Friday February 10, 2012
I am selling my long positions today. While TLT and the Dollar have experienced modest pullbacks they have not powered the markets of oil, gold, or other commodties a lot higher. The market internals appear to be peaking, have peaked, or depending on the indicator, are running out of room to go higher. The risk reward is totally opposite what it was last August or October.
So again we recommend selling positions here. There may be another 50 points left in the SPX but it is up form 1075 to 1350.
Our reasoning is as follows.
Analysts on CNBC and Bloomberg have turned quite bulish. Yesterday one recommended Apple on a slight pullback. Apple is in a near vertical parabolic position, up from 360 in the fall to 490. It was a buy at 360.
QQQ has likewise powered to a new high.
While TLT and the Dollar have come donw that has not powered gold and oil higher as one would have expected. As we remarked yesterday no one seems interested.
VIX dropped below 17.5 and bounced up 2.59% yesterday. The area under 17.50 is certainly associated with prior highs in the market.
Most important there is just not enough left for internal indicators to go higher. It seems far better to leave the party now than wait for a sudden surprise. Examples include
SP Bullish Percent BP of stocks over 50 day MA is 86.6%, over 200 is 79.6%
NYSE Summation Index
How much more can one expect. This is not coincident with a low risk buying opportunity. This is coincident with a high rist exit point. This is why we are exiting. It is truly incredible that the talking heads on CNBC are bullsih now. Note MACD is topping out as it did in November.
NASD Summation Index
Likewise the NASD Summation Index is in nose bleed territory. Readers know that we have relied on teh summaiton index and had very good results following its lead. MACD is topping here as well in the lower panel. So the summation index for both NYSE and NASD seems to confirm a top.
NYSE Advance Decline
One might label this chart, as good as it gets. THis is the exact opposite from March 2009. Hm a new high in the A/D not matched by a new high in the actual index. Let's leave the party.
GDXJ Market Vector Jr and CEF Central Fund both flashed daily sell signals on our PAR SAR indiator.
GDXJ made a lower high than Sept or Nov and has turned down. Note the PAR SAR blue dots indicating a flashing a sell signal. In the bottom panel slope is rolling over.
I expected TLT to be much lower by now. It is not. The Dollar has dropped from 81.5 to 78.57.
Despite my optimism GM has double topped at 26.5. Still that is a nice move from 20.
Overall RIG, GDXJ, CEF, HPQ, WRE, WRI have performed well. Take profits. Note we are doing this ahead of what appears to be a potentially perilous March with a host of elections around the world. Note that we have written about a Perfect Storm of investing optimism but extreme negative social mood world wide. Those are incompatible events.
The Market Perspective bases its information on techniques and sources that have been found to be reliable in the past, and The Market Perspective tries to base opinions on sound judgment and research, however, we do not guarantee that future results will match past performance ands no guarantee can be made that advice will be profitable. The Market Perspective accepts no money for stock recommendations and is purely motivated by its own research in recommending any stocks. Put another way, the responsibility for decisions made from information contained in this letter lies solely with the individuals making those decisions. The editor and persons affiliated with The Market Perspective may at times have positions in securities mentioned. Nothing contained herein represents an offer to buy or sell securities. The Market Perspective encourages investors to be diversified, and to maintain sell stops and risk control over their valuable investment capital. No guarantee can be made to the accuracy of text or charts.