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26 May ' 12:26
An Update On Investor Sentiment.
Saturday, May 26, 10:30
I’m seeing a lot of commentary claiming that investor sentiment has become extremely bearish and is at levels usually seen at correction and market bottoms.
I’m not seeing that in my favored measurements of sentiment.
The poll of its members by the American Association of Individual Investors this week showed 30.5% bullish, and 38.7% bearish. In our work we consider the AAII poll to be in the warning zone to watch our other indicators for an upside reversal when bearishness rises above 50%, and bullishness drops below 20%.
Consensus Sentiment Index (Consensus Inc.) which measures the sentiment of brokerage firms and professional advisors, is at 55% bullish, down from 61% three weeks ago. Consensus Inc. identifies a level of 25% bullish as the approximate oversold level for potential trend reversals. Heading in the direction usually seen during market corrections, but not near levels usually associated with market lows.
And then there is the VIX Index (aka the Fear Index), which measures the optimism/fear level of options traders.
As shown in the chart (the vertical red lines), by the time fear (bearishness) has reached an extreme low level a rally has usually run its course and a top is near. The VIX then begins to rise as the next correction gets underway as traders increasingly lose their confidence and bullishness.
As the current correction has been underway the VIX has been rising, but it has some ways to go before it would reach the minimum level of fear usually seen at correction lows, which is the dotted blue line. And as the chart shows, in more serious corrections fear can rise much higher than the dotted line.
So based on investor sentiment anyway, it would appear the correction has further to go.
But we will certainly be watching the technical indicators that give us our buy and sell signals closely, as our next signal will obviously be a buy signal.
To read my weekend newspaper column click here: Stop the Noise – Americans Aren’t Dumb! May 25, 2012
Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, there is an in-depth ‘Global Markets’ report from Thursday, and an in-depth ‘U.S. Markets’ update from Wednesday in the subscribers’ area of theBut please stay tuned to the hotline in the meantime for more potential portfolio changes!
It was a fractionally negative day, but not enough to spoil the positive week. Volume was very light with only 0.6 billion shares traded on the NYSE.
closed down 74 points, or 0.6%. The closed down 0.2%. closed down 0.2%. The closed down 0.1%. The closed down 0.2%. The closed down less than 0.1%. The closed down 0.6%. The closed up 0.1%.
closed up $14 an ounce at $1,572, but down $19 for the week.
closed up $.16 a barrel to $90.82 a barrel.
etf UUP closed up 0.1%.
The
European markets closed up fractionally. The FTSE closed up 0.1%. The German DAX closed up 0.4%. And France’s CAC closed up 0.3%.
Global markets for the week.
A mixed week globally after three very ugly weeks.
THIS WEEK (May 25) DJIA 12454 + 0.7% S&P 500 1317 + 1.7% NYSE 7534 + 1.4% NASDAQ 2837 + 2.1% NASD 100 2527 + 2.0% Russ 2000 766 + 2.6% DJTransprts 5079 + 4.2% DJ Utilities 467 + 0.7% XOI Oils 1,119 + 1.5% Gold bull. 1,572 - 1.2% GoldStcks 157 + 6.8% Canada 11576 + 2.6% 5351 + 1.6% 6339 + 1.1% 3047 + 1.3% 18713 - 1.3% 8580 - 0.4% 4081 - 0.4% S. Korea 1824 + 2.4% 16217 + 0.4% 3902 - 2.0% Brazil 54505 + 0.1% Mexico 37486 + 1.7% 2444 - 0.5% LAST WEEK (May 18) DJIA 12369 - 3.5% S&P 500 1295 - 4.3% NYSE 7427 - 5.0% NASDAQ 2778 - 5.3% NASD 100 2478 - 5.2% Russ 2000 747 - 5.4% DJTransprts 4873 - 5.2% DJ Utilities 464 - 1.7% XOI Oils 1,102 - 5.1% Gold bull. 1,591 + 0.6% GoldStcks 147 - 2.6% Canada 11280 - 3.5% London 5267 - 5.5% Germany 6271 - 4.7% France 3008 - 3.9% Hong Kong 18951 - 5.1% Japan 8611 - 3.8% Australia 4098 - 5.6% S. Korea 1782 - 7.0% India 16152 - 0.9% Indonesia 3980 - 3.3% Brazil 54474 - 8.2% Mexico 36875 - 5.2% China 2455 + 2.5% PREVIOUS WEEK (May 11) DJIA 12820 - 1.6% S&P 500 1353 - 1.2% NYSE 7816 - 2.2% NASDAQ 2933 - 0.8% NASD 100 2615 - 4.5% Russ 2000 790 - 0.1% DJTransprts 5140 - 1.7% DJ Utilities 472 + 0.8% XOI Oils 1,161 - 2.7% Gold bull. 1,581 - 3.8% GoldStcks 151 - 0.3% Canada 11694 - 1.5% London 5575 - 1.4% Germany 6579 + 0.3% France 3129 - 1.0% Hong Kong 19964 - 5.3% Japan 8953 - 4.6% Australia 4342 - 2.7% S. Korea 1917 - 3.6% India 16292 - 3.2% Indonesia 4114 - 2.4% Brazil 59336 - 2.4% Mexico 38891 - 1.3% China 2394 - 2.4% Premium Content Area.
In the Premium Content section this morning: U.S. stock market short-term and intermediate-term signals. Gold. Bonds.
Next week’s Economic Reports:
Next week, a holiday-shortened week, will be a very heavy week for potential market-moving economic reports, which include the ADP Monthly Jobs Report, Chicago PMI, the next Revision to 1st Quarter GDPISM Mfg Index, and The Big One!, the Labor Department’s monthly jobs report for May. To see the full list and times for each release
To read my weekend newspaper column click here: Stop the Noise – Americans Aren’t Dumb! May 25, 2012
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.
Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, there is an in-depth ‘Global Markets’ report from Thursday, and an in-depth ‘U.S. Markets’ update from Wednesday in the subscribers’ area of theBut please stay tuned to the hotline in the meantime for more potential portfolio changes!
I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m.
We believe we can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!
Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings. And we are off to a great start this year, and also moved up to #1 Long-Term Market-Timer.
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.
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25 May ' 09:54
Europe Expected Nothing From EU Meet And Got Nothing!
Thursday, May 24, 9:25
The European Union’s informal Wednesday summit meeting on the eurozone crisis ended last night with results similar to last weekend’s G-8 meeting in the U.S.
The leaders emerged to announce they agreed that they’d like Greece to remain in the eurozone, but had made no progress on agreeing how to accomplish that, or anything else. But they will continue to work on it in advance of their next meeting June 29.
European stock markets expected nothing from the meeting, and factored that expected lack of progress into stock prices yesterday, with major European markets including Germany, France, and the U.K. plunging an average of more than 2.5%.
But they’re bouncing back some this morning in spite of quite ugly new economic reports.
The U.K. announced a downward revision in its recessionary 1st quarter GDP contraction to minus –0.3% from the previously reported –0.2%.
Germany’s Ifo Business Climate Index unexpectedly declined in May, dropping to 106.9 from 109.9 in April. It is its first decline in six months, and puts it at its lowest level since last November.
Germany’s PMI fell to 49.6 in May from 50.5 in April. Any number under 50 in PMI numbers indicates recessionary contraction.
It was also reported that France’s PMI fell to 44.7 in May from 45.9 in April.
And it was reported that the overall euro-zone’s PMI fell to a 35-month low of 45.9 in May from 46.7 in April.
Europe’s economic slowdown is even worse than previously thought and still headed in the wrong direction.
