StreetSmartPost

Will the Fed Really Dial Back QE3 or Just Talk About It?

Sy Harding — Tue, 21 May 2013 13:27:14 +0000

Tuesday, May 21, 9:25 a.m.

In April, as the economic reports were worsening and the stock market was sliding, the Fed quickly came out in its FOMC statement and subsequent interviews, to reassure markets that its QE3 bond-buying stimulus efforts were open-ended, that it could, and would, increase that bond-buying if necessary to provide still more liquidity into the financial system.

And its words had the desired effect. Although the economic reports continued as mostly negative surprises, the market came out of its funk, and with the aid of a stronger than expected jobs report, broke out to new highs three weeks ago, and has kept on going higher.

It’s interesting that now that investors are pumped again, that even though the economic reports continue to deteriorate, talk is now that the Fed could begin to dial back its bond-buying, begin to remove the stimulus punch-bowl.

Not likely. The Fed is in a bit of a difficult corner right now.

With the economic slowdown continuing, as evidenced by the continuing negative surprises in most of the economic reports, and earnings slowing, and major corporations warning of the slowdown continuing, the Fed would be hesitant to actually begin removing the punchbowl.

The QE bond-buying and easy money policies have not only been extremely important for 4 years now in keeping the recovery going, but the Fed had to step in with increases in QE in each of the last three years to rescue the economy from similar stumbles each summer.

So it’s very doubtful that this time, as the economy stumbles again, that the Fed would take the opposite approach to what worked the previous times, and begin to dial back QE. Not until it at least sees some signs of the economic stumble ending.

But at the same time, it wouldn’t want to take a chance on keeping the spigot open too long and be accused of creating another bubble in the stock market.

So if the stock market’s spike-up continues even as the basic driving forces of the market, the economy and earnings, deteriorate, the Fed will more likely resort to talk again, and indicate that it is preparing to dial back the stimulus, in hopes of taking some of the exuberance out of investors’ euphoria.

But I seriously doubt it will actually do anything but talk as long as the economic recovery continues to stumble. Historically, it has accomplished its goals through talk, hints, and promises much more often than it has actually taken action. But concerns about what the Fed might do is now topping the media debates.

Is commodity guru Jimmy Rogers just talking his book?

Legendary investor and Chairman of Rogers Holdings, said in an interview yesterday that he doesn’t see a problem for commodities, that their long bull market remains intact. He said, “I don’t see massive new supply coming into the market to keep prices down.”

But Rogers knows better than anyone that there are two sides to the supply/demand equation that drives prices in any market. It’s not just massive new supplies coming into commodities that would drive prices lower. A slackening in demand, as in a slowing economy, has the same effect in skewing the supply/demand ratio to the side of lower prices.

On Saturday’s blog I noted that Rogers recently also said that while he expects gold’s ‘correction’ to continue for a while yet, he would “not start to be concerned that this is more than just a correction unless gold drops to $800 an ounce”.

As I noted Saturday, gold is already down $513 (27%) an ounce from its peak at $1900 in 2011, already officially in a bear market, not just a correction. At $800 it would be down 58%. I said I can’t believe he was quoted accurately, that it would have to be down 58% before he would be concerned. But the comments were repeated in numerous sources.

Rogers is not only the chairman of Rogers Holdings, but in 2011 launched a new commodities index fund, which he says focuses on the top companies in agriculture, mining, metals, and energy sectors, the Rogers Global Resources Equity Index fund.

Is it remotely possible that in these interviews saying he sees no problems in gold or commodities that he is engaging in typical Wall Street spin of ‘talking his book’?

Is it possible that perhaps he launched his mining and commodities fund in 2011 with just a tiny bit of poor timing, just about when both gold and commodities reached record peaks and rolled over into bear markets, and his investors might need some encouraging talk?

I don’t know. I’m just saying that it seems odd to me that he sees no problems yet.

To read my weekend newspaper column click here: The Last of the 2008 Doomsday Scenarios Is Fading Away!

Subscribers to Street Smart Report: There is an in-depth ‘Gold, Bonds, Dollar, Commodities’ report from yesterday in your secure area of the Street Smart Report website. There will be an in-depth ‘U.S. Stock Market Outlook and Recommendations’ report tomorrow afternoon.

Yesterday in the U.S. Market.

A mixed day on light volume, with only 0.65 billion shares traded on the NYSE.

The Dow closed down 19 points or 0.1%. The S&P 500 closed down 0.1%. The NYSE Composite closed up 0.1%. The Nasdaq closed down 0.1%. The Nasdaq 100 closed down 0.3%. The Russell 2000 closed up 0.2%. The DJ Transportation Avg. closed down 0.6%. The DJ Utilities Avg closed down 0.4%.

Gold closed up $19 an ounce at $1,384.

Oil closed up $.42 a barrel to $96.71.

The U.S. dollar etf UUP closed down 0.6%.

The U.S. Treasury bond etf TLT closed down 0.1%.

Yesterday in European Markets.

European markets mostly closed higher yesterday. The overall Europe Dow closed up 0.6%. Among individual countries, London was up 0.5%. The German DAX closed up 0.7%. France’s CAC closed up 0.5%. Belgium closed up 0.3%. Italy closed down 0.6%. Portugal closed down 0.8%. Spain closed down 0.8%. Russia closed up 0.2%.

Most Asian Markets closed down last night.

The DJ Asia-Pacific Index closed down 0.3%.

Among individual markets:

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

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.

To obtain access please click on the ‘Subscribe’ link. It will take you to an information page on subscribing to Street Smart Report, a subscription to which includes access to the premium content area of this Street Smart Post blog.

In the premium content area this morning: Updated market signals and charts, intermediate-term and short-term, Stock market overall and sectors, bonds, and gold.

*Premium Content*

Please Login or Subscribe to view this content.

Markets This Morning:

European markets are off earlier lows, still mostly down but still improving. At the moment, the Europe Dow is down 0.2%. Among individual countries the London FTSE is up 0.2%. The German DAX is down 0.2%. France’s CAC is down 0.4%. Belgium is down 0.6%. Norway is up 0.6%. Portugal is down 0.4%. Spain is down 0.8%. Switzerland is up down 0.3%. Italy is down 0.5%. Russia is up 1.2%.

Oil is down $.25 a barrel at $96.46.

Gold is down $18 an ounce at $1,365.

This Morning in the U.S. Market:

This week will have a number of important economic reports that include the Chicago Fed’s National Activity Index, Existing Home Sales, New Home Sales, Durable Goods Orders, and the minutes of the Fed’s last FOMC meeting. 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 not a positive. The Chicago Fed’s National Activity Index (CFNAI), which is a weighted average of 85 different economic indicators the Fed uses, worsened again in April, plunging from -0.23 in March to –0.53 in April. The 3-month moving average was also in negative territory, at –0.04. The Index is designed so that a 0 reading or above indicates trend growth, while a minus number indicates a slowing economy. A reading of -0.7 or below on the 3-month moving average indicates a recession is underway.

There are no reports scheduled for release today.

But as we’ve been saying lately the market doesn’t seem to care about economic reports anyway.

Our Pre-Open Indicators:

Our pre-open indicators are well off overnight lows, now pointing to the Dow being up 30 points or so at the open.

To read my weekend newspaper column click here: The Last of the 2008 Doomsday Scenarios Is Fading Away!

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

Non-Subscribers:

We can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

SUBSCRIBE NOW! To get all of this:

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

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)
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.
Sy’s weekly column on markets and the economy every Friday.
Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.

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*****

Stocks Still Poppin – Gold Still Droppin!

Sy Harding — Sat, 18 May 2013 15:08:50 +0000

Saturday, May 17, 11:15 a.m.

Four straight weeks of stock market gains without even a minor pullback to retest the support at the 30-day m.a. again. In the 7th straight month of gains since the November low.

