The Market Perspective

A Good Start but so Far that's All it Is

Wednesday Nov 21 2012

We do believe a bottom of some significance occurred last Friday.But the bottoming process is not over yet. Recall that markets move in fractals, one large move consists of smaller moves in shorter time frames. The two hour chart demonstrates just that since Friday. 

SPX Two Hour

A nice pop to the shortest moving average, amazing how that happens eh? We have less voume now that the MA has been encountered. And one can eyeball this concluding the two hour chart needs to do a lot more work to turn all these MAs to the upside. That is why I backed off yesterday with my warning to wait until next week. 

We will have light volume today and Black Friday but those are seasonally up days. yesterday saw an 80 point Dow drop and recovery over two hours, again one has to place orders lower to get the bargains. 

Crude oil has stalled at its daily 50 bar moving average. So, let's stay on the sidelines until next week. I suspect a pullback to test that last Friday low. That should occur going into the end of the month. 

Anecdotal positive nugget for the week. 

Despite the devastating effects of Hurricane Sandy, remaining tickets for the Rolling Stones Concert in  New Jersey Dec 13 and 15  are

$350 a pop. You can get Satisfaction but at $350 a concert ticket. 

Update for Tuesday, Let's Keep our Powder Dry for Now

Tuesday Nov 20 2012

If yuou bought a bit this morning no big harm done. But I am thinking we mayu see a pull back next week. That would be in keeping with the June analog. Let's keep our powder dry for now.

 

I have no orders in at this time. It may be that some issues have a higher low and some double bottom next week.

Summation Index Begins to Turn

Tuesday November 20 2012

If you are reading this blog you are one of the relatively few attempting to manage your ow money or learn more about the markets. Bravo, most individuals trust someone else with this task. As we will explain in our forthcoming e book, someone else of course has a completely different point of view and objective than you might have. While you might believe your objective is maximum return ,their objective is minimum risk so as to maximize the number of potential clients. Hence buy and hold is the mantra of the typical financial adviser. We sold September 18 which would have been a good time to unload Apple shares by the way. I doubt many advisers recommended doing so. 

We featured Gayed last week noting the sell off might end soon, he suggests his ATAC model may soon issue a buy signal. 

At any rate, our suspicion of a High Noon Friday for a mood change was correct. The markets have rallied since then. The reason for the dramatic rally Monday was not the Fiscal Cliff rumors but exactly what we told you this weekend, an absence of sellers. Once the selling was exhausted, the buyers did no encounter any resistance on the way up, Ka Boom. 

Summation Index

Yes I do show some charts that are a bit complex but this is not an easy business, it requires study and vigilance. The top panel features the McClellan Oscillator bounded by Bollinger Bands. Bollinger Bands are standard deviations on either side of the index. The point here is that the vertical line at left was drawn right at the top of the oscillator. The main panel is the summation index, an cumulative indication of the McClellan Oscillator in the top pane. Of course the Summation index lags the oscillator as it arithmetically adds each day's result. Notice the same thing is true at a bottom. The Oscillator bottoms first then the summation index starts to turn. The Oscillator at top appears to coincide with the Commodity Channel Index at bottom. 

I read numerous articles and other blogs this morning. My conclusion looking over the internal indicators is that a bottom of some significance has been made. 

GDXJ

A couple of interesting things here. First we remind you how nearly all quantitative trading programs are tied to the 200 day MA. As GDXJ broke it, a flood of automatic sell orders drove GDXJ down two points. 

Second, note that the 125 day MA again prOved decisive, just as it did on the pullback in early September. At this juncture we have a higher low than in September, a bullish sign. 

I have all my positions bought over a week ago. I see others trying to draw out what will happen in the next few months but I still like the analogy to the correction and rebound earlier this year. Let's keep our eye focused on that. 

SPX

SP

The move up from June to September was about 200 points. A similar move would take the SPX to 1540 form here. That's probably a decent target for now. 

If this analog is correct we will have several pullbacks along the way. A succession of lower and lower orders should be entered for GDXJ, REMX, MOO XME. Place them evenly and in small increments. There will be pullbacks. 

Update it is now 11:53 AM Tuesday November 20 2012

Note I sruck through the above comment. I am not so sure, if you bought a small amount as suggested no great harm done. But we really need to see the Dollar start to drop to be more assured of a low here. TLT is down today but not much.

Thanks for reading The Market Perspective, tell a friend about us!

