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BWC Market Update - January 22, 2019

Economic Comment

2019 is starting off on a much better note for Equity markets than how 2018 ended. The strong employment report on January 4th got the party started. On Wednesday, January 16th , good bank earnings has kept the equity markets advancing. Our risk indicators have had some substantial changes in the last two weeks.

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

10 Week- Bullish Percent (Short-term): The 10-week hit the 6% level the last week in December, which has proven historically to be a good intermediate buying indicator. The 10 week has now gone from 6% to 46% which is a great recovery and puts this indicator in a neutral position. (Source: Dorsey Wright,1/16/2019)

Optionable-Stock Bullish Percent (Intermediate-term): January 7th saw this indicator reverse up and it is now on OFFENSE! (Source: Dorsey Wright,1/16/2019)

NYSE Bullish Percent (NYSEBP) (Longer-term): January 7th, saw this indicator go back to OFFENSE as well, currently at 30%. This indicator tells us that field position is at an appropriate level to put money to work in equities. (Source: Dorsey Wright, 1/16/2019)

Point and Figure Charts (Source: Dorsey Wright, 1/16/2019)

S&P 500: We are showing a 25-point chart for the S&P 500 so that we can focus on some important levels. The S&P 500 has gotten back above an important long-term uptrend line at the 2550-2575 level. The next challenge will be if the S&P 500 can break through the down trend line at 2675. Typically, the first attempt at an important down trend line is rejected. The move off the bottom has been straight up and almost as violent as the move down. We would still like to see a trading range develop before the S&P 500 attempts to trade above 2650-2675. (Source: Dorsey Wright Website,1/16/2019)

S&P 500

SP500 1.22.19

NASDAQ: The recent NASDAQ moves have been so sharp and violent, we had to slow down this chart to try and get a better picture. You can see that the NASDAQ is about to challenge an important down trend line at 7150. Again, typically the first challenge to a down trend line gets rejected. (Source: Dorsey Wright Website 1/16/2019)

NASDAQ

NASDAQ 1.22.19

US 10-Year Treasury Note: After the sharp move lower for rates, the 10-year has seen some profit taking. The 2.8-2.9% zone should act as resistance and may keep a lid on the move higher for interest rates. (Source: Dorsey Wright Website 1/16/2019) 

10-year Treasury

10yearTreasury 1.22.19

Crude Oil, Continuous: Crude oil saw a low at $43 in 2017 and the proved to be the magic number for a bounce from. Crude is now back to the $50-$54 zone and seems content as these levels for the time being. A trading range at these levels could be developing. (Source: Dorsey Wright Website 1/16/2019)

Crudie Oil, Continuous

CrudeOil 1.22.19

Conclusion

Our risk indicators got to washed out levels we haven’t seen since March of 2009. They continue this week with the intermediate and longer term bullish percent’s getting OFFENSE back on the field. We will continue to use any pullbacks to get our clients more fully invested in US Equities. We are putting small amounts of money work in international and emerging markets. Like we said in our last note, the US equity markets, in certain sectors, are pricing in a hard recession for 2019. This overreaction looks to be an investing opportunity. We will keep monitoring our risk indicators and remain flexible in case we need to change our investment game plan.

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.

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© 2019 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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