Friday November 16 2012
Even John Boehner does not expect anything to come from today's meeting so we should not either and that negative news will no doubt propel things a bit lower.
We do NOT have a bottom or turn in the market internals that justifies a buy of the sort that was generated on June 1 2012. The across the board drop in the mining stocks is taking gold lower this morning to 1709. Back in the day a move in the miners always foretold what would happen to gold. That has not been the case the last few years however. I am thinking my original 1650 target was about right, note to self, listen to self.....
We do have evidence however that the market is reaching a June 1 oversold condition. However this is occurring against a backdrop of transition to what is likely at 1973-74 type bear market.
NASD New Lows
The main panel reflects the spikes in the number of new lows in the NASD, this is roughly coincident with lows in the market, here I used the QQQ. However, before you get carried away anticipating a bottom before Thanksgiving or something, let me as our title suggests, provide some Market Perspective.
NASD New Lows go Viral
This is the same chart with another four months added, Those peaks marked by the blue arrows don't looks so impressive if one goes back another four months.
My point is that we just don't know. I want considerable more evidence of a bottom before adding any more positions.
Summation Index
Our reliable friend the summation index has clearly NOT made a bottom yet. While it looks close, that first low last August 2011 occurred at QQQ 50 or SPX 1000. way way lower than we are now. I don't expect that to happen but ... we do not normally speculate on what is in the mind of politicians as that is fodder for 24/7 cable tv and those folks never have to defend their conclusions. But as one reader noted in an e mail, CNBC is simply going nuts aver the Fiscal Cliff. Now suppose Saturday morning, tomorrow, we read
Boehner and Obama are privately furious at the lack of compromise, persons familiar with the matter relay that the President felt his positions were vindicated in the election and it is time for the losing side to come around. One long time observer noted that if the Fiscal Cliff happens, Obama gets his tax hikes and cuts in defense he wants without doing anything, and can blame it all on the Republicans who after all lost the elction.
I think that is a very real scenario. And if that is in the news, care to guess where the market would close on Monday?
But on the other hand, most everyone on cable tv is already negative.
US Dollar
While stocks have gone lower the Dollar has not gone higher. If things were really going to fall apart investors would be buying more dollars, TLT made move a bit higher. Yesterday insider buying soared from what it has been the last month.
So we wait and watch. I have no orders to do anything at this time.
Thanks for reading The Market Perspective, we always enjoy hearing from you.
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