Is it really only institutional investors that are selling?

Tuesday, July 29, 9:25 a.m.

From CNBC/Yahoo Finance: Big money managers may be doing something retail investors aren’t – pulling money out of the market.

“Last week, investors added $379 million into equity mutual funds (the kind that’s popular with retail investors) according to Thomson Reuters’ Lipper. At the same time, exchange-traded funds focusing on equities – the kind of securities traded by institutional investors – saw a whopping $7.97 billion in outflows.”

I’m not sure I agree with that assessment that money being pulled aggressively out of ETF’s indicates that only institutional investors are lightening up positions, while retail investors pour more in.

Money flows into and out of ETFs may have provided that kind of indication a few years ago when they were used predominantly by institutions, hedge funds, and other large investors.

But in recent years, astute retail investors have pretty much caught onto the advantages of ETF’s over managed funds and end-of-day priced mutual funds.

One reason to believe that retail investors utilizing ETF’s have also been pulling money out is the way the Russell 2000 has been tumbling. It has given back all its gains of the year and more, now down 2% YTD.

072914g

It is the home of small stocks, the favorite arena of retail investors, and institutions are pretty much blocked out of such stocks. The small amount of holdings they could achieve with such small capitalization stocks would not make enough difference in their portfolios either way. Due to the $billions they are dealing with, they are pretty much confined to medium to large-cap stocks.

The money still flowing into end-of-day priced mutual funds is probably from employees still contributing to their 401K and IRA plans and their employers’ matching contributions, and from those with a monthly dollar cost averaging strategy.

Those two categories of public investors probably contribute most to the pattern I showed in my column two weeks ago (Will Investors Get Out On Time This Time-) which showed how public investors continue to put additional money into the market all the way down in bear markets, and only bail out in disgust after the bear has ended and the next bull market is underway.

Most public investors may be more astute than that if the profit-taking in the small-cap Russell 2000 is any indication.

To read my weekend newspaper column click here: China’s Market Finally Looks Like a Buy

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 mixed day yesterday, and well off its mid-day lows. The Dow was down as much as 83 at mid-day and recovered to close up 22 points. Volume was just under 0.6 billion shares traded.

The Dow closed up 22 points, or 0.1%. The S&P 500 closed basically unchanged, up 0.03%. The NYSE Composite closed unchanged. The Nasdaq closed unchanged. The Nasdaq 100 closed up 0.1%. The Russell 2000 closed down 0.5%. The DJ Transportation Avg. closed down 1.1%. The DJ Utilities Avg closed up 1.2%.

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

The U.S. dollar etf UUP closed unchanged.

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

The China etf GXC closed up 1.5%.

European Markets closed down yesterday.

The London FTSE closed down 0.1%. The German DAX closed down 0.5%. France’s CAC closed up 0.3%. Belgium closed down 0.2%. Denmark closed down 0.3%. Finland closed down 0.5%. Greece closed down 0.1%.  Ireland closed up 0.1%. Italy closed down 0.6%. Netherlands closed down 0.1%. Norway closed down 0.8%. Portugal closed up 0.3%. Spain closed down 0.1%. Switzerland closed down 0.5%.

Asian Markets closed mixed last night.

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

Australia closed up 0.2%. China closed up 0.2%. Hong Kong closed up 0.9%. India closed down 0.5%. Indonesia closed down 0.2%. Japan closed up 0.6%. Malaysia closed up 0.1%. New Zealand closed down 0.4%. South Korea closed up 0.6%. Singapore closed up 0.2%. Taiwan closed down 0.3%. Thailand closed down 1.1%.

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Markets This Morning:

European markets are bouncing back this morning.

The Europe Dow is up 0.4%.

The London FTSE is up 0.5%. The German DAX is up 0.6%. France’s CAC is up 0.6%. Belgium is up 0.6%. Denmark is up 0.4%. Finland is down 0.1%. Greece is down 1.7%. Ireland is up 0.6%. Italy is up 1.2%. Netherlands is up 0.4%. Norway is up 0.2%. Portugal is down 0.3%. Spain is up 0.6%. Switzerland is up 0.1%.

This Morning in the U.S. Market:

Oil is down $.54 a barrel, at $101.13.

Gold is up $4 an ounce at $1,307.

This week’s Economic Reports:

This week will be see a number of important economic reports, including the the ADP Jobs Report, the first look at 2nd quarter GDP growth, the ISM Mfg Index, Construction Spending, and The Big One!, the Labor Department’s Monthly Employment Report, 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 reports were that the Markit PMI non-services Index remained unchanged in July at 61. Pending Home Sales declined 1.1% in June, the first decline in 4 months. The index is 7.3% below a year ago. And the Dallas Fed Mfg Index improved from 15.5 in June to 19.1 in July, better than the consensus forecast.

