Weekend August 9, 2014
I suspect a bottom is forming in stocks. The sharp reversal Friday on the 2 hour chart looks like a reversal.
Dow Industrials Two Hour
THe Commodity Channel INdex at bottom had a rebound Friday.This again looks like the start of a reversal.
150 Day MA
This indicator dipped near the February low also suggesting the correction may be ending.
NYSE Summation Index
The usually reliable Summation Index is over sold and probably in buy territory.
Bonds
Bonds are now technically where stocks were a month ago. Which is to say money has moved into bonds as stocks fell, TLT is too far above its MAs and probably due for a pullback.
US Dollar
The US Dollar seems to have gotten a bit over done. That also suggests, if the dollar pulls back a bit, that stocks would advance. Note the dollar fell Friday and stocks rallied nicely.
Crude Oil
Crude oil should be making a bottom here and it is indeed oversold. But it needs more work to establish a bottom pattern.
Natural Gas
Natural Gas has given back half its gains or more since the top earlier this year. Recall predictions that nat gas would have to go to zero to stabilize the over supply. Instead it bottomed at $1.92. It then soared to $6.50. Now it appears to be coming to some support at $3.75.
Luxury Goods Coach
I have a list of many luxury goods makers. From Coach to Ralph Lauren near all have been hit hard. I mention this is my newspaper column which appears tomorrow and will be published here as well. But it might be time to buy Coach, it rebounded nicely Friday.
Sotheby's BID
BID is usualy a reliable reflection of the market, all we can say is OUCH!
The Bottom Line
Stocks appear to be bottoming after a needed correction. Bonds conversely are stretched to the upside. The Dollar has rallied as stocks fell, so it too should be pulling back. Our best guess is a final leg on this rally into October. That should see a new high in various indexes. Whether oil will join or wait for a later high we cannot know at this time. I do think it is significant that oil has not made a new high with stock indexes.
Social Mood
Our long standing prediction has been that we would duplicate the political landscape of 1974. That prediction has been 100% accurate. I just watched the WSJ Weekend tv Show. The comparison was not just with Watergate but with humans clinging to helicopters leaving the US Embassy in Saigon. Likewise the entire Middle East, after years of US involvement, can only be labeled Chaos Stan. A genuine human tragedy is occurring with the Yazidi becoming a genocide target. The US has lost credibility.
I had originally thought is this were to happen, that lower stock prices would result. The WSJ writers noted the loss in faith that government can solve problems. But FED money has kept stocks high. The rule of alternation then has resulted in new highs in stock prices when new lows were seen in December 1974. What a 40 year anniversary this is. Nixon resigned rather than be impeached. Ironically Obama is using the impeachment threat to rally his base knowing there will not be 67 votes in the Senate against him anyway. It is quite cavalier to take a serious matter like impeachment in such an un serious vein but here we are.
Watergate was about Republicans breaking into offices to see what was in Democrat files. That was politician versus politician. Since we are a higher degre of wave intensity now, the government has moved against its own people with the IRS investigations.
99 people have been shot Chicago since Memorial Day, the border is over run with illegal immigrants, Russia comes back to Cuba, and so it goes.
We have written extensively that a period of negative mood ws coming, and it is now upon us.
hanks for reading The Market Perspective
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