Tuesday Feb 14, 2012
The market had a bounce Monday after out exit on what was regrettably a down day Friday. See our reflections on Strategy in a recent post.
But the evidence is quickly mounting that the deision to exit was correct, if a few days behind the orthodox top.
We also noted the increase in insider selling last week. Note we bought in October when the insiders did as well. An alert reader brought Mark Hulbert's report to our attention. Also note the video link about hte lagging Transports potentially flashing a Dow Theory Sell Signal.
Transports look ot be completing some sort of third wave. Note the downturn in MACD aat bottom. This is not screaming sell just slipping out of the trading room when most are not noticing. And the Trannies are way ahead of their trend line.
Social mood is positively expanding as noted in our comments about the skyscraper in Cambodia and the return of the McMansion in friday's WSJ. Now Bloomberg jumps on board.
Yet another alert TMP reader brought this to our attention. It dovetails nicely with new highs in Ralph Lauren RL.
And there's more.
Monday yesterday was na outside reversal day in RIG, to the downside. An outside reversal occurs when the range exceeds the prior day range to a new high and low and price declines. The buying is exhausted.
And this is happening well below total book value for RIG.
Insider selling, expansive social mood, a very weak PTEN, and an outside reversal day in RIG,
all of which supports our idea of taking profits last week.
OH looks like GM finished five waves up from December, support at 23.5. We bought at 20 and sold Friday around 25.5.
Various articles in the media and on the WSJ op ed page today suggest that the Greek vote is mere window dressing. The population, busy burning down Athens, does not eralize the economy has been floating on a sea of spending via government borrowing. Now the borrowing has ended and the huge transfer payment economy of government employment is ending. This explains the US Dollar re surgence.
The market of course will do everything it can to keep the majority long as warning signs are ignored. Not the euphoria over Apple hitting $500, now the most valuable stock on the planet. The media will continue reoporting stocks hitting new highs convincing the average viewer that all stocks are rising.
The seasonal pattern is a final high before tax time April 15. That may come a bit early this year but we are watching from the sidelines. This is a high risk market where most stocks are way elevated from their October lows and the majority are now over MAs, where as less than 15% in some cases were over those indicators this past fall.
thanks for reading TMP.