The Market Perspective

The US Dollar Powers Ahead

Tuesday Nov 22, 2011

The US Dollar rallied taking gold silver and stocks down, never mind the Super Comittee.

Silver in gray moves opposite of the US Dollar, That is clear in the negative corrrelation at bottom. We noted the weakness in sliver a couple of weekends back.  Gold has now joined hat move to the downside. 

Markets have recovered  in Europe and here this morning.  But let's look to the leader here, Apple.

Apple is 12% of the QQQ. That shows as a positive correlation at bottom. It may be that a re test and  a move under the 200 day MA is in order here. That was the case in June and October. 

In the first graph the Dollar is only one point away from a double top. That might make the most sense. The Dollar tops again and stocks like Apple re test important MA before a Santa Claus rally in December. 

Other major analysts are screaming downside breakout. I am not so sure with the VIX still elevated. 

Let's look at the VIX, is it headed up or down?

That is probably too many lines on one chart but I was attempting to discern a trend. The MA ribbons seems to be peaking. The two black lines form a triangle. AT top TLT had double topped at 120. It strikes me that VIX is not confirming the move higher in TLT. We may have to wait till next week for more volume to clear this up. The SPX did bounce of Art Cashin's line in the sand at 1185 yesterday. 

Market Vectors Jr versus the Dollar

UUP is an ETF for the US Dollar, in green. It moves opposite the price of GDXJ.Note the complete opposite move at the October low. We are coming to another similar situation. I suggest placing a succession of lower orders for GDXJ. A move back to 26 will be a one third drop. that sounds like a bargain basement sale to me. 

A Turkey Day Rally Ahead?

Saturday November 19, 2011

Overall

The Positives

The market hit two extremes of negative sentiment and over sold condition Aug 8 and Oct 3.

The seasonal trend the last three years argues for a low prior to Thanksgiving and then a rally. 

VIX and TLT remain quite high reflecting a high state of fear and defensive position. 

The Negatives

Various indices are breaking down. 

The weekly  summation index has run into resistance. 

The stock market topped in Fall 2007. Overseas markets topped at this same time November 2010 as we have reported. 

Did we overstay our welcome at the party?

One more thing. The markets are alive with various Exchange Traded Funds. These funds allow sector investment throughout the day in just about anything you can imagine from precious metals to oil to financial institutions. Many of these ETFs use futures and or options to set up a 'synthetic' trade.  In the update Friday afternoon we posted a comment from an introducing firm that had shut its doors. 

BCM ceases operations

Note the author is quite upset with the Obama Administration. A counter party failure is what occurred with MF Global, and what caused Greenspan to be fearful of Long Term Capital Management in 1998. If the other side cannot fulfill its obligation, we have a failure. Here clients cannot access their money, and the administration is doing nothing about it. This is serious. In answer to an e mail yes we would put all ETFs at 'in danger' for counter party risk. That was the cause of the 2008n meltdown. The geniuses at Lehman borrowed short term via commercial paper to leverage long term in sub prime mortgages. When the mortgages did not pay, they failed to pay on the commercial paper and the whole system locked up. 

 

NYSE Advance Decline Line 2007

The NYSE A/D line peaked i the summer of 2007. We used the SPX at top since most are more familiar with the numbers for it than the NYSE. The SPX double topped. Its fall was slower as it is volume weighted and the A/D line is not. 

NYSE A/D line now

Regular readers recall that this indicator has had a steady uptrend since the March 2009 lows. We have long held that a change in direction here would be telling and probably result in a market turn. This time the A/D line double topped. The index at top has made a lower high. To be fair the moving averages have not turned down. We have had sideways action since June.

Daily NYSE Summation Index

The weekly summation index NYSI which we often cite has not turned down. The daily however clearly as and we how it above. This means we have seen the best of the recovery rally for now. 

Hourly Dow

I suspect the hourly chart generated a low here that was a re test of the resistance at 11,600-11,700. We should see the expected rally this next week. Note the low position of MACD at far right. 

 

The sensitive semiconductor SOX index dropped this week as well weakening the NASD 100 and its trading partner the QQQ. 

The Dashboard VIX TLT SPX

VIX a measure of put buying a defensive activity is up in the middle panel.

At bottom TLT the bond fund is up, another defensive measure.

At top the SPX is down, the usual result of the first two actions.  But you are always backstopped by, as they say on the tv ads, diversifying into gold and silver right, not quite.

Gold and Silver

Gold is the red gold line and silver is the black line. One can see the correlation. 

