Carpenter Analytix

Carpenter's Market Remarks
              Notes on Recent Statistics and Inference

                   
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January 9, 2015. Friday's bond price drop looks like there's probably more to come. Pictured below is a chart of the iShares intermediate Treasury ETF (symbol IEF). The red box at upper right demarks what John McGee would call an "island reversal," suggesting retracement of the recent price uptrend. That means higher rates.

February 2, 2015. Here (below) is a view of our NYSE Core Index. The Core Indexes (NY, Nasdaq, Large Cap, Small Cap, etc) are constructed to omit stocks with outlier returns, and also stocks with trivial (noise level) fluctuation. So the Cores capture meaningful-but-non-headline returns. This is the market's core activity.

When the Core Indexes diverge from conventional indexes, the Core indications usually prevail. We now have a major divergence from last September to date. (The other Cores differ in particulars, but agree in generality.) It would be astonishing for this persistent weakness to not spread through the markets.

For other reasons, the coming week has a good chance for advance.

Robin C.
Hanover NH

January 26, 2015. More of the same: near-term dynamics are mostly positive, but big picture is plainly negative. So cautious position is warranted....along with resolve to avoid remorse of limited commitment if averages push toward recent highs .

NYSE Core Momentum path is posted below.

Robin C.
Hanover NH

January 20, 2015. Cross-currents abound. Bottom line seems to remain as it has been for many weeks; near-term trend is positive, but evidence of longer-term weakness continues...and the LT weakness will likely win in the end. The first image below shows Friday's somewhat positive Skew Profile, illustrating the near-term positives. The profile isn't a standout positive, but it's more pos than neg. (And another positive short-term effect is that Shanghai's 8% drop on Monday seems not to be metastasizing to other markets. Japan was up at the same time, and Germany's DAX was up more than half a percent.)

The second image shows an update of the NYSE Core Skew. We only have 15 years of this indicator, but it's clear that negative readings (like now) have led to substantial declines. It's a good time to be positioned cautiously.

Robin C.
Hanover NH

 

January 5, 2015. Daily Skew is still running positive in spite of averages being down, as shown in the bar chart profile below. That has positive implication for near-term. But Core Indexes are all off from their highs, and Core Momentum is running negative on NYSE (posted further below), and barely positive on Nasdaq. That has negative implication for bigger picture trends. With short-term and long-term indications opposing each other, best to watch and wait until the signs align.

Happy new year!
Robin C.

 

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