John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: richardred who wrote (18498)	12/11/2016 10:40:15 AM
From: John Pitera	Read Replies (1) of 33421

Looking at these daily and weekly charts of the SPX, RUT, DJIA, DJTA.. they are showing tremendous strength and impulse wave action. The market leadership has been constructive. and interest rates have backed off a little. siliconinvestor.com See how over the past 10 years when the WTIC gets very strong relative to the Eur/JPY Cross, the SPX then has a substantial period of outperformance, I attribute it to the risk on environment when crude comes back down and regresses to the mean of the Eur/JPY which is itself a key driver of global risk on/off. with the EUR/JPY having been so strong (due to massive capital flows being able to leave be put back out to work in global yield and risk markets due to the subsidence of the perceived risk factors that were calling Trillions of Yen back home when the carry trade comes under pressure. The Average True range of the EUR/JPY/ WTIC has seen the short term 14 period come back into equilibrium with the very long 200 week ATR. That is another under the hood indicator that we have stabilization and beyond that an environment that is aggressively calling for a "Risk ON" environment in which US stocks, global equities and several lower grade bond makets can have their yield spreads come in. *Being long equities is the the Best Approach over the next few months.* Having the SPX so far above it's weekly bollinger band is very bullish and means higher stock prices to come. EUR/JPY cross rate is the most bullishly above it's Bollinger band index in the past decade... Most definitely a "RISK ON" signal in case one wants to know when to be out or short stocks when they are blowing up in a vicious bear market just look at the action of the EUR/JPY from July to Oct of 2008 when not only did the cross rate collapse but it continually got below it's lower BBand. that's the time to be in cash or have short strategies. JP

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