The Market Perspective

Are the Markets Topping Now?

Monday Jan 30 2017

We have been expecting a top in this time period, take a look.

Our view is of course completely contrary to the perma bulls at CNBC and now stock charts.

Transports

 

Looking at many indexes and stocks, I see violent reversals everywhere.

Russell 2000

These two indexes are Distant Early Warning indicators DEW Line.

This is how the down turn begins.

Caution!

Are the Markets Topping Now?

Monday Jan 30 2017

We have been expecting a top in this time period, take a look.

Transports

 

Looking at many indexes and stocks, I see violent reversals everywhere.

Russell 2000

These two indexes are Distant Early Warning indicators DEW Line.

This is how the down turn begins.

Caution!

Markets Surge to New Highs

Weekend Jan 29, 2017

Of Two Minds on Job Creation

The Working Class Strikes Back   Of Two Minds on the Collapse of the Left, world wide

David Cameron out in theUK, Hollande unable to run with low, a right wing politician is likely to win next, Itlaian PM out, Brazil President impeached, Nieto at low ratings,

Stock Market Indexes are overbought but still on a tear. Various markets are all within weeks of setting perfect 17 year cycle highs with Janary, 2000.

Russell 2000

RUT needs a close below  1344 to turn the short term trend down.

DJIA Versus Bonds

The ratio chart still favors stocks over bonds.

Ten Year Note Yield

DBC Commodity Fund

John Murphy reports lots of money going into commodities. We think commodity priced bottomed last February which is what this chart shows.

DBC Weekly

Breaking through resistance at  16 will remove all doubt!  The daily chart is well along and perhaps over done already, This loks like a good spot to put in a ladder of orders at lower prices.

Gold versus the US Dollar

If the Dollar remains strong, gold could drop a good bit, note the MACD at bottom is rolling over.

UNG

UNG the Nat GAS ETF is stuck in mid trading range, but we still like it.

 Bottom Line

Stocks remain in uptrends across the Board.  But markets are overbought and celebrating important cycle highs.

We think the ten year rate will eventually rise to 3%

Gold and silver are not making much progress for the time being but overall commodity prices are.

We like Natural Gas.

 

 

Social Mood

La La Land loks like a winner, Robert Folsom explains why.

It is 1964-66 all over again when My Fair Lady and Sound of Music swept the Oscars.

Social mood precedes social action. The mood is positive so the mood towards musicals, now as in 1964-66 is favorable.

It works the other way as well. Five years after Sound of Music, Midnight Cowboy won the Oscar, as afar removed from the upbeat musical

as one could imagine.

And history repeats, check out what the public was watching pre -rash in 2008, The Dark Knight. 

The tag line for that movie was The City Has no Hope. So the movie matched the growing negative mood.

How much match you ask?  Oh about $500 M.j  And note that was in a short seven months!

Box Office

Budget:

$185,000,000 (estimated)

Opening Weekend:

$158,411,483 (USA) (18 July 2008)

Gross:

$533,316,061 (USA) (27 February 2009)

Pop Trends Price Culture

 

 

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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 and 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.

 

 

 

 

 

Why Punish Mexico?

Friday Jan 27 2017

Why Punish Mexico?

It is difficult to stop a bad idea cloaked in good intentions.

Dennis Elam

The President is treating our neighbor like Obama treated Israel.

The Wall Street Journal WSJ on Mexico

And then…

A US –United Kingdom trade deal may never be easier to strike than right now.

The WSJ again, but why penalize Mexican made Fords and not British made Jaguars and Range Rovers?

Trump has some good ideas in approving the Keystone Pipeline construction and re starting the Dakota Pipeline. But his ideas on Mexican trade are the failed ideas which have been tried before. Mexican President Nieto cancelled a planned Washington DC trip on trade after a bitter Twitter exchange with Trump. Yet Trump meets with British Prime Minister Theresa May today to negotiate a trade deal! Or as P J O’Rourke titles his new book, What the H___ is going on Here?