Meanwhile, in Asia, China’s HSBC PMI was reported as declining again, to 48.7 from 49.3 in April.
Marc Faber backtracks on crash prediction.
Marc Faber, famed Swiss economist and editor of the Gloom Boom and Doom Report, caused a minor fuss with a prediction a few weeks ago that “unless there is a massive QE3 program the U.S. market could experience a 1987 style crash in the second half of the year”.
It was a feeling subsequently expressed to us by a number of readers in their e’mails, probably influenced by Farber’s comments.
But Faber has now back-tracked on that prediction, explaining in a Bloomberg interview that circumstances have changed, saying that, “I said if the markets do not correct meaningfully, and continue to rise into July and August, then the likelihood of a crash would increase. But instead, now we are in the midst of a very significant correction.”
On the subject of market crashes.
There have only been two market crashes in the U.S. in market history as far back as I have data (well over 100 years). One was in 1929, and the other 58 years later, in 1987. The surrounding conditions in place at both were completely different, as were the causes of the collapses.
That makes it quite difficult, if not impossible to tell when, or even if, we will ever see another.
But since 1987 there have been hundreds of crash predictions.
Those who were around in the 1980’s probably recall that for four or five years after the 1987 crash, every September the media would roll out articles warning of the possibility (the probability to the more aggressive) of a market crash. The reasoning? Because both the 1929 and 1987 crashes had taken place in October.
It might be well to remember that in 1929 and in 1987 no one was predicting even a correction let alone a crash. They were times of strong economies and markets where investors were caught by surprise by the plunges.
I’d be leery of crash predictions in a time when global economies are already slowing and global uncertainties and worries have been high for a couple of years, and when the more nervous investors have been switching from stocks to bonds for several years in spite of an impressive bull market since early 2009.
The one time that conditions were extremely similar to 1929 was in the 1999 stock market bubble, when after record long 9-year bull markets without corrections, it was again supposedly a ‘new era’ in which even bear markets were events of the past and would never be seen again.
But no. Even then, the subsequent 2000-2002 bear market did not come close to including a crash, but was a typical serious bear market that took a couple of years to play out, with numerous short-term bounces on the way down.
But, as a little aside, I recall one investor in 1988 who was sure he knew how to predict crashes to the day, based on how the 1987 crash had developed.
In the week prior to the ‘Black Monday’ crash on October 19, 1987, the Dow was down 3.8% on Wednesday, 2.3% on Thursday, and 4.6% on Friday, before the crash of 22.6% on Monday.
So all through 1988 and into 1989, every time the market was down on Wednesday, again on Thursday, and was falling again on Friday, by early afternoon on Friday he would call our subscription office very excited and agitated, and tell them to warn me that I needed to get a hotline on immediately telling subscribers to get out of the market because there was going to be a crash of at least 20% on Monday. When it didn’t happen the first time, in subsequent calls he said we had just been lucky, adding an explanation of why it hadn’t happened, but was sure to this time. That must have happened 4 or 5 times before he apparently gave up on the idea.
If only it was that easy to predict the recurrence of something that has only happened twice in three generations.
Street Smart Report: There is a hotline from last evening, and an in-depth U.S. Market report from yesterday afternoon in the subscribers’ area of theAnd please stay tuned to the hotline for more potential portfolio changes!
To read my weekend newspaper column click here: This Is Crazy! Where Are The Promised Regulations- May 18, 2012
Unlike markets in Asia and Europe, the U.S. market staged an impressive recovery from morning weakness. The Dow was down 191 points by mid-day, but began to recover during the afternoon, increasingly putting a squeeze on short-sellers, to close down just 7 points. And most of the rest of the U.S. market indexes reversed from ugly morning declines to close positive for the day.
closed down 6 points, or less than 0.1%. The closed up 0.2%. The closed down less than 0.1%. The closed up 0.4%. The closed up 0.3%. The closed up 0.7%. The closed up 1.2%. The closed down 0.6%.
plunged $20 an ounce at $1,548.
closed down $1.50 a barrel at $89.90, below $90.
etf UUP closed up 0.4%.
came off earlier highs to close up 0.7%.
European markets plunged sharply yesterday. The FTSE closed down 2.5%. The closed down 2.3%. index plunged 2.6%.
Asian Markets plunged Tuesday night but mixed last night.
The Asia Dow closed down 0.1% last night.
Among individual markets:
closed down 0.3%. closed down 0.5%. closed down 0.6%. closed up1.7%. closed up 0.1%. Malaysia closed up 0.5%. New Zealand closed down 0.4%. South Korea closed up 0.3%. Singapore closed down 0.1%. Taiwan closed down 0.3%. Thailand closed up 1.4%.
Subscribers Premium Content Area.
In the premium content area this morning: Our signals, short-term and intermediate-term on the U.S. Stock Market, Gold, and U.S. Treasury bonds.
Markets This Morning:
European markets are bouncing back partially from yesterday’s plunge. FTSE is up 1.5%. The German DAX is up 0.9%. France’s CAC is up 1.2%.
Oil is bouncing back, up $1.07 a barrel at $90.97.
Gold is also bouncing back after its big plunge yesterday, up $24 an ounce at $1,572 an ounce, but still down $19 for the week.
This Morning in the U.S. Market:
This week is a relative light week for potential market-moving economic reports, which include the Chicago Fed National Business Index, Existing Home Sales, Durable Goods Orders, and Consumer Sentiment. . To see the full list and times for each releaseand look at the left side of the page it takes you to.
Monday’s report was that the Chicago Fed’s National Business Activity Index rose to +0.11 in April from –0.44 in March. But the three-month moving average fell to –0.6 in April from an already skimpy +0.02 in March, the first negative reading since November.
Tuesday it was that Existing Home Sales were up 3.0% in April, although the inventory of unsold homes jumped 9.5% since more homes were put on the market. The Richmond Fed’s Mfg. Index fell to 4 in May from 14 in April.
Yesterday it was that New Home sales were up 3.3% in April. And the FHFA reported that home prices were up 1.8% in March.
This morning it was that new weekly unemployment claims fell slightly last week, by 2,000 . The four-week m.a. fell by 5,000 to 370,000. And Durable Goods Orders were up 0.2% in April after falling 3.7% in March. But the flash PMI Index in the U.S. declined to 53.9 in May from 56.0 in April.
Still to come is the Kansas Fed Index, which will be released at 10 a.m.
Our Pre-Open Indicators:
Our pre-open indicators are pointing to the Dow being up 50 points or so in the early going.
Street Smart Report: There is a hotline from last evening, and an in-depth U.S. Market report from yesterday afternoon in the subscribers’ area of theAnd please stay tuned to the hotline for more potential portfolio changes!
To read my weekend newspaper column click here: This Is Crazy! Where Are The Promised Regulations- May 18, 2012
I’ll be back with the next regular blog post on Saturday morning, as usual later then the week-day updates, probably around 11 a.m. eastern time.
We believe we can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!
Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings. And we are off to an even better start this year, now ranked #1 Long-Term Market Timer so far in 2012.
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23 May ' 08:42
The Facebook IPO Should Be Ringing Alarm Bells!
Tuesday, May 22, 9:25
I’m tired of all the coverage of the Facebook IPO. Yet the IPO provides important lessons for investors, investment banks, the Nasdaq, and regulators concerned about the ability of the stock exchanges to handle high volume events.
As everyone is aware, the Nasdaq system could not keep up with the trading volume in Facebook shares on Friday morning.
Its first problem was inability to match the buy and sell orders it had prior to the open. So the opening of Facebook for trading was delayed.
