ForexProsThe Exchange Rates are powered by Forexpros - The Leading Financial Portal.

By April 23, 2016 0 Comments

Why You Don’t Want Utilities to Fall Lower

The Market This is what a correction looks like. Now, let’s see if it can last longer than a day. The most curious part to me was the lack of fussing on the utilities. I suppose everyone seems to think that the utes are simply too defensive, so they want them lower. Well, I have news for those folks: weaker utes over time are not bullish for the overall stock market. There is no timing to this, but if looking at last year there will be a noticeable weakening of the utes in February 2015. That happened at a time when the rest of the market peaked in the April-to-May period. Then, in December, the utes hit lows and the rest of the market did so one month later. So, I simply do not understand why there are folks who believe weak utes are bullish for the market. Maybe in the short term it doesn’t matter, but over time it matters plenty. Currently, the utes are right at their first support level where I said I expect a bounce. Quite frankly, I expected more hysteria over them. But, with tomorrow being the third day, I still expect some sort of a bounce, but I still think this correction is not over for the utes.

So, my point is the market saw a collective shrug over the action in the utes. It also seems the market was a bit sanguine about the action in the defensive dividend paying stocks. They were overpriced anyway. But someone was clearly nervous, perhaps about all those after-the-bell earnings, since the put/call ratios were off the charts, in fact back to the levels not seen since January. In the very near term, this should cause the market to bounce. Overall, however, the moving average lines of the put/call ratios are rising. Down below, I show the 10-day moving average of the ISE Ratio, which is heading down (bearish). Today, I saw one other sentiment indicator get too bullish. The National Association of Active Investment Managers (NAAIM) has a survey that shows it is nearly fully invested at 82.5%, compared to its lows of 25%.

I still believe that more of a correction is needed and that hasn’t changed. Let’s see if the market can cooperate, or wants to continue to prove me wrong. Finally, speaking of NAAIM, I am speaking at its conference in Ft. Lauderdale, Fla., on May 2. If you’re in the area, come join us. The link is here. New Ideas I want to follow up on Paychex (PAYX), which I looked at a couple of weeks ago. I was cautious, thinking it was unlikely to break out and now it appears on the verge of breaking down. If it breaks down from this point, the next target is $ 50 to $ 50.50 — possibly $ 48.50. …

Click to view a price quote on SLV.

Click to research the Financial Services industry.
TheStreet Search RSS Feed: Silver Prices Today

Posted in: Silver

Post a Comment