Trump, well make that President Trump, complains that the US has a $60 Billion trade deficit with Mexico. This means we buy more from them than Mexico buys from us. Well, yes, and perhaps Trump should dust off those Wharton School of Business lectures;he sure likes to brag about the degree. But where is the learning?

If two nations produce very different kinds of goods, there is a reasonable chance for balanced trade. Consider say Japan and Chile. Chile produces vegetable and fruit which cannot be grown in Japan. Japan produces economical light trucks which are useful in a developing country like Chile. So the two trade with one another on a somewhat equal basis.

Mexico produces vehicles for a variety of companies, notably Nissan and VW but now Ford and GM as well. As those cars can be assembled for less cost in Mexico than in Michigan, production gravitates to its lower cost provider. So of course we have a trade deficit with Mexico!

Elsewhere in today’s WSJ, some bone headed economists suggest NAFTA has not had that much impact on the US Economy. Obviously these guys have not visited Laredo, one of the biggest trade ports in the US now, or tried to navigate I-35 between Laredo and DFW.

Trump now threatens (promises?) a 20% import tax on goods made in Mexico to finance his Wall on the Border. This idea has been tried before, with disastrous results. And interestingly it surfaced at about the same time in the markets.

The Smoot-Hawley Tariff Act of 1930 was signed into law June 17, 1930.   The tariffs (import duties on foreign goods) were the highest in 100 years. Trading partners retaliated slowing trade, and job growth, both places.  Exports and imports were cut by half, lengthening the Depression.   The idea then was to ‘protect’ famers as land had been freed up from grazing livestock as America embraced the automobile.

Now consider the timing of the planning. During his 1928 campaign, Hoover promised to ‘help’ farmers by raising import duties on agriculture products. The thinking was that this sort of trade protectionism would lower imports and raise the market for US agriculture products.

The House passed a version of the bill on May 1, 1929. Smoot and Hawley by the way were both Republicans as was Hoover. The Senate bill passed in March 1930, 44 to 42. My point is that the House version passed six months before the market crashed. No doubt in a misguided attempt to help, the Senate passed its bill just as the markets had risen 50% and began its historic dive to Dow 41.  My point is that this same bad idea is being floated just at the US DJIA has hit 20,00, a new record now as then in the markets. This is a remarkable similarity, decades apart.

All of this really began back in the 1970. Japan became the leader in motorcycles and then small cars using motorcycle engine technology. Instead of meeting the competition (such as making AM FM radios standard equipment in US cars) the automakers fought with tariffs then as well. It did not work.

The fact of the matter is that modern production techniques are such that is it just not economical to pay someone $25 an hour to assemble a washing machine or air conditioner.   Those workers need more sophisticated jobs. And so Mexico moves to where the US was after WW II with a growing manufacturing economy.   Worker wages in Mexico have grown in some cases 8x in the twenty years since NAFTA passed. In the 1980s Monterey was a sleepy town, to day you can go to the opera there.

The far better idea would be a powerful NAFTA from Vera Cruz to Montreal. That would create a North America which was finally energy independent from the precarious Middle East. And trade would flourish.

Sorry, but Mr. Trump cannot dictate growth by fiat any more than Hugo Chavez could in Venezuela.

Smoot and Hawley proved that 80 years ago.

The Bitcoin Bubble

Friday Jan 27, 2017

Tom McClellan suggests Bitcoin is a bubble.

Do you suppose that could precede a sell off into April?

30 to 110-150 in just over a year, quite a run!

EWI on Inflation and Global Report

Thursday January 26, 2017

I don't quite agree that inflation is not a problem Industrial metals and firms like FCX are on a tear. But EWI is always an interesting read

so here it is.

 

Inflation: Here's What the Wrong-Way Bet Looks Like
Chart of the Day

By Elliott Wave International

---

Markets all around the world are at a critical juncture -- you must see this free report now. This is the fifth year EWI has created their annual State of the Global Markets Report. And since many markets around the world are at a critical juncture, this may be the most-timely edition of the State of the Global Markets Report yet! It comes right out of the pages of their paid publications. For a limited time, you can see this report at no cost. Get your 21-page State of the Global Markets Report -- 2017 Edition now.

