The Market Perspective

Stocks Soar, Commodities Hit 200 Day Resistance

Weekend Feb 23 2014

An amateur investor 31 years of age is quoted on the front page of the WSJ. He is considering giving up his job to trade stocks full time, This is typical of

someone with a short term view of the stock market

individuals pouring into the market after a 10,000 Dow point advance

big volume and positive sentiment which occurs towards the end of any move up or down

that we are surely getting the last few on board ala 1999 when the NASD added 3,000 points iun a matter of months, outperforming 17 years of gains.

 

 

The Advance Decline Volume is still solidly up. The seasonal high lies ahead around April 15 tax time.

 The NASD 100 has perhaps been the strongest index led by Google and Facebook.

FED money printing has led to what is likely to be a commodity rally coming after the stock rally of this past year. As we noted last weekend, everything is  breaking to the upside, coffee, gold, silver, oil.

Note the similarity be tween this chart and the CRB, silver is much the same. I would expect some resistance here at teh 200 MA. 

Crude breaks out to the upside, we showed the longer term trends as well as the 2007-2008 break out, this looks much the same. Will oil spike to the old highs of 145 again?

 

The US Dollar is listless. Please be sure to read Niall Ferguson's article on page A 15 on the US retreat from leadership. Perhaps this too is affecting the value of our dollar, it is worth no more than the promises behind it. 

 

We led with an internal indicator showing the markets are still headed up, Commodities are headedup and the dollar has pulled back. So far this is similar to the patterns of early 2008. 

Social Mood

I took a ride  donwn the Rhine River of Germany in the 1980s. About ever ten kilometers we passed the remains of a castle. Apparently the conflicts of the Middle Age revolved around the hunt for food. Castles wer built to withstand a multi day seige, complete with a moat and drawbridge to make  an invasion as difficult as possible. The invaders would bring catapults to hurl firey bombs inside the castle. Has anything changed I wonder.

At left we have a Ukraine protestor throwing a firebomb, molotov cocktail, at the state police. 

As I write the President of the Ukraine, who sided with Rusia, has fled the country. The protestors are taking their country back. 

 

 

 

 

 

A successful army tactic created with the Greeks was the Phalanx. This consisted of troops

marching in lock step with their shields forming one large barrier. The idea was to crush the opposition. 

 

OUr point is that times change, people don't. 

 

 

 

 

 

Meanwhile in this hemisphere crowds protest in Caracas, Venezuela.

Chavez of course made a mess of things and his successor is trying to hang on. 

 

Argentina is having is periodic multi year meltdown again reported in the WSJ.

 

 

 

 

Does the butterfly in the Orient disrupt things in the States by moving its wings? Chaos Theory suggests it just might. Again the stock rally in the US has its roots in FED money printing, not in a new ear of peace and progress.  It is hard to imagine the markets continuing this joy ride with riots from  North Africa to Chaos Stan to South America. Recall that we recently had near vilent protests in Wisconsin in a recall election. 

 

 

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.

 

Trivial Pursuits for those under 30, what is this young lady doing? 

 

Houston We Have Lift Off

Wed Feb 19 2014

After being battered last year, commodities are coming back, across the board.

Gold is hitting both arithmetic and exponential MAs. There is some resistance here and the MA is overdone or nearly so at bottom.

The  two hour chart is really getting over cooked. At bottom the MACD has rolled over. But things are just getting started.

Dollar via UUP Two Hour

So iit makes sense that the dollar has fallen and may be ready for a bounce.

Coffee

This is what a drought in Brazil can do to coffee prices.

NASD the last 3,000 points in 1999-2000

It was a breath taking end to an 18 year bull market. After taking 17 years to reach 2750, the NASD piled on, or rather NASD investors piled in, for anothe r2250 points from November 1999 to March 2000. The talking heads on CNBC could scarcely contain their enthusiasm, celebrating each new , in round nunmbers1,000 point level. NOte the hesitation at 4250 in February, 2000. THe last 1250 points from 3750 to  5000 came in 60 days.

Here We Go Again

AFter a pull back to 4000, the NASD is now trading over 4200.

Given the over sold UUP we may have another hiccup here but it looks like the NASD wants to re visit 5000, one more time.

