Weekend Dec 29 2013
Turkey Unravels Turkey which appeared to show real promise as a secular run Islamic Nation has returned to its role as the Poor Man of Europe.
Eisenstadt sees another 8% for stocks.
Turkey
That's a 40% drop from 75. This is a good example of just how fast things can unravel in a bear market once mood turns negative. As I recall in 2012 the Wall Street Journal Magazine had a lavish article on Turkish culture. The article went on and on about expansive real estate and how the country was a new emerging economy. Clearly that was a flawed analysis.
BRIC
Not long ago someone coined the term BRIC for Brazil, Russia, India, China. Notice the BRICS peaked in 2011. The index is getting turned back each time it tests the 200 week MA.
Shanghai
Shanghai is not far from its 2008 panic low. This is an example of my reference to 1973-74 in the USA markets. . There never was a crash per se but a persistent bear grinding ever lower.
The US, Britain, France, Japan, Canada, New Zealand, and Australia are all hitting new highs. But clearly many of the emerging countries have turned down. Gold, silver, and bond prices are also turning down.
The big story for 2013 is certainly interest rates.
Ten Year Yields
The steep drops the last few years are QE interventions. Now that the FED has indicated it will stop buying bonds but that somehow rates will remain low will be quite a challenge. Rates have broken through all the MAs and above the downtrend line from 2006. Rates just completed a back test of the 200 week MA and moved higher again. The market not Janet Yellen is now in charge of rates. As I speculated last weekend, if rates can drop 50% in two years on intervention without intervention can we expect them to double again in the next two years?
An alert reader points out I had an incorrect count in closed end muni BTA. I have cancelled other orders for closed end muni fund, it looks like this is just a bounce as yields move higher.
New HIghs, New Lows
Internals like the net new high versus new low indicator above are improving to the point of near validating the new highs in price.
Nary a Discouraging Word
In this sector shot of various ETFs only Utilities are down. That is a reaction to increased interest rates.
NYSE versus Summation Index
The NYSE is in green, hitting new highs. The Summation Index is turning up after hitting the typical seasonal low a bit early in September. For some reason the annotation feature is not working well this weekend but one can eyeball a downtrend line from the May high. Taking out that line will be another bullish sign. AT top RSI for the Summation Index is still climbing.
NYSE versus Crude Oil
The NYSE closed the year at a new high. Crude Oil was tracking stocks but fell from Sept to December.
Now I suspect crude oil via USO is a better bet than stocks.EEP, OKS, and TCP, all pipelines have moved up joining crude oil higher. These pay generous dividends as well.
So with the DOW up 10,000 points, what's a timid investor to do? Has anyone noticed that commodities and shippers are stirring/
Commodity Tracking Index
Shazam! Notice the two big updays in this index on a supposedly quiet day in the markets, and low volume days to boot.
XME
XME has soared 33% from its lows of the summer. And shippers are heading up.
Shippers, Baltic Shipping Index, FREE, DRYS
FREE has fallen from $229 to $2.50, with the Baltic Shipping Index taking off both FREE and DRYS are surely good buys here. This looks like the overall stock market in December 1974 at DOW 577. In case you think that is an exaggeration, let's step back for the longer view. Mind you DRYS has already doublee from $2.
Here are the same three on a monthly chart back eleven years. The big gains in the Baltic were of course at the END of the move as it soared from 4000 to 10,000. I don't know that FREE is going back to 229 or that DRYS is headed for 125 but even a fraction of those gains from here would be nice.
As always investigate first. At real market bottoms, participants often go bankrupt. Here is an article suggesting this will happen to Genco.
I have positions in USO, FREE, and DRYS.
GDX
GDX would have to take out 21.52 on the SAR indicator. And the 13 day MA would need to cross the 34 day which has not happened.
The Bottom Line
This is starting to look like Fall 2007 and into 2008. Then commodities soared with oil going to $145. Stocks topped first with commodities joining the party later, then as now.This suggests to me that we are sowly re playing the 2008 scenario. As prices rise for commodities, more are shipped. Whether that represents a stronger economy I don't know but up is up.
I am favoring positions in crude oil, pipelines, and shippers. Gold and silver are still indecisive. Stocks are no doubt headed higher, see the RSI indicator on the Summation chart.
Social Mood
That's it for the Arab Spring, it turns out to be the Arab Disaster.
Wall Street Journal Magazine cdlaims it has been named the Hottest Style Magazine of the Year. I assume that means it topped even Town and Country for over the top, one percenter advertisements for all sort of expensive jewelry, cars, watches, and clothing. This is in keeping with mood necessary for a 10,000 point advance in the DOW.
The New Civil War - I Stand with Phil garnered its goal of 250,000 signatures. A & E relents, allowing Phil back on the show. This is truly a perfect example of The New Civil War. The South has risent to defeat a Hollywood edict, amazing.
The VW bus ends its half century plus run in a Brazilian factory. A counter culture icon featured in Arlo Guthri's Alice's Restaurant, it was the first mini van. However VW never capitalized on its potential with an engine actually large enough to keep up with traffic or air conditioning or an automatic transmission. It would be Chrysler that would perfect the formula with a front not rear drive mini van that easily fit in the garage.
Thanks for reading The Market Perspective
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