This article was syndicated by Elliott Wave International and was originally published under the headline Inflation: Here's What the Wrong-Way Bet Looks Like. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

Dow 20,000

Thursday January 26, 2017

It is said that when non financial publications make financial news front page or on the magazine cover, the move, in either direction, is near an end..

While most would label the WSJ a financial publication yes it runs columns on markets buried in the Markets and Investing section every day.

But rarely is the stock market front page and center in every day news.

Well not today. I have never seen so many stock market graphs in one edition of the WSJ.  And yes it is a doubling of the market since hitting the 10,000 mark in Year 2000.

While the news seeks to link the new high with the promise of Trump the market was heading up already. And no doubt the change in administrations helped the parabolic rise, well,

grow more parabolic.

But market moves up usually end in parabolic fashion, and this is no exception. The last 1,000 points took but 42 days.

Market tops occur as a result of positive social mood.

In the mid 1960s as the Dow approached 1,000 for the first time ever,  Americans went to see  My Fair Lady and  The Sound of Music.

In an echo of that era, La La Land, one of the few musicals recently made, is an Oscar favorite.
Note the happy couple dancing at right, a frequent image of the movie.

Conventional wisdom has it that such movies case movie goers to be optimistic and upbeat, hence the attend La La Land.

But in fact it is social mood turning positive, and turning up markets, that causes La La Land to be popular now, just as Sound of Music was a hit at Dow 10,00.

So it is no accident that La La Land, an appropriate title for Dow 20,000, both are popular at the same time.

Monday Begins Quietly

Monday January 23, 2017

The stock market is pricey at these levels.

And there is lots of bullish speculation on oil prices.

As the Wall Street Journal points out, this one statistic shows why the bull market likely won’t last much longer: The total value of U.S. stocks was pegged at 169% of gross domestic product at the end of 2016, compared with 85% when 2008 came to a close and 177% at the bubbly finish of 1999.

Monday Begins Quietly

Monday January 23, 2017

The stock market is pricey at these levels.

And there is lots of bullish speculation on oil prices.

As the Wall Street Journal points out, this one statistic shows why the bull market likely won’t last much longer: The total value of U.S. stocks was pegged at 169% of gross domestic product at the end of 2016, compared with 85% when 2008 came to a close and 177% at the bubbly finish of 1999.

The Year Ahead - 2017

Weekend January 22, 2017

Cycles

My apologies for getting too bearish too soon. The high in the Transports back in Fall, 2014 went before a final low in multiple indexes this last February 2016. That led to multiple highs

across many indexes which is occurring, and probably peaking now.  Let's look at the confluence of cycles now coming together.

40 Year cycle from  1974 Low to present High

17 Year Cycle from January 200 to right now, a remarkable timely occurrence

14 Year Cycle from  1988, 2002, 2016

10 Year  1997-2007-2017

And 66 week, 33 week, and a 5 month Jan 2016 June 2016 Nov 2016 with the next half of that cycle occurring now

We suggest readers consider a subscription to Insiide Track for more insight, Caution the author uses a proprietary method which takes a lot of time and reading to grasp

www.insiidetrack.com

I am not affiliated and receive nothing from subscriptions to that sight

Gann also warned about the seventh year of a stock market and the danger there in, consider 1987, 1997, 2007

So I am expecting a high in the stock markets now followed by ups and downs the rest of the year. We shall see if the previous Nov 2016 low holds

Social Mood

We techies like to say there is always a fundamental event to validate the technicals. And wow we have a bunch on the table.

Negative mood results in a throw the bums out attitude and that is now just in the US but world wide.

Cameron out as British PM on the Brexit vote.

Hollande not running for re election he is so far down in French polls. Right wing French politicians also calling for an exit from the EU. See the move from left socialist, to right in France.

Italy PM out.