But even after the open, the Nasdaq was not able to provide brokers with confirmations of whether orders had been filled or not for several hours.
The result was chaos for many investors, large and small, but particularly large investors, money-management firms, and hedge funds, who were left in the dark.
They may have placed a pre-open order for 50,000 shares at a limit of $42. They could not find out if their orders had been executed at all, and if so for how many shares, or at what price. (Partial fills are made if there are not enough sellers at the specified price, unless the order is placed as ‘all or none’).
Those who tried to enter sell orders to exit positions when the price began to fall, were denied by their own computer systems, which had not received purchase confirmations that they had any shares in their portfolios to sell. So they didn’t know if they owned shares or not.
Those who had placed limit orders at higher prices and then cancelled them, and entered new orders at a lower price, didn’t know if the cancelation had taken place, or if perhaps the two buy orders had both been executed. And so on.
Nasdaq is reported to be working with regulators on how it should implement procedures to adjust orders that were not properly executed, or were executed but not reported in a timely enough manner to allow investors to place subsequent buy or sell orders.
Morgan Stanley said Monday morning that it had a number of customers’ orders from Friday that had still not been confirmed.
Here’s why alarm bells should be ringing!
The 1987 crash was exacerbated by the inability of the NYSE to keep up with the trading volume. As I wrote in my 1999 book ‘Riding the Bear – How To Prosper in the Coming Bear Market’:
“Only much later did investors learn how close the entire financial system had come to total meltdown that day in 1987. Sell orders so swamped the trading floor prior to the open that the NYSE was unable to even get all thirty Dow stocks open for trading until two hours into the session.”
“By that time the Dow was shown to already be down 9 percent. As that brought in still more selling, trading in individual stocks were repeatedly halted through the day because at times there were no buyers at any price.”
“Telephone and computer systems were totally inadequate for the volume of calls from investors trying to get through to their brokers, while their brokers’ systems were also overloaded and they could get no information from the trading floor. The plunges were triggering margin calls and the floor brokers were simply selling margin positions out since they couldn’t get through with margin calls to investors for more cash.”
“I was told by a friend who was a long-time broker at Merrill Lynch, that he and many brokers simply abandoned their desks, went to lunch and stayed away, telling their secretaries to tell any clients who did get through that they were ‘in a strategy meeting and unavailable.’”
The investigations afterward resulted in the stock exchanges under-taking massive efforts to beef up their systems, soon assuring Congress, regulators, and investors that they would be able to handle many times any possible spike in volume in the future.
Friday’s problems with handling unusual volume in just one stock should be raising alarms about what could happen in the event of a more widespread volume event’.
Commodity Pressures Increase!
I provided a chart in my newspaper column two weeks ago, Plunging Commodity Prices Are Ominous For Stock Market! May 11, 2012, that showed how slowing demand for commodities has commodity prices plunging, which in the past has often been a bad omen for global economies and stock markets. eg. The CRB Commodity Index plunged 57% in 2008 and the S&P 500 plunged 57% in the 2008-2009 bear market. The CRB fell 15% in the summer of 2010 and the S&P 500 declined 15% in the summer correction in 2010. The CRB declined 19.5% last summer and the S&P 500 declined 21% in last summer’s correction.
Unlike the U.S. stock market the CRB did not completely recover from its decline of last summer, and now its back to the downside, down 11.5% so far from its high in February.
And on the subject of commodities, from Asia comes news that China’s demand for commodities has tailed off severely.
Financial Times reported yesterday that Chinese users of thermal coal and iron ore are asking suppliers to defer shipments, and “in some cases defaulting on contracts, in the clearest sign yet of the country’s economic slowdown on the global commodities markets.”
FT went on to say, “Soft commodities such as soy bean and cotton have also seen Chinese commercial customers default in the last two weeks according to a trader at another global trading house.”
A chief executive of Samsung, the world’s largest producer of such products, says the company is worried about weakness in Chinese consumer spending, damped by government austerity measures. China is not only the world’s largest importer and user of commodities, but also the world’s largest internet, smartphone, and flat-panel market.
But commodities are also oversold short-term.
The plunge in commodities and gold since February, and in global stock markets since March, had them all oversold on the short-term charts as of last Friday, and probably due for at least a brief technical rally off those oversold levels.
I said a week ago I expected an oversold rally in stock markets last week. It didn’t happen, but is underway this week – well markets were up yesterday anyway.
Gold was also oversold short-term and had an impressive two-day rally Thursday and Friday. But is that all there will be to it? It was back down yesterday, and is down $8 an ounce this morning.
It’s pretty much the same thing with commodity prices including oil.
A number of Wall Street spokesmen were saying yesterday that the rally marked the end of the correction.
Perhaps, but I have to ask myself whether anything has changed other than the short-term oversold condition?
Have the economic slowdowns in Asia, Europe, and the U.S. suddenly shown signs of improving? Does the eurozone crisis appear to be improving?
As if in answer to those questions, the International Monetary Fund said this morning that Britain needs further monetary easing since further risks to the U.K. economy “are large and clearly tilted to the downside.”
And the OECD (Organization of Economic Cooperation and Development) cut its forecasts for the economies of the euro-zone again.
And in a surprise announcement, Fitch Ratings downgraded Japan’s credit rating and issued a negative outlook.
Don’t make me laugh any harder.
In another ‘don’t make me laugh any harder moment’, leaders of the G-8 nations emerged from their weekend summit in Washington, which was billed as having its focus on managing the eurozone crisis, to announce that they’d like Greece to remain in the eurozone – but had failed to agree on how to accomplish that, or how to calm the escalating crisis.
They did issue a joint statement saying more must be done to promote economic growth and job creation. Wow. How impressively insightful.
Subscribers toStreet Smart Report: The new issue of the newsletter is in the subscribers’ area of the from Wednesday. And please stay tuned to the hotline for more potential portfolio changes!
To read my weekend newspaper column click here: This Is Crazy! Where Are The Promised Regulations- May 18, 2012
A nice rally day for a change, with the market closing on its highs rather than its lows. Volume was about as it has been, with .8 billion shares traded on the NYSE.
closed up 135 points, or 1.1%. The closed up 1.6%. The closed up 1.5%. The closed up 2.5%. The closed up 2.7%. The closed up 2.3%. The closed up 2.6%. The
closed unchanged at $1,591 an ounce.
bouned back $1.38 a barrel at $92.86 a barrel.
etf UUP closed down 0.3%.
closed down 0.2%.
European markets closed back up some yesterday. closed up 0.7%. closed up 0.9%. closed up 0.6%.
Asian Markets Were Up Last Night.
The DJ Asia-Pacific Index closed up 0.8%.
Among individual markets:
closed down up 1.2%. closed up 1.1%. closed up 0.6%. closed down 1.0%. closed up 2.0%. closed up 1.1%. closed up 0.7%. closed up 1.0%. closed up 1.6%. closed up 1.2%. closed up 1.1%.
In the premium content area this morning: Our signals, short-term and intermediate-term on the U.S. Stock Market, Gold, and U.S. Treasury bonds.
European markets are up again today. The FTSE is up 1.2%. The German DAX is up 1.2%. France’s CAC is up 1.3%.
is down $.27 a barrel at $92.30.
is down $8 an ounce at $1,581.
This week is a relative light week for potential market-moving economic reports, which include the Chicago Fed National Business Index, Existing Home Sales, Durable Goods Orders, and Consumer Sentiment. . To see the full list and times for each release, and look at the left side of the page it takes you to.
