Tuesday Oct 2 2012 7:46 AM CST
Most brokerage firms put out vague, hazy assortments of economic data which passes as investor advice. Do not confuse data with information. Here is an example of a vague indicator at best. The Manager suggests that when forecasts for earnings turn down one should be exiting the market. This is is far too vague to be of real value. Depending on internal indicators as we do at TMP is a far better metric.
The Land Down Under Slips Further Under. We have observed that as China slows all the Pacific Rim countries leaning up against it, will fall much further. The March Down has begun, Australia was a big commodity play on Chinese consumption of materials.
Before there was a Warren Buffet there was John Templeton. Sixteen Rules for Investors. Sir Templeton was a stock picker something we don't do here but he was also an early advocate of global investing.
Istanbul , where people want to work, celebrates the decline of France, Spain, Greece, where people have convinced themselves they do not have to work, at least not much. Money never sleeps, it moves to where the action is. In my lifetime Texas has gone from nearly no Fortune 500 headquarters to out pacing New York State. More of the 500 are now headquartered in Texas than in New York.
Doug Short usually has some interesting charts and these two are no exception. The indicators suggest that we are at the same valuations as 1937 and 1966 but below 2000 and 2007. As he says this can go on for some time but it does speak to the degree of over valuation.
A hallmark of the run-up in the markets atop the real estate boom of 2004-2007 was the expansion of the Distinctive Properties section in the WSJ. At the market top in Fall 2007, that Friday section ran some dozen pages. When a publication that tracks stocks and bonds goes for real estate, it is worthy of attention. Now in Monday's edition 10/1/12, a full page ad on page A 11 proclaims that the WSJ is 'raising the bar' on real estate this friday 10/5/12. Coming four years after the bottom, this is another clear socionomic sign of expansive mood typical of the forthcoming top we have been discussing. There were no such announcements in 2009. Hollywood stars seem to be doing better trading real estate among themselves than by acting in movies and television. In the last two weeks we have noted
-the announcement of the completion of financing for the Kingdom Tower, the world's tallest at one kilometer, while the Burj in Dubai is still under performing
-the assured success of the new Formula One track in Austin, TX, and it may be successful but it is opening at a four year high in the markets, the third high in markets in this 18 year cycle since Year 2000, and that is the point
-the desire by the WSJ to cash in on advertising for Distincitive (read over priced) real estate. Real estate speculation is a derivative of the economy. The cheap money provided by the FED only fuels such speculation it does not create widespread jobs.
It's all here, but the job of the socionomist is to point it out.
SOX Semi Conductor Index
If semi conductors are coming to the Stock Party, they need to get dressed and out the door. SOX topped in August and has either corrected or fallen out of favor since. LIke the lagging Transports this is a non confirmation of the stock rally. Semis are the basis for everything electronic in the economy so this is a measure of economic strength.
DOW Indus trials versus the Transports
S & P Bullish Percent Indicator
This indicator has fallen below its uptrend line from June 1. Does that mean anything, yet? I don't know. Is BP coming down to test the converging moving averages at 70? Or is it making a lower high signalling the typical weak Fall time period? This is why unweighted internals are important. It gives a better picture of what the overall market is doing than the weighted major market averages.
BP Closer Up
the quiet series of higher lows since mid August, all of Sept is slightly higher
the rounded bottom formation which dates back to the end of June.
That VIX closed over its 50 day MA
that the other MAs are converging
This is how a market bottom is formed. Eachpullback sees slightly more buyers coming into the market. The MAs come together, the shortest MA starts climbing, a first attempt to break through fails but as we say, a higher bottom is then formed. This bears watchng very closely.
I have not changed my opinion that it seems unlikely the market would reward all those still in the Safe Harbor of bonds, TLT has rallied again to a short term overbought point. Yet the four month stock rally is not generating across the board participation. I am happy enough to have profits in the bank.
The markets are up this morning in pre open trading. Perhaps things will pick up here. But remember that October is historically a treacherous month.