What would a 10% or 20% correction look like?

Thursday, July 24, 9:25 a.m.

Although historically a correction of 10% has come along on average of once a year, we haven’t had a 10% correction since 2011 (that was actually a 19% correction).

As a result the market has gone for a rare 1,021 days without a 15 to 20% correction. The last time it went that long was 30 years ago, when it went 1,127 days from July, 1984 to August 1987. That ended with the 1987 crash, with the S&P 500 down 37%.

No wonder then that investors are currently extremely complacent, so much so that even Fed Chair Janet Yellen said investor complacency was one of her worries.

If we were ever to have one again, not that we ever will, but what would a 10% or 20% correction look like?

A 10% decline would take the Dow down to 15,377, its level at the January low, also its level in May, of last year.

A 20% decline would take it down to 13,676, wiping out all of this year’s gain to date, and almost all of last year’s.

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But then, no one expects those previous kinds of normal market volatility to happen any more. So why even think about it.

To read my weekend newspaper column click here:   Will Investors Get Out On Time This Time-

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, there is an important hotline from 8 a.m. this morning, and an in-depth Markets Update (stocks, gold, bonds) from yesterday in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market. 

A mixed but mostly positive day, on light volume of under 0.6 billion shares traded on the NYSE.

The Dow closed down 25 points, or 0.2%. The S&P 500 closed up 0.2%. The NYSE Composite closed up less than 0.1%. The Nasdaq closed up 0.4%. The Nasdaq 100 closed up 0.6%. The Russell 2000 closed up 0.2%. The DJ Transportation Avg. closed up 0.2%. The DJ Utilities Avg closed unchanged.

Gold closed down $2 an ounce at $1,305.

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The U.S. dollar etf UUP closed up 0.1%.

The 20-yr bond etf TLT closed down 0.1%.

European Markets closed well off their highs and barely positive yesterday.

The Europe Dow closed up less than 0.1%,

The London FTSE closed up less than 0.1%. The German DAX closed up 0.2%. France’s CAC closed up 0.1%. Belgium closed up 0.4%. Denmark closed unchanged. Finland closed up 0.5%. Greece closed up 0.2%.  Ireland closed up 0.4%. Italy closed down 0.2%. Netherlands closed up 0.1%. Norway closed up 0.3%. Portugal closed up 1.7%. Spain closed up 0.1%. Switzerland closed up 0.1%.

Asian Markets closed up last night.

The Asia Dow closed up 0.4%. Among individual countries:

Australia closed up 0.2%. China closed up 1.3%. Hong Kong closed up 0.7%. India up 0.5%. Indonesia closed up 0.1%. Japan closed down 0.2%. Malaysia closed up 0.2%. New Zealand closed up 0.6%. South Korea closed down 0.1%. Singapore closed up 0.4%. Taiwan closed up 0.3%. Thailand closed up 0.2%.

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Markets This Morning:

European markets are bouncing back again this morning.

The London FTSE is up 0.1%. The German DAX is up 0.5%. France’s CAC is up 0.7%. Belgium is up 0.6%. Denmark is up 0.2%. Finland is up 1.0%. Greece is up 1.2%. Ireland is down 0.3%. Italy is up 1.6%. Netherlands is up 0.3%. Norway is up 0.2%. Portugal is up 1.2%. Spain is up 1.7%. Switzerland is up 0.6%.

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This Morning in the U.S. Market:

Oil is down $.38 a barrel, at $102.74.

Gold is down $7 an ounce at $1,298.

This week’s Economic Reports:

This week will be see a number of important economic reports, including the Consumer Price Index, Existing Home Sales, New Home Sales, Durable Goods Orders, etc. To see the full list and times click here, and look at the left side of the page it takes you to.

Monday’s only report was that the Fed’s National Business Index (CFNBI), a composite of 85 economic indicators, declined to 0.12 in June from 0.16 in May. The more important three-month moving average declined from 0.33 in May to 0.18 in June.

Tuesday’s reports were that the Consumer Price Index (CPI) was up 0.3% in June, but the core rate (minus food and energy) was up only 0.1%. That was much better than the consensus forecast that the core rate would rise 0.3%, as it did in May. The FHFA Home Price Index showed home prices rose 0.4% in May. And Existing Home Sales rose 2.6% in June, higher than last October, and fractionally better than the consensus forecast, but still 2.3% lower than the pace a year ago. The number of homes for sale increased by 6.5% in June from a year ago. And the Richmond Fed Mfg Index improved from a reading of 4 in June to 7 in July.

There were no reports yesterday.

This morning’s reports so far are that new weekly unemployment claims fell by 19,000 last week to just 284,000, the lowest level since February 2006, much better than the consensus forecast of 310,000. The 4 week m.a. declined by 7,250 to 302,000.

Still to come are the PMI Mfg Index, due out at 9:45 am, and New Home Sales, due out at 10am.

The pre-open indicators, already positive, were not affected by the unemployment report. But then the market hasn’t been paying much mind to economic reports in either direction for some time.

Our Pre-open Indicators:

Our pre-open indicators are pointing to the Dow being up 30 points or so in the early going.