 

The Indicator If you Only Had One

Monday Feb 17 2014

NYSE A/D line

The great thing about this indicator is that it

rarely gives a signal

when it does it is the right signal

A closer look

THe 13 EMA dropeed below the 34 EMA in November  2007, near 10,000 on thge NYSE. 

WHile the A/D line crossed teh MAS again in MJay  2008, the MAs themselves never crosed again till the coast  was claer by May 2009. And looking back at the previous graph, the EMAs  have never crossed to the downside again, not even once.

The point here is that the warning has not gone out and the indicator is in full tilt WOW mode now. Indeed a bit of pullback would be welcome here. But for now, onward and upward. 

New HIghs in Stocks

Weekend Feb 15 2014

Charles Hugh Smit points out that if another melt down occurs and stocks, REITs, commercial real estate are written down by trillions, excess trillion dollar money printing will not be excess any more. Why a Wendy Davis ad is on his site I guess indicates that he sees the fallacy of Dem programs but cannot abandon his college days of liberalism.

As always Tom McClellan has an interesting chart. Notice how prift peaks come before a market downturn.

We have maintained that the markets were very much like the position of 1973-74. Then stocks made a high in January, 1973. The President became embroiled in Water gate losing the confidence of the public and the markets declined for two years.

It is the 50th anniversary of the February 7 1964 Beatles appearance on Ed Sullivan. I will post my weekly newspaper column here tomorrow after it appears in the papers. Bob Prechter has done an interesting study on the Beatles Rise and Fall.  But in a nutshell after bursting on the scene near the end of the 1948-1966 bull market in 1964, their path followed that of pop culture in the USA. By 1969 the Band broke up. Meanwhile the US was breaking up ala Watts Riots, the Tet Offensive in Viet Nam, and the Chicago Seven Convention Riot in Chicago.

We are five years out from the 2008-09 meltdown. Let's take a look at potential similarities.

CRB Back Then

The CRB rocked along at 320 and then broke and and ran to new highs from Fall 2007 to summer 2008. It was the result of excessive money printing and leveraged speculation on mortgages and commodities brought on by the FED easy money policy.

CRB Today

The CRB index has just broken its downtrend going back to the 2011 high. Gold and oil have both been moving up.  We follow up with a look at oil, the Baltic and shippers themselves. All look ready to move up.

NASD

We opined last week that the NASD would likely return to its Year 200 peak at 5000. Remember the social mood is most intense near the end of a move.  That explains the big move from 2900 to 4200 which near no one believed.

NASD

It took three years from April 2009 for the NASD to really break free from dancing about its multiple moving averages. Now in the last two years it has soared above all the MAs, The distance from the 200 week MA is now the highest for the entire five year period, with no sign of the trend abating. This is who markets blow off parabolic to the top. It also allows for a lot of money to be made in the last few months for those clever enough to lay out multiple positions, take profits along the way, and then bail out in time.

Bonds

The bond rally has not ended. It has corrected back to its shorter term MA. The bond market is a lot more sophisticated than the stock market. This suggests the bond market knows the move to lower rates is not completely done yet.

Closed End Municipals

I have been w;riting about the closed end munis and their fin yields for months. The market is finally turning up on this sector.

The BRICs Tank

Mary O Grady details the decline of Venezuela and Argentina in her weekly columns on Monday inthe WSJ. On Page A 7 in the Weekend WSJ Brazil's Economy is seen in decline. A Russian Writer laments on the New Russia as the Old Russia on Page A 12. Walter Mead reflects on Putin out manuevering the US on page C3.

Crude Oil Breaks Out

Curde oil is confirming the move up in commodities, The endless money printing is having its result in higher oil prices even as we drive less and produce more oil.

Ratio Chart Canadian versus U S Dollar

The ratio chart shows th ecommodity based Candian Dollar outperforming the US Dollar. As the US sinks in value commodities will be priced higher to retain their purchasing power.

Baltic Shipping Index with FREE and DRYS

We were way early in recommending FREE and DRYS a few weeks back. But they are turning up. As commodity prices move up it is likely the Baltic Shipping Index and shippers FREE and DRYS will as well.

Shippers

Create your own Shipping ETF by buying equal percentages of these shippers. All of these charts look to be in position to move to the upside with commodity prices.