It does have a lot of scrambling going on to reverse previous opinions, and a lot of interesting observations.

Financial Times: “The equity market is putting disciplined investment approaches to the test. The adage ‘Don’t chase a rally’ is a core principle in investing. But such advice counts for little at the moment. After spending much of April unable to break through 1,600, the S&P has mainly been a one-way bet in May, rising an additional 4.4% to 1,670. All of which places both private and professional investors in a quandary. . . . In the current momentum driven market we are on the cusp of partying like its 1999, all the while flirting with the danger that when the music stops the consequences of having bought anywhere near the top are likely to be brutal and swift.”

Comstock Partners (Hedge Fund): “Although the Fed, so far, has been able to lift stock prices, it has failed to elevate the economy to a point where growth is self-sustaining despite over four years of extremely easy monetary policy. The headwinds from fiscal policy will actually intensify in the months ahead.

It is also noteworthy that the market is losing the important boost it has received from rapidly rising earnings. Over the last four quarters earnings are up only 0.4% from the four prior quarters. Given sluggish U.S. and global economic growth, we think that current estimates of 22% second half earnings growth are highly unrealistic. Furthermore, the S&P 500 is now selling at 20 times cyclically-smoothed trailing GAAP earnings, at the very high end of the zone that was considered normal prior to the serial bubbles of the last decade and a half.

All in all, we believe that economic growth and corporate earnings will be highly disappointing in coming quarters and that investors will drop the pretense that the Fed can fix everything that ails the economy. Although Bernanke, himself, has been virtually begging for help from fiscal policy, it does not seem likely that he will get it anytime soon. In our view, the risk of a substantial decline in the market outweighs the limited rewards from current levels.”

Reuters: “As the major indexes inch higher and higher to set record after record, many analysts are shrugging off previous pullback worries. . . As the market continues its upward move, some market participants are beginning to reverse opinions of it being a bubble to thoughts that it might rather be the start of a new bull market.”

Okay, I can agree that it isn’t a bubble, but the start of a new bull market? That’s an opinion I’ve seen frequently lately.

Doesn’t make sense to me. How can it be the beginning of a new bull market when the bull market that began in 2009 remains intact?

By the way, note how the S&P is not just unusually overbought short-term above its 30-day m.a., but even more so intermediate-term above its long-term 200-day (40-week) m.a.

But as I’ve been saying, an overbought condition is not a sell signal. Markets can just become more overbought. It takes a reversal of momentum and money-flows showing up in technical indicators. And while that seemed to be threating in April, it didn’t come to pass, and the consensus of our technical indicators remains on the Dec. 11 buy signal.

But we are still advising caution at this point and being alert for potential changes. Something just doesn’t smell right, and it involves not just the overbought condition, but the unusual bullish investor sentiment at a time when the economy and earnings are slowing.

Meanwhile:

Gold is still droppin’.

Like all its previous rally attempts since the October peak, gold’s most recent rally attempt off an oversold condition also ran into problems when it reached the resistance at the 30-day m.a.

But it’s now at an interesting juncture.

Another rally attempt from here would be with a potential double-bottom in place, while a break to new bear market lows would likely bring another dose of intense selling.

At the moment anyway, the consensus of the 35 intermediate-term technical indicators we use remains on the October 15 sell signal.

And it’s not encouraging for gold’s outlook that the gold mining stocks, which have been leading the way down, did break down to a new bear market low this week.

I was surprised to see the comments of famed commodity trader Jimmy Rogers, who has been correctly very bullish for gold for years, that while he expects the ”correction” to continue for a while yet, he would “not start to be concerned that this is more than just a correction unless gold drops to $800 an ounce”.

Gold is already down $513 (27%) an ounce from its peak at $1900 in 2011, already officially in a bear market, not just a correction. At $800 it would be down 58%. I can’t believe he was quoted accurately, that it would have to be down 58% before he would be concerned. But the comments were repeated in numerous sources.

Investor Sentiment.

In recent blog posts I’ve pointed out the unusually high level of bullish investor sentiment, as measured by the NAAIM Sentiment Index (National Association of Active Investor Managers), the Investors Intelligence Sentiment Index (newsletter writers), the Consensus Inc. Sentiment Index, etc., and record level of margin debt.

Here’s another one:

The Credit Suisse Fear Barometer, known as the CSFB Index, fell 11.4 points over the past two weeks – the largest decline on record – and is now at a one-year low of 21.73.

The indicator essentially tracks investors’ willingness to pay for downside protection with zero-premium collar trades that expire in three months, using S&P 500 index (.SPX) options.

"It’s unusual to see at these stock market levels that there are very few indications (based on options activity) that investors are expecting a pullback," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab in Austin, Texas.

To read my weekend newspaper column click here: The Last of the 2008 Doomsday Scenarios Is Fading Away!

Subscribers to Street Smart Report: In addition to the charts and recommendations in the subscribers’ ‘Premium Content’ area of this blog, we will have an in-depth ‘Gold, Bonds, Dollar, Commodities’ update on Monday in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market.

A very positive day to close out a very positive week. And volume picked up significantly to more than 0.8 billion shares traded on the NYSE.

The Dow closed up 121 points, or 0.8%. The S&P 500 closed up 1.0%. The NYSE Composite closed up 0.9%. The Nasdaq closed up 1.0%. The Nasdaq 100 closed up 1.0%. The Russell 2000 closed up 1.1%. The DJ Transportation Avg. closed up 1.3%. The DJ Utilities Avg closed up 0.9%.

Gold plunged another $32 an ounce at $1,354.

Oil closed up $.91 a barrel at $96.07.

The U.S. dollar etf UUP closed up 0.6%.

The U.S. Treasury bond etf TLT closed down 1.3%.

Asian markets mostly closed up in their last session of the week.

The DJ Asia-Pacific Index closed up 0.4% Thursday night (Friday in Asia).

Among individual Asian markets:

Australia closed up 0.3%. China closed up 1.4%. Hong Kong closed up 0.2%. India closed up 0.2%. Indonesia closed up 1.3%. Japan closed up 0.7%. Malaysia closed up 0.4%. New Zealand closed down 0.8%. South Korea closed up 0.8%. Singapore closed down 0.1%. Taiwan closed down 0.3%. Thailand closed up 0.6%.

Yesterday in European Markets.

European markets closed up again yesterday. The Europe Dow closed down 0.2%. But among individual countries; The London FTSE closed up 0.5%. The German DAX closed up 0.3%. France’s CAC closed up 0.6%. Belgium closed up 0.2%. Finland closed down 0.2%. Greece closed up 1.6%. Ireland closed up 0.2%. Italy closed up 0.4%. The Netherlands closed up 0.7%. Spain closed up 0.5%. Switzerland closed up 0.3%. Russia closed up 1.6%.

Global markets for the week.

Yet another positive week for stocks.