Chanel 1932 Collection, Twilight at SPX 1350

Monday November 19 2012

Monday Morning

Markets are up nicely this morning as we suspected in our weekend update. 

Chanel 1932

We have noted that different markets even different stock indexes top and bottom at different times, not all together at once. Hence efforts by various writers to 'call the top or bottom' are flased in their assumption that there is one top or bottom. 

Today's WSJ reports and displays some amazing socionomic juxtapositions. A front page story For Greeks, Crisis Reverses a Generation of Progress, infact reveals that this is at least two to three generation collapse. Recall that old saying shirtsleeves to shirtsleeves in three generations. As former insurance underwriters and graphic artists milk goats and tend to chickens, that is today's Greece. The old saying has it that Grandad worked hard to build an enterprise, the son maintained it, and the grand kids blew the success returning to where the family was three generations ago. 

Now turn the front section over to the back page. This features a Chanel 1932 inspired ad campaign. The actual photo in the WSJ appears to be a broach or quite an earing, I am not sure which. But the tagline says it all

1932 Collection

80th Anniversary

It seems Coco Chanel displayed a lavish jewelry display in Paris in November 1932. Perhaps that was forward looking, the markets in the US had bottomed that previous May 1932 at Dow 41. Surely things could only get better. There was a stunning rally to teh low 180s over the next four years, and then the market collapsed again. The mention of 80th has considerable significance. 

Erid Hadik follows a 17 year cycle at Insiide Track, Tom McClellan follows a 20 year cycle, and I have mentioned an 18 year cycle. No matter that roughly breaks down to a generational 20 years. 

From 1932,  the bottom in the Dow at 41 after a top of 390 just three years earlier

1952 Dow was up to 275

1972 the Dow began a disastrous 50% plunge from just over 1,000 to 577

1992 the Dow is soaring again

2012 the Dow is up but it looks like 1973-74 ahead to me, it is that time in Greece already

The juxtaposition of lavish jewelry on the back page compared to a 54 year old Greek man sleeping back in his childhood bed again at home in an agricultural village is quite a story. 

Twilight

The Vampire Franchise has done well in both book and movie form. On page B5 is just what we would expect to happen in a fifth or final wave up in the market

Twilight Sparkles at No. 1

Vampire Installment Takes in $141.3 million, but Fails to Top Franchise Record

$141.3 M for an openning weekend is quite a score so to speak. It trailed the second installment, Twilight Saga New Moon which did $142.8 M. Fifth waves reach higher in terms of index value but lack the breadth of third waves. So this response is in keeping with what Ralph Elliott told us to expect in the last phase of a bull market run. We remain focused on a final high in spring 2013.

Positive Moods Drives Mergers, Emerging Negative Mood Drives Shutdowns

Weekend November 18 2012

As themarket move toward a final top, now slated to occur the first few months of 2013 (just as in 1973) we have evidence of a mixed mood. 

Positive Mood

England's Norton Rose law firm merged with Houston's Fulbright & jaworski. The article also details other recent large law firm mergers. This crates a '3,800 lawyer behemoth with 55 offices around the world. The principals of course say that their global clients are driving the merger as more across the border work is done. Not really, positive social mood results in inclusionary actions. The extended period of better mood since March 2009 resulted in not one but two mergers by SNR Denton. There was plenty of across the border action in 2009 as well but no one was merging then. The mergers happen at SPX 1350, not 666.

Nike sells Cole Haan to Apax for $570 Million.  Now there is a vote of confidence for you. cole Haan is a maker of expensive shoes. This is yet another example of first the desire to show off worldly goods as evidence of success. Have you noticed the Johnston and Murphy ads in the WSJ lately. Second it is an incredible bet by Apax, a hedge fund, that the good times will continue. 

In watching the preliminaries for the Austin Grand Prix on Speed yesterday, I noticed some unexpected sponsors. Spanish banks may be in trouble but that's Santander on the wing of this race car. European auto makers struggle but Renault is a major backer. Race tickets are sold out, the two hour race begins today at 12:30 CST on Speed.  I mentioned this previously as a $300 million  bet on positive mood. Meanwhile NASCAR tracks experience severly declining attendance. 

 

Negative Mood

Hostess went bankrupt, again.  The WSJ notes there were $52 Million in Workmen Comp claims in 2012 and a hornet's nest of regulations and union requirements. 18,000 union workers lose their jobs. 