I’ll be back with the next post on Saturday morning, as usual later than on the weekdays, probably around 12 noon.

To read my weekend newspaper column click here:   Will Investors Get Out On Time This Time-

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, there is an important hotline from 8 a.m. this morning, and an in-depth Markets Update (stocks, gold, bonds) from yesterday in your secure area of the Street Smart Report website.

Non-Subscribers:

If you haven’t done so yet, check out our new bull market/bear market indicator (BBMI) by clicking here: Market Timing Strategy

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**** End of Today’s post*****

Enough with the bubble talk already.

Tuesday, July 22, 9:25 a.m.

So much analysis we see and hear lately is concerned with whether the stock market is in a bubble or not. A sampling of headlines in last month or so:

‘It’s Time to Worry About A Stock Market Bubble.’

‘Five Warning Signs of a Stock Market Bubble’

‘According to Many Famous Investors U.S. Stocks Are In a Bubble.’

‘Stock Market Bubble – These Two Charts Should Scare You.’

‘Here’s Why U.S. market Is Not In a Bubble.’

‘Facts Do Not Support Bubble Talk.’

‘Not in a Bubble Yet So Bull Will Continue to Run For Two More Years.’

Come on, folks.

We had an extremely unusual two bubbles in the first 8 years of the new century, the dotcom/stock market bubble in 2000, and the housing bubble in 2006. Most investors, and most people writing so continuously about bubbles now, probably heard the word ‘bubble’ for the first time in their lives in 1999/2000. And now whether the market is in a bubble is the way market risk is defined?

If we can determine the market is in a bubble we can know we need to get out because it’s due for a serious collapse, but if we can determine it is not in a bubble we can be assured the bull market has several more years to go?

Huh?

There have been 25 bear markets over the last 113 years, or one on average of every 4.5 years. The average decline was 36.5%. The ten worst averaged a decline of 49.9%.

How many of those serious bear markets were the result of the market being in a valuation bubble that burst? Well, there was 1929. And 70 years later there was 2000. You might be able to stretch the requirements enough to call the 1973 top prior to the 1973-74 bear market a bubble, but it would be a stretch.

Bear markets begin, as did the 2007-2009 bear, not due to a valuation bubble bursting, but in anticipation of a potential recession or financial crisis (domestic or global), rising inflation, rising interest rates, global events, or just because the bull runs out of energy.

So let’s cool down the bubble talk. Bubbles are probably still once in a lifetime events;

Meanwhile, 15% corrections are annual events on average; and bear markets take place on average of every 4.5 years.

To read my weekend newspaper column click here:   Will Investors Get Out On Time This Time-

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, there will be an in-depth Markets Update (stocks, gold, bonds) in your secure area of the Street Smart Report website. tomorrow. 

Yesterday in the U.S. Market. 

A somewhat negative day to begin the week, but on light summer Monday volume of just over 0.5 billion shares traded on the NYSE. The day to day volatility continues. The Dow was up 77 points last Wednesday, down 161 points on Thursday, back up 123 points Friday, down 48 points yesterday, and looks like it will be up today, at least in the early going.

The Dow closed down 48 points, or 0.3%. The S&P 500 closed down 0.2%. The NYSE Composite closed down 0.3%. The Nasdaq closed down 0.2%. The Nasdaq 100 closed down 0.2%. The Russell 2000 closed down 0.4%. The DJ Transportation Avg. closed down 0.3%. The DJ Utilities Avg closed down 0.1%.

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Gold closed up $3 an ounce at $1,313.

The U.S. dollar etf UUP closed down 0.1%.

The 20-yr bond etf TLT closed up 0.5%.

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European Markets closed down again yesterday.

The Europe Dow closed down 0.5%,

The London FTSE closed down 0.3%. The German DAX closed down 1.1%. France’s CAC closed down 0.7%. Belgium closed down 0.2%. Denmark closed own 0.7%. Finland closed up 0.4%. Greece closed down 0.8%.  Ireland closed down 0.5%. Italy closed down 1.5%. Netherlands closed down 0.2%. Norway closed up 0.4%. Portugal closed up 0.1%. Spain closed down 0.4%. Switzerland closed up 0.1%.

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Asian Markets closed up last night.

The Asia Dow closed up 0.6%. Among individual countries:

Australia closed up 0.1%. China closed up 1.0%. Hong Kong closed up 1.7%. India up 1.2%. Indonesia closed down 0.9%. Japan closed up 0.8%. Malaysia closed up 0.2%. New Zealand closed up 0.1%. South Korea closed up 0.5%. Singapore closed up 0.1%. Taiwan closed up 0.6%. Thailand closed down 1.1%.

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Markets This Morning:

European markets are bouncing back strongly this morning.

The Europe Dow is up 1.1%.

The London FTSE is up 0.9%. The German DAX is up 1.2%. France’s CAC is up 1.3%. Belgium is up 1.1%. Denmark is up 1.3%. Finland is up 0.1%. Greece is up 0.1%. Ireland is up 0.9%. Italy is up 1.7%. Netherlands is up 0.9%. Norway is up 0.6%. Portugal is up 0.5%. Spain is up 1.2%. Switzerland is up 0.6%.