This morning, the Case-Shiller Home Price Index showed home prices rose 1.1% in May (negative for home purchase affordability?).

Still to come is Consumer Confidence at 10 a.m.

Tomorrow the major reports of the week begin, with the ADP Jobs Report, the first look at 2nd quarter GDP, and the Fed’s statement after its FOMC meeting ends.

The pre-open indicators remain positive. 

Our Pre-open Indicators:

Our pre-open indicators are pointing to the Dow being up 40 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: China’s Market Finally Looks Like a Buy

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. 

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*****

The Big Housing Comeback–Not.

Saturday, July 26, 12 noon.

Let’s see now.

Housing affordability increased dramatically from 2006 when the housing bubble burst, and house prices began plunging, while at the same time interest rates plunged to near zero and mortgage rates fell to record lows.

As a result, housing began leading the economy out of the Great Recession even as unemployment grew and jobs were being lost monthly. Chart is of existing home sales only to July of last year.

clip_image002[6]

However, the housing recovery began to unravel about 15 months ago. The increasing sales demand created by low prices and low mortgage rates had home prices beginning to rise, and mortgage rates also reversing to the the upside.

According to the Federal Housing Finance Agency (FHFA), home prices have risen 22% since June, 2011. And 30-year mortgage rates for well-qualified borrowers have risen 20% since January 2013 (from 3.4% to 4.1%).

The sweet spot for selling a home began going away in 2006 when the housing bubble began to burst. And in 2012 the sweet spot for buying a home began to fade.

Those rising home prices and rising mortgage rates translate to roughly a 40% increase in monthly payments on new mortgages over the last 18 months, which is reflected in this chart from the St. Louis Fed showing the dramatic plunge in its Housing Affordability Index.

clip_image002

Meanwhile, the economy and housing slowed in the winter months, blamed entirely on weather. Therefore a sizable rebound in housing from pent-up demand was expected in the spring.

So far, at least in the housing sector, that rebound is not showing up. In fact, if anything the housing industry is in a more pronounced funk than prior to the winter months.

It’s not that the warning signs have not been plentiful.

Existing Home Sales rose a rather tepid 2.6% in June. That was higher than last October, and fractionally better than the consensus forecast, but still 2.3% lower than the pace a year ago.

New home starts fell 6.5% in May, and permits for futures starts fell 6.4%, not boding well for June and July new home sales.

And sure enough, this week we learned that new home sales plunged 8.1% in June to an annualized rate of just 406,000. Rather than a rebound, that was an even slower pace than three months ago. It missed the consensus forecast for 475,000 by a wide margin, and has new home sales not rebounding, but instead 11.5% lower than June of last year.

Looking ahead.

Affordability. The latest read on the FHFA Home Price Index showed home prices rose another 0.4% in May. So even though mortgage rates have stabilized at current levels, at least for now, affordability for potential home-buyers is still deteriorating.

Realtors have been claiming the lower inventory of homes available for sale was the problem. If so, the report that the number of homes on the market increased by 6.5% in June from a year ago, will be a positive. The longer homes remain on the market and the more there are of them, the more pressure increases for sellers to cut prices. If prices start to come down again, it may improve affordability. That’s a lot of ifs.

Meanwhile, applications for new mortgages were down sharply in June and in the first two weeks of July.

This week the Mortgage Bankers Association reported a small 2.4% increase in mortgage applications last week.

However, it was mostly applications for refinancing of existing mortgages by current home-owners, which were up 4.0%, and not by those looking to buy a home.

But even applications for refinancing mortgages are down 40% from a a year ago, and after their further declines in June and July. And mortgage applications for home purchases are down 15% from a year ago.

It looks more like instead of rebounding in the spring and summer, housing continues the slump that began more than a year ago.

And while the Fed did not see the warning signs, it looks like the major banks and lenders saw them clearly, and were correct in closing down mortgage offices and laying off thousands of employees several months ago, forecasting that their mortgage business would be down 30% to 40% this year, and not recover to any degree next year.

How company stock buy-backs can mislead investors.

Investors and the media tend to look on corporations buying back their own stock as a sign the company believes its future is looking bright.

For instance, from an article on Business Insider on Thursday: “Caterpillar just announced Q2 earnings that beat Wall Street’s estimates and announced a big stock buyback. This could be good news for the whole economy. As a global supplier of construction and mining equipment, Caterpillar is a bellwether of economic activity.”