Yesterday’s report was that the Chicago Fed’s National Business Activity Index rose to +0.11 in April from –0.44 in March. But the three-month moving average fell to –0.6 in April from an already skimpy +0.02 in March, the first negative reading since November.
This morning it will be Existing Home Sales and the Richmond Fed’s Mfg. Index, both of which will be released at 10 a.m.
Our pre-open indicators are pointing to the Dow being up 20 points or so in the early going.
Subscribers toStreet Smart Report: The new issue of the newsletter is in the subscribers’ area of the from Wednesday. And please stay tuned to the hotline for more potential portfolio changes!
To read my weekend newspaper column click here: This Is Crazy! Where Are The Promised Regulations- May 18, 2012
I’ll be back with the next regular blog post on Thursday morning at 9:25 a.m.
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21 May ' 11:28
To read my weekend newspaper column click here: This Is Crazy! Where Are The Promised Regulations- May 18, 2012
To read my weekend newspaper column click here: This Is Crazy! Where Are The Promised Regulations- May 18, 2012
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19 May ' 10:09
Facebook IPO Revealed Much About How Wall Street Works!
Saturday, May 18, 12:00 noon.
I doubt we will ever again see an IPO handled as this one was.
Normally, public investors are pretty much locked out of getting stock at the pre-open offering price. Those shares are normally allotted to the largest clients of the investment banks handling the IPO, which means friends and family, mutual funds, hedge funds, major money-management firms, and very large individual investors.
And only after the stock begins trading is the public able to pile in, which normally immediately spikes the price up double-digits and the well-hyped stock is off to the races.
But apparently Mark Zuckerberg insisted that retail investors have access to a sizable portion of his Facebook offering at the pre-open offering price. And even non-profit charitable institutions were insisting on getting in. So the number of shares insiders were selling was increased significantly to provide additional shares for the public (and the offering price was increased to $38, the upper limit of the previously announced range).
There were so many shares made available to retail investors that the comment was made on CNBC that if investors didn’t get an allotment offer they should ask their broker why.
The result appeared to be that public investors who were interested were already in on the deal when the stock began trading.
So rather than the public rushing in to drive the price higher, the investment banks had the embarrassing situation of having to rush in with unintended buying themselves, just to prevent the price from dropping below the offering price when selling dominated the activity.
It was a costly mistake for the investment banks, and on one of the largest IPO’s in history. They’re not likely to make the same mistake on future IPO’s.
Retail investors can expect to be put back in their place, where their role is to let insiders, investment banks, and their biggest clients get positioned first, and then to rush in and excitedly drive the price higher for those fortunate folks.
Was gold’s two-day bounce a reversal?
Gold plunged an additional $45 an ounce the first three days of the week, and then spiked back up $55 an ounce the last two days, to close up $10 for the week.
Is it an upside reversal or just a bounce off the oversold condition?
Is the stock market due for a similar bounce?
As I warned when our technical indicators came off their October buy signal, the market goes down a lot faster than it goes up. So not waiting to re-position is more important when the market is overbought and at risk of a correction than when the indicators are pointing to a potential bottom. There’s usually more time to position on buy signals.
And indeed, the stock market has given back almost five months of gains in just three weeks. Those who took profits can expect to get back in and make some of the profits all over again, while those who hold on will need the next upmove just to hopefully get back to even.
Of course making and keeping profits from the upside by taking them, and then making more from downside positions is even better. But as I often say it’s not quite as much fun to make profits from downside positions when most everyone is experiencing losses, as it is in rising markets when everyone is happy. But it beats the alternative.
The substantial plunge of the last three weeks does have the market potentially oversold short-term. Will it result in a bounce off the oversold condition, or perhaps even be the end of the pullback? Or will it just keep going down as it did last summer, as circled in the chart? That’s what our work is all about.
‘This Is Crazy! Bring Back Glass Steagall!’
Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, a hotline and the latest issue of the newsletter is in the subscribers’ area of the from Wednesday. But please stay tuned to the hotline in the meantime for more potential portfolio changes!
It was another day that started out positive but ended negative. The Dow was up 50 points early on, but gave up the gains to close down 73 points. Volume was higher than the recent norm, with 1.1 billion shares traded on the NYSE, but that can be attributed to the normal higher volume on options expirations days.
closed down 73 points, or 0.6%. The closed down 0.7%. closed down 0.7%. The closed down 1.2%. The closed down 1.2%. The closed down 0.9%. The closed down 1.3%. The closed unchanged.
closed up $17 an ounce at 1,592.
closed down $1.24 a barrel to $95.83 a barrel. ???????
etf UUP closed down 0.4%.
European markets closed down again. The FTSE closed down 0.6%. The German DAX closed down 1.2%. And France’s CAC closed down 0.7%.
Global markets for the week.
A negative week pretty much globally.
THIS WEEK (May 18) DJIA 12369 - 3.5% S&P 500 1295 - 4.3% NYSE 7427 - 5.0% NASDAQ 2778 - 5.3% NASD 100 2478 - 5.2% Russ 2000 747 - 5.4% DJTransprts 4873 - 5.2% DJ Utilities 464 - 1.7% XOI Oils 1,102 - 5.1% Gold bull. 1,591 + 0.6% GoldStcks 147 - 2.6% Canada 11280 - 3.5% 5267 - 5.5% 6271 - 4.7% 3008 - 3.9% 18951 - 5.1% 8611 - 3.8% 4098 - 5.6% S. Korea 1782 - 7.0% 16152 - 0.9% 3980 - 3.3% Brazil 54474 - 8.2% Mexico 36875 - 5.2% 2455 + 2.5% LAST WEEK (May 11) DJIA 12820 - 1.6% S&P 500 1353 - 1.2% NYSE 7816 - 2.2% NASDAQ 2933 - 0.8% NASD 100 2615 - 4.5% Russ 2000 790 - 0.1% DJTransprts 5140 - 1.7% DJ Utilities 472 + 0.8% XOI Oils 1,161 - 2.7% Gold bull. 1,581 - 3.8% GoldStcks 151 - 0.3% Canada 11694 - 1.5% London 5575 - 1.4% Germany 6579 + 0.3% France 3129 - 1.0% Hong Kong 19964 - 5.3% Japan 8953 - 4.6% Australia 4342 - 2.7% S. Korea 1917 - 3.6% India 16292 - 3.2% Indonesia 4114 - 2.4% Brazil 59336 - 2.4% Mexico 38891 - 1.3% China 2394 - 2.4% PREVIOUS WEEK (May 4) DJIA 13038 - 1.4% S&P 500 1369 - 2.4% NYSE 7993 - 2.0% NASDAQ 2956 - 3.7% NASD 100 2737 - 3.8% Russ 2000 791 - 4.1% DJTransprts 5227 - 0.8% DJ Utilities 468 - 0.2% XOI Oils 1,193 - 2.5% Gold bull. 1,643 - 1.2% GoldStcks 156 - 6.0% Canada 11871 - 3.0% London 5655 - 2.1% Germany 6561 - 3.5% France 3161 - 3.2% Hong Kong 21086 + 1.7% Japan 9380 - 1.5% Australia 4459 + 0.6% S. Korea 1989 + 0.7% India 16831 - 1.8% Indonesia 4216 + 1.3% Brazil 60820 - 1.4% Mexico 39408 + 0.2% China 2452 + 2.3% Premium Content Area.
In the Premium Content section this morning: U.S. stock market short-term and intermediate-term signals. Gold. Bonds.