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This Morning in the U.S. Market:

Oil is down $.10 a barrel, at $104.49. It did not remain below $100 a barrel for long.

072214a

Gold is down $1 an ounce at $1,312.

This week’s Economic Reports:

This week will be see a number of important economic reports, including the Consumer Price Index, Existing Home Sales, New Home Sales, Durable Goods Orders, etc. To see the full list and times click here, and look at the left side of the page it takes you to.

Yesterday’s only report was that the Fed’s National Business Index (CFNBI), a composite of 85 economic indicators, declined to 0.12 in June from 0.16 in May. The more important three-month moving average declined from 0.33 in May to 0.18 in June.

This morning’s reports so far are that the Consumer Price Index (CPI) was up 0.3% in June, but the core rate (minus food and energy) was up only 0.1%. That was much better than the consensus forecast that the core rate would rise 0.3%, as it did in May.

Still to come are Existing Home Sales, and the Richmond Fed Index, both of which will be released at 10 a.m.

The pre-open indicators, already positive, improved further after the CPI report. 

Our Pre-open Indicators:

Our pre-open indicators are pointing to the Dow being up 70 points or so at the open.

I’ll be back with the next post on Thursday morning at 9:25 a.m.

To read my weekend newspaper column click here:   Will Investors Get Out On Time This Time-

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, there wil be an in-depth Markets Update (stocks, gold, bonds) in your secure area of the Street Smart Report website. tomorrow. 

Non-Subscribers:

If you haven’t done so yet, check out our new bull market/bear market indicator (BBMI) by clicking here: Market Timing Strategy

SUBSCRIBE NOW! To get all of this:

(The equivalent of four or five normal newsletters at the cost of one)

  • Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.
  • A 6-page Mid-Week Markets Report every week.
  • A 4 to 6 page Gold, Bonds, U.S. Dollar Report every three weeks.
  • A 4 to 6 page Global Market Report every three weeks.
  • The 8-page Street Smart Report newsletter every 3 weeks.
  • Hotline Updates whenever signals or recommendations change.
  • Two specific portfolios (Seasonal Timing & Technical Analysis Timing)
  • Sy’s weekly column on markets and the economy every Friday.

Market, sector, stock, gold, bond, and dollar buy and sell signals, short-sales, long-side and ‘inverse’ etf’s, mutual funds. Highly regarded and in our 26th year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

This blog appears every Tuesday, Thursday, and Saturday morning!

**** End of Today’s post*****

The Market Bounce-Back This Week Was Not Impressive

Saturday, July 19, 11 a.m.

Markets most everywhere closed up this week. At first glance it looks great. But a look at the technical charts shows it was not impressive, particularly in the U.S. and Europe.

For instance, the NYSE Composite and Nasdaq closed down 1.5% the previous week and bounced back only 0.4% this week. The Russell 2000 closed down 4.1% the previous week, and closed down another 0.7% this week.

Germany and France closed down 3.4% the previous week, and bounced back only 0.6% this week.

It didn’t change anything in the short-term risk picture.

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But those are only short-term charts and the markets do remain within a few percentage points of their highs. A few short-term support levels at 50-day moving averages have been broken, but that has happened fairly often.

So no worries – right?

Short-term market patterns.

The way the market continues to follow its short-term patterns is almost spooky.

Most recently, an up-week in keeping with the ‘monthly strength period’. Then a down week in keeping with the tendency for the week before an options expirations to be negative. And now an up week this week in keeping with the tendency for the options expirations week to be positive.

Is the economy really rebounding from the winter slowdown?

We know the Federal Reserve has an ax to grind in always painting a positive picture of the economy. Imagine what would happen to consumer and business confidence, and markets, if the Fed came out with an assessment saying that “We have a number of problems that will have the economy in a continuing slowdown.”

So we see the Federal Reserve, at least in their public statements, always behind the curve at turning points. For instance, then Fed Chairman Bernanke assured us after the housing bubble burst in 2006 that, “Our assessment is that this looks like an orderly and moderate kind of cooling off.” In 2008, with the ‘Great Recession’ already underway, that, “The Federal Reserve is not currently forecasting a recession.”

We know Wall Street and its cheerleaders have a compelling reason to always paint a positive picture of the economy, in an effort to keep investors confidently buying, and bull markets going as long as possible.

So we see Wall Street and its cheerleaders cherry-pick the economic reports, playing up those that are positive and pretty much ignoring those that are negative.

But does not the important economic question of the last six months remain, whether the economy is rebounding from the pronounced winter slowdown?

The slowdown began last fall when GDP growth fell from 4.1% in the third quarter to 2.4% in the fourth quarter, and plunged further to negative -2.9% in the first quarter of this year.

The Fed and Wall Street assured us there would be a robust rebound in the spring. Pent-up demand from the winter months, when consumers couldn’t get out to spend due to the weather, would add to the normal strong spring buying season, especially for housing.

