Sat Dec 31, 2011
Our basic internal indicators for stocks continue to improve. We have been bullish since the eAugust and Oct lows. The market has performed up 15% this quarter despite all the negative publicity.
Well that's pretty simple isn't it? THe 50 bar MA crossed over the 200, the NYSI is turing up, MACD is up. Yet there are plenty of analysts only looking at the price charts suggesting of course that stocks would easily fall off the cliff. for the record Bullish percent readings are
CCOMP 46.23
Dow 70
NYSE 54.66
SPX 63.40
Point and figure charts read bull confirmed for all but the COMP which has lagged the others, thank you Oracle.
Fear continues to run rampant despite the positive implications of our first chart
TLT
Talk about a crowded trade! Bill Gross at PIMCO has been consistently wrong in his bets on bods. He was short Bonds when TLT bottomed at 87 earlier this year and is now long at 124! Both RSI at top andMACD at bottom are weakening. Price is way too high above its MAs. A 50% correction would take it back to 104. The 50 bar MA is about 100 and that seems more reasonable. IF that is reasonable, imagine what a 20 point drop in TLT will do for stocks. That will be a lot of money available for stocks.
Now couple this picture withe the Euro.
Euro Currency
Page A 10 in Friday's WSJ is yet another hand wringing article about the never ending Euro Crisis. Well last I checked Europe still exists but the club Med group is paying higher borrowing rates as punishment for their financial frivolity. End of story. The EUro is close to its last low at the start of 2011 the surge in stock and gold prices suggests to me that this last move down is causing even more shorts in the EURO which will not work out well. Now take a look at the jump in GDXJ a fund of some 80 small gold miners.
I recommended GDXJ at 27 and again at the end of this week as it briefly touched 23.
GDXJ
Price ended the week at 24.7, our stop and reverse buy is 25.10 using the PAR indicator.
At top the On Balance Volume INdicator looks to have bottomed out. At bottom the MACD has made a higher low showing some divergence.
Check back as we will be posting more thoughts this weekend including a look back at what we got right and wrong, ouch!
The scourge that stole Santa
Almost all analysts are predicting a rise in the stock market in the first half of 2012 and then a correction with a yearend rally. If history is a guide, then when everyone is position in one end then the opposite happens.
read this article
http://seekingalpha.com/article/316844-what-the-missing-santa-claus-rally-signals-for-stocks-in-january?source=email_macro_view&ifp=0
Posted by: valentin tristan jr. | January 02, 2012 at 06:59 PM