Weekend Sept 15 2013
Perhaps the most important article to read is the lead editorial in the Weekend WSJ on the coming
FERC appointment of Ron Binz. When the US should be doing all it can to achieve energy independence, instead the administration will do all it can go kill natural gas as an energy source for the US.
Bullish Percent
In April we thought a significant high had occurred in the stock market. And it did the next month in May, in terms of a new internal high for stocks displaying bullish percentage. This indicator is down but price is up. This is typical of waning momentum in the final stages of a top. Interestingly this past Tuesday John Murphy at stock charts declared we are in a new bull market for stocks and a bear market for gold. I am pretty sure of the latter. The idea that the two bear markets in stocks since Year 2000 are over flies in the face of the repeated 18 year bear cycles US stock markets have previously experienced since the Dow Jones average was created in 1896.
NASD 100 outperforms the S & P
The weekly NASD summation index has turned up again, after a frantic up down sequence so far this year. At top the NDX NASD 100 outperforms the SPX in ratio chart form, so it is risk on.
REITs via SKT Tanger Outlet Mall
SKT is more than just an REIT, it is one of the top five tourist attractions in Texas. Located between Austin and San Antonio, it draws shoppers from Mexico and all over the state. But SKT has numerous locations. The dividend is a mere 2.9% about where the ten year government note trades. It has had the biggest pullback since the 2008 low, just touching out 125 week MA.
SKT Daily
Recall from the first chart that the market internals peaked in May. And Bernanke suggested tapering off bond purchases. As though a switch were pulled, SKT collapsed eight dollars in four months. Notice the big volume day in a back test of the 50 day MA this month, and On Balance Volume declines. While the weekly chart has the uptrend still intact,the daily looks quite a bit worse.
Washington Real Estate WRE
WRE is now sporting a 4.9% dividend at the new lower price has adjusted to the decline in the ten year note price. WRE is shown in green. So the question becomes, is the yield correction adjustment over for the time being or are rates headed higher, meaning REITS and such are probably headed lower.
Ten Year Note Price Weekly
Here the ten year note price has undergone the largest correction since the crash of 2008. This is the first time it has plunged below its 200 week MA. At top RSI is the most oversold since 2008. By the way, the Summers Yellen debate is really over not much of anything, Either candidate would be a re play of Greenspan and Bernanke. I did see one article suggesting a real change, putting someone like Steve Forbes in as FED Chair, but that won't happen. WIll the note fall to 118, that may be the case.
Stock bulls like John Murphy claim higher rates means a stronger economy. Indeed, but higher rates also signal some concern about defaults, and in the municipal sector there is plenty of that on tap.
Monthly T Note
A higher low than in 2011 is certainly possible and this monthly chart is a slow mover. 118-124 area bears watching.
Energy
A real storm is brewing in the energy sector. This Administration has abandoned the Syrian Rebels for good after failing to send arms and then allowing a so called chemical weaps on hand off by Assad who has claimed he never had them and then never used them but.....Now Syria's neighbors will be dealing with Vlad (remember my prediction, bet on Vlad?) not the US. While Syria is not a big oil exporter, the reality is a consolidation of power via Iran, Russia's favorite in the region. The Saudis with a military of their own have never shown any interest in using it to project power.
Now take a look at the lead editorial page A 12 Target Natural Gas in the weekend WSJ. Ron Binz the nominee to run the Federal Energy Regulatory Commission thinks natural gas is a 'dead end.'That comes as large trucks are making the switch from diesel to natural gas. Let's connect the dots here.
The very worst enemies of the US, think energy supply, have been emboldened in the mid East. The US has finally had a shot at some realistic energy indepdence via fracking, instead, Keystone XL pipeline is not being built. And an administrator is being installed to make sure Natural Gas has a hard time of it, favoring wind and solar instead.
Is it any wonder the monthly oil chart is headed up?
SEEC
After three years of correction, Shanghai looks to be back in action. And so demand for copper and steel is up. At top we ahve Freeport McMoran Copper and Gold perking up.
Gold
Gold looks to be headed to our expected October low. If wave 5 matches wave one, $1,000 looks to be a good target.
Gold versus the Dollar
The dollar is in red and green, gold is in orange. This shows the inverse relationship. If the Dollar is headed higher, gold is headed lower. Gold bugs thought every rung lower was THE bottom. And they stil believe the eventual start of the bull market in gold will shortly resume. If in fact the Dollar is on a long term trend to the upside, waiting for the gold bull to retun could be a very long wait.
The Bottom Line
Money flows to stocks as breadth weakens. This may portend a high early this next year ala 1973. STocks topped in early 1973 before falling 50% by the end of 1974.
Bonds have yet to bottom in price. The decline has taken JUNK and REITs with it.
Crude is headed higher ala year 2008.
The Dollar is also likely headed higher taking gold lower.
World Social Mood
More than 4,000 people have been killed in Iraq since the start of April, with 804 just in August. Yesterday a suicide bomber killed 20 and injured another 35 during a funeral.
A six day stand off leaves 55 dead in the Philipines; hopes for a quick deal with the Muslim rebels evaporate.
Whatever nation building was accomplished in Iraq, it is now going the other way in Iraq and Afghnistan. With Putin and Iran now in charge, there is little to dissuade the return of the suicide bomber. It is hard to see a long term bull market starting in stocks around the world with this kind of situation under way. John Murphy has a lot more readers than I do so we shall see.
Thanks for reading The Market Perspective
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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. |
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