Well, spring has come and gone, and we’re almost halfway through summer.

In its FOMC statements, and Beige Book this week, the Fed says the economy has indeed bounced back, with moderate growth, strong jobs reports, with only perhaps a little disappointment in a somewhat slow recovery in housing.

However, realizing the Fed and Wall Street have obviously self-serving motivations in painting a rosy picture for consumers and investors, let’s look at the negative reports they have been pretty much ignoring. What is the picture those reports are painting?

Consumer spending accounts for 66% of the economy. Home purchases are their biggest expenditures. The housing industry is a major driving force of the economy in both directions.

So how are those areas of the housing industry, retail sales, and consumer confidence looking?

A month ago it was reported that new housing starts fell 6.5% in May. Permits for future starts fell 6.4%, to a four month low.

This week it was reported that they plunged again in June, down 9.3%, to an annualized rate of 893,000, the slowest pace in 9 months. And already dismal housing starts for May were revised down from the originally reported 1.0 million to 985,000.

Looking ahead, mortgage applications fell sharply in June, down double-digits for the month, and this week we learned they fell sharply again in the first week of July.

U.S. retail sales were up almost 1.0% in February, almost 1.5% in March, but only 0.5% in April, and 0.5% in May.

The consensus forecast was that they would be up 0.6% in June. But they didn’t come close to even that. June retail sales were up only 0.2%, the slowest pace in five months.

Meanwhile, yesterday it was reported that consumer confidence (University of Michigan/ Thomson/Reuters Consumer Sentiment Index) fell from 82.5 in June to 81.3 in July, a four-month low.

Those reports do not indicate a big bounce back from pent-up demand created by the winter weather, at least from housing and consumer spending.

Recent reports also showed Factory Orders fell 0.5% in May, and Industrial Production rose at a slower than forecast 0.2% pace in June.  

It was also reported this week that the Producer Price Index jumped 0.4% in June, adding to the concerns from the Consumer Price Index that inflation may be picking up, lowering the spending power of the dollar, and making it more difficult for consumers to spend more even if they wanted to.

The economy was no doubt back in positive territory in the 2nd quarter, but in a robust big recovery that has the economy in a significant recovery uptrend?

The Fed and Wall Street say so. Therefore it must be so.

To read my weekend newspaper column click here:  Will Investors Get Out On Time This Time-

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, the new issue of the newsletter from Wednesday is in your secure area of the Street Smart Report website.

Non-Subscribers:

Check out our new bull market/bear market indicator (BBMI) by clicking here: Market Timing Strategy !

U.S. market yesterday.

A strong bounce-back rally from the previous day’s triple-digit plunge. Volume was just over 0.7 billion shares traded on the NYSE, light for an options expirations day.

The Dow closed up 123 points, or 0.7%. The S&P 500 closed up 1.0%. The NYSE Composite closed up 0.9%. The Nasdaq closed up 1.6%. The Nasdaq 100 closed up 1.6%. The Russell 2000 closed up 1.6%. The DJ Transportation Avg. closed up 1.3%. The DJ Utilities Avg closed up 1.1%.

Gold closed down $6 at $1,310 an ounce.

The U.S. dollar etf UUP closed unchanged.

The 20-yr bond etf TLT closed down 0.3%.

Our global market etf holding closed up 1.0%.

Asian markets closed mixed in their last session of the week.

Asian markets closed mixed Thursday night (Friday in the U.S.).

The Asia Dow closed down 0.1%.

Among individual markets:

Australia closed up 0.2%. China closed up 0.2%. Hong Kong closed down 0.3%. India closed up 0.3%. Indonesia closed up 0.5%. Japan closed down 1.0%. Malaysia closed down 0.6%. New Zealand closed down 0.1%. South Korea closed down 0.1%. Singapore closed up 0.1%. Taiwan closed down 0.1%. Thailand closed down 0.2%.

European markets closed mixed yesterday.

The London FTSE closed up 0.2%. The German DAX closed down 0.4%. France’s CAC closed up 0.4%. Belgium closed up 0.1%. Denmark closed down 1.0%. Finland closed up 0.1%. Greece plunged 2.3%. Ireland closed down 0.7%. Italy closed up 0.6%. The Netherlands closed down 0.1%. Norway closed down 0.9%. Portugal closed down 0.8%. Spain closed down 0.1%. Switzerland closed down 0.4%.

Global markets for the week. 

A bounce-back week everywhere. Not impressive in U.S. or Europe.