THIS WEEK (May 17)
DJIA	15354	+ 1.6%
S&P 500	1666	+ 2.0%
NYSE	9576	+ 1.4%
NASDAQ	3498	+ 1.8%
NASD 100	3028	+ 1.6%
Russ 2000	996	+ 2.2%
DJTransprts	6549	+ 2.7%
DJ Utilities	516	+ 0.6%
XOI Oils	1,407	+ 2.1%
Gold bull.	1,357	- 6.2%
GoldStcks	97.49	- 10.2%
Canada	12613	+ 0.2%
London	6723	+ 1.5%
Germany	8398	+ 1.5%
France	4001	+ 1.2%
Hong Kong	23082	- 1.0%
Japan	15138	+ 3.6%
Australia	5159	- 0.6%
S. Korea	1986	+ 2.2%
India	20286	+ 1.0%
Indonesia	5145	+ 0.8%
Brazil	55050	unchgd
Mexico	41802	+ 0.2%
China	2389	+ 1.6%

LAST WEEK (May 10)
DJIA	15118	+ 1.0%
S&P 500	1633	+ 1.2%
NYSE	9442	+ 1.1%
NASDAQ	3436	+ 1.7%
NASD 100	2981	+ 1.3%
Russ 2000	975	+ 2.2%
DJTransprts	6375	+ 2.5%
DJ Utilities	514	- 3.0%
XOI Oils	1,378	- 0.6%
Gold bull.	1,446	- 1.6%
GoldStcks	108.52	+ 0.8%
Canada	12589	+ 1.2%
London	6624	+ 1.6%
Germany	8278	+ 1.9%
France	3953	+ 1.1%
Hong Kong	23321	+ 2.8%
Japan	14607	+ 6.7%
Australia	5191	+ 1.7%
S. Korea	1944	- 1.1%
India	20082	+ 2.6%
Indonesia	5105	+ 3.6%
Brazil	55042	- 0.7%
Mexico	41741	- 2.0%
China	2351	+ 1.9%

PREVIOUS WEEK (May 3)
DJIA	14973	+ 1.8%
S&P 500	1614	+ 2.0%
NYSE	9340	+ 1.9%
NASDAQ	3378	+ 3.0%
NASD 100	2944	+ 3.7%
Russ 2000	954	+ 2.0%
DJTransprts	6218	+ 1.7%
DJ Utilities	529	- 0.5%
XOI Oils	1,386	+ 3.2%
Gold bull.	1,469	+ 0.7%
GoldStcks	107.67	+ 1.3%
Canada	12438	+ 1.8%
London	6521	+ 1.5%
Germany	8122	+ 3.9%
France	3912	+ 2.7%
Hong Kong	22689	+ 0.6%
Japan	13694	- 1.4%
Australia	5105	+ 0.5%
S. Korea	1965	+ 1.1%
India	19575	+ 1.5%
Indonesia	4925	- 1.1%
Brazil	55455	+ 2.2%
Mexico	42602	+ 1.7%
China	2308	+ 1.3%

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.

In the Premium Content area this morning. The U.S. stock market, gold, and bonds, signals and analysis of each.

*Premium Content*

Please Login or Subscribe to view this content.

Next week’s Economic Reports:

Next week will have a number of important economic reports that will include the Chicago Fed’s National Activity Index, Existing Home Sales, New Home Sales, Durable Goods Orders, and the minutes of the Fed’s last FOMC meeting. To see the full list and times click here, and look at the left side of the page it takes you to.

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

To read my weekend newspaper column click here: The Last of the 2008 Doomsday Scenarios Is Fading Away!

Non-Subscribers:

We can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

SUBSCRIBE NOW! To get all of this:

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

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)
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.
Sy’s weekly column on markets and the economy every Friday.
Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.

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*****

The Stream of Dismal Economic Reports Continues!

Sy Harding — Thu, 16 May 2013 13:32:23 +0000

Thursday, May 16, 9:30.m.

I haven’t been remarking much lately about the several months of worsening economic reports that clearly indicate how the economy is stumbling again this year as we enter the summer months. What would be the point. Unlike the last three years, the stock market doesn’t seem to care this year.

But the negative surprises in the reports continue. The list was long in March and April, and continues in May.

Two weeks ago it was that Consumer Spending was up only 0.2% in March, the smallest gain since December. The Dallas Fed’s Mfg Index plunged from +7.4 in March to –15.6 in April. Its new orders index fell from +9.5 to –4.9. The Chicago PMI Index fell from 52.4 in March to 49.0 in April, its lowest level in in 3 1/2 years, while its index of new orders plunged from 45.0 to 40.6. The national ISM Mfg Index fell to 50.7 in April from 51.3 in March, remaining barely above the 50 level that separates expansion from recessionary contraction.

Since then it has been that the Empire State (NY) Mfg Index fell into negative territory in May, falling from +3.1 in April to -1.4 in May. And nationally, Industrial Production fell 0.5% in April.

This morning it was updates from the two areas that had been providing some hope, housing and employment. And unfortunately they have joined the long list of negative surprises.

New housing starts plunged a huge 16.5% in April to an annual rate of 853,000, the lowest level since November. (Not that it bothers Wall Street or the market, with analysts focused instead on the 14.3% increase in permits for future starts).

And new weekly unemployment claims unexpectedly surged up by 32,000 last week to 360,000, the highest level in a month and a half. The consensus forecast was for only 330,000 claims. (But the focus is on the 4-week m.a. which rose only 1,250 to 339,250).

So the months-long string of negative reports continues to indicate the economy is stumbling, as it has in each of the last three summers.

In each of the last three years the result was double-digit declines by the S&P 500 of up to 21%, until each time the Fed rushed to the rescue with promises of another round of QE stimulus.

The market doesn’t seem at all concerned by the stumbling economy this time, repeatedly closing at new record highs.

But the economy is still slowing, and commodity prices, a bellwether for the economy, are still collapsing, as they did in each of the last three years.

To read my weekend newspaper column click here: It’s Still Fool’s Gold For A While Yet!

Subscribers to Street Smart Report: In addition to the charts and signals in the ‘Subscribers Premium Content’ area of his blog, the mid-week markets update from yesterday is in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market.

A somewhat negative market in the early going that had the Dow down 40 points. But it recovered by mid-day, sold off again in the afternoon, but was rescued by last hour strength. Volume was light with fewer than 0.7 billion shares traded on the NYSE.

The Dow closed up 60 points, or 0.4%. The S&P 500 closed up 0.5%. The NYSE Composite closed up 0.4%. The Nasdaq closed up 0.3%. The Nasdaq 100 closed up 0.2%. The Russell 2000 closed up 0.3%. The DJ Transportation Avg. closed up 0.8%. The DJ Utilities Avg closed up 0.7%.

Gold plunged $27 an ounce to $1,396, breaking below the psychological ‘round number’ support at 1,400.

Oil closed up $.10 a barrel at 94.30.

The U.S. dollar etf UUP closed up 0.3%.

The U.S. Treasury bond etf TLT closed up 0.7%.

Yesterday in European Markets.

European markets mostly closed higher yesterday in spite of the dismal reports that the eurozone recession worsened yet again in the first quarter. The overall Europe Dow closed down 0.2%. But among individual countries, London closed up 0.1%. The German DAX closed up 0.3%. France’s CAC closed up 0.4%. Belgium closed up 0.1%. Italy closed up 1.0%. Portugal closed up 1.0%. Spain closed up 1.3%. Russia closed down 0.5%.

Most Asian Markets closed mixed last night.

The Asia Dow closed down 0.1%.

Among individual markets:

Australia closed down 0.6%. China closed up 1.2%. Hong Kong closed up 0.2%. India closed up 0.2%. Indonesia closed down 0.2%. Japan closed down 0.4%. Malaysia closed down 0.8%. S. Korea closed up 0.8%. Singapore closed up 0.3%. Taiwan closed up 0.9%. Thailand closed down 0.8%.

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.

In the premium content area this morning: Updated market signals and charts, intermediate-term and short-term, Stock market overall and sectors, bonds, and gold.

*Premium Content*

Please Login or Subscribe to view this content.

Markets This Morning:

European markets are mixed this morning. The Europe Dow is down 0.1%. Among individual countries the London FTSE is up 0.2%. The German DAX is up 0.3%. France’s CAC is down 0.1%. Belgium is down 0.1%. Norway is up 0.2%. Portugal is down 0.5%. Spain is down 0.2%. Switzerland is down 0.3%. Italy is up 0.3%. Russia is down 0.1%.

Oil is up $.16 a barrel at $94.46.

Gold is plunging another $19 an ounce at $1,377.