Next week’s Economic Reports:
Next week is a relative light week for potential market-moving economic reports, which include the Chicago Fed National Business Index, Existing Home Sales, Durable Goods Orders, and Consumer Sentiment. To see the full list and times for each release,and look at the left side of the page it takes you to.
‘This Is Crazy! Bring Back Glass Steagall!’
Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, a hotline and the latest issue of the newsletter is in the subscribers’ area of the from Wednesday. But please stay tuned to the hotline in the meantime for more potential portfolio changes!
I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m.
We believe we can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!
Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings. And we are off to a great start this year, and also moved up to #1 Long-Term Market-Timer.
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17 May ' 07:53
Investor Sentiment Says Correction Has Further To Go.
Thursday, May 17, 9:25
The weekly poll of its members by the American Association of Individual Investors is moving toward a level of bearishness usually associated with market lows, but has some ways to go yet.
This week’s poll was released last night and shows only 23.6% now bullish, and 46.0% bearish. We consider the AAII poll to potentially be in the vicinity of a correction bottom when bearishness exceeds 55% and bullishness is in the range of 16% to 20%.
The Consensus Inc. Sentiment Index, which was at a very bullish 78% in March, above the 75% level that Consensus Inc. says is “overbought bullishness indicating a downside reversal in trend may be imminent”, has cooled off, but is still 61% bullish. Consensus Inc. considers 25% bullish to be the oversold bullish level usually seen at correction bottoms.
And then there is the VIX Index (aka the Fear Index).
As the correction began the VIX began rising out of the extreme low fear zone usually seen at market and rally tops.
But it has quite a ways to go if it is to reach the level of fear usually seen at correction lows, which is at the level of the dotted line in the chart. We won’t dwell on the fact that, as the chart shows, fear can get considerably higher than the dotted line before correction bottoms are reached.
So, based on investor sentiment anyway, it looks like the correction has further to run.
Of course, markets can’t be timed by sentiment alone.
A Tip For Those Planning To Buy Facebook Shares.
Public investors tend to place ‘market orders’ on their trades. That is they are willing to pay whatever the asking price is at the time. In a fast moving market, with orders piling up in the orders books that can be costly.
As Robert Schwartz, professor of finance at Baruch College, is quoted in today’s Wall Street Journal, “The use of market orders, often favored by retail investors who just want to buy or sell quickly at the going market rate, can leave investors exposed. The order book can clear out, and if it does, there’s no safety net.”
That had happened so often to small investors scrambling to get in at any price on a new issue in all the excitement that surrounds an IPO, that the Financial Industry Regulatory Authority (Finra) detailed rules forbidding ‘market orders’ at the opening of new IPO’s in late 2010, but they weren’t implemented until September, 2011.
In the meantime, as one example of many, website Zillow Inc priced its IPO at $20 a share. The first public trades went off at $60 and then fell 25% to $45 just seconds later. Brokers blamed it on an influx of initial public ‘market orders’ to buy at whatever price sellers were asking. As soon as those wild asking prices were cleared out the price dropped.
Investors will apparently get some protection from themselves when Facebook initially trades, since brokers have been reminded of the Finra rule, and will block ‘market orders’ at the opening, only executing ‘limit orders’ that specify a specific price the buyer is willing to pay.
Investors just can’t catch a break from Wall Street.
Here we go again in another correction. The S&P 500 was at 1,415 in March. It closed yesterday at 1,328.
And so far all the way it’s been “Support should be just below at 1,405.” “Support should be just below at 1,400.” Then at 1,389, 1,375, 1,366, or whatever. Never more than a fraction lower than each low reached. It sure works to keep investors in, even those who intended to take profits and even downside positioning in the next correction. Instead it works to keep them ‘buying the dips’ all the way down in corrections.
I look at each of those supposed next support levels and hardly ever see what they possibly could be based on. I look at trendlines, various moving averages, previous lows, Fibonacci retracement levels, whatever, but I guess I am too dumb to spot the potential supports so fractionally close to each other each time the latest is violated.
Subscribers to Street Smart Report: A hotline from last evening, and the new issue of the newsletter are in the subscribers’ area of theAnd please stay tuned to the hotline for more potential portfolio changes!
‘Plunging Commodity Prices Are Ominous For Stock Market’
Another ugly day, with a failed mid-day attempt to recover and then a late day sell-off.
closed down 125 points, or 1.0%. The closed down 1.4%. The closed down 1.1%. The closed down 1.0%. The closed down 1.4%. The closed down 0.8%. The closed down 0.4%.
plunged another $26 an ounce to $1,557 an ounce.
closed down another $1.69 a barrel at $94.44 a barrel.
closed up 1.4%.
European markets were mixed yesterday. closed down 0.6%. closed down 0.3%. But closed up 0.3%.
Asian Markets Plunged Wednesday Night But Bounced Some Last Night.
The DJ Asia-Pacific Index closed down a big 2.3% Wednesday night, Hong Kong and South Korea closing down more than 3%.
The DJ Asia-Pacific Index closed up 0.6% last night.
Among individual markets last night:
closed down 0.2%. closed up 1.4%. closed down 0.3%. closed up 0.3%. closed down 1.6%. closed up 0.9%. Malaysia closed up 0.6%. New Zealand closed up 0.2%. South Korea closed up 0.3%. Singapore closed down 0.3%. Taiwan closed up 1.7%. Thailand closed up 0.2%.
Subscribers Premium Content Area.
Markets This Morning:
European markets are down again this morning. FTSE is down 1.0%. The German DAX is down 0.4%. France’s CAC is down 0.6%.
Oil is up $.65 a barrel at $93.45.
Gold is bouncing back $19 an ounce at $1,555.
This Morning in the U.S. Market:
This week is an average week for potential market-moving economic reports, which include the Consumer Price Index, Retail Sales, Housing Starts, FOMC minutes, the Fed’s Phila Fed Index, etc. To see the full list and times for each release
There were no reports Monday.
On Tuesday it was reported that the Consumer Price Index was unchanged in April, while the core rate (with food and energy costs removed) was up 0.2%. And Retail Sales edged up just 0.1% in April. But the Empire State (NY) Mfg Index bounced back to 17.1 in May from 6.6 in April. The Housing Market Index, which measures the sentiment of home-builders, rose to 29 in May from 24 in April. That was better than forecasts of an improvement to 27, but the index remains pessimistic, well below the level of 50 that indicates that at least 50% of builders are optimistic.
Yesterday’s reports were that new housing starts were up 2.6% in April, no doubt contributing to the improvement in home-builder sentiment in May. But permits for future starts fell 7.0%. And Industrial Production was up 1.1% in April, better than the forecast of a 0.7% increase. But that was helped by March production, previously reported as unchanged, being revised down to minus 0.6%. And the minutes of the Fed’s last FOMC meeting showed the usual debates between Fed governors differing in their assessments of the economy, inflation, and how long the Fed should say it will keep interest rates low, none of which changes what the Fed inferred in its statement after the meeting.
This morning’s report was that new weekly unemployment claims were unchanged last week at 370,000. The four-week moving average of claims fell by 4,750 to 375,000.
Still to come are the Phila Fed Index, and the Leading Economic Indicator Index, both of which will be released at 10 a.m.
The pre-open indicators have been hovering both sides of unchanged all morning.
Our Pre-Open Indicators:
Our pre-open indicators are pointing to the Dow being up 10 points or so in the early going, not meaningful at all as to direction later in the day.
Street Smart Report: A hotline from last evening, and the new issue of the newsletter of yesterday are in the subscribers’ area of theAnd please stay tuned to the hotline for more potential portfolio changes!