THIS WEEK (July 18)
DJIA 17100 + 0.9%
S&P 500 1978 + 0.6%
NYSE 10985 + 0.5%
NASDAQ 4432 + 0.4%
NASD 100 3939 + 0.9%
Russ 2000 1151 - 0.7%
DJTransprts 8385 + 1.6%
DJ Utilities 559 + 0.9%
XOI Oils 1,670 + 0.9%
Gold bull. 1,310 - 2.1%
GoldStcks 101.98 - 2.0%
Canada 15266 + 0.9%
London 6749 + 0.9%
Germany 9720 + 0.6%
France 4335 + 0.4%
Hong Kong 23454 + 1.0%
Japan 15215 + 0.3%
Australia 5519 + 0.8%
S. Korea 2019 + 1.6%
India 25641 + 2.5%
Indonesia 5087 + 1.1%
Brazil 56974 + 3.9%
Mexico 44278 + 1.9%
China 2155 + 0.6%
LAST WEEK (July 11)
DJIA 16943 - 0.7%
S&P 500 1967 - 0.9%
NYSE 10936 - 1.5%
NASDAQ 4415 - 1.6%
NASD 100 3904 - 0.5%
Russ 2000 1159 - 4.1%
DJTransprts 8254 - 0.5%
DJ Utilities 558 + 0.9%
XOI Oils 1,656 - 1.9%
Gold bull. 1,338 + 1.4%
GoldStcks 104.07 + 2.6%
Canada 15125 - 0.6%
London 6690 - 2.6%
Germany 9666 - 3.4%
France 4316 - 3.4%
Hong Kong 23233 - 1.3%
Japan 15164 - 1.8%
Australia 5474 - 0.7%
S. Korea 1988 - 1.1%
India 25024 - 3.6%
Indonesia 5032 + 2.6%
Brazil 54846 + 1.5%
Mexico 43481 - 0.1%
China 2143 - 0.6%
PRVIOUS WEEK (July 4)
DJIA 17068 + 1.3%
S&P 500 1985 + 1.3%
NYSE 11104 + 1.2%
NASDAQ 4485 + 2.0%
NASD 100 3923 + 2.1%
Russ 2000 1208 + 1.6%
DJTransprts 8294 + 1.5%
DJ Utilities 554 - 3.1%
XOI Oils 1,688 + 0.2%
Gold bull. 1,320 + 0.4%
GoldStcks 101.48 + 2.4%
Canada 15214 + 0.8%
London 6866 + 1.6%
Germany 10009 + 2.0%
France 4468 + 0.7%
Hong Kong 23546 + 1.4%
Japan 15437 + 2.3%
Australia 5511 + 1.5%
S. Korea 2009 + 1.1%
India 25962 + 3.4%
Indonesia 4905 + 1.2%
Brazil 55055 + 1.7%
Mexico 43518 + 2.4%
China 2156 + 1.1%

Premium Content Area.

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NOTE: To gain access call our subscription office at 1-386-943-4081 (week-days only). If you can afford two cups of coffee a week you can afford the cost of 25.95 a month ($6.50 a week). For that you also receive the full Street Smart Report advisory service (newsletter, hotlines, in depth mid-week reports on stocks, gold ,bonds, etc.). Or to subscribe online click here: https://streetsmart.securesites.net/order.html

In the premium content area this morning: The next short-term market pattern. Charts and signals on the U.S. stock market, gold, and bonds, signals (long-term, intermediate-term, and short-term), and analysis of each.


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Next week’s Economic Reports:

Next week will be see a number of important economic reports, including the Consumer Price Index, Existing Home Sales, New Home Sales, Durable Goods Orders, etc. To see the full list and times click here, and look at the left side of the page it takes you to.

To read my weekend newspaper column click here:  Will Investors Get Out On Time This Time-

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, the new issue of the newsletter from Wednesday is in your secure area of the Street Smart Report website.

I’ll be back with the next blog post Tuesday morning at 9:25 a.m., with those retail sales numbers for June.

Non-Subscribers:

SUBSCRIBE NOW! To get all of this:

(The equivalent of four or five normal newsletters at the cost of one)

  • Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.
  • A 6-page Mid-Week Markets Report every week.
  • A 4 to 6 page Gold, Bonds, U.S. Dollar Report every three weeks.
  • A 4 to 6 page Global Market Report every three weeks.
  • The 8-page Street Smart Report newsletter every 3 weeks.
  • Hotline Updates whenever signals or recommendations change.
  • Two specific portfolios (Seasonal Timing & Technical Analysis Timing)
  • Sy’s weekly column on markets and the economy every Friday.

Market, sector, stock, gold, bond, and dollar buy and sell signals, short-sales, long-side and ‘inverse’ etf’s, mutual funds. Highly regarded and in our 26th year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

This blog appears every Tuesday, Thursday, and Saturday morning and at occasional times in between! Follow it via the RSS feed or follow it in Twitter (the ‘handle’ is @streetsmartpost) so you won’t miss any posts.

**** End of Today’s post*****

Chart comparisons with previous market tops.

Thursday, July 17, 9:25 a.m.

There are three observations being made about the current resilience of the stock market.

1. The market has gone 33 months, since 2011, without at least a 10% correction.

2. It has gone 1,014 days without a 20% correction. That’s the longest stretch since it went 1,127 days, from July, 1984 to August 1987, 30 years ago.

3. The average bull market over the last 100 years lasted 53 months. The current bull market is now a very rare 65 months old. The last time it came close to that long was the 2003-2007 bull market, which lasted 60 months to its 2007 top.

That’s three time-frames in which the market is currently flirting with the odds in trying to last even longer.