This Morning in the U.S. Market:

This week has a fairly heavy schedule of important economic reports including Retail Sales, Consumer Price Index, Industrial Production, Housing Market Index, New Housing starts, Consumer Sentiment, and others. To see the full list and times click here, and look at the left side of the page it takes you to.

Monday’s reports were that Retail Sales were up slightly, 0.1%, in April. But that was better than the 0.6% decline that was the consensus forecast. And it was reported that business inventories were flat in March.

Tuesday’s only report was that the Small Business Optimism Index rose 2.6 to 92.1 in April, more than recovering the drop in March.

Yesterday’s reports were that the Producer Price Index fell 0.7% in April, the biggest drop in 3 years. The Empire State (NY) Mfg Index fell into negative territory in May, falling from +3.1 in April to –1.4 in May. Industrial Production fell 0.5% in May. But the Housing Market Index, measuring the optimism of home-builders, rose to 44 in May from 41 in April, in line with the consensus forecast of 44. The index remains below the key level of 50 which would indicate that 50% of builders are optimistic.

This morning’s reports are that new weekly unemployment claims jumped by 32,000 last week to 360,000, while the 4-week m.a. rose only 1,250. The Consumer Price Index fell 0.4% in April. And new Housing Starts plunged 16.5% in April, while permiots for futures starts were up 14.3%.

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

But as we’ve been saying lately the market doesn’t seem to care about economic reports anyway.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 20 points at the open, meaningless as to direction later.

To read my weekend newspaper column click here: It’s Still Fool’s Gold For A While Yet!

I’ll be back with the next regular blog post on Saturday morning, as usual later than on the weekdays, probably around 11:00 a.m.

Non-Subscribers:

We can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

SUBSCRIBE NOW! To get all of this:

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

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)
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.
Sy’s weekly column on markets and the economy every Friday.
Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.

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

**** End of Today’s post*****

Market is Unusually Overbought Short-Term Again!

Sy Harding — Tue, 14 May 2013 13:31:29 +0000

Tuesday, May 13, 9:30.m.

It’s difficult to imagine what could cause a correction at this point if the dismal economic reports were unable to cause more than the minor 6-week pause from early March through mid-April, if the increasing call for the Fed to begin withdrawing the punchbowl of easy money could not, if the forward-looking warnings from major corporations during the 1st quarter earnings reporting period last month could not.

But the spike-up from the mid-April low does have the market unusually overbought above 30-day moving averages, to levels that usually tempt traders to take profits. Coupled with the extreme high readings of bullish investor sentiment, it is a condition that could be a catalyst for at least another short-term pullback to the m.a.

To read my weekend newspaper column click here: It’s Still Fool’s Gold For A While Yet!

Subscribers to Street Smart Report: In addition to the charts and signals in the ‘Subscribers Premium Content’ area of his blog, the mid-week markets update will be in your secure area of the Street Smart Report website. tomorrow.

Yesterday in the U.S. Market.

A fractionally negative day for a change. Volume was very light with fewer than 0.6 billion shares traded on the NYSE.

The Dow closed down 26 points or 0.12. The S&P 500 closed unchanged. The NYSE Composite closed down 0.1%. The Nasdaq closed up 0.1%. The Nasdaq 100 closed up 0.1%. The Russell 2000 closed down 0.1%. The DJ Transportation Avg. closed down 0.5%. The DJ Utilities Avg closed down 0.6%.

Gold closed down $14 an ounce at $1,432.

Oil closed down $1.04 a barrel to $95.00.

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

The U.S. Treasury bond etf TLT closed down 0.8%.

Yesterday in European Markets.

European markets mostly closed down yesterday. The overall Europe Dow closed down 0.3%. Among individual countries, London was up 0.1%. The German DAX closed unchanged. France’s CAC closed down 0.2%. Belgium closed down 0.4%. Italy closed down 0.7%. Portugal closed down 0.9%. Spain closed down 1.0%. Russia closed down 0.4%.

Most Asian Markets closed up fractionally last night.

The Asia Dow closed up 0.1%.

Among individual markets:

Australia closed up 0.2%. China closed down 1.1%. Hong Kong closed down 0.3%. India closed up 0.2%. Indonesia closed up 0.5%. Japan closed down 0.2%. Malaysia closed down 0.1%. S. Korea closed up 1.0%. Singapore closed up 0.1%. Taiwan closed up 0.1%. Thailand closed up 0.4%.

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.

In the premium content area this morning: Updated market signals and charts, intermediate-term and short-term, Stock market overall and sectors, bonds, and gold.

*Premium Content*

Please Login or Subscribe to view this content.

Markets This Morning:

European markets are mixed this morning. The Europe Dow is down 0.6%. Among individual countries the London FTSE is up 0.2%. The German DAX is up 0.2%. France’s CAC is down 0.1%. Belgium is down 0.4%. Norway is down 0.4%. Portugal is plunging 3.4%. Spain is down 0.5%. Switzerland is up 0.1%. Italy is down 0.1%. Russia is up 0.2%.

Oil is down $.36 a barrel at $94.82.

Gold is down $8 an ounce at $1,426.

This Morning in the U.S. Market:

This week will be the opposite of last week’s absence of economic reports. This week has a fairly heavy schedule including the first reports from the housing industry in a while. The reports will include Retail Sales, Consumer Price Index, Industrial Production, Housing Market Index, New Housing starts, Consumer Sentiment, and others. 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 Retail Sales were up slightly, 0.1%, in April. But that was better than the 0.6% decline that was the consensus forecast. And it was reported that business inventories were flat in March.

This morning’s only report was that the Small Business Optimism Index rose 2.6 to 92.1 in April, more than recovering the drop in March.

The heavy schedule of reports begins tomorrow morning.

But as we’ve been saying lately the market doesn’t seem to care about economic reports anyway.

U.S. Treasury bonds are gaining in overnight trading in reaction to a sell-off in Japanese govt bonds.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 10 points at the open, meaningless as to direction later.

To read my weekend newspaper column click here: It’s Still Fool’s Gold For A While Yet!

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

Non-Subscribers:

We can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

SUBSCRIBE NOW! To get all of this:

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

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)
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.
Sy’s weekly column on markets and the economy every Friday.
Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.

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

**** End of Today’s post*****

Market Is Still on Buy Signal–But Investors Need To be Alert!

Sy Harding — Sat, 11 May 2013 15:46:55 +0000

Saturday, May 11, 11:45 a.m.

The consensus of our intermediate-term indicators remain on the buy signal.

But there are reasons to remain alert.

As noted in Thursday’s blog, there is the high level of investor bullishness, at levels usually seen at rally and market tops.

And the continuing economic slowdown.

And the tumbling commodity prices.

And unfavorable seasonality.

The new highs created enough investor bullishness and super confidence that safe haven bonds and defensive areas like utilities were totally abandoned this week, with investors piling into technology, and using near record levels of margin debt to do so. It invokes memories of 2000.

So we shall see how much longer this can last.

Other Voices. Words of Caution.

In Thursday’s blog I said that Wall Street bears are hard to find anymore, and noted the extreme levels of bullish investor sentiment as measured by a number of sentiment indexes and polls.

However, there are a few bears still providing words of caution.

Comstock Partners: “As we watch the market climb to new highs in the face of deteriorating fundamentals we have the feeling we’ve seen this movie before, in 2000 and 2007.”

Art Cashin, UBS Director of floor operations on the NYSE:“The S&P 500 has been up 56 of 88 trading sessions. That rate of success is not only extremely rare, it is borderline unprecedented.”

Marc Faber, Gloom, Boom, Doom Report: “In the 40 years I’ve been working as an economist and investor I have never seen such a disconnect between the asset market and the economic reality. . . . Asset markets are in the sky and the economy for ordinary people is in the dumps, where their real incomes adjusted for inflation are going down and asset markets are going up.”