One can also see the high in late summer, a lower high in November and now both are lower again, as the saying goes, its all one market AOM. So what is oil doing?

OIl and Patterson Energy Service PTEN

Until the October low, PTEN closely tracked the price of oil. I noticed on the rebound though that PTEN was substantially underperforming the oil price. What did the market know about PTEN?  Well something notice that PTEN rolled over at a lower high this week than its September peak. At bottom the MACD has peaked on oil. 

So

the NYSE  Advance Decline line double topped

the Daily Summation Index rolled over

the DOW, NASD 100, Russell 2000 are all rolling over, the smaller stocks look worse than the big caps

Gold and Silver are in decline

Oil prices are not confirmed by the Energy Service Sector

The financial XLF and Broker XBD have fallen under both their 50 and 200 day moving averages. 

On the other hand the weekly charts as we have noted are in contrast to the over bought nature of the daily charts. Weekly charts appear to be bottoming. 

Our conclusion is that we will continue to expect the same sort of rally we had the last three years. It is unlikely the market will fall apart with VIX and TLT at elevated levels. But the overall look is that of late 2007. The internals are getting weaker. The banks and brokers are weakest of all, here is our last chart, even White House Insiders are having a terrible year. Buffet's options on GS are now below his strike price. 

GS

Socionomics

1960 was a banner year for the US. Jack Kennedy would be elected President, the recession of 1958 was behind us, and yes GE had introduced color television. Sunday Night was the big night for television. The Wonderful World of Disney led off the evening. This promoted Disney Everything and featured entertainment for the whole family. Tinkerbelle, Davy Crockett, Jiminy Crickett warns Pinnochio of danger, you get the idea. 

Since GE owned NBC and since they really wanted everyone to buy a color tv, GE had NBC produce a show just to showcase what color tv could do for your entertainment level. Younger readers cannot appreciate just how poor the color was what with vacuum tubes and all but...

Bonanza played from 1959 to 1973.  An alternate title might have been How the West Never Was. Filmed  near Lake Tahoe, it was  and is a beautiful setting. Think Father Knows Best or better yet, My Three Sons  on Horseback And though everything was green on the Ponderosa, it never rained, the characters never had  spot of mud on their immaculate outfits. 

This is what happens in a positive cycle of social mood. That was the case form 1948 to 1966 and those Sunday evenings were the epitome of positive social mood, look at the expressions on Hoss, Ben, and Little Joe at right. 

 

 

 

 

 

 

 

Fast forward to our present 18 year cycle of negative mood. I actually rejected the photos of blood and gore to find this one to contrast with the family portrait of the Cartwrights above.

Now  on Suncday evening AMC features, the best line up they can come up with, and is it ever in tune withe the mood.  Notice the difference in the photos? Yep meet The Walking Dead. I honestly have not watched the series but in the interest of socionomics will do so. 

After this hour of family fun and frolic, AMC follows with We're Not Bonanza otherwise known as Hell on Wheels. The hero's wife was raped and murdered and he's out for revenge, when not pontificating over all the violence. Did I mention he owned slaves?  Interestingly the lead freed slave Bohanon bonds with has my last name as his first name, Elam. 

 

 

Our point here is to contrast the mood of the two eras. If you're wondering why the Super Committee cannot agree on an outcome....well compare the photos above, the mood has changed. 

 

 

Thanks for reading TMP

 

Dennislelam@gmail.com

 

 

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.

 

 

Dances with Wolves

Saturday Nov 19, 2011

Kevin Costner's movie Dances with Wolves featured a dramatic recreation of a buffalo hunt. A few Indians on horseback stampede a giant herd of buffalo, killing a few in the process. The remaining hundreds of buffalo run for their lives. 

What's wrong with that picture, well everything from the Buffalo's standpoint. A horse in no match for a rhino like buffalo. If the buffalo had turned and run against the Indians, it would have been a totally different outcome. The indians would have become farmers, if they wanted to eat. In the process the herd could have easily run through a teepee village trampling and destroying them all. 

But the buffalo did not do that. They reacted with a herding instinct. Yes, there was danger, but the correct response was to run at the Indians, not away from them. And so, the few buffalo remaining  are on display in zoos and various wildlife areas today. 

As humans we have fives senses of touch, smell, sight, hearing, and taste. Those served our cave man ancestors and the Indians reasonably well. At the sight of danger, the buffalo is chasing us, run. 