I thought it might be interesting to compare the charts of this year to the year when those previous long stretches ended.

1. The market has gone an unusual 33 months since 2011 without at least a 10% correction.

In 2011, GDP went negative in the 1st quarter for first time since the Great Recession, as it did this year. Actually it went twice as negative in the 1st quarter this year as in the 1st quarter of 2011.

Change In Real GDP

On the following market chart, 2011 followed a strong 2010, with repeated new highs. It declined in March, and then resumed making repeated new highs until mid-year.  And then a 19% plunge to the October low.

071714d

This year, 2014, follows a strong 2103, with repeated new highs. There was a decline in January, and then new highs to mid-year so far. 33 months since that last correction of 10% or more in 2011?

071714e

2. The S&P 500 has now gone 1,014 days without a 20% correction. That’s the longest stretch since it went 1,127 days, from July, 1984 to August 1987, 30 years ago.

In 1987, the market had a minor decline in May then climbed to successive new highs into early August. It then topped out into a 36% decline including the 1987 crash in October.

071714f

3. The current bull market is now a very rare 65 months old. The last time it came close to that long was the 2003-2007 bull market which lasted 60 months to its 2007 top.

Among some other conditions, market valuations are even higher now than they were in 2007, as is margin debt and other conditions often seen at significant market tops.

In 2007, the market was coming off a strong 2006. It pulled back early in the year, then recovered and began making repeated new highs into July. It then declined 10% into August, only to recover to a new high in October. That had everyone thinking all was well.

But that time it was not just a correction, or even just a quick crash as in 1987, but the beginning of the severe 2007-2009 bear market. 

071714g

It may not mean anything. Three data points are not meaningful statistically.

But, annual seasonality and the 2nd year of the Presidential Cycle going back 100 years do have a statistically meaningful history, and are also in play.

Combined with the three unusual time stretches the market is trying to exceed, (time since last 10% correction, since last 20% correction, and since last bear market began), and the similar conditions and appearance of the charts in those years, it looks a bit more ominous.

The consensus of our intermediate-term indicators came off their buy signal of last fall in February but only to neutral. The market is still making new highs, and our intermediate-term indicators remain neutral. But we are holding 60% in cash with odds still high of a sell signal at some point fairly soon, and significant profits from downside positioning. 

The above comparisons of 2011, 2007, and 1987, do not alleviate my concerns.

To read my weekend newspaper column click here:    The Bond Rally Is Not a Good Omen for the Stock Market

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, the new issue of the newsletter is in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market. 

A positive day to fractional new highs for the Dow and S&P 500. Volume was just over 0.6 billion shares traded on the NYSE.

The Dow closed up 77 points, or 0.5%. The S&P 500 closed up 0.4%. The NYSE Composite closed up 0.5%. The Nasdaq closed up 0.2%. The Nasdaq 100 closed up 0.5%. The Russell 2000 closed down 0.2%. The DJ Transportation Avg. closed up 0.6%. The DJ Utilities Avg closed up 0.5%.

Gold closed up $2 an ounce to $1,298.

The U.S. dollar etf UUP closed up 0.2%.

The 20-yr bond etf TLT closed up 0.5%.

Our holding in the global etf closed up 0.7%.

European Markets rallied off oversold condition yesterday as expected.

The London FTSE closed up 1.1%. The German DAX closed up 1.4%. France’s CAC closed up 1.5%. Belgium closed up 1.4%. Denmark closed up 1.1%. Finland closed up 1.3%. Greece closed up 0.8%.  Ireland closed up 1.2%. Italy closed up 3.2%. Netherlands closed up 1.2%. Norway closed up 1.0%. Portugal closed up 3.1%. Spain closed up 1.8%. Switzerland closed up 0.5%.

Asian Markets closed mixed last night.

The Asia Dow closed down 0.1%. Among individual countries:

Australia closed up 0.1%. China closed down 0.6%. Hong Kong closed down 0.1%. India up 0.1%. Indonesia closed down 0.8%. Japan closed down 0.1%. Malaysia closed down  0.2%. New Zealand closed down 0.1%. South Korea closed up 0.4%. Singapore closed up 0.1%. Taiwan closed down 0.8%. Thailand closed up 0.3%.

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Markets This Morning:

European markets are down sharply this morning.

The Europe Dow is down 1.1%.

The London FTSE is down 0.7%. The German DAX is down 0.9%. France’s CAC is down 1.1%. Belgium is down 1.0%. Denmark is down 0.4%. Finland is down 0.3%. Greece is down 1.0%. Ireland is down 0.4%. Italy is down 1.5%. Netherlands is down 0.8%. Norway is down 0.5%. Portugal is down 1.4%. Spain is down 1.2%. Switzerland is down 0.7%

This Morning in the U.S. Market:

Oil is up $1.17 a barrel, at $102.37.

Gold is up $5 an ounce at $1,304.

This week’s Economic Reports:

This week has a number of important economic reports, including Retail Sales, the Producer Price Index, the Fed’s Beige Book, New Housing Starts, etc. To see the full list and times click here, and look at the left side of the page it takes you to.