AND:

Warren Buffett didn’t really say that.

Headlines last week screamed, ‘Buffett Says Stocks Will Go A Lot Higher.’

Well yes and no. The quote was taken completely out of context from a Buffett interview with Becky Quick on CNBC . What he actually said to Becky was “Stocks will go a lot higher in your lifetime.” Since she is 41 and has a life expectancy of 82, what he actually said was stocks will be a lot higher sometime in the next 40 years.

Already missing Alan Abelson.

Famed Barron’s editor and columnist Alan Abelson passed away last Thursday, at the age of 87. His insightful columns were already missing, the last one appearing in February, which had raised concerns about his health.

I didn’t always agree with his usually bearish outlook, but always admired his dedication to getting the information right, being tough on Wall Street and Washington when necessary, but most of all his ability to get his points across with such entertainingly wise wit and wonderful writing.

I often quoted from his columns in this blog, and remember his very occasional positive mentions of my work as exciting that he even knew who I was.

He continued his work, doing what he loved to do, until the very end, his writings as feisty and well-informed as ever. As Barron’s columnist Randall Forsyth puts it in a tribute article in this week’s Barron’s, that “is the very definition of a life well-lived”.

To read my weekend newspaper column click here: It’s Still Fool’s Gold For A While Yet!

Subscribers to Street Smart Report: In addition to the charts and recommendations in the subscribers’ ‘Premium Content’ area of this blog, the new issue of the newsletter from Wednesday evening is in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market.

A fairly positive day to end a positive week. The Dow was negative to flat all day until the final minutes when they popped it up to a positive close. Volume remained light with just 0.6 billion shares traded on the NYSE, 1.6 billion on the Nasdaq.

The Dow closed up 35 points, or 0.2%. The S&P 500 closed up 0.4%. The NYSE Composite closed up 0.4%. The Nasdaq closed up 0.8%. The Nasdaq 100 closed up 0.7%. The Russell 2000 closed up 0.9%. The DJ Transportation Avg. closed up 0.6%. The DJ Utilities Avg closed up 0.2%.

Gold closed down $21 an ounce at $1,446.

Oil closed down $.45 a barrel at $95.92.

The U.S. dollar etf UUP closed up 0.5%.

The U.S. Treasury bond etf TLT closed down 1.1%.

Asian markets mostly closed up in their last session of the week.

The DJ Asia-Pacific Index closed up 0.2% Thursday night (Friday in Asia).

Among individual Asian markets:

Australia closed up 0.2%. China closed up 0.6%. Hong Kong closed up 0.5%. India closed up 0.7%. Indonesia closed up 0.3%. Japan closed up 2.4%. Malaysia closed up 0.7%. New Zealand closed up 0.3%. South Korea closed down 1.7%. Singapore closed up 0.3%. Taiwan closed down 0.1%. Thailand closed up 0.1%.

Yesterday in European Markets.

European markets closed mixed yesterday. The Europe Dow closed down 0.8%. Among individual countries; The London FTSE closed up 0.5%. The German DAX closed up 0.2%. France’s CAC closed up 0.6%. Belgium closed down 0.1%. Finland closed up 1.4%. Greece closed down 3.0%. Ireland closed up 0.4%. Italy closed up 1.1%. The Netherlands closed up 0.6%. Spain closed down 0.3%. Switzerland closed up 1.0%. Russia closed down 0.6%.

Global markets for the week.

A positive week for most stock markets, and big declines for safe-haven bonds and utilities. Who needs safe havens? Stocks now up 3 straight weeks.

THIS WEEK (May 10)
DJIA	15118	+ 1.0%
S&P 500	1633	+ 1.2%
NYSE	9442	+ 1.1%
NASDAQ	3436	+ 1.7%
NASD 100	2981	+ 1.3%
Russ 2000	975	+ 2.2%
DJTransprts	6375	+ 2.5%
DJ Utilities	514	- 3.0%
XOI Oils	1,378	- 0.6%
Gold bull.	1,446	- 1.6%
GoldStcks	108.52	+ 0.8%
Canada	12589	+ 1.2%
London	6624	+ 1.6%
Germany	8278	+ 1.9%
France	3953	+ 1.1%
Hong Kong	23321	+ 2.8%
Japan	14607	+ 6.7%
Australia	5191	+ 1.7%
S. Korea	1944	- 1.1%
India	20082	+ 2.6%
Indonesia	5105	+ 3.6%
Brazil	55042	- 0.7%
Mexico	41741	- 2.0%
China	2351	+ 1.9%

LAST WEEK (May 3)
DJIA	14973	+ 1.8%
S&P 500	1614	+ 2.0%
NYSE	9340	+ 1.9%
NASDAQ	3378	+ 3.0%
NASD 100	2944	+ 3.7%
Russ 2000	954	+ 2.0%
DJTransprts	6218	+ 1.7%
DJ Utilities	529	- 0.5%
XOI Oils	1,386	+ 3.2%
Gold bull.	1,469	+ 0.7%
GoldStcks	107.67	+ 1.3%
Canada	12438	+ 1.8%
London	6521	+ 1.5%
Germany	8122	+ 3.9%
France	3912	+ 2.7%
Hong Kong	22689	+ 0.6%
Japan	13694	- 1.4%
Australia	5105	+ 0.5%
S. Korea	1965	+ 1.1%
India	19575	+ 1.5%
Indonesia	4925	- 1.1%
Brazil	55455	+ 2.2%
Mexico	42602	+ 1.7%
China	2308	+ 1.3%

PREVIOUS WEEK (April 26)
DJIA	14712	+ 1.1%
S&P 500	1582	+ 1.7%
NYSE	9169	+ 1.9%
NASDAQ	3279	+ 2.3%
NASD 100	2840	+ 2.2%
Russ 2000	935	+ 2.5%
DJTransprts	6115	+ 1.3%
DJ Utilities	532	+ 0.8%
XOI Oils	1,343	+ 4.7%
Gold bull.	1,459	+ 4.1%
GoldStcks	106.31	+ 3.3%
Canada	12220	+ 1.3%
London	6426	+ 2.2%
Germany	7814	+ 4.8%
France	3810	+ 4.4%
Hong Kong	22547	+ 2.4%
Japan	13884	+ 4.3%
Australia	5082	+ 3.2%
S. Korea	1944	+ 2.0%
India	19286	+ 1.4%
Indonesia	4978	- 0.4%
Brazil	54261	+ 0.6%
Mexico	41896	- 2.1%
China	2279	- 3.0%

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.

In the Premium Content area this morning. The U.S. stock market, gold, and bonds, signals and analysis of each.

*Premium Content*

Please Login or Subscribe to view this content.

Next week’s Economic Reports:

Next week will be the opposite of this week’s absence of economic reports. Next week has a fairly heavy schedule including the first reports from the housing industry in a while. The reports will include Retail Sales, Consumer Price Index, Industrial Production, Housing Market Index, New Housing starts, Consumer Sentiment, and others. To see the full list and times click here, and look at the left side of the page it takes you to.

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

To read my weekend newspaper column click here: It’s Still Fool’s Gold For A While Yet!

Non-Subscribers:

We can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

SUBSCRIBE NOW! To get all of this:

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

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)
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.
Sy’s weekly column on markets and the economy every Friday.
Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.

**** End of Today’s post*****

Wall Street bears are hard to find anymore.

Sy Harding — Thu, 09 May 2013 13:36:54 +0000

Thursday, May 9, 9:30 a.m.

Bears have quickly become an extinct species on Wall Street, or at least have gone into hiding.

By most measurements investor sentiment is at high levels of confidence and bullishness (low levels of bearishness and fear), usually seen at rally and market tops.

The NAAIM Sentiment Index (National Association of Active Investor Managers) is an unusual 82% bullish. Above 70% is considered to be an area of extreme bullishness.