However, companies buying back their own stock is often just a means of removing shares from the public float to improve their price/earnings ratio. (With fewer shares to divide earnings over, the earnings per share go up even though the overall profits may go down).

So here is a different take on Caterpillar’s announcement  from Tyler Durden on Zerohedge on Thursday.

“Earlier today, Caterpillar reported its monthly global OEM retail sales. It didn’t get any press coverage for one simple reason: Through stock repurchases, Caterpillar has managed its stock to all time highs in recent months and hardly wants the investing public to know the unpleasant truth, a truth which is shown in its simplest format in the chart below: Starting in December 2012 and continuing through today, Caterpillar has reported 19 consecutive months of declining global year-over-year retail sales. The last, and only, time it had 19 consecutive months of such decline? The period starting in October 2008 just when Lehman filed for bankruptcy.”

Durden says, “So I guess if the previous time was the Great Financial Crisis because stock prices plunged, we can call this the Great Recovery?”

Here is Caterpillar’s stock action through the same period. Did Caterpillar manage its stock price higher with stock buybacks that kept the sales per share and P/E ratio lower, hiding the company’s true business trend?

072614a

To read my weekend newspaper column click here:  China’s Market Finally Looks Like a Buy

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, there is an in-depth Markets Update (stock market, gold, and bonds) from Wednesday 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 negative day on light volume of under 0.6 billion shares traded on the NYSE,

The Dow was down as much as 168 points, but last hour buy-programs spiked it up to a loss of only 123 points.

The Dow closed down 123 points, or 0.7%. The S&P 500 closed down 0.5%. The NYSE Composite closed down 0.5%. The Nasdaq closed down 0.5%. The Nasdaq 100 closed down 0.5%. The Russell 2000 closed down 1.0%. The DJ Transportation Avg. closed down 0.5%. The DJ Utilities Avg closed down 0.7%.

Gold closed up $16 an ounce at 1,307, but down $3 for the week.

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

The 20-yr bond etf TLT closed up 1.2%.

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 just about flat, up 0.1%.

Among individual markets:

Australia closed down 0.1%. China closed up 1.0%. Hong Kong closed up 0.3%. India closed down 0.6%. Indonesia closed down 0.2%. Japan closed up 1.1%. Malaysia closed up 0.1%. New Zealand closed up 0.4%. South Korea closed up 0.4%. Singapore closed down 0.1%. Taiwan closed down 0.9%. Thailand closed unchanged.

European markets closed down quite sharply yesterday.

The London FTSE closed down 0.4%. The German DAX closed down 1.5%. France’s CAC closed down 1.8%. Belgium closed down 0.9%. Denmark closed up 0.3%. Finland closed down 0.3%. Greece surged up 2.7%. Ireland closed down 0.5%. Italy closed down 0.9%. The Netherlands closed down 1.3%. Norway closed down 0.9%. Portugal closed down 0.3%. Spain closed up 0.3%. Switzerland closed down 0.8%.

Global markets for the week. 

Asia continued to come alive. Not much movement either way elsewhere.

THIS WEEK (July 25)
DJIA 16960 - 0.8%
S&P 500 1978 unchgd
NYSE 10985 unchgd
NASDAQ 4449 + 0.4%
NASD 100 3965 + 0.7%
Russ 2000 1144 - 0.6%
DJTransprts 8428 + 0.5%
DJ Utilities 556 - 0.1%
XOI Oils 1,686 + 1.0%
Gold bull. 1,307 - 0.2%
GoldStcks 101.59 - 0.4%
Canada 15455 + 1.2%
London 6791 + 0.6%
Germany 9644 - 0.8%
France 4330 - 0.1%
Hong Kong 24216 + 3.2%
Japan 15457 + 1.6%
Australia 5574 + 1.0%
S. Korea 2033 + 0.7%
India 26126 + 1.9%
Indonesia 5088 + 0.1%
Brazil 57774 +1.4%
Mexico 44385 + 0.2%
China 2226 + 3.3%
LAST 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%
PREVIOUS 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%

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Next week’s Economic Reports:

Next week will be see a number of important economic reports, including the the ADP Jobs Report, the first look at 2nd quarter GDP growth, the ISM Mfg Index, Construction Spending, and The Big One!, the Labor Department’s Monthly Employment Report, 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:  China’s Market Finally Looks Like a Buy

Subscribers to Street Smart Report:

In addition to the charts and signals in the ‘premium content’ area of this blog, there is an in-depth Markets Update (stock market, gold, and bonds) from Wednesday 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:

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**** End of Today’s post*****

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.

072414d

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.

072414c

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%.

072414b

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

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*****

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.

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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

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**** 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.

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

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*****

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