There were no economic reports in the U.S. on Monday.

Tuesday’s reports were that Retail Sales were up only 0.2% in June after rising only 0.5% in May, significantly missing the consensus forecast of a rise of 0.6%. The Empire State (NY) Mfg Index improved to 25.6 in July from 19.3 in June.

Yesterday’s reports were that the Housing Market Index, which measures the optimism of homebuilders, ticked up into positive territory for the first time in six months, rising from 49 in in June to 53 in July, a small majority now positive. Industrial Production rose at a slower than forecast pace in June, rising only 0.2%, while capacity utilization remained at 79.1%, a tick below the forecast for 79.2%. And the Producer Price Index jumped 0.4% in June. The core rate (minus the cost of food and energy) was up a smaller 0.2%. And in its Beige Book the Fed said the economy is back on a modest recovery track after a rough beginning to the year.

This morning’s reports are that new weekly unemployment claims fell by 3,000 last week to 302,000, the lowest level in 9 weeks. The 4-week m.a. also fell by 3,000, to 309,000. And Housing Starts plunged 9.3% in June to an annualized rate of 893,000, the slowest pace in 9 months, significantly worse than the consensus forecast for 1.02 million. And housing starts in May were revised down from the originally reported 1.0 million to 985,000.

Still to come is the Phila Fed Index, which will be released at 10 am.

The pre-open indicators, already negative, have not been further affected by the reports so far. 

Our Pre-open Indicators:

Our pre-open indicators are pointing to the Dow being down 50 points or so at the open.

I’ll be back with the next post on Saturday morning, as usual later than on the week days, probably around 12 noon.

To read my weekend newspaper column click here:    The Bond Rally Is Not a Good Omen for the Stock Market

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, the new issue of the newsletter is in your secure area of the Street Smart Report website.

Non-Subscribers:

If you haven’t done so yet, check out our new bull market/bear market indicator (BBMI) by clicking here: Market Timing Strategy

SUBSCRIBE NOW! To get all of this:

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  • Two specific portfolios (Seasonal Timing & Technical Analysis Timing)
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**** End of Today’s post*****

June Retail Sales Were Disappointing.

Tuesday, July 15, 9:25 a.m.

Consumer spending accounts for 66% of the U.S. economy. Except for spending on new cars, it has been worrisome. Concerns increased last week with warnings from the likes of WalMart, The Container Store chain, Family Dollar Stores, clothing chain Gap, and others, of slowing sales.

So, as I said in Saturday’s blog, today’s Retail Sales report would be important regarding whether the economy is recovering from the winter slowdown.

U.S. retail sales were up almost 1.0% in February, almost 1.5% in March, but only 0.5% in April, and 0.5% in May (revised this morning from the initial report of 0.3%).

The consensus forecast was that they would be up 0.6% in June.

They didn’t come close to even that. June retail sales were just reported, and were up only 0.2%, the slowest pace in five months.

That does not indicate a big bounce back from pent-up demand created by the winter weather, at least from consumer spending.

European markets rallied as expected.

I also noted in Saturday’s blog that in their declines European markets had become so short-term oversold beneath their 50-day moving averages that a rally off the oversold conditions was likely.

And European market were up quite strongly yesterday, but not near enough to alleviate the oversold condition.

071514e

071514f

They got more dismal news from Europe’s biggest economy, Germany, this morning that has the rally halted at least for the moment.

It was reported this morning that German investor confidence declined for the 7th straight month in July, dropping from 29.8 in June, to 27.1 in July.

In Europe, retail sales and industrial production has been declining as well as incoming orders. The disappointing German data comes after a recent string of disappointing news from the euro zone, adding to concerns that economic growth in Europe has stalled.

But the European markets are still short-term oversold.

U.S. market still short-term overbought.. 

Yesterday’s triple-digit rally in the U.S. was impressive, but did not change the short-term risk of the overbought condition above 50-day moving averages and trend-lines, and sell signals on short-term technical indicators.

071514a

Bu the short-term may be unimportant. What about the intermediate-term?

Other Voices: 

Richard Ross, Auerbach: “It’s very difficult to assail the technicals . . . . . We’ve been above the 150-week moving average for quite some time. In fact, you have to go back to the period of 1982 to 1987 to find a similar type period from a technical standpoint when we were above trend for so long. And we all know how things ended in 1987.”

Gina Sanchez, Chantical Global: “The economy contracted 2.9% in the first quarter, and corporate results were mediocre. The market is trading as if it expects to make up the losses throughout the rest of this year, but the International Monetary Fund estimates show that may not happen. . . . . And if you look at FactSet right now, 111 companies have come out with earnings guidance. Of those, 84 companies have given negative guidance. That’s 76 percent of companies, and that’s after a weak first quarter. So if you’re expecting them to be gaining that back, the guidance isn’t suggesting that.”

To read my weekend newspaper column click here:    The Bond Rally Is Not a Good Omen for the Stock Market

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, there is a new in-depth ‘Gold, Bonds, Dollar, Inflation’ update from last evening in your secure area of the Street Smart Report website. And the next edition of the newsletter will be out tomorrow.

