Weekend August 23, 2014
A 1962 Ferrari GTO sold for $38 million last week at Bonhams Auction in Monterey, a record for a car bought at auction (eclipsing the previous mark of just under $29 million for a Mercedes-Benz W196 Formula 1 Racing Single-Seater). At the RM auction last Saturday, a 1964 Ferrari GTB/C Speciale earned the fourth-highest price ever at auction, $26.4 million (including buyer fees). Gooding and Co. Auction sold a '61 Ferrari 250 GT SWB California Spider for a none-too-shabby $15.2 million.
Dan Neil, WSJ, Ferrari Dominates Pebble Beach Auto Show
We have continuously updated with higher and higher collectible car prices, we now have a fitting record if indeed stocks top this fall as expected
Oil prices appear to be breaking down. This is extremely significant as oil prices are positively correlated to stock prices.If correct this will offer a trade entry point to what should be a long term decline in oil prices.
Oil prices topped in 2011 after the big peak in 2008. The correction back up appears to have ended with a breakdown in the important weekly chart. Granted there was an overthrow to the downside in 2011 but this appears more seroius given the expansion of supply.
Crude versus the Dollar
Weekly crude broke botth the 125 abd 200 week moving averages. It did so just as the two averages were converging which is even more ominous.
It might Play out Like This
Crude is oversold. I am guessing it is due for a bounce back up to test the breakdown, known as a back test. Then it fails again confirming a real bear market is setting in. This is in keeping with the break down pattern of the CRB, gold, silver, natural gas, etc.
XLE for Energy XES for Energy Service versus Dollar
At far right in the large section the ETF for Energy XLE failed on Friday. That would be A back test of trying to regain the 50 day moving average and it failed. At bottom the dollar continues to rise. at top the XES for energy service also is failing.
S & P Bullish Percent
Here the bullish percent is not at a new high but the SPX index is. This is a sign of failing breadth.Breadth refers to the percentage of stocks participating in the rally. As the rally ends fewer and fewer stocks participate.
QQQ and NASD summation index
We began this blog with the idea that the internal strength of the market would determine direction.Alas, the massive FED money has trumped internals for some time. But all good things come to their end eh? Here the QQQ powered by the usual suspects of Priceline, Apple, HPQ and such powers on. But the broader market shown by the Summation Index is really lagging the NYSE price index. This is how bull markets end. Fewer and Fewer stocks participate in the rally as the smart money begins its exit. Smaller investors lured by higher and higher prices over stay their welcome.
Bonds TLT
For some reason typepad is truncating the screen shot in annotate mode. But TLT recorded an inside week. It has certainly been on a tear to the upside this year, sorry I missed that one! I suspect the more sophisticated bond market sees trouble ahead in stocks, anticipating a dash to cash and flight to safety in bonds, TLT has already rallied.
The Euro Tanks
Angela Merkel is trying to negotiate an end to the Ukrain crisis, Putin of course has only one end in mind. As unemployment stays high across the continent, the future of the Euro is again in doubt. The dollar in green soars.
The Battle of Tours occurred Oct 10 732 AD. That was 1252 years ago.Then a large Moslem cavalry met French infantrymen. It was the furthest the Moslems ever advanced into Europe, until now. Today political correctness has allowed Islam to over run Europe without ever firing a shot. The /European Central Bank reports on unemployment there.
CRB ratio chart to SPX
The CRB is still falling relative to the SPX. Deflation looks to be key as this resolves.
Social Mood
This readers is simply huge. Both the Permian Basin where I lived and worked for decades through the prior boom and bust and the Eagle Ford exhibit classic socionomic 'what could go wrong' manias.
The Odessa Chamber is publishing and e mailing economic updates several times a week.Midland and Odessa are glorying in being labeled the fastest growing cities in the US. This of course is actually not bullish after some point, all parabolic rises crash eventually.
An economist in Amarillo is actually making a lving reporting on oil activity. Don't get me wrong, Karl Ingram is doing a great job. But in normal times this does not happen.Normally no one cares what happens in Odessa.
We have detailed other features of the mania
HAL builds giant facility in Eagle Ford Note that the EAgle Ford has its own website
A conference pass to the Eagle Ford Energy Show is $895. This is actually a sign of the parabolic emotion that accompanies such a peak.
A ringing endorsement of the skyscrpaer theory is underway in Midland, TX with a 53 story office building underway For comparison the tallest existing buildingin Midland is about 20 stories. The same thing happened in 1979 when the First National Bank of Midland added ten stories to its existing building. It went completely bankrutp in 1986.
Promoting direct investment and tax shelters in oil and gas is all the rage again. Google invest in oil and gas wells to see how many are promoting the idea. This was another feature of the previous boom.
Gallup reports 14% of those 24-34 living at home again. This is the real economy where
Only 47% of working Americans have full time jobs.
Months from now I suspect we will be reading articles that it was 'obvious the market was overbought and had out distanced the poor shape of the economy.'
hanks for reading The Market Perspective
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