And Some Old Friends, Drillers

Seadrill

 

Silver

After months of basing silver finally looks ready to go. Note the move above all three MAs this friday. Gold is already underway. But I would balance my investments with shippers and other segments that might benefit from a final inflationary swing.

Gold

Both sivler and gold are finally breaking out from a long basing period.

The Bottom Line

Stocks should pull back for a couple of weeks before another fling to new highs. 

Money is moviong into muni bonds, TLT pulling back but hsould also find support soon. 

Commodities are moving up as the Dollar moves down. We are watching buy write possibilities on mining ETFs and  individual stocks.  USO the oil ETF is another candidate. Shippers also are looking good.  Gold and silver are breaking out with weekly bottoms apprently in place. 

 

 

 

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.

 

Market Topped Wednesday, Down into end of month

Thursday Feb 13 2014

Mark Hulbert updates the 1929 analogy.

The market should have topped with the Yellen comments. The degree of sell off may tell us more about what to expect the rest of the spring. 

FED Drives Frothy Market

Weekend February 8 2014

I have mentioned many times that REITs were amaong the worst casualties of the 1973-74 market meltdown. In this link,  Charles Hugh Smith and Gordon Long discuss the decline of commercial retail real estate.

Months back I rana photo of a vacant strip mall on a well traveled street in San Antonio. Wolf Camera was I think the last to move out of some four spots. It is still vacant. The video also discusses the rise of robotics. Applebees has introduced the Waiter Terminator so that you order on a Touch Pad. 

Robotics has moved from agriculture, John Deere, Intl Harvester, which eliminated back breaking boring jobs of harvesting to manufacturing where robotic welders never have to attend the school play, and now are into retail. Red Box put Blockbuster out of business in a matter fo 40 months. 

Howard Davidowitz has estimated we have twice as much retail space as needed.

All oif this is clear in recent stock market action for JCP, SHLD, BBY, as well as vacant new and old small strip malls across the country.  This has propelled AMZN to new highs but AMZN is not making much money; that stock also dropped for that reason. 

CHS also discusses that hte FED nuclear opion won't work. Sure the FED can offset a small decline in the markets buying bad mortgages and such. But if a half the shopping malls in the US are going empty, buying those mortgages will not add any value. 

Commercial Real Estate, the College Loan Bubble, and the Shuffling of Mortgages, all loom on the horizon

 GEerge Lindsay's Three Peaks and a Domed House

 We have referred to Ed Carlson's work at Seattle Technical Ad-visors and his books on George Lindsay. With full reference to Ed, this is what he is currently seeing in the charts. Such a formation is a prelude to a massive re -tracement. As Bob Farrell said at Merrill years ago, trend return to their mean. Here the index is way way above the moving average. 

NASD

At NASD 1200 five years ago it seemed impossible that the NASD would ever return to its  Year 200 high  at 5000. Those were heady days at CNBC where the anchors cheered the NASD at every new one thousand point rung on the ladder. Incredibly after taking 18 years to reach NASD 2000. the crowd plunged in driving the index 60%  or its final 3000 points in the last year or so of the 18 year move. We are now in much the same position. Art Hill and John Murphy are totally ignoring the height above the MAs instead calling this a new bull market.. Murphy has allowed that a correction of some magnitude should begin after April this year.  But new bull markets begin amid a change in mood, which we had in 1982-84. Mood is worsening around the world and particularly in the US now. 

Short Term NASD

THe  125 MA is 4138.58while the 0162 is 4116.33. Those are boundaries to a 61.8% retrace also in that neighborhood. Couple that with an MACD at bottom that is still climbing but not topped out and we have a reasonable target for a Wave B top this week.

 

NASD versus TLT

TLT a long dated bond fund moves opposite of stocks. This is worth watching for a near term top in stocks. 

FED Renders Internal Analysis Moot

The main panel is the percent of stocks on the NYSE that are in bullish position on the point and figure charts. It has been falling all last year. Yet the index in the top panel moved higher. The answer is that the money provided by the FED has pushed the major stocks bought by funds in all indexes higher.  And so the market floats up on a sea of FED money rather than fundamentals. 

Shippers - Whoops We Were Early!

The Baltic Index of shipping rates is in the main panel. The chart of Dry Ships a, shipping company is in the op pane. We were a few weeks early recommending this one. It appears this would be a good time to acquire shares. 