In Mexico NIeto falls to 12% approval rating.

Barack Obama out and Trump already falling in popularity polls here.

Venezuela Brazil Argentina in terrible shape, Brazilian President impeached

and so it goes.

Like him or not, everyone from Rush to the political left agrees that Trump has no particular ideology. Instead he sees the world in terms of winners and losers. It is not that he embraces Putin's policies,he just sees Putin as a winner in Russia versus our loser list above.

And like a pugnacious 13 year old, Trump feels compelled to answer every real or imagined insult with a Tweet. Yesterday his press secretary was excoriating the press for suggesting his inaugural turnout was lower than Obamas, I mean who cares, is that the PR Hill to die on the first day? 

But my point is that he openly has declared the press unfair to him, )as though the declaration would change their mind), and that he will continue tweeting to get his message across.   In his column last Thursday Karl Rove explained the danger of such 140 character comments on national and international policy. But  what we need to grasp is that this sort of action will probably be cited as careening markets first one way and then the other this year.   Polls indicate a majority of Americans have tired of the tweets but that won't change Donald.But the point is that Trump's tweeting to every imagined insult will just give encouragement to his supporters and more blood in the eye to his detractors. At the height of the Watergate frenzy, the press devoted thousands of lines of print to nothing but the crisis.The Trump Presidency is already shaping up the same way, consider his calling his own  CIA a bunch of Nazis. Then yesterday he claimed more support than ever for the same CIA. This sort of flip flop will not help assure the markets.

It was interesting to watch the interviews with the crowd January 20.  There were clearly many ordinary folks who had not attended before but were happy to stand for hours in the drizzling rain to see their guy. And he did not disappoint with his sixteen minute Change Starts Today speech.

The tone is further set by one third of the House Demcrats boycotting the event, so much for reaching across the aisle.

Conclusion-the political stage is now the most polarized  since Nixon in 1972-the start of the 40 year cycle kicking in even back then.

Markets

Russell 2000

The RUT 2000 posted a stunning near 50% rally from the February lows. The PAR SAR has traced out five waves to the upside.

And this seems to qualify as a parabolic blow off. It will take a weekly close under 1200.67 to revers the pattern.

All indexes will peak at different times so as to throw off as many investors as possible.

Bonds

Wave A up and now a Wave B down, this market needs to turn back up this week to keep the idea alive of a counter trend bounce.

XAU Daily

The daily is over bought for now but the  weekly looks quite strong.

Energy

UNG Nat Gas

 

I am still bullish into February for a new high  in nat gas prices.

Bottom Line

Stocks are topping, notice the DJIA has still not crossed 20,000.

Bonds need to advance this week to resume counter trend bounce.

Crude and nat gas are moving up.

Social Mood

Pop Trends Price Culture

A topic I began writing on in creating this blog was The New Civil War.

Notice this article was written in November 2012.

Here is the Obama Romney map

In my original article I showed the 1861 Civil War map, then the Right to Work map, and then the Red Blue Map. I pointed out they were all the same map.

The Southern States voted Red for Republican. Democrats were mostly isolated on the coasts and in the mid west, traditional union territory.

Now compare the above with the 2016 final election map

T

The Democrats lost all the South including Florida. And that Blue Wall of the mid-west gave way. If Trump had not fueded with the Republican Governor of New Mexico he might have done better there.  But picking pointless fights is part of his brand.

And more states are joining the right to work movement, see this map and notice yep, just about the same as the 2016 election map.

So the trend has been for fewer Democrat victories amid the loss of over  1,000 Democrat seats since the Obama win inj 2008.

More states are voting right to work as RTW states gain more employers.

And non RTS states like Illinois CA New York CT continue to lose population to RTW states.

The trend is clear. And this is precisely why Trump won, te disconnect between Washington DC and the governed. Henninger noted the crime in Chicao and the ACA failure as the two big determinants of the failure of central planning.

Or as Betty Davis remarked in All About Eve, fasten your seat belt, it's going to be a bumpy ride.

 

[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 and 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.