But that does not work in investing. We need  a sixth sense. 

My high school debate textbook listed four levels of probability. 

Certainly true -  the earth revolves to the east

Probably true - that won't change

Plausibly true - a giant meteor will hit he earth in our liftime

Certainly false - the earth will spin out of its orbit resulting in another ice age as it spins away from the sun or the earth will reverse the direction of spin or some such

The problem for investors in divining the difference between probably and plausible. Will the markets continue up or sideways or reverse and go down. 

Charting was once the venue of the well to do with  the data to produce the charts. Chart services were available in the 1980s for those that subscribed and studied the books on how to interpret them. And so there were reliable 'reversal' patterns. 

Now however, virtually everyone interested has some kind of charting software. The old rules no longer hold. A move lower, like August 8 or Oct 3 may be just a throw under, not the start of a complete breakdown. 

We had another example of this yesterday. THere are chart breakdowns the last two days. One of the Deans of Tech Analysis, John Murphy,  made this pronouncement Thursday on stockcharts.com

Chart 10 shows the QQQ falling below both moving average lines in rising volume. A 4% drop in the Semiconductor (SOX) Index was a big reason for that. From a charting standpoint, that appears to have ended the October rally. 

Dennis Gartman, who is another well respected, and expensive analyst, was cited in this article listing five reasons to move to the sidelines. 

I was in the process of posting a refute of his reasons Friday afternoon. 

The riots in Greece are nothing new, occupy Wall Street is being shut down and never produced one serious realistic demand, Euro debt contagion is a problem but as noted the Euro is higher than a year ago, the debt committee will do what Congressional debt committees always do with out money, spend more of it. 

However the article on Zero Hedge we posted yesterday did give me some pause on the MF Global issue. 

BCM ceases operations

An introducing broker has shut down. Her clients simply cannot get to their funds. Weeks after the MF Global demise, where is their money. She suggests Corzine simply stole from the segregated accunts, and lost it. Corzine was free to gamble MF's money but not the clients. Now that money  is apparently gone. 

This is the modern equivalent of the bank failures of 1930, you cannot have your money, it;s gone. 

After duPont Walston sold its offices in 1974, funds went to the buying offices. It was not possible to get them transferred to another broker. At least the money was there if not where you wanted it. 

And so I posted the article and candidly told all that I liquidated my QQQ positions dramatically lowering my risk exposure. 

Was I right to do so?  We'll look at that later this weekend. For a buffalo, it's an important decision. 

 

 

Futures and Options

Friday November 16, 2011

An alert TMP reader sent us this article from Zero Hedge. A futures broker has with drawn from the business warning that the entire futures and options business has changed. 

BCM ceases operations

 

We take this news very seriously. We are eliminating our QQQ  positions. The possibility of a massive couter party failure would be most serious. We received this after 2:00 PM today. Whether account positions will be resolved is not known. 

 

More in our update this weekend. 

Weekly Newspaper Column

This column was written this past Wednesday for publication in two West Texas Newspapers. 

Crude Surges Over $100

US Crude oil futures surged 3.2% Wednesday, settling at a five and a half month high of $102.59 a barrel on news of a pipeline reversal expected to ease a logjam that had been depressing values of benchmark West Texas Interemediate crude oil.

Dow Jones Newswire, Wednesday,  November 16, 2011

After dipping to $75 earlier this summer, the oil price reversed dramatically. This week it climbed over $100. Here’s the story on why this happened.

There has been a surplus of oil at the Cushing, Oklahoma tank farm Cushing, OK is the delivery point for oil contracts traded on the New York Mercantile Exchange.

Pardon the ‘crude’ analogy but like the Roach Motel, crude had moved into Cushing but it could not move out. There has been a lack of pipeline capacity to do that. This past week the direction of the Seaway Pipeline altered the status quo.

The direction of Seaway is being reversed. The result is that crude will be moving to the Gulf Coast Refining Region.  The inability to move crude oil to refineries in the US has kept West Texas Intermediate at a substantial discount to Brent North Sea Crude oil.   Indeed the premium of Bent over WTI reached $27.90 in mid-October.

So traders were selling Brent and buying West Texas Intermediate. This explains the big jump in price given little change in demand for oil.

Our interest of course is how this affects the West Texas economy.  The high for crude oil  this year was  the April 29 closing price at 113.29. The XES is the Electronic Traded Fund for energy services. It double topped then and again in lat July at $44. XES is tracking West Texas  Intermediate crude prices. It has attained the same level now that it had when oil was last at this price.