The Investors Intelligence Sentiment Index (newsletter writers) is 47.9% bulls, 18.8% bears. A more than 2:1 bullish ratio is considered excessive bullishness.

The Consensus Inc. Sentiment Index is 71% bullish. It was 78% bullish four weeks ago. Consensus considers 75% bullish as the level to watch for a potential downside market reversal (25% bullish as the level to watch for an upside market reversal).

Margin debt, borrowing to buy stocks, is close to a record high again on NYSE. The last two record highs were at the market tops in 1999 and 2007.

Investor sentiment is a so-called ‘contrary indicator’. That is, investor sentiment is always at high levels of bullishness at rally and market tops, and high levels of bearishness and fear at market lows.

That only makes sense. As markets rise investors become less worried and increasingly confident. So naturally sentiment would reach high levels of bullishness by the time markets are ready to top out. And vice versa after corrections have had the opposite effect.

But not to worry. Sentiment does not provide buy or sell signals. It only indicates when it’s time to pay closer attention for a potential reversal.

There is no trigger line. What the extreme level will be each time varies considerably, as sentiment can just become more extreme, or can continue at current levels for some time before reversals take place.

We don’t have to look any further than the VIX Index (aka the Fear Index) for confirmation of that.

The VIX has become virtually useless anymore as a provider of warnings regarding investor sentiment. Prior to this year, low readings of fear and bearishness on the VIX (high levels of bullishness) have most often soon seen rallies top out as indicated by the vertical lines.

But VIX has been at levels lower than at any time since the 2007 market top for the entire year so far. And even its low readings last summer did not lead to much of a market decline (about 11% for the S&P 500).

To read my weekend newspaper column click here: Did This Week’s Critical Economic Reports Vindicate Market’s Resilience-

Subscribers to Street Smart Report: The new issue of the newsletter is in your secure area of the Street Smart Report website. from last evening.

Yesterday in the U.S. Market.

A mixed, flat, and boring day until the final hour when buy programs piled in to drive the market fairly positive at the close. Volume was 0.7 billion shares traded on the NYSE, with roughly 30% of that in the final hour.

The Dow closed up 48 points, or 0.3%, and at another record high above 15,000, closing at 15,105. The S&P 500 closed up 0.4%. The NYSE Composite closed up 0.6%. The Nasdaq closed up 0.5%. The Nasdaq 100 closed up 0.5%. The Russell 2000 closed up 0.3%. The DJ Transportation Avg. closed up 0.2%. The DJ Utilities Avg closed down 1.2%.

Gold closed up $20 an ounce at $1,474.

Oil closed up $.90 a barrel to $96.62.

The U.S. dollar etf UUP closed down 0.4%.

The U.S. Treasury bond etf TLT closed up 0.2%.

Yesterday in European Markets.

European markets closed up. The overall Europe Dow closed up 1.0%. Among individual countries, London closed up 0.4%. The German DAX closed up 0.8%. France’s CAC closed up 0.9%. Belgium closed up 0.7%. Italy closed up 0.8%. Portugal closed down 1.4%. Spain closed up 0.6%. Russia closed up 0.8%.

Asian Markets closed .

The Asia Dow closed mixed last night.

Among individual markets:

Australia closed up 0.1%. China closed down 0.6%. Hong Kong closed down 0.1%. India closed down 0.3%. Indonesia closed up 0.9%. Japan closed down 0.7%. Malaysia closed up 0.1%. S. Korea closed up 1.2%. Singapore closed up 0.6%. Taiwan closed up 0.2%. Thailand closed up 0.4%.

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.

In the premium content area this morning: Signals, intermediate-term and short-term, Stock market overall and sectors, bonds, and gold.

*Premium Content*

Please Login or Subscribe to view this content.

Markets This Morning:

European markets are mixed this morning. The Europe Dow is down 0.6%. Among individual countries the London FTSE is up 0.1%. The German DAX is up 0.1%. France’s CAC is down 0.6%. Belgium is down 0.2%. Norway is up 0.5%. Portugal is down 0.2%. Spain is down 0.1%. Switzerland is up 1.5%. Italy is down 0.7%. Russia is down 0.9%.

Oil is down $.77 a barrel at $95.85.

Gold is down $13 an ounce at $1,461.

This Morning in the U.S. Market:

This week has been just the opposite of last week’s intense schedule of important potential market-moving economic reports. This week there have been virtually none except the weekly unemployment numbers. To see the full list and times click here, and look at the left side of the page it takes you to.

There have been no reports of any importance this week.

This morning’s report is that new weekly unemployment reports fell again, this time by 4,000 to 323,000, much better than the consensus forecast of an increase to 335,000. The 4-week m.a. average fell by 6,250 to 336,750, the lowest level since November, 2007, before the 2008 financial meltdown hit.

But the market doesn’t seem to care a lot about economic reports positive or negative anyway.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 5 points or so in the early going this morning, meaningless as to direction later.

To read my weekend newspaper column click here: Did This Week’s Critical Economic Reports Vindicate Market’s Resilience-

Subscribers to Street Smart Report: The new issue of the newsletter is in your secure area of the Street Smart Report website. from last evening.

I’ll be back with the next regular blog post on Saturday morning, as usual later than the week-day posts, probably around at 11:00 a.m.

Non-Subscribers:

We can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

SUBSCRIBE NOW! To get all of this:

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

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)
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.
Sy’s weekly column on markets and the economy every Friday.
Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.

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

**** End of Today’s post*****

Oil at critical point again.

Sy Harding — Tue, 07 May 2013 13:26:56 +0000

Tuesday, May 7, 9:30 a.m.

For some time now we’ve been advising keeping an eye on the direction of commodities and oil prices, since they are harbingers for the direction of the economy, and probably therefore the stock market.

Oil has been locked in a symmetrical triangle formation for more than two years. As I noted previously with bonds and gold, the direction of a market’s breakout from such a pattern usually indicates its next direction for awhile.

So far each time it plunges it creates concerns in the media that the bottom will drop out. But it only gets to the lower limit of the pattern again and begins another rally attempt.

And every time oil looks ready to break to the upside it gets only as far as the upper limit of the formation and plunges again.

At the present time its has rallied back above $95 a barrel and is again creating confidence of $100 and more being just ahead.

But it is again up against the upper limit of the formation, still at a lower high.

The uncertainty can’t continue much longer. With each move the triangle is tightening and the break out of it in one direction or the other will have to take place.

It’s the annual Warren Buffet love-fest on financial TV.

In the aftermath of Berkshire Hathaway’s weekend share-holders’ meeting and promotional activities, Warren Buffett is all over the financial media with his typical all’s well with the market interviews.

While the media is usually friendly in its interviews with all Wall Street spokesman and their views, no one gets the kid-gloves treatment of softball questions as does Buffett.

Just once when he provides his observations that ‘moving in and out of stocks is foolish’, I‘d like someone to ask if non-billionaire ordinary investors could be expected to handle holding through whatever comes along with the same calmness he does each time.

If they would show a chart like this at the same time it would make the question’s relevancy clear. By my count over the last 15 years Buffett’s holdings have plunged double-digits five times, twice by roughly 50%, and have taken two to five years each time just to get back to even.

We’ve seen the statistics that clearly show that ordinary (non-billionaire) investors cannot hold through such fearful periods, and worse, hold on most of the way down and only begin pulling out of stocks near the lows.

Of course with $50 billion or so invested Buffett can’t move in and out of stocks to avoid losses even if he wanted to. But ordinary investors can do so very simply.

Yet the financial media continues to ignore Berkshire Hathaway’s record of pretty much moving with the market, up and down to the same degree as a market index not at all having the magic quality they help promote.

It terribly misleads investors who cannot handle periodic huge losses in their portfolios.