 The Bottom Line

Stocks are likely to make another top this week before a low later this month. 

 

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.

 

A Third Wave Down in the Making?

Monday Feb  3 2013

We mentioned the weakness in retail this weekend. 

XRT

A four month rally has been wiped out in one month. Retail IS the economy.

Brick and mortar have been losing ground to AMZN.We noted AMZN was not making any money and that sported like a 900 to 1 price earnings ratio.

Is the SPX just now starting a third wave down, and this is just now Monday...

WE have suggested for some time that the markets might be entering a period much like January 1973-74. So far most analysts think this is just a pullback from the big advance in 2013. Maybe, we shall see. 

REITs had been suggested as alternatives to bonds, not today, they are dropping hard. 

2014 Likely to be Transition Year

Weekend February 2 2014

But few predicted a January as rough as the one that just ended or the reasons for the reversal. 

Dow Fell by 5.3%, Page B1 Weekend WSJ

Well the few that read TMP were aware that we expected January to celebrate the 40th anniversary of the start of the 1973-+74 bear market. It has done so. 

Elsewhere IBM execs forgo bonuses, retailers are reporting weak fourth quarters, but Facebook is making money and Loyd Blankfein earned  $23 M paycheck

Every bull market has its favorites. Here are some early warning signs. 

Apple

Recall that just 18 months ago everyone thought Apple was going to $1,000, it was just a matter of when. Shares dropped 8% this past week from an apparent B Wave top. Now we read endless articles on whether Apple has lost its innovative edge, quite a come down in 185 months. 

IBM

Before there was Apple there was IBM. And IBM re made itself into a E Commerce company. But this looks like  a rounding top. 

Facebook

 

Fcebook has rebounded from its failure to launch. Call me old fashioned but, does FB really contribute to the economy in the way Apple, IBM, or CAT does?  Those companies sell products and services, FB sells ads. Is that really value added, just wondering. 

Starbucks

The fascination, no make that adoration. of America with an expensive cup of coffee still amazes me. The line at the drive up window at the SBUX near me never seems to shorten. But this stock called the top in the overall market. Coffee prices are bottoming but this may be a good social mood indicator. 

SPX Just speculating

January suggests we are in for a volatile year. The real support here is way down at 1660, the Sept and October lows. WHile that looks a long way off on the daily chart, it is simply the 50 week moving average.

Weekly

 

Tom  McClellan

Tom McClellan's yield spread model calls for a May 14 low. John Murphy has called for an April high. That would be two months after our projected late February low. As we said,this looks to be a transition year with lots of volatility. 

Closed End Municipals

 This looks like a pretty good low on the municipal chart, ditto for the government bond charts. I expect that pullbacks on the daily chart should be bought. We will get a confirmation on this weekly chart if and when the 13 crosses the 34 to the upside. 

Blackrock symbols in clude BLE BTA MYD MUH MHD MVF

Nuveen NBDNPI NPM NQU NXP

Pimco PMJL OMFThe Biog Picture in Municipals

I ran this chart several weeks ago. It suggests we still have a fith wave up in bond prices. If Wave One equals Wave Five it sould last well over 1.5 years.

$USD Dollar Weekly 

It is agonizingly slow but the US Dollar is turning up. This weighs on gold, silver, stocks, and crude oil. Which is to say the a stronger dollar lowers the prices of those assets priced in dollars. 

Crude oil

Here are lower highs on crude oil, if it fails to take out $100, it is headed lower. Again the dollar strength weighs on this sector. 

Gold

 

One failed rally after another. NEM just hit its 2008 low. I don't see any reason to be in this market.

Stocks appear to be headed for a late February low, we should see a bounce first.

Money is flowing back into bonds.

The Dollar strengthens taking oil and gold lower.  

 

Social Mood

The rise and now falling fortunes of Chris Christie remind me a bit of the French Revolution and  Robespierre. He too was a great orator, all for the Revolution, but it was the Revolution that took his life. 

No one attacking Christie is giving him any credit for at least putting the brakes on New Jersey's plight. Politics trumps accomplishment. 

Chicago black activists suggest that Obama should just quit.  This group asks how a minimum wage hike helps someone without a job, good question. 

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.