Other commodities however have fallen this year. Copper, palladium,  and silver are  all down. The Commodities Research Bureau CRB index is down from 370 to 322.   Only gold and oil seem to be recovering.

Meanwhile the Administration has kicked the Keystone XL pipeline can down the road past the 2012 elections.  Keystone XL would transport heavy Canadian tar sand oil to Gulf of Mexico refineries.  While the blogs against the pipeline suggest the output from the refineries would all go over seas, we have no way of knowing that . The pipeline is estimated to  create 20,000 jobs during construction and certainly would keep the Gulf refineries busy. It is no coincidence that No Pipeline =  Higher Oil Prices. Add in the uncertainty and increased regulatory cost of producing in the Gulf, and bingo, we have even higher oil prices.   But environmentalists like higher oil prices.   Higher prices should cause us to use less of the awful stuff don’t you see.  (This mindset is much easier to adopt on a New York or Chicago subway than while driving from Odessa to Austin).

Our favorite indicator for the West Texas economy remains Patterson PTEN. It jumped 2.4% today (Wednesday) to $22.92. . The 200 day Moving average is $26.22.   At this point the typical economic survey on oil dissolves into meaningless demand and supply statistics.  Well, that’s not our trademark and that’s now why we get published.

We suspect crude oil  will rise to potentially challenge its previous high around $112.  XES will likely also challenge its former high at $44. Patterson is lagging. Will Patterson play catch up?  That seems a reasonable guess for PTEN, and the Basin Economy. While it remains counter intuitive for talking heads on television, high oil prices usually affirm higher stock prices.  The highs in oil should parallel the highs expected in the stock market for the first quarter of 2012.

So for energy service providers in the Permian Basin….

Santa Claus is coming to town, at least in 2011…

 

Friday, the Market Recovers

Friday Nov 19, 2011

The market continued its pattern of short sharp pullbacks. These are designed to get the last few individuals just fearful enough to shed stocks before the seasonal Santa Rally begins. Yesterday was typical of recent and frankly most fall type seasonal action. 

Sotheby's BID

 Sotheby's mimics the overall stock market as an auction house for collectibles. If you think about it, 

the stock market is an auction house for paper collectibles. Here BID exhibits a reverse head and shoulder pattern now seen in many stocks and indices. Perhaps yesterday completed the last re test of the 30 level. A bottom to neckline measure is six points which suggests a target of 44 for this stock. We put TLT at bottom. It soared to 120 within a few points of its all time high!  This should have given you confidence to buy. A collapse in the market will not begin with most investors in the safe harbor of 2% government bonds. Already the nervous headlines yesterday about Europe, the debt committee, and perhaps the success of the Academy Awards with Billy Crystal as emcee (as good as anything else to worry about with VIX and TLT elevated) are fading. 

Typically the market rallies into three day holidays as well as Thanksgiving. IN 2008 BID dipped right before Thanksgiving and then rallied from 25 to 30 in less than a month. I checked and yes, it did the same thing, a dip and then a rally, in 2009 and 2010. It seems shoppers enjoy looking forward to the biggest shopping day of the year after Thanks giving!

So, we remain on track. We will update the very big picture for you this weekend of what has happened and where we are in what has overall been a reliable pattern for previous 18 year periods of sideways action and negative social mod. 

Seaway Pipeline Reversal Raises Crude Oil Prices

Thursday Nov 17, 2011

This article explains the jump in West Tx Intermediate versus Brent North Sea oil this past week. 

Seaway Pipeline

Despite all the media attention he gets, Bill O'Reiley never understands that higher oil prices are coincident with higher stock prices. Yes Bill it's all one market, higher oil prices reflect economic confidence as well as the ability to pay for the oil. Just look at 2008. As oil peaked at $145 the stock market was still up, but by December with $35 oil, stocks had crashed. 

I just got received today's  WSJ and the lead article on Page One details the pipeline changes. 

Here is  a graph of the VIX versus the price of West Texas Intermediate.

OIl is in red black and the VIX the fear index for the stock market is in green. The red and green arrows highlight the polar opposite nature of the indicators. At bottom the correlation coefficient indicates that the two are usually out of synch with one another and nearly always in the negative category. 

And so we have yet another Dashboard indicator to follow. Expect Patterson, the XES Energy Service Indicator and the SPX to all top, when the VIX bottoms this next spring. 

