Weekend Jan 25 2015
He hates them. They hate him.
Peggy Noonan on the relationship of the President and the Republicans
Peggy is someone who usually dances around real relationships i thought that comment was validation of my contention that social mood is souring and will eventually work its way into markets. The EU Central Bank plans the same as the US FED, lots of bond buying. But with their economy well into recession, it is hard to see how that will work. Too little too late n an environment unfriendly to business, burdened by demographics which do not support a growing older dependent class, and facing double digit unemployment.
The Advance Decline Momentum Slows
Our most reliable indicator has not turned down. But its momentum has certainly slowed. Note the weaker condition of RSI at top. Weekly closes below 50% would be significant. Remember topping is a process.
Taking out the December low at 10.390 will turn this trend down. We are five months into a series of lower highs. This is what John Hussman meant whenhe said the bear market had alredy begun.
Stock indexes are moving sideways in topping patterns. HDGE is moving sideways in a bottom pattern. Patience as Richard Russell says.
France versus US
France in the main panel makes lower highs. The US at bottom makes higher higs.
Spain the Bear Market Gets underway
Monthly indicators are slow to change. The price has turned down as has MACD at bottom. The bear takes hold in Europe.
Bonds via TLT and the US Dollar
I overlaid the TLT red black bars with the Greeen line of the US Dollar. IT is clear what has happened. To park money in the strong dollar, the world has purchased US Stocks and Bonds, period.
A reversal in the Dollar will likelymean a reversal to the strong stock and bond rallies.
Ten Year Yield
Let's watch this two hour chart on the ten year yield. If it takes out th January low, yields are haeded down, if not Janet Y. will be surrprised to learn she is a player not the player in the bond market.
Dollar versus Euro
The Dollar Rally has lasted longer than I thought it would. It depressed both the Euro and Oil Prices. With all the negative news on Europe, a rally in the Euro is surely at hand. One might scale in positions on a dollar averaging basis in the euro or, hmm, oil?
USO Oil ETF
I'm shot to pieces.
Ned Pepper to Rooster Cogburn in True Grit
Oil is truly shot to pieces. With sentiment at 98% bulls on the dollar this has lasted a good while. Still oil has not been knocked below the lower 40s.
Is gold finally going its own way? It is interesting that gold has rallied as the Dollar soars. That is an uphill climb for gold. If the Buck reverses in the near future, what will gold do, advance? It looks like a fourth wave down is setting up on the daily chart.
The Bottom Line
Some European stocks markets are already in full bear mode. The US markets are peaking one by one in such fashion that the public and many analysts are still quite bullish. If the NYSE takes out 10,390, the trend there has turned down.
Rates are negative in some European countries which suggests further bond buying is futile but Mario never called me to ask.
The higher the Dollar goes the more surprising the reversal will be. That could take oil prices back up as well as gold. Gold may be the sleeper maket of surprise this year.
Social mood has turned negative. The President threatened six vetoes before Congress even convened. Barbarity reigns in the Middle East. People march in France but the government does nothing to change things. Russia presses its advantage in the Ukraine, again the West does nothing. The Election in Greece today will give us a first clue about sentiment towards staying in the EU. The Italian President wants Euro parity wih the dollar and so the currency wars begin.
As our openning qote indicated, even mild mannered Peggy Noonan is seeing the handwriting on the wall.
Thanks for reading TMP
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