LAX  workers threaten a strike over Thanksgiving. 

And no the housing crisis is not over.

 

 

After months of rocket attacks by Hamas, Israel strikes Gaza. Just wondering, when does an attack or retaliation become an out and out war?

 

 

 

British Intelligence  confirms Iran Support for Syria. The reason is simple. Iran fears that if Assad falls the revolution spreads to Iran. 

Connecting the dots, Tom Friedman suggests that toppling Assad without a ready replacement would lead to an endless civil war, especially without a strong man like America involved. 

Now just run your eye over the last threelinks. We have the makings of much more than a  Fiscal Cliff in the Mid East. In months to come expect

the Mid East never ending strife

Union strikes strikes in America

the Collapse of US  cities and staes with bankruptcies already underway

the pending trillion dollar student loan melt down

a collapse in sky high real estate prices in developing economies, including Canada

all to displace positive mood stories like those listed above. 

soaring entitlements like the food stamp program to dwarf whatever deal is made on the Fiscal Cliff. 

The news is all here, the job of the socionomist is to point out the growing social mood change. 

DId the Mood Change at High Noon Friday?

Weekend November 17, 2012

Alan Greenspan has not been right about anything in years. His pronouncement that the markets will be in trouble if the fiscal cliff is not solved are therefore a pretty good assurance that the lows in the market may have been seen Friday November 16. Apparently he has not noticed the market  drop already this month. 

Plan on avoiding LAX over Thanksgiving.  This is a preview of emerging negative social mood that will dominate the news the next couple of years Recall the last era of stagnation ended about 1982with Reagan firing Aircraft Flight Controllers in August of 1981. The next big down move may be preceded with strikes at airports stranding travelers at the worst time of the year and of course hardening attitudes further. 

Stock of the Week - jGetting High On Legalized Marijuana MDBX soars 3,000% this week. (Another missed
opportunity.)

Overview

This weekend we remind readers of what makes bottoms and tops, (again, note to self, listen to self) that social mood runs to extremes of risk on and risk off as the saying goes these days, and then examine whether, surprise, the low was yesterday. If so that  means our initial purchase was exactly five days early.

While reams of cyber ink are spilled on 'analyzing markets, college courses claim to teach the true worth of a stock, and all kinds of technical indicators have been invented, in the end it's a simple process.

Stock Market bottoms occur when the selling is exhausted. The last stockholder gives up in a socionomic funk and tosses good companies overboard at bargain prices. Stock Market tops are a sociononic frenzy to join the herd at the top. Investors climb aboard, usually after a prolonged move upward. Once the last dollar is laid on the croupier's table, the buying is exhausted. The top is in, the selling overwhelms the buying and down we go. Now if we can just figure out how to calculate those two events, we can  quit our day jobs, right?  Well don't do that yet, but we are advancing a series of tools that aid us in that very objective. 

Let's first examine our risk on assets. They wil bottom about the time risk off peaks. 

The Bigger Picture, The SPX Daily

Stocks got 118 points above the 200 day MA on September 14. Stocks pushed reached their maximum low under the 200 day MA on Friday November 16; As we noted earlier this week, that duplicates the pattern from June 1 shown at far left. Let's move in for a closer look shall we?

We have mentioned on numerous occasions that that quantitative based computerized  trading programs are predicated on using a the 200 day MA. That was the reason for the big drop last Wednesday, note the red bar on the chart above. Connecting the dots we later examine where some of that money has been going, into muni bond funds. Our point being that if Mom and Pop investors have not been in stocks anyway, most of the selling was probably computer based as was the case June 1. Could the selling be over?

Hourly SPX

The Boehner Obama announcement came at noon Friday, and pundits were linking the move up in stocks that afternoon with the event. On the other hand, the volume at bottom shows the selling intensified in one last flurry the first hour of November 16. Did the last seller exit at that point? MACD in the center panel turned up nicely. Here is an overall top to bottom tw hour picture of what happened from Sept 14 to November 16.

SPX 2 Hour Chart

Simply put, stocks got too high above the red 200 bar  MA and then plunged even further below the 200 bar MA. MACD picked up but it has done that before on the way down. But it can't go much lower at least on this chart. Also note the parabolic nature of the decline. Socionomics holds that the most intense mood occurs at the end of moves. This was clear at the top, and the move down intensified, the slope increased, as this bottom on Friday drew closer. 