Copper Losing Its Shine

Tuesday Nov 15, 2011

Page C 4 in today's WSJ reports that low interest rates in China have led to borrowing on the cheap, buying copper, and then flipping it at higher prices. 

So we put copper in gold over the Shanghai Index in red black bars. The SSEC topped last November 2010 and then again this year in April - May. Speculation in copper held up with other markets then collapsed along with world markets in August. The correlation coefficient at bottom shows a high correlation between the SEEC and Copper. 

Our conclusion is that the march to a world wide deflationary collapse is well under way. China has been the driving force for rising commodity prices. Now we learn that copper was held up via speculation not usage. The Goldman Sachs Commodity Index, the CRB, and the DJ Commodity Index all exhibit the same pattern as the above chart with highs earlier this year. 

The over building in emerging markets is reflected in the poor performance of Shanghai, Bombay, and Brazil. Russia is floating on a sea of high priced crude. The strength of Russia is keeping the BRIC index from collapsing altogether. 

Natural gas is trading at some of the lowest prices ever. It is being discovered all over the USA. The Keystone XL pipeline has been put on hold until after the election. A move to natural gas would certainly speed the USA independence from Mid East Oil. My point here is that low priced loans no doubt encourage speculation in oil prices just as it did in copper prices. There is  the cheaper natural gas alternative. 

Markets Pull Back Tuesday

Tuesday Nov 15, 2011

Buy low. The markets are down in pre open trading. This is another chance to buy before stocks completely catapult back into the higher trading range that existed earlier this year. As noted we are still in the weak fall period. The truly great buys are behind us but as we say there is no reason not to place orders under the market to scoop up the last of the lower prices. 

Mark Hulbert notes the Euro is higher now than when the year began, outpacing the SPX!  It seems other countries like Estonia still want in the EU for the trade advantages.   The point is that the Euro is not going go collapse now which will support a stock rally into early 2012. 

Santa Claus Is Comin' to Town

Sunday Nov 13, 2011

Italy is forming a new government and paying substantially higher bond rates. And so the Euro can is kicked down the road again. 

The Market Perspective

Overview

Major indices have returned to pre-August internal levels. The DOW, NYSE, SPX now exhibit bullish percentages in more than 50% of their stocks. The NASD is lagging at 49%.  A performance chart of the larger indices versus the smaller shows the Russell small cap still underperforming. 

VIX Volatility Index continues to pull back confirming the renewed confidence in stocks. 

Crude oil and energy service are surging higher supporting both optimism and higher stock prices. 

Silver appears to exhibit bear market characteristics. 

 

 

 

The Stock Market

This chart of the  SPX with the accompanying indicators sums up the action of the last few months. The seasonal weakness started early this fall, in August. At top the Chakin Money flow shows investors exiting stocks in to August. The big drop then generated a sell signal in the PAR SAR, see blue dots at top. That has reversed to a buy signal three weeks ago in the PAR SAR, see blue dots at bottom. 

The red green purple ribbon of Moving Averages MAs shows the break down. The 13 has not penetrated back to the upside but it is close. On Oct 24 MACD SAR PAR and the MAs flashed an all clear as money began moving back into stocks. 

 

Our comments and recommendations throughout this period are posted on the blog for all to see. We recommended going long during periods of weakness. Our buy this past Wednesday worked out well. We recommended a ladder of lower buy limit orders. That day saw the Dow down about 400 points. Friday's recovery made it quite the dramatic reversal. That probably was the last of the panic lows for the weakfall season. 

One would expect the markets to recover in typical seasonal fashion with a Santa Claus rally continuing into January. 

The Dashboard - The other side of the coin

 

TLT long government bonds are in gold. We used the same ribbon MAs on the VIX to demonstrate the opposite end of the worry spectrum. The low has been the 25 level circled in blue. Fear is still elevated with TLT at 115 and VIX at 30.04. Note the big drop this week from over 35. At bottom note the mirror image recovery in SPX.

But the big picture is that VIX is moving to a complacent under 20 level. At that point TLT should confirm with a move below 97.5. Clearly we are a long way from there yet. 

 So complacency and over confidence are returning. This is necessary to set up a January 1973 type level of over confidence. 

 Apple

Another reason for NASD under performance is Apple. AAPL looks to have gotten too far above its 20 day MA. Support lies at 350. Our school is undertaking an IPad rental program as are other public school districts. Apple has become a mainstream player in the same way IBM used to be with its typewriters.