‘Plunging Commodity Prices Are Ominous For Stock Market’
I’ll be back with the next regular blog post on Saturday morning, as usual later than the week-day posts, probably around 11:00 a.m. (eastern time).
We believe we can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!
Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings. And we are off to an even better start this year, ranked #1 Long-Term Market Timer in 2012 in April.
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15 May ' 07:33
Mixed economic reports from Europe!
Tuesday, May 15, 9:25
It was reported this morning that the German economy (GDP) grew by 0.5% in the 1st quarter, Austria’s by 0.2%, Finland’s by 1.3%, and Belgium’s by 0.3%.
That was enough to offset the declines in other countries and keep the overall eurozone’s economy flat at 0%.
However, it did not change the European Commission’s forecast that the overall euro-zone will be in a recession this year with its economy shrinking by –0.3%.
On the downside, France’s economy stalled, with its GDP growth at 0% in the 1st quarter. Italy remains in recession with its 1st quarter GDP shrinking by 0.8% for the 3rd straight quarter. Spain slid into recession, its 1st quarter GDP contracting 0.3%, negative for the 2nd straight quarter. Greece remained in a serious recession with its GDP negative by 6.2% in the 1st quarter. The Dutch economy shrank by 0.2% for the 3rd straight quarter. Portugal remained in recession, its GDP down 0.1%.
European countries not members of the eurozone, including Hungary, Romania, and Czechoslovakia, also saw their economies in recessionary contractions in the 1st quarter.
Meanwhile, investor confidence in Germany has declined in May for the time in six months. The ZEW Indicator of Economic Sentiment in Germany fell to 10.8 in May from 23.4 in April.
And that shows up in the charts of the German market.
Europe is becoming the dog wagging the U.S. tail.
If you don’t believe the influence Europe is having on the U.S. market watch how the S&P futures move up and down with the European markets prior to markets opening in the U.S.
This morning was typical. European markets were quite positive in response to the better GDP report from Germany. And the U.S. futures were quite positive too.
But when the European markets reversed sharply to the downside, the U.S. futures reversed to negative territory too in spite of the better than expected Empire State Mfg Index report that had added to the positive look of the futures for awhile.
Quote of the day.
A. Gary Shilling, Money-manager & president of economic consulting firm:
”Don’t buy your first home now unless you’re willing to lose 20% of its value in the next few years. It will take a further 22% drop to return median single-family house prices to the trend identified by Robert Shiller of Yale University that prevailed until the housing bubble began. It adjusts for inflation and the tendency for houses to get bigger over time.”Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, the new issue of the newsletter will be available sometime tomorrow in the subscribers’ area of theStreet Smart Report website. And please stay tuned to the hotline for more potential portfolio changes!
‘Plunging Commodity Prices Are Ominous For Stock Market’
Another ugly day, with a failed mid-day attempt to recover and then a late day sell-off.
closed down 125 points, or 1.0%. The closed down 1.1%. The closed down 1.4%. The closed down 1.1%. The closed down 1.0%. The closed down 1.4%. The closed down 0.8%. The
plunged another $26 an ounce to $1,557 an ounce.
closed down another $1.69 a barrel at $94.44 a barrel.
etf UUP closed up 0.4%.
closed up 1.4%.
European markets were down sharply again. London closed down 2.0%. closed down 2.0%. closed down 2.3%.
Asian Markets Were Down Sunday Night and Again Last Night.
closed down 0.6% Sunday night, and down 0.6% last night.
Among individual markets last night:
closed down up 0.8%. closed up 0.8%. Japan closed down 1.0%. closed down 0.6%. closed down 0.8%. closed up 0.2%. closed up 1.6%.
U.S. Stock Market & Gold.
European markets gave up early gains and are now down quite sharply again The FTSE is down 0.8%. The German DAX is down 1.2%. France’s CAC is down 1.1%.
is down $.20 a barrel at $94.58.
is down $2 an ounce at $1,555.
This week returns to being an average week for potential market-moving economic reports, which include the Consumer Price Index, Retail Sales, Housing Starts, FOMC minutesFed’s Phila Fed Index, etc. To see the full list and times for each release
There were no reports yesterday.
This morning it was reported that the Consumer Price Index was unchanged in April, while the core rate (with food and energy costs removed) was up 0.2%. And Retail Sales edged up just 0.1% in April. But the Empire State (NY) Mfg Index bounced back to 17.1 in May from 6.6 in April.
Housing Market Index, which will be released at 10 a.m.
The pre-open indicators were fairly positive earlier, bounced further after the reports, but have now given up the gains as European markets have suddenly turned sharply lower.
Our pre-open indicators are now pointing to the Dow being down 30 points or so in the early going.
Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, the new issue of the newsletter will be available sometime tomorrow in the subscribers’ area of theStreet Smart Report website. And please stay tuned to the hotline for more potential portfolio changes!
‘Plunging Commodity Prices Are Ominous For Stock Market’
I’ll be back with the next regular blog post on Thursday morning at 9:25 a.m.
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12 May ' 10:09
Gold headed down to $1,500 or worse?
Saturday, May 12, 11:00
We remain on a sell signal for gold.
Our signal was primarily due to deterioration of gold’s technicals, reversals of our momentum indicators (not shown), investor sentiment for gold at the time, the pattern of lower highs and lower lows, and so forth.
But as usual, the fundamentals have caught up to what technical analysis was seeing in February.
Global economies are slowing. Even the U.S. economic recovery is stumbling. So demand for commodities is plunging, as are commodity prices. The jobs picture is deteriorating again preventing pressure from building for higher wages.
And those deflationary effects are taking support out from under gold, the historical hedge against inflation.
Our original downside target was $1,500 an ounce, which at the time of the sell signal was at the lower limit of the trading band that has formed since last August.
However, gold has been taking its time in getting there, which has given the lower limit of the trading band time to extend further, perhaps indicating a move below $1,500.
Emerging Markets. Buy or Bail?
I’m still hearing a lot of bullish analysis regarding emerging markets as the place to be, given the economic problems and market declines in developed country markets.
“With demand from the developed world tepid at best, trade between emerging markets themselves will accelerate.”
“Emerging markets had a good start in 2012 and our Asian strategists expect Asia to outperform developed markets in 2012.”
Much of the analysis points out how emerging markets even made larger gains than developed country markets in the bull market off the 2009 lows.
True, but that was then, and this is now.
Technical analysis is showing a different picture.
Emerging markets look to me like they’re possibly in a bear market that began in April of last year, with the rally off the October low to a lower high, potentially being only a bear market rally within an ongoing bear market.
How Far Behind the Curve Is the Average Guy in The Street?
Analysts and markets have been concerned about the economy since the monthly jobs reports over the last few months began showing new jobs in serious declines.
Yesterday it was reported that the University of Michigan’s Consumer Sentiment Index improved to 77.8 in May from 76.4 in April, topping forecasts of a fractional decline to 76.2.
And interestingly, the report said almost twice as many consumers in the survey reported hearing about the previous new monthly job gains than had heard about recent monthly job losses.
Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, there is a hotline and in-depth Mid-Week Markets Signals Update from Wednesday evening in the subscribers’ area of the. The next issue of the newsletter will be out on Wednesday. But please stay tuned to the hotline in the meantime for more potential portfolio changes!
‘Plunging Commodity Prices Are Ominous For Stock Market’
It was a mostly down day yesterday. Volume remained average based on the new normal, with 0.8 billion shares traded on the NYSE.
closed down 34 points, or 0.3%. The closed down 0.3%. closed down 0.5%. The closed unchanged. The closed unchanged. The closed down 0.2%. The closed up 0.1%. The closed up 0.1%.
closed down $14 an ounce at 1,581.
closed down $1.24 a barrel to $95.83 a barrel.
etf UUP closed up 0.2%.
closed up 0.8%.