To read my weekend newspaper column click here: Did This Week’s Critical Economic Reports Vindicate Market’s Resilience-

Subscribers to Street Smart Report: In addition to the charts and signals in the ‘Subscribers Premium Content’ area of his blog, the new issue of the newsletter will be available tomorrow afternoon in your secure area of the Street Smart Report website.

Non-subscribers: We recently updated the sample newsletter to a later issue you might find interesting. Click here to view it: Sample issue of Street Smart Report newsletter

Yesterday in the U.S. Market.

A mostly positive day on very light volume of only 0.6 billion shares traded on the NYSE.

The Dow closed down 5 points or 0.1%. The S&P 500 closed up 0.2%. The NYSE Composite closed up 0.1%. The Nasdaq closed up 0.4%. The Nasdaq 100 closed up 0.4%. The Russell 2000 closed up 0.6%. The DJ Transportation Avg. closed up 1.3%. The DJ Utilities Avg closed down 1.4%.

Gold closed unchanged at $1,469.

Oil closed up $.11 a barrel to $95.72.

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

The U.S. Treasury bond etf TLT closed down 0.3%.

Yesterday in European Markets.

European markets closed mixed. The overall Europe Dow closed down 0.7%. Among individual countries, London was closed for a holiday. The German DAX closed down 0.1%. France’s CAC closed down 0.2%. Belgium closed unchanged. Italy closed down 0.4%. Portugal closed up 0.7%. Spain closed down 0.5%. Russia closed up 2.0%.

Asian Markets closed up last night.

The Asia Dow closed up 1.1%.

Among individual markets:

Australia closed down 0.2%. China closed up 0.2%. Hong Kong closed up 0.6%. India closed up 1.2%. Indonesia closed up 1.0%. Japan surged up 3.6%. Malaysia closed up 1.5%. S. Korea closed down 0.4%. Singapore closed unchanged. Taiwan closed down 0.1%. Thailand closed up 1.4%.

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.

In the premium content area this morning: Updated market signals and charts, intermediate-term and short-term, Stock market overall and sectors, bonds, and gold.

*Premium Content*

Please Login or Subscribe to view this content.

Markets This Morning:

European markets are up this morning. The Europe Dow is up 1.1%. Among individual countries the London FTSE is up 0.4%. The German DAX is up 0.9%. France’s CAC is up 0.8%. Belgium is up 0.7%. Norway is up 0.2%. Portugal is up 1.0%. Spain is up 0.8%. Switzerland is up 0.1%. Italy is up 0.1%. Russia is up 1.4%.

Oil is down $.42 a barrel at $95.74.

Gold is plunging $179 an ounce at $1,451.

This Morning in the U.S. Market:

This week will be the opposite of last week’s intense schedule of important potential market-moving economic reports. This week there will be virtually none except the weekly unemployment numbers. To see the full list and times click here, and look at the left side of the page it takes you to.

While there were no U.S. reports yesterday,

There are no important reports due out today.

The market doesn’t seem to care about economic reports anyway.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 36 points or so in the early going this morning.

To read my weekend newspaper column click here: Did This Week’s Critical Economic Reports Vindicate Market’s Resilience-

Non-subscribers: We recently updated the sample newsletter to a later issue you might find interesting. Click here to view it: Sample issue of Street Smart Report newsletter

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

Non-Subscribers:

We can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

SUBSCRIBE NOW! To get all of this:

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

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)
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.
Sy’s weekly column on markets and the economy every Friday.
Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.

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

**** End of Today’s post*****

Another Independent Confirmation Of Market Seasonality!

Sy Harding — Sat, 04 May 2013 16:42:47 +0000

Saturday, May 3, 12.40 p.m.

In April each year, as May 1 approaches, a few analysts and columnists looking for something timely to write about jump on Sell In May as a likely topic. And so the articles begin, suggesting why Sell In May won’t work this year, or why it’s likely to, or how it could be adjusted this time to maybe just cutting back some, or by continuing to buy but substituting this or that foreign market, or defensive stocks, or whatever.

The articles are never the result of research to see if the data would support the thesis of monkeying with the remarkable consistency of the market’s seasonality, but rely on maybes, and theories, and various forms of analyzing current economic or political situations or conditions.

So it’s always good to see someone put the time and expense into independently gathering many decades of data, compiling and analyzing it, and writing an opinion based on facts.

One of the most recent to do so is Walter Zimmerman, chief technical analyst at United-ICAP.

His work is reported in an article on Business Insiders titled ‘Here’s How Rich You’d Be If You Did the ‘Sell in May and Go Away’ trade since 1950’ http://www.businessinsider.com/the-sell-in-may-and-go-away-trade-2013-5

This is Zimmerman’s chart of the difference between the market’s favorable season and its unfavorable season tracked back to 1950.

The chart is based on three approaches to investing $10,000 in the Dow in 1950.

The horizontal red line at the bottom represents an investor who only invested in the unfavorable season of May 1 to October 31, and each year switched out of the market into cash for that year’s favorable season of Nov. 1 to April 31. That investor would have a loss of $1,251 (12.2%) over the 63 years.

The second investor simply bought and held the Dow through the entire period, and would have a gain of $659,116. Not bad at all.

But the green line represents the performance of an investor who followed the ‘Sell in May’ strategy of switching into the market on Nov. 1 and back out into cash on May. 1. The investor’s compounded return would be $943,130, or 43% more than buy and hold.

And the chart does not reveal the additional attraction that the over-performance of the seasonal approach was achieved while taking only 50% of market risk (out of the market 6 months every year), and avoiding the worst of corrections that might be difficult to hold through and result is selling at the lows. (Corrections and crashes obviously tend to take place unexpectedly in the unfavorable seasons, which is the only reason a seasonal strategy works so well).

Interestingly, Zimmerman noted that from his research, “This advice has shined the brightest in those years with the most extreme bullish sentiment going into May.”

Misunderstanding how seasonality works.

Each year when the market does not immediately top out in early May, the articles then begin to pile up about how seasonality doesn’t work, about how it’s an ‘iffy’ thing.

But the facts are that all seasonality is saying is that the market is most likely to be lower November 1 than on May 1. And indeed over the years when there were corrections they most often took place in the fall, to lows in October. It has only been in the last three years that May 1 was so specifically close to tops.

Meanwhile, numerous academic studies of the market going back many decades have confirmed that even though there is not a correction every year, and sometimes for several years in a row, an investor who simply bought the Dow or S&P 500 via an index mutual fund or etf on November 1 each year, and moved to cash on May 1 outperformed the market over the long-term by a significant amount.

Does that mean it outperforms the market in every individual year? No. But then there is no strategy that does, most particularly a buy and hold strategy.

Yet in spite of years of proof piling up, investors and the financial media still struggle with the thought of such simplicity outperforming the market, and therefore the majority of mutual funds and professional money-managers, and doing so while taking only 50% of market risk (out of the market 6 months each year).

Even many of those who happily benefit by following it don’t always remember that it is strictly a mechanical strategy. One of its most important attributes is that it is mechanical and therefore avoids the problem that most often harms performance, the intrusion of the emotions of fear or greed, excess bullishness or bearishness.

Each year there are reasons to think that this time is different, that seasonality won’t work. In the fall, as the re-entry date approaches the emotion is usually fear. There has often been a summer correction brought on by worrisome conditions that have investors and the media expecting more downside. In the other direction, by the time the exit date approaches in the spring there has usually been an impressive favorable season rally that has reversed sentiment, convincing many that this time is different, that seasonality will not be a factor, that the market will most likely continue to climb through its unfavorable season.

And there are just enough years when that does happen to keep investors and the media skeptical, describing seasonality as ‘iffy’, and those following the strategy tempted to allow short-term emotions to interfere.