The Dollar

The US Dollar has begun an oh so slow recovery. The blue arrows on this weekly chart mark the higher lows. Now that we have yet another 'back from the dead' Euro recovery story, best guess is that the Dollar will bottom in such a fashion that the recovery in stocks is not threatened until well into the New Year. At top note that RSI is just now recovering over the 50% level. 

Crude Oil The Master Market

Here is another confirmation that stocks should sail into the New Year. Yep the All One Market AOM Theory is alive and well. Note that oil prices tracked the sell off and recovery in stocks. 

At top is our energy service indicator Patterson PTEN. We pegged the top of the oil market this summer using the 2008 analog when PTEN topped at 34. My guess is that Patterson starts to move up with the recovery in oil prices. But I doubt oil can take out its previous high at 115. That  top in oil and PTEN should tip us off to a top in stocks, just as it did this past summer. 

Silver

 Despite the hype, silver is putting in a series of lower highs and lower lows, a bear market in the making.   The 50 day MA has crossed over the 200 to the downside. Price has stopped at the 50 day MA level. The May sell off was four days and the late September sell off was shorter than that. So, no good way to play the shorts here either. Silver is reflecting industrial weakness and US Dollar Strength. 

The Trojan Horse

Athens now trades at less than one fifth of its 2008 valuation. This panic low should serve as a temporary stop on the way to whatever the new Euro will be. 

Bombay

Bombay ( india) Brazil and Shanghai all continue to look terrible. As the US recovers the Daily MACD rols over. Admittedly the US daily MACD   is also high but the US market is recovering. Note the big drop Friday in india. 

Recommended Action

The great buying opportunities are now quickly passed. You might mentally prepare for the first quarter of next year by visiting a library that has micro fiche of newspapers in 1973. I am not kidding.  Read the headlines of January 1973.  By the time complacency displaces the pessimism of the past three months, it will be hard to mentally start selling stocks and buying long dated government bonds. 

One might purchase a stock index and sell a short term call such as December or January against it. The idea would be to say buy QQQ at 58 and sell a January or December call. But frankly at this point the best idea is as we said above start mentally preparing for a top the first quarter of 2012. 

Ultra short funds like TBT that seek a 2X short against the bond market are subject to all sorts of difficulties as they re adjust their daily prices to the futures market. One can be right on the direction of the market and still come away empty handed. 

 

Socionomics

We now need a return to the overconfidence of January 1973. 

You can revisit how the 1973 bear began at this link. Optimism was high as McGovern had lost his  home state of South Dakota winning only   Massachusetts and the District of Columbia. The US was leaving VIet Nam just as it is leaving Afghanistan and Iraq today. The DOW had recovered to its 1966 high of 1,000 just as the DOW is recovering to previous 200 and 2007 peaks as I write.  

Today on MarketWatch I see an article speculating that 2012 will be a good investing year since Obama is running for re-election.  That is precisely the same sentiment that accompanied Nixon's re-eection in 1972.It didn't work out that way. 

 The charts of Bombay Brazil and Shanghai suggest however that the best of times in those countries has already past. Real estate remains at elevated levels, there are reports of payments slowing in China, rail projects on hold,  and increasing dissent. . 

The Business Editor for the San Antonio paper recanted his prediction  that we are in another recession.  He gave up too soon! That of course ignores the 45 M plus individuals  on food stamps, the near permanent unemployment at over 10%, and massive unfunded Pensions at city and state levels in the US. Harrisburg PA and Montgomery Co AL took bankruptcy this past month. So much for PA coming to the rescue of Harrisburg. So the required complacency is coming, we will track it via TLT and VIX. 

Various cities are desiring the removal of OWS protests at violence and undesirable activity has increased in those locations. This mirrors the unrest of the 1973-74 period. With Obama sporting below 50 ratings, a Republican party unenthused about its candidates, and Congress polling in the single digits, the stage is set for real unhappiness. And remember these numbers are occurring with the DOW at 12,000!

We noted the confluence of negative sentiment this past Wed as headlines screamed there was no future for Europe, Penn State's reputation collapsed, a blogger was beheaded in Mexico, and the DOW dropped 400 points. Elsewhere multiple accusers against Herman Cain appeared and the Governor of Texas could not remember he wanted to eliminate the Department of Energy. We'll let the sun spot experts explain that one but it speaks to the potential of negative sentiment which will surface once the market roll over here. Again note the graph of Bombay, the move down has already begun world wide. 

Thanks for reading TMP

 

Dennislelam@gmail.com

 

 

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.