European markets were mixed yesterday. The FTSE closed up 0.6%. The German DAX closed up 1.0%. And France’s CAC
Global markets for the week.
A negative week, very much so in Asia.
THIS WEEK (May 11) DJIA 12820 - 1.6% S&P 500 1353 - 1.2% NYSE 7816 - 2.2% NASDAQ 2933 - 0.8% NASD 100 2615 - 4.5% Russ 2000 790 - 0.1% DJTransprts 5140 - 1.7% DJ Utilities 472 + 0.8% XOI Oils 1,161 - 2.7% Gold bull. 1,581 - 3.8% GoldStcks 151 - 0.3% Canada 11694 - 1.5% 5575 - 1.4% 6579 + 0.3% 3129 - 1.0% Hong Kong 19964 - 5.3% 8953 - 4.6% 4342 - 2.7% S. Korea 1917 - 3.6% India 16292 - 3.2% Indonesia 4114 - 2.4% Brazil 59336 - 2.4% Mexico 38891 - 1.3% China 2394 - 2.4% LAST WEEK (May 4) DJIA 13038 - 1.4% S&P 500 1369 - 2.4% NYSE 7993 - 2.0% NASDAQ 2956 - 3.7% NASD 100 2737 - 3.8% Russ 2000 791 - 4.1% DJTransprts 5227 - 0.8% DJ Utilities 468 - 0.2% XOI Oils 1,193 - 2.5% Gold bull. 1,643 - 1.2% GoldStcks 156 - 6.0% Canada 11871 - 3.0% London 5655 - 2.1% Germany 6561 - 3.5% France 3161 - 3.2% Hong Kong 21086 + 1.7% Japan 9380 - 1.5% Australia 4459 + 0.6% S. Korea 1989 + 0.7% India 16831 - 1.8% Indonesia 4216 + 1.3% Brazil 60820 - 1.4% Mexico 39408 + 0.2% China 2452 + 2.3% PREVIOUS WEEK (April 27) DJIA 13228 + 1.5% S&P 500 1403 + 1.8% NYSE 8152 + 1.6% NASDAQ 3069 + 2.3% NASD 100 2741 + 2.4% Russ 2000 825 + 2.6% DJTransprts 5267 + 0.6% DJ Utilities 469 + 1.9% XOI Oils 1,224 + 1.8% Gold bull. 1,663 + 1.3% GoldStcks 166 + 1.2% Canada 12239 + 0.8% London 5777 + 0.1% Germany 6801 + 0.8% France 3266 + 2.4% Hong Kong 20741 - 1.3% Japan 9520 - 0.4% Australia 4433 - 0.3% S. Korea 1975 unchgd India 17134 - 1.4% Indonesia 4163 - 0.4% Brazil 61691 - 1.2% Mexico 39327 - 0.1% China 2396 - 0.4% Premium Content Area.
In the Premium Content section this morning: U.S. stock market short-term and intermediate-term signals.
Next week’s Economic Reports:
Next week returns to being an average week for potential market-moving economic reports, which include the Consumer Price Index, Retail Sales, Housing Starts, FOMC minutesFed’s Phila Fed Index, etc. To see the full list and times for each release
‘Plunging Commodity Prices Are Ominous For Stock Market’
Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, there is a hotline and in-depth Mid-Week Markets Signals Update from Wednesday evening in the subscribers’ area of the. The next issue of the newsletter will be out on Wednesday. But please stay tuned to the hotline in the meantime for more potential portfolio changes!
I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m.
We believe we can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!
Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings. And we are off to a great start this year, and also moved up to #1 Long-Term Market-Timer.
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10 May ' 23:05
A Scary Chart Says A Global Bear Market Is Underway!
Thursday, May 10, 9:20
We haven’t seen this analysis anywhere else, but it’s looking increasingly like global markets outside of the U.S. rolled over into a bear market last April, and that their rally off the October low was only a bear market rally within an ongoing bear market.
We’ve been saying we expect only another correction sometime this summer, but not the next global bear market until 2013 and 2014. And the U.S. market recovered from last summer’s correction and has gone on to nominal new highs.
But the FT World Index Ex-USA plunged 22% last summer, exceeding the official 20% decline that defines a bear market. And the rally off the October low only partially retraced that decline before rolling over to the downside again in what could be the beginning of a typical 2nd leg down.
Global markets outside the U.S. have been correctly fearing for over a year now that the eurozone debt crisis, austerity programs, slowing economies, and actual recessions in Europe, were a threat to global economies
Will U.S. Follow Europe’s Lead in Solving Its Debt Problem?
Luka Katseli, former economy minister of Greece, says, “The euro-zone’s debt program is suicidal, not only for Greece, but for Spain, Portugal, Italy, everywhere. The mistake is being made.”
She is referring to the EU’s German-led year-long insistence that governments tackle their debt and deficits problems by immediately cutting government spending in the midst of slowing economies and even recessions.
Demands for similar cuts and austerity actions to curb its record government debt are being made in the U.S.
Fed Chairman Bernanke has warned Congress several times in the last two years that it needs to have a plan for tackling the debt problems, but the plan shouldn’t be implemented while the economic recovery is still anemic.
In making his points a year ago he said he thought Europe was making a mistake by tackling its debt problems too soon with austerity programs, that it could potentially drop their economies back into recessions, requiring more spending and exacerbating their problems. Seems like he was right.
‘Europe Is a Bigger Problem Than the Slowing U.S. Economy’
Subscribers to Street Smart Report: There is a very important hotline and in-depth ‘U.S. Market Signals and Recommendations’ update from last evening in the subscribers’ area of theThat is in addition to the important ‘Global Markets’ update from Monday, and the ‘Gold, Bonds, Dollar, Inflation’ report from Tuesday.
Another negative day, but another day that saw weakness in the morning but some recovery in the afternoon. The Dow was down 185 points at its low, but recovered to close down ‘only’ 97 points. Volume picked up some again, with 0.94 billion shares traded on the NYSE.
closed down 97 points, or 0.8%. The closed down 0.7%. The closed down 0.9%. The closed down 0.4%. The closed down 0.3%. The closed down 0.5%. The closed down 1.4%. The closed down 0.1%.
closed down another $9 an ounce at $1,589 an ounce.
closed down $.52 a barrel at $96.49 a barrel.
etf UUP closed up 0.4%.
European markets came well off their earlier lows to close mixed yesterday. closed down 0.4%. recovered from being down more than 1% to being up 0.5%. recovered to close down only 0.2%.
Asian Markets Were Mixed Last Night.
The Asia Dow closed down 0.1%.
Among individual markets last night:
closed up 0.5%. closed up 0.1%. closed down 0.5%. closed down 0.4%. closed up 0.1%. closed down 0.4%. Malaysia closed up 0.2%. New ZealandSouth Korea closed down 0.3%. Singapore closed up 0.1%. Taiwan closed up 0.1%. Thailand closed down 1.4%.
Subscribers Premium Content Area.
Markets This Morning:
European markets are bouncing back some this morning. FTSE is up 0.4%. The German DAX is up 1.0%. France’s CAC is up 0.6%.
Oil is up $.58 a barrel at $97.39.
Gold is up $6 an ounce at $1,594.
This Morning in the U.S. Market:
This week is a very light week for potential market-moving economic reports, almost none. To see the full list and times for each release , and look at the left side of the page it takes you to.