Is the Fog Lifting, Our Title A Week ago Friday

No  the Fog Was About to Close In, Yikes, as a long time sailor I should have seen that coming!  Sailing is an excellent analogy to investing. As I will explain in my long anticipated blockbuster sure to be reviewed in Forbes and Fortune E iBook, a sailor cannot make the boat go just where he or she wants. The sailor must make do with the wind and adjust sails accordingly. Investing is the same, the market is going where it wants, do not get wedded to any one theory or scenario. 

At any rate here is an update on that chart from a week ago, I think the similarity in the outlined green boxes is remarkable, what do you think? I posted all these charts on Saturday. It is now Sunday morning Nov. 18. I am thinking the time period from now to Inauguration, January 26, will look like the pattern from June to August. We may  have an up week going into Thanksgiving. Then as I suggested in an earlier post this week, the lack of resolution on the Fiscal Cliff renders  the market in a sawtooth pattern. Some indexes will make new lows, others higher lows. But the Markets start to grind higher.

Let's move in for a really close look at risk off, the Dollar versus risk on, the SPX. We  can break Friday down into fifteen minute increments. 

 

UUP Dollar in a 15 Minute Chart

The red black bars are UUP a fund that mimics the dollar. Stockcharts does not have intra day date for the US Dollar itself but we do for UUP. Note that SPX in gray was headed down all week. It moved lower to 1345 by 11:00 AM on Friday. At the same time, UUP made its high at 22.30. Then both reversed. SPX finished the day higher than it began the day. UUP was roughly back where it began the day. While we are at it, let's see

how the VIX performed Friday. 

The VIX has consistently formed lower highs, and even registered a lower high when the SPX made a new low Thursday and Friday, then it too fell the last half of the day, just like the Dollar. 

Yes this is significant, not enough to call The Bottom but another puzzle piece. 

 

Anecdotally readers of TMP have e mailed saying they would not do anything until after the election so they had no stock to sell. Peruse the news and Mom and Pop have been exiting stock funds for months adn piling into bond funds. An article on page B9 of the Weekend WSJ notes, 

Muni Bond Yields Drag on Bottom

Record low yields have  been set every day the market has been open this week...on a benchmark scale since the measure began in 1981. 

So we know individual investors have now moved muni bond prices to an all time high, that is probably a peak fear indicator. Check out the

Franklin Federal Tax Free Fund

Does that look like a multi-year peak?  I think so!  Again our point is that perceived risk off investments in bonds and the dollar will peak about the time risk on stocks and gold bottom. Note how steep the rise or slope of the fund is indicating the herding, make that stampeding, of investors into this supposed Safe Harbor. 

Regular readers can of course guess where I am going next. Our core belief here lies in following the internal indicators. The extreme high recorded in the High Low Index prompted our exit September 18. Yesterday we noted that one indicator, New Lows, was already at an area which marked the last two bottoms. 

NASD New Lows

Given the weakness in Apple and the NASD in general, here is the NASD new lows. Note that as with  the last two peaks, this indicator violently reversed the next day.  Friday is the red down day. 

 NYSE Net New highs Lows

Again note the reversal from the very lowest low on Thursday since the high of September. 

The summation index for the NYSE and NASD has not bottomed; both are still in decline. 

Bullish Percent

This indicator perked up on the 50, 150 and 200 day versions, the last shown here. Think about it, if stocks are in a bull market, by definition they would  turn back up at the 50% level. That means half the stocks must stay in bull mode to be by definition in a bull market. That happened Friday.

NYSE Advance Decline Volume

 

Here is another indicator we have recently used. NYSE Advance Decline volume turned up. And it did so at a slightly higher low than the two previous lows. 

MdClellan Oscillator

The Summation Index has not turned up but the Oscillator itself did. My take on these puzzle pieces is that a low of some significance occurred Friday. Clearly we need to see follow through this next week. The week before Thanksgiving is typically an up week,  seasonally speaking. 

Gold

If the mining stocks fell first, they may likely lead gold back up. The gold  trend has not turned up yet. 

Yet another  alert TMP reader e mailed me this week noting that there were numerous inverse head and shoulder patterns on the charts, she was right, look at this!  The trend for gold is not up but if mining stocks led gold down, will they lead gold and silver (shown in gray) to the upside?