Yesterday in the U.S. Market. 

A positive day, although an afternoon selloff knocked the Dow down 77 points from its mid-day high when it was up 188 points. Volume was just under 0.6 billion shares traded on the NYSE.

The Dow closed up 111 points, or 0.7%. The S&P 500 closed up 0.5%. The NYSE Composite closed up 0.5%. The Nasdaq closed up 0.6%. The Nasdaq 100 closed up 0.6%. The Russell 2000 closed up 0.5%. The DJ Transportation Avg. closed up 0.7%. The DJ Utilities Avg closed down 1.1%.

Gold plunged $30 an ounce to $1,307.

The U.S. dollar etf UUP closed down 0.1%.

The 20-yr bond etf TLT closed down 0.4%.

European Markets closed up as expected yesterday.

The London FTSE closed up 0.8%. The German DAX closed up 1.2%. France’s CAC closed up 0.8%. Belgium closed up 1.0%. Denmark closed up 0.9%. Finland closed up 1.4%. Greece closed up 2.0%.  Ireland closed up 1.0%. Italy closed up 0.4%. Netherlands closed up 0.7%. Norway closed up 1.2%. Portugal closed up 0.6%. Spain closed up 0.6%. Switzerland closed up 1.2%.

Asian Markets closed up last night.

The Asia Dow closed up 0.4%. Among individual countries:

Australia closed unchanged. China closed up 0.2%. Hong Kong closed up 0.5%. India up 0.9%. Indonesia closed up 1.0%. Japan closed up 0.6%. Malaysia closed up 0.1%. New Zealand closed down 0.2%. South Korea closed up 0.9%. Singapore closed up 0.1%. Taiwan closed up 0.5%. Thailand closed down 0.3%.

Subscribers Premium Content Area.

For Street Smart Report subscribers only, used to provide additional info to that provided in the newsletter, mid-week reports, and hotlines.

NOTE: To gain access call our subscription office at 1-386-943-4081 (week-days only). If you can afford two cups of coffee a week you can afford the cost of 25.95 a month ($6.50 a week). For that you also receive the full Street Smart Report advisory service (newsletter, hotlines, in depth mid-week reports on stocks, gold ,bonds, etc.). Or to subscribe online click here:https://streetsmart.securesites.net/order.html


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Markets This Morning:

European markets are mixed and flat this morning.

The Europe Dow is down 0.2%.

The London FTSE is down 0.1%. The German DAX is down 0.1%. France’s CAC is down 0.2%. Belgium is up 0.2%. Denmark is down 0.2%. Finland is down 0.3%. Greece is up 0.1%. Ireland is up 0.3%. Italy is down 0.3%. Netherlands is down 0.2%. Norway is up 0.3%. Portugal is up 0.2%. Spain is down 0.5%. Switzerland is up 0.2%

This Morning in the U.S. Market:

Oil is down $1.19 a barrel, at $99.72, back under $100.

Gold is up $2 an ounce at $1,309.

This week’s Economic Reports:

This week will be see a number of important economic reports, including Retail Sales, the Producer Price Index, the Fed’s Beige Book, New Housing Starts, etc. To see the full list and times click here, and look at the left side of the page it takes you to.

There were no economic reports in the U.S. yesterday.

This morning’s reports were that Retail Sales were up only 0.2% in June after rising only 0.5% in May, significantly missing the consensus forecast of a rise of 0.6%. The Empire State (NY) Mfg Index improved to 25.6 in July from 19.3 in June.

The pre-open indicators have not been affected by the reports so far. 

Our Pre-open Indicators:

Our pre-open indicators are pointing to the Dow being up 25 points or so at the open.

I’ll be back with the next post on Thursday morning at 9:25 a.m.

To read my weekend newspaper column click here:    The Bond Rally Is Not a Good Omen for the Stock Market

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, there is a new in-depth ‘Gold, Bonds, Dollar, Inflation’ update from last evening in your secure area of the Street Smart Report website. And the next edition of the newsletter will be out tomorrow.

Non-Subscribers:

If you haven’t done so yet, check out our new bull market/bear market indicator (BBMI) by clicking here: Market Timing Strategy

SUBSCRIBE NOW! To get all of this:

(The equivalent of four or five normal newsletters at the cost of one)

  • Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.
  • A 6-page Mid-Week Markets Report every week.
  • A 4 to 6 page Gold, Bonds, U.S. Dollar Report every three weeks.
  • A 4 to 6 page Global Market Report every three weeks.
  • The 8-page Street Smart Report newsletter every 3 weeks.
  • Hotline Updates whenever signals or recommendations change.
  • Two specific portfolios (Seasonal Timing & Technical Analysis Timing)
  • Sy’s weekly column on markets and the economy every Friday.

Market, sector, stock, gold, bond, and dollar buy and sell signals, short-sales, long-side and ‘inverse’ etf’s, mutual funds. Highly regarded and in our 26th year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

This blog appears every Tuesday, Thursday, and Saturday morning!

**** End of Today’s post*****

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