Monday it was reported that U.S. consumers, who had begun to cut back on debt in the aftermath of the 2008-2009 financial crisis, continued to load up on debt in recent months. Consumer debt rose by $21.3 billion in March, the 7th straight month of increases. It was double the consensus forecast for an increase of $10 billion.
Tuesday it was reported that the NFIB Small Business Optimism Index rose to 94.5 in March from 92.5 in February, which returns it to the same level as February of last year.
Yesterday it was reported that U.S. wholesale inventories rose 0.3% in March, while sales rose 0.5%.
This morning it was reported that new weekly unemployment claims fell a fractional 1,000 last week. The more important four-week moving average dropped by 5,250 to 379,000. And the Commerce Department reported the U.S. Trade deficit widened sharply, by 14.1%, in March.
Concerns over the situations (plural) in Europe are receding a bit this morning in Europe and the U.S.
Our Pre-Open Indicators:
Our pre-open indicators are pointing to the Dow being up 80 points or so in the early going.
Subscribers to Street Smart Report: There is a very important hotline and in-depth ‘U.S. Market Signals and Recommendations’ update from last evening in the subscribers’ area of theThat is in addition to the important ‘Global Markets’ update from Monday, and the ‘Gold, Bonds, Dollar, Inflation’ report from Tuesday.
I’ll be back with the next regular blog post on Saturday morning, as usual later than the week-day posts, probably around 11 a.m.
We believe we can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!
Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings. And we are off to an even better start this year, now ranked #1 Long-Term Market Timer so far in 2012.
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08 May ' 11:54
Be Careful of Claims About Election Years!
Tuesday, May 8, 9:25
As is the case every election year, I’m seeing and hearing a lot about how election years are always positive, and getting a lot of e-mails from non-subscribers asking if the market’s seasonality ever works in election years, since they’re always positive for investors.
I can tell you how our Seasonal Timing Strategy worked in the three election years that have taken place since STS was introduced in 1999.
The years 2000, 2004, and 2008 were election years.
As shown in the table in the Sample issue of our newsletter, or in its description (Seasonal Timing Strategy) on the Street Smart Report website, our STS was up 2.1% in 2000, when the S&P 500 was down 9.1% for the year (and the Nasdaq plunged 39%). In 2004, our STS was up 8.1%, but the Dow was up only 5.5%. And in 2008, our STS was down only 3.6% when the S&P 500 was down 36% for the year, and the Dow lost 31%. So our version of seasonality certainly worked in the way it was designed even in election years.
Regarding election years in general, as subscribers know, five months ago, in December, I provided a study of election years going back to 1920 for subscribers to keep in mind for this year. You can see it by clicking on this link. The Truth About Election Years! Dec. 16, 2011. It includes a table of each election year since 1920, the incumbent president at the time, his party affiliation, whether the market was up or down for the year, and by how much.
Summing it up:
Of the 23 election years, 15 were positive, or 66.7%.
However, ignoring whether or not they were election years, over those 91 years, 62 were up anyway, or 68%.
Conclusion: The market was up in 68% of years overall, and 67% of election years. So, whether it was an election year or not had no effect on the market’s performance.
Of the 23 election years, the market was up 63.3% of the years when a Democrat was the incumbent president, and 66.7% when it was a Republican.
Conclusion: It makes no difference which party is in the White House at the time of the election.
A BIg-Thank-You to:
Alan Newman, editor of Stock Market Crosscurrents (www.cross-currents.net), for his tribute to our Seasonal Timing System.
In his current issue, Alan covers the market’s seasonality and the ‘Sell in May and Go Away’ phenomenon, in which the market has a very strong history of making most of its gains between Nov. 1 and May 1, and experiencing most of its corrections in the opposite season.
He includes an interesting chart showing how $10,000 invested in the Dow index in 1950, but only in the favorable season each year, would have grown to $657,000 by now, or an average of 14.1% a year. But $10,000 invested only in the unfavorable seasons would be worth only $9,028.
Alan says,
“The pattern of favorable and unfavorable seasonality was initially uncovered by both Norm Fosbach and Yale Hirsch. The baton was later taken up and vastly improved upon by our colleague Sy Harding, who coupled seasonality with a common technical indicator. As distinctive as our chart above might be, Harding’s investment formula based on seasonality has an even more astonishing record.”
Quote of the day.
Confirmation bias is the tendency to see things in your environment that confirm your pre-conceived ideas, and not see things that conflict with what you already believe. From ‘Defending Jacob’, a novel.
‘Europe Is a Bigger Problem Than the Slowing U.S. Economy’ Click here.
Street Smart Report: There is a very important in-depth ‘Global Markets’ update from last evening in the subscribers’ area of thetomorrow. The regular in-depth ‘Mid-Week U.S. Market Signals and Recommendations’ update will be there some time tomorrow.
A mixed day. There was no follow through to last week’s decline in spite of the Sunday elections in Greece and France, and the very negative reactions in Asian markets.
The Dow was down 68 points at its low, but recovered to close down only 29 points, or 0.2%. The rest of the market indexes were also down in the early going but they recovered enough to close up fractionally. Volume was light at 0.75 billion shares traded on the NYSE.
closed down 29 points, or 0.2%. The closed up 0.1%. The closed up 0.2%. The closed up 0.1%. The closed up 0.1%. The closed up 0.2%. The closed up 0.3%. The
closed down $6 an ounce at $1,638 an ounce.
closed down $.46 a barrel at $98.02 a barrel.
etf UUP closed up 0.1%.
closed unchanged.
European markets were down sharply in the early going yesterday in reaction to the elections in France and Greece, but closed mixed. closed down 1.9%. recovered from being down more than 2% to being up 0.1%. recovered to close up 1.6%.
Asian Markets Plunged Sunday Night But Recovered Fractionally Last Night.
plunged 2.1% Sunday night, with individual markets closing down as much as 2.2% (Australia), 2.8% (Japan) and 2.6% (Hong Kong).
But they bounced back up fractionally last night, with the DJ Asia-Pacific Index closing up 0.2%
Among individual markets last night:
closed down 0.3%. plunged 2.2%. closed up 0.5%. closed up 0.63. closed up 0.5%.Thailand closed up 0.3%.
In the premium content area this morning: Our signals on the U.S. Stock Market.
European markets are down again this morning. The FTSE is down 0.2%. The German DAX is down 0.7%. France’s CAC is down 1.6%.
is down $1.04 a barrel at $96.90.
is plunging $23 an ounce at $1,616.
This week is a very light week for potential market-moving economic reports, almost none. To see the full list and times for each release , and look at the left side of the page it takes you to.
Yesterday it was reported that U.S. consumers, who had begun to cut back on debt in the aftermath of the 2008-2009 financial crisis, continue to load up on debt in recent months. Consumer debt rose by $21.3 billion in March, the 7th straight month of increases. It was double the consensus forecast for an increase of $10 billion.
This morning it was reported that the NFIB Small Business Optimism Index rose to 94.5 in March from 92.5 in February, which returns it to the same level as February of last year.
Concerns over the situations (plural) in Europe are the new focus of the market, replacing the initial reaction to Friday’s dismal jobs report.
Our pre-open indicators are pointing to the Dow being down 70 points or so in the early going.
‘Europe Is a Bigger Problem Than the Slowing U.S. Economy’ Click here.
Street Smart Report: There is a very important in-depth ‘Global Markets’ update from last evening in the subscribers’ area of thetomorrow. The regular in-depth ‘Mid-Week U.S. Market Signals and Recommendations’ update will be there some time tomorrow.
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