A 10-year treasury note is a debt obligation issued by the United States government that matures in 10 years. A 10-year Treasury note pays interest at a fixed rate once every six months and pays the face value to the holder at maturity. The Crude Oil Continuous price is showing chart data presented in such a way that the expiring contract, i.e. the present front month, “feeds into” the next contract month. This is repeated monthly to get a “continuous price”.Historical Futures Prices: Crude Oil Futures, Continuous Contract #1. Non-adjusted price based on spot-month continuous contract calculations. Raw data from CME. For more on the roll algorithm used please see this page: https://ww.quandl.com/collections/futures/continuous. https://www.quandl.com/data/CHRIS/CME_CL1-Crude-Oil-Futures-Continuous-Contract-1-CL1-Front-Month  About Beirne Wealth Consulting Services, LLCBeirne Wealth Consulting Services, LLC (“BWC”) is a growing, privately owned, SEC Registered Investment Advisor with offices in Connecticut, Pennsylvania and Florida. BWC provides independent, fee-based investment management services and customized financial planning solutions. Our institutional business provides consulting expertise to defined benefit and defined contribution plans, endowments, foundations and non-profit organizations. Our private clients include high net-worth individuals and prominent families, many of whom bring complex wealth management challenges and multigenerational planning needs. For more information, please visit www.beirnewealth.com or give us a call today at 888-231-6372. *Registration does not imply a level of skill or training. © 2018 Beirne Wealth Consulting Services, LLC (BWC).  All rights reserved. Reproduction or Use without permission is prohibited. This market update is not intended to be a client‐specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this update as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.Information contained herein has been obtained from a range of third party sources.  While the information is believed to be reliable, BWC has not sought to verify it independently.  As such, BWC makes no representations or warranties as to the accuracy of the information presented and takes no responsibility or liability (including for indirect, consequential or incidental damages) for any error, omission or inaccuracy in the data supplied by any third party.

 

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