Our Seasonal Timing Strategy is a further improvement over the ‘Sell in May and Go Away’ strategy, for the simple reason that obviously the market does not begin to rally on the same day (Nov. 1) each year, or roll over to the downside on the same day in the spring (May 1). In fact Nov. 1 and May 1 are not even the best average days to use if one is going to use just a calendar for the decisions.

So back in the 1990s we researched the best average calendar days historically, and then added the short-term momentum reversal indicator MACD to determine whether the market was reversing or not as those calendar dates arrived. If MACD is on a sell signal as the earliest calendar entry date arrives, the re-entry is simply delayed until MACD reverses to a buy signal. And in the spring, if MACD is still on a buy signal when the earliest calendar exit date arrives, the exit is simply delayed until MACD reverses to a sell signal. The result is a seasonal strategy in which the seasons can be as short as 5 months or as long as 7 months , depending on what the market is doing each year. The improvement is dramatic, whether back-tested over the last 70 years, or in real-time in our portfolio since 1999.

But the basic truth and consistency of the market’s seasonality is similar in virtually all charts.

We have always compared seasonal strategies only to buy and hold, as we can’t imagine why anyone would invest only in the unfavorable season.

But by also charting the market’s performance in its unfavorable seasons, Zimmerman’s chart not only shows the advantage of harnessing the market’s seasonality but also the poor odds of making further gains in the unfavorable season with long-side positions.

To see the actual performance figures and more details on seasonality click here: Seasonal Timing Strategy

To read my weekend newspaper column click here: Did This Week’s Critical Economic Reports Vindicate Market’s Resilience-

To read previous week’s column click here: Here’s Why Next Week’s Economic Reports Are The Most Critical in Months!

Subscribers to Street Smart Report: In addition to the charts and recommendations in the subscribers’ ‘Premium Content’ area of this blog, the next issue of the newsletter will be out on Wednesday in your secure area of the Street Smart Report website.

Non-subscribers: We recently updated the sample issue of the newsletter to a more recent issue you might find interesting. Click here to view it: Sample issue of Street Smart Report newsletter

Yesterday in the U.S. Market.

A very positive day in reaction to the positive surprise of the jobs report. A number of indexes closed at new record highs. The Dow created some additional excitement when it briefly exceeded 15,000 for the first time ever, touching 15,009 before pulling back some at the close to 14,973. Volume remained relatively light, just 0.7 billion shares traded on the NYSE, 1.7 billion on the Nasdaq.

The Dow closed up 142 points, or 1.0%. The S&P 500 closed up 1.0%. The NYSE Composite closed up 1.0%. The Nasdaq closed up 1.1%. The Nasdaq 100 closed up 1.1%. The Russell 2000 closed up 1.6%. The DJ Transportation Avg. closed up 2.0%. The DJ Utilities Avg closed down 0.3%.

Gold closed up $1 an ounce at $1,469.

Oil closed up $1.45 a barrel at $95.44.

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

The U.S. Treasury bond etf TLT plunged 2.4%.

Asian markets mostly closed down in their last session of the week.

The Asia Dow closed down 0.2% Thursday night (Friday in Asia).

Among individual Asian markets:

Australia closed up 0.1%. China closed up 1.4%. Hong Kong closed up 0.1%. India closed down 0.8%. Indonesia closed down 1.4%. Japan closed down 0.8%. Malaysia closed down 0.9%. New Zealand closed down 0.7%. South Korea closed up 0.4%. Singapore closed down 1.0%. Taiwan closed up 0.1%. Thailand closed down 0.6%.

Yesterday in European Markets.

European markets closed up strongly yesterday on the back of the U.S. jobs report. The London FTSE closed up 0.9%. The German DAX closed up 2.0%. France’s CAC closed up 1.4%. Belgium closed up 1.3%. Finland closed up 1.5%. Greece closed up 1.0%. Ireland closed up 1.3%. Italy closed up 1.0%. The Netherlands closed up 0.8%. Spain closed up 1.6%. Switzerland closed up 0.5%. Russia closed up 2.0%.

Global markets for the week.

A big positive week for most stock market, and declines for safe-haven bonds and utilities.

THIS WEEK (May 3)
DJIA	14973	+ 1.8%
S&P 500	1614	+ 2.0%
NYSE	9340	+ 1.9%
NASDAQ	3378	+ 3.0%
NASD 100	2944	+ 3.7%
Russ 2000	954	+ 2.0%
DJTransprts	6218	+ 1.7%
DJ Utilities	529	- 0.5%
XOI Oils	1,386	+ 3.2%
Gold bull.	1,469	+ 0.7%
GoldStcks	107.67	+ 1.3%
Canada	12438	+ 1.8%
London	6521	+ 1.5%
Germany	8122	+ 3.9%
France	3912	+ 2.7%
Hong Kong	22689	+ 0.6%
Japan	13694	- 1.4%
Australia	5105	+ 0.5%
S. Korea	1965	+ 1.1%
India	19575	+ 1.5%
Indonesia	4925	- 1.1%
Brazil	55455	+ 2.2%
Mexico	42602	+ 1.7%
China	2308	+ 1.3%

LAST WEEK (April 26)
DJIA	14712	+ 1.1%
S&P 500	1582	+ 1.7%
NYSE	9169	+ 1.9%
NASDAQ	3279	+ 2.3%
NASD 100	2840	+ 2.2%
Russ 2000	935	+ 2.5%
DJTransprts	6115	+ 1.3%
DJ Utilities	532	+ 0.8%
XOI Oils	1,343	+ 4.7%
Gold bull.	1,459	+ 4.1%
GoldStcks	106.31	+ 3.3%
Canada	12220	+ 1.3%
London	6426	+ 2.2%
Germany	7814	+ 4.8%
France	3810	+ 4.4%
Hong Kong	22547	+ 2.4%
Japan	13884	+ 4.3%
Australia	5082	+ 3.2%
S. Korea	1944	+ 2.0%
India	19286	+ 1.4%
Indonesia	4978	- 0.4%
Brazil	54261	+ 0.6%
Mexico	41896	- 2.1%
China	2279	- 3.0%

PREVIOUS WEEK (April 19)
DJIA	14547	- 2.1%
S&P 500	1555	- 2.1%
NYSE	8994	- 2.1%
NASDAQ	3206	- 2.8%
NASD 100	2780	- 2.7%
Russ 2000	912	- 3.2%
DJTransprts	6034	- 1.8%
DJ Utilities	528	+ 0.9%
XOI Oils	1,283	- 4.0%
Gold bull.	1,401	- 5.8%
GoldStcks	102.89	- 11.6%
Canada	12065	- 2.2%
London	6286	- 1.5%
Germany	7459	- 3.7%
France	3651	- 2.1%
Hong Kong	22013	- 0.3%
Japan	13316	- 1.3%
Australia	4923	- 1.9%
S. Korea	1906	- 0.9%
India	19016	+ 4.2%
Indonesia	4998	+ 1.2%
Brazil	53938	- 2.1%
Mexico	42808	- 2.7%
China	2349	+ 1.7%

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.

In the Premium Content area this morning. The U.S. stock market, gold, and bonds, signals and analysis of each.

*Premium Content*

Please Login or Subscribe to view this content.

Next week’s Economic Reports:

Next week will be the opposite of this week’s intense week of important potential market-moving economic reports. Next week there will be virtually none except the weekly unemployment numbers. To see the full list and times click here, and look at the left side of the page it takes you to.

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

To read my weekend newspaper column click here: Did This Week’s Critical Economic Reports Vindicate Market’s Resilience-

To read previous week’s column click here: Here’s Why Next Week’s Economic Reports Are The Most Critical in Months!

Non-Subscribers:

We can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

SUBSCRIBE NOW! To get all of this:

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

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)
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.
Sy’s weekly column on markets and the economy every Friday.
Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.

**** End of Today’s post*****