Saturday November 5, 2011
Forty-eight percent said they view the Democratic Party favorably, while the Republicans came in at 40%. (Neither of the parties in our two party system broke through to 50%, which tells you something about the moment we're in.)
Peggy Noon, Weekend WSJ
This of course is precisely what we have been discussing in our socionomic section this past year. And Peggy this is not just a moment. This is about half way through an 18 year period of negative mood. The sour public mood has rejected politicians world wide. (Greece is forming a new government as we write). The discord was evident in the up down nature of stocks where we have seen many reversals across successive days. Libertarians have long wanted a None of the Above on the ballot. If None were to win, all other candidates would be out of the race and unable to run for the seat. Needless to say this option has not been embraced by incumbent professional politicians.
Expect more Dollar Bashing as the US Buck quietly establishes a higher low
The Market Perspective Oct 29, 2011 Summary last Weekend
The US Dollar
Indeed our prediction of the past weekend is already coming true. The Buck made a higher low a week ago and then rallied back above its 50 day MA. We used the correlation coefficient at bottom to remind you that the Dollar and US Stocks move opposite one another. This renewed strength in the Dollar wil eventually cause stocks to top out, probably within the next three to four months.
Please compare this negative correlation above with the positive correlation of BID and PTEN i the last graph in this update. This is why we call ourselves The Market Perspective.
Internal Indicators
84% of the S & P stocks are over their 50 day MA.
74& of the S & P stocks exhibit bullish chart patterns.
The weekly high low indicator pulled back to its 200 day MA, that explains the up down action of this past week.
The Daily NYSE Summation Index has blow through both MAs, 50 and 200 confirming the rally underway.
At the first sign of sell off this past week investors scampered back into the VIX. As long as fear remains high the rally is in no danger of ending. Rallies end amid complacency with low VIX values.
VIX Volatility Index
At left note that the VIX bottomed just under 15 in late April a day before stocks topped in the bottom panel. Then VIX soared to 47.5 and stocks dropped from 1350 to 1075. The twin peaks on VIX in August and October correspond to the stock market lows of Aug 8 and Oct 3. The blue 50 day MA is breaking over which means the rally in stocks is underway despite all the Greek hype and such. At bottom stocks broke out of their sideways pattern re tested the top of that pattern this past week and then rallied again. Period. Barring a cataclysmic event, it should take three of four months for complacency to set in such that VIX recedes back below 20. It needs to break below the 200 day MA to do that. And really that is all one needs to know.
Sootheby BID Patterson PTEN and their correlation to the markets
Sootheby's BID the auction house in the large panel and Patterson PTEN at top an energy service company both display remarkable correlation to the overall market. BID is a reflection of positive mood which causes people to bet or bid higher on art and such. PTEN reflects the oil market as a sort of hyper derivative. The higher oil prices go the more activity that spurs is stimulating existing production.
We ran the Correlation with BID and SPX and it is a solid .9. At bottom the weekly MACD is just starting to turn up.
Conclusion, don't worry about Obama's low ratings. As the market rallies his approval will move up as well. That won't be the case by late next year but for now, as we said last weekend, enjoy the Santa Claus rally.
Socionomics
Sarbanes Oxley, Dodd Frank and a jillion new rules did not prevent a known loser, Jon Corzine, from talking the CFTC Commodity Trading Futures Commission out of stricter regulations. The missing $633 M was apparently found at another bank late this week.
CFTC Chair Gary Gensler said regulators are 'taking all appropriate action to get to the bottom of the shortfall.
Wel as Tanya Tucker sings, it's a little to late to do the right thing now. The right thing would be enforcing the rules against someone known for flaunting them. Gensler is simply lucky that MF Global was not the size of Bear or Lehman. His negligence would certainly be in question, as it is he apparently gets a free ride for not doing his job.
This sort of continued inability to get regulators to do their job only builds more negative sentiment against Washington.
Thanks for reading TMP
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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 and 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.
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