GDXJ From Positive to Negative Social Mood in Six Weeks

Here is an excellent depiction of the move from 

Positive Social mood mid September to 

Negative Social Mood mid November

Green to red, please study this chart, paaste it on your 'frigerator door, as George Strait sang

this is literally what investing is all about , changing social mood, 

or as Bill Cosby described his wife when they were dating. 

come here come here come here

followed by 

get away get away get away

The Bottom Line

I believe a bottom of some significance occurred this past Friday, scan through our charts and comments,  whether that is THE LOW remains to be seen but the evidence is in favor of a low. 

I said this earlier under the chart with the green box outlines but it sums up this weekend post so here it is again, 

Rampant Speculation Our Best Guess

At any rate here is an update on that chart from a week ago, I think the similarity in the outlined green boxes is remarkable, what do you think? I posted all the charts on Saturday. It is now Sunday morning Nov. 18. I am thinking the time period from now to Inauguration, January 26, will look like the pattern from June to August. We have an up week going into Thanksgiving. Then as I suggested in an earlier post this week, the lack of resolution on the Fiscal Cliff puts  the market in a sawtooth pattern. Some indexes will make new lows, others higher lows. But the Markets start to grind higher.

Why I Blog

This post is about as long as I suspect most will read. I will add my socionomic comments for the week in the next post, serialized plots are always more fun anyway. 

My original objective in starting TMP  was to improve my investing by making my thoughts and recommendations public. Since then the number of TMP readers has grown. I sincerely enjoy hearing from you and am  quite grateful for those of you that admired my humility in admitting my errors. As one of my broker friends put it

If we were perfect 

We'd start a religion

Not a brokerage service.

Mistakes will be made, the difference with TMP is that we admit them and attempt to learn from them. Tell an investing friend about TMP, hey, the price is right. I have described myself as one who makes complex financial transactions understandable. We attempt to do that with every post on TMP blog. We attempt to be informative, entertaining, and hopefully profitable. Our journalistic icons  are Tom Wolfe American novelist extraordinaire,  and David E. Davis, long time automotive journalist. I made that comment as a student in a college class to some guffaws from  the group that passed for UT Austin MBAs at the time, I was right then and now. The academics have it all wrong, publishing is not about peer reviewed journals that few read, good writing simply means that folks want to read what you have to say.  That is our aim at TMP.  

Thanks for reading The Market Perspective

[email protected]

 

 

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 ands 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.

 More to Come, See Our Next Post, Don't Miss Out!

Socionomics

LAX

Hostess Twinkies

Fubright Crooker Jaworski merges with, what, an English firm!

Formula One Racimg

Civilization with Nial Ferguson

Internals Still Falling

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. 

Markets Break 200 Day Moving Averages

Thursday November 15 2012

Major stock indexes and commodity shares broke their 200 day MAs yesterday closing down. This caused a compuer generated wave of selling in both. While this duplicates the drop below the  200  day MAs in June, the internal indicators show no sign of a bottom as I have been reporting.  While gold and silver have not fallen out of bed, neither have they advanced to new highs, gold over 1739 for example. That is needed to turn the gold trend higher. 

The SPX VIX ratio fell back to recent lows on the sell off. GDXJ followed lower at bottom. Years ago mining share action led the metal but these days they seem to go their own way. 

Neither the dollar nor bonds made new highs which seems a bit divergent given the across the board collapse in equities. My entire page of internal indicators are solidly red, down. No bottom in sight there yet. 

Where are we?

The decision to sell September 18 was one of the best calls of the year for  TMP. 

The decision to start buying again was at best too early  and at the moment, a terrible idea, I  ignored the fact that the internal indicators like the summation index had not bottomed. This points up the danger of not sticking to the game plan.  I have  promised  to be forthright and admit my errors. This was an error. But no point in selling here, let's see if this is  a re play of June 1.  For those of you new to reading about investments, the vast majority of writers never ever admit an error choosing to ignore or gloss over mistakes. 

At the moment probably not!  News is uniformly negative all over the world, I expect grand standing not compromise on the Fiscal Cliff tomorrow, gold is not rallying which suggests my original target of 1650 will come in before we see a low, stocks are oversold, are there sufficient numbers of short sellers to keep driving the averages down, for now probably. 

Recall my observation on Sept 18, it's easy to sell when things are calm. In the midst of a selling panic, it is too late to go short and too early to be buying. 

