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Strategies & Market Trends : General market lab and commentary

SPY 671.91

0.0%

Nov 14 4:00 PM EST

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To: Robohogs who wrote (330)	4/14/2016 3:06:11 AM
From: Robohogs	of 668

Melt up still in process and per Fat Pitch, institutional managers remain severely underweight equities and overweight cash and bonds, with US and dollar underweight relatively. According to Bespoke, individual investors have not participated this round and may be gone for decades. So who is buying? Aliens? Seriously, an extremely over-valued market has no where to go but up. Crazy I know. But something tells me earnings will mean revert quickly higher without mean reverting down further. If earnings have been hit 15% between dollar and oil, what if we get a 15% bounce back - still below previous trend but enough to keep things going? fat-pitch.blogspot.hk China had strong exports last month. US mfg continues recovery. Real unemployment rate per Richmond Fed is nearer 8% so fuel to grow. 1Q GDP is flat per Atlanta but up 1% per NY Fed. BUT whatever, Q1 GDP has stunk last two years and improved later (charts earlier in week). richmondfed.org libertystreeteconomics.newyorkfed.org On mkts, breadth was awesome yday as were DJ Transports and IWM. New NYSE breadth ATH. New HOY in many indices. NYMO is off bottom of chart with room to rise more, though it often has one down day about now. Vix is very low with steep structure. Skew is normal. Put calls are over done with calls. ISE Equity Ratio closed at 213%, highest since 3/2 and before that 1/29. Mkt usually flops for a day after readings like this. TRIN was around 1, so saying nothing. Additionally, longer term, DSI (a trending reading) is massively overbought near 85. From twitter, @keith_dubauskas @hmeisler according to NDR: since '02 DSI S&P has spent 18% of time > 79% bullish resulting in fwd avg return -13.6% pa. But remember the 90% of SPX stocks above 50 dma had predictive power of about that much up over next year. This is a clear red flag though. I leave you with China.

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