Friday Pre market Opening

Friday April 20, 2012

What are We Thinking Now

Originally this month, April 6 I believe and then again this past Wednesday April 18, we laid out a corrective Wave A B C scenario. 

Monday this week, April 16, we laid out a corrective sideways scenario. so which is it?

I just eyeballed al 30 some odd internal indicators. So far the internal low was April 9-11. This is in terms of numbers of new lows and highs. The summation Index for the NASD and NYSE are both still headed down. The Bullish Percent on the SPX is still headed down as is the DOW. Other indicators are wandering sideways. 

Ramki makes a case for Apple falling to 510. If that is the case, we have further to go to the downside, the fact is that Apple has had little correction thus far. 

Apple

507-510- would be about half the recent rise so that number makes some sense. 

Gold and silver will bottom before stocks, just watching the tape on CNBC yesterday I got that impression. A ratio chart of gold to stocks however does not yet support that supposition. 

So  there you have it, I promised readers we would admit mistakes ( we bought SJT and HGT too early) and if things were not clear I would say so rather than pretend I was saying something. By way of demonstration, here is  the kind of information you will not find me writing on this site.

However, when we look at another 
country in the core space, such as Finland, we note that 1) the beta versus Italian spreads is 
much smaller (0.1 vs 0.3 in France), and 2) the beta during tightening periods falls 
somewhat, as the widening is never too aggressive to start with.  

Barclays

This is the sort of thing that passes as a finance major in universities these days, the above from Barclays. Great stuff for the Economics Journal but what does that tell  you about what to do when the market opens?

Reading Assignments While We Wait on the Market to Show Its Hand

Here is an article that reflects the endless speculation about pipelines and the Brent versus WTIC price difference.

Do Jobless Claims track the stock market?

The weak economy of France made the cover of Economist magazine last week, here is another speculation on why France matters less and less.  If you were going to contract to have something built would you go to France or Poland, that's what I thought  too....actually I was not aware that there was a French politician who is not a socialist.....

The next sub prime crisis will center on student loan defaults. You heard it here first. At least with a sub prime mortgage there is something to foreclose, there is no collateral whatsoever with a student loan against a college degree. The Dot.com insanity returns. 

Socionomics

On pages A 12  the WSJ comments on the French election, see my reference above. 

On page A 13 A Clock Work Orange apprently is alive and well with bruish behavior in England. This is typical fo period of stagnation such as we are in now. Social mood goes negative. On the fromt page, Ireland colapses, again. 

Leonardo DiCaprio will play hard partying drug abusing  Jordan Belfort, the Wolf of Wall Street. Scorcese starts filming this August. If the market meltdown is well underway by 2012, this movie with a negative view of Wall Street should resonate well with the public. Given Scorcese's penchant for the darker side of life, perhaps a good title would follow his earlier effort about 1830 in NYC, this one could be

Gangs of New York, II

thanks for reading the Market Perspective.

 

Comments

[StuartD]

Great articles as always and very much appreciate the candid attitude. I thought it might be a good time to make a couple of comments as I do see very strong signs in the patterns and, as importantly, behavior and sentiment-

'Summation Index Promises Higher Highs After Correction Ends' - this is the recent article title by Tom McClellan. I highly respect his reports and articles and have no reason to doubt the validity of this latest correlation being made. I do however get concerned with pronouncements like this when it comes to the market. It very much reminds me of Mr. Prechter over the last few years and we know how well that's turned out as far as timing at least. The pronouncement and sentiment being promoted so strongly is where I get concerned.

The perception by the public could well be that of not being too concerned - after all the chart 'promises' all will be well a little later on. Does this demonstrate the already-present complacency and more recently indifference (neutral) sentiment? There are different ways the correlation could play out as you well know- the market will create it's own reality. That isn't what concerns me as much as the attitude being demonstrated. I was actually surprised to see the word 'promise' in an article by such an outstanding technician.

Not to be unkind to Mr. McClellan, perhaps I might be being a little reactionary. Perhaps you have other thoughts on this.

[Dennis Elam]

Stuart

As a matter of fact I received that same update from McClellan and wondered the same thing, is a higher market justified later this year. Tom seems to see more things from his examples than I do. He has lots of stats, more than I have but I would say the jury is out on his conclusion.

by the way, Bob Prechter has a lot of heavy hitters at his socio conference. On my row of tables were the tech heads of J P Morgan, Barclays who spoke, and HSBC. They are following Steve Hochberg and the writers for the various letters rather then Bob's generalizations I expect.

[StuartD]

Thank you for the information. I do have respect for Robert Prechter's ground-breaking work regarding the aspects of how sentiment drives markets. I have to wonder if media attention somehow emboldens these technicians who then lose perspective. Perhaps demonstrating a characteristic trait of their personality types? They may not realize how many people take them seriously. It seems Bob Prechter lost some aspect of his judgement right around the time he was featured prominently in the media a few years back. A recent spate of appearances in the media by Tom McClellan occurred prior to this particular statement. Seemed like a repeating pattern of loss of care over word choices.

Very interesting note on the socionomics attendees. Perhaps EWI need to keep Robert away from the mike regarding market timing? (attempt at humor). Are you saying that Bob Prechter does not officially represent the data sent in the general market position newsletter? I have been reading in many blogs that 'Robert Prechter's stop' gets blown again. At least twice in the last few months. Even prior to that you can see his warnings over the past few years as searchable records and his warnings were always for the immediate term. Does Steve Hochberg and other writers have different conclusions? If so, why isn't EWI getting credit for better general market timing? I'm just trying to understand the set up. Thanks again.

[StuartD]

Also does EWI have a credible and demonstrated track record for all of their market calls over the last few years? I have not seen a list published by them yet. Seems odd. They do hand-select certain examples of winners but that hardly counts over a longer term. If they do have one you are familiar with, could you please forward the url or access procedure to me? I would be very grateful.

I have not been able to find much positive feedback anywhere but lots of negative comments from traders who have used their service. I also discovered a review site the other day that seemed credible (I forget the url) and they gave Bob Prechter 23% over the last 5 years (not 'EWI'). The maximum I saw was 53% for another market newsletter. In fairness, they did mention that they weren't sure what to give Bob over a longer time frame.

I wonder what it is the heavy-hitters would find useful apart from the socionomics. Sorry for my confusion here but something doesn't seem to add up. Thanks.