Thursday January 24 2013
Stock index futures fell Thursday as Apple slid nearly 10 percent following a revenue miss, and analysts said equities may be due for a pullback after a six-day rally for the S&P 500. Apple Inc missed Wall Street's revenue forecast for a third straight quarter after iPhone sales came in below expectations, fanning fears its dominance of consumer electronics is slipping.
We have been disucssing a forthcomng top over the last two weeks. We are very very near that point if not right on it. A significant clue was the drop in mining stocks yesteday.
SPX Daily
I extended the chart back to the October 2011 lows for perspective. RSI at top leads MACD at bottom. Both are flashing topping signals. SPX is about 100 points over its daily 200 MA which gave us a top at out exit Sept 18. it was 60 days to the low in mid November and now a bit more than 60 days to this top.
Daily High low Indicator
We used this indicator in mid September to help spot out exit. it is helpful again. It hit a high similar to Sept 18 on the last day of 2012 and made a lower high just days ago.
To paraphrase Fred Sanford warning Lamont, is this the big one, is this The Top? (For younger readers in the tv series Sanford and Son Fred was always warning of a pending heart attack at inflection points in the script). By The Top I mean a 40 year anniversary of the top seen in January 1973 that led to a 50% stock market decline. We have recently shown the graph from that time period and this is a similar set up. We detailed the long Fibonacci time series for you this weekend. Recall that the markets are at a five year high from the 2008 early year high. Whether this is The Top or we make another high later this year, I am not sure it is worth the risk of being long this market.
NYSE Summation Index
The NYSI only made one higher high the last 2.5 years. And it has fomed a rather ominous series of lower highs since its recovery high n August of 2009.
Daily Summation Index
Our reliable Summation index has made a new daily high exceeding the September high. So all the indicators seem to be lined up flashing topping signals.
Apple World
All bull markets have cheer leaders. Certainly Apple has been the darling lately. But bear markets are often ushered in with surprise annoncements, Apple is such an example. The weakness of Apple has kept the QQQ at top from making a new high along with other indexes. At bottom money flow has not turned positive yet.
Not shown here is that Apple dropped 9.7% in after hours trading yesterday taking it to 464.09. This is exactly the sort of fall from grace that occasions a move to a bear market.
Sootheby's BID
Sootheby's has a high correlation to the stock market. In periods of positive social mood people buy stocks at the NYSE and stuff at Sootheby's. BID exhibits a lower high than last April and a potential triple top series of lower highs since then.
Bullish Percent Gold Miners
Gold shares typically lead stock shares. And this indicator appears headed back to the August lows. All the pundits including myself have been too optimistic too soon on gold and silver.
GDXJ correlated to Gold
GDXJ exhibits a high correlation in the lower panel to gold in the top panel.
Botom Line
There are ample indications that the stock market is making another high at least similar to the high of September and April of 2012. The Summation Index has entered territory where other highs have occurred since 2009. Daily summation index has made a new high. Daily new highs new lows has made an ominous divergent lower high. The SPX price is at the top of its uptrending channel. Gold miners continue trending down.
Cycle wise the markets are a near perfect 40 years from the 1973 high. We are
13 years from the year 200 high.
5 years from the 2008 low
Politically we have the Congress and the House of Representatives on a collision course just as we did then as welll. Then Nixon was promsing a way out of the Viet Nam War. Now we are told a troop exit from Afghanistan lies just ahead. Now we have a dead amabassador and bodyguards in Libya and dead hostages in the Algerian oil fields. (The point here is that ememies were then and now emboldened.) Nixon felt empowerd with his big victory just as Barack Obama feels the same way now. Nixon then and Obama now were and are operating in a What Could Go Wrong Mode. Both replaced numerous Cabinet Officials. Each gladly takes credit then and now for a recovering stock market. Then the market had revisited its all time high just over 1,000 on the Dow. Now we have numerous all time highs over the last year and agan this week. The rule of alternation has reversed the party positions of the President and the House. Past eriods of stagnation have exhibited three big drops in the market, since year 2000 we have had two. A third drop lies ahead it is just a matter of when. See the parallels?
If you think I am exaggerating the parallel, consider the article on page one of the WSJ today. France does not have the airlift capability to even move 80 troops adn thier equipment to Africa. Canada and the UK offered threee planes two of which broke down in route. I expect the opposition in Mali reads the WSJ as well.
I was half way through broker school in January 1973. And trust me no one thought the markets were about to tank 50%. I have laid out the indicators and the parallels to the best of my ability .
We hope TMP is of assistance in making your investing decisions.
Comments