I have no orders to buy or sell anything at this time. If this were easy, we could all invest from the couch and skip our day jobs. This ain't easy. 

Sandy, the Election, Petraeus, MSFT AAPL Down, Shirtless FBI Guys,Geez!

Wednesday November 14 2012

Here is an Elliott Wave Count and Cup and Handle formation on gold. This certainly seems like a fourth or corrective wave that beats us all down.

The exec at MSFT behind Windows left the company today. MSFT  was  down some 3.2% taking the end of day market with it.

Gold itself is having trouble getting through its 50 day Moving Average.  

I have been reading a highly technical letter which requires one to first read a 144 page library explaining the all the hocus pokus. This fellow may be right, he suggests t a low later this month after setting a rebound high right here Wednesday through Friday. ALL the news of course, see our headline above, is negative. The House convenes this week and is expected to do nothing right into Thanksgiving.  

The NASD advance decline line is already back at the June Lows. This of course has been helped by the drop in AAPL and MSFT. There is no point in showing any of the other usual internal indicators as none of them have bottomed yet, just as NAAD has not bottomed. 

Is there on single positive I could find in my stack of charts?  Here is one I have not shown but looks interesting. 

SPX versus VIX

I have heard little to nothing from readers lately though the number of hits has been pretty good for TMP. Everyone on CNBC Marketwatch and other blogs is absolutely certain the market has to fall a good deal further, one reader did e mail me to expect a 400 point SPX drop. Okay, if everyone is absolutely certain things are going to fall apart, will they?  This is a ratio chart of the SPX versus the VIX. When it is rising the SPX is rising relative to negative bets against it which is what the VIX represents. 

In the main panel the indicator has exhibited the same pattern as at the June  bottom. It overshot the 200 day MA, convincing everyone lower prices were inevitable, then rebounded. Now it has even rebounded over, count 'em, three longer term moving averages MAs. 

In the bottom panel, what can it be, the MACD curls up a bit, note in May the MACD curled up  a bit before the actual bottom of the indicator. 

In the top panel, CCI also was an early warning indicator, bottoming before the main chart bottomed. 

Hmmm, I was so intrgued that I took this a step further. The next chart is a ratio of the actual NYSE index symbol NYA versus the VIX. 

The summation index NYSI is actually for the New York Stock Exchange so it is necessary to get an apple to apple in synch display with the NYSE all around. Now, what do you see?  Oh turn down CNBC and Bloomberg and just take a look. 

The black line is the Summation Index. While it looks to be hopelessly falling, in fact it turned in the proverbial dime at its June low. The mood changed. If the rally stays intact it really needs to find support at the red line in the bottom panel.

I showed Michael Gayed's column this week in which he said his model had his firm absolutely positively out of stocks. And they by golly weren't going back in till it got better. I wondered what would constitute enough better to get him to put in a buy order?  My point being that psychologically it is tough to buy at a bottom, running toward the buffalo herd is just not an instinctive thing to do. 

Is this significant or will the markets just fail again?  I suspect things need to rapidly improve the next three trading sessions or in fact lower prices lie ahead. 

One more thing, is GDXJ outperforming the NYSE?

GDXJ versus NYSE remains in a solid uptrend. IF it survives this test of the 50 day MA it will be moving up. Is MACD turning up at bottom? Hmmm....Stay tuned, we will keep you informed while others track the Petraeus Paula Jill  e mails. Markets are modestly up this morning. Watch the US Dollar. 

Ten Year Yields Fall to 1.6%

Tuesday November 13 2012

Michael Gayed suggests the correction could end sooner than you think.

An alert reader of TMP send us this link on gold in swiss francs.

Gold in Swiss Francs

The trend is up. 

VIX

 

Granted VIX came down to its uptrend line, but it did come down. 

SPX at 50% Re Tracement Level

Volume show in the low green bar highlighted by the blue box was low on Veteran's Day. The SPX has come down to the half way mark from its June launch. Price has and three moving averages have arrived at the same point. I have not showed internal indicators because they have yet to give us a decisive conclusion. 

Ten Year Yield

The lower the yield the higher the fear level. The previous graph shows stocks giving back half their gains since the June 1 low. So it makes sense that the ten year yield would also come back down reflecting  the fear that stocks can only fall further. The previous extreme was 1.55% and we are just about there. After looking over all the charts, this looks to be a good indicator. Are investors so fearful that they drive ten year yields to a new low here?  We shall see.