Benjamin Roth: The Great Depression: A Diary
It's all here, times change people don't
-the endless govt programs that fail to stimulate the private sector
-the ups and downs of the economy, the veterans pension stimulates just as the housing credit did, until of course the money runs out
-Roth is a attorney in Youngstown Ohio who kept a diary regarding the economy from 1930 until WW II breaks out, he is objective, candid, and forthright which is more than we get from Washington DC now or then
highly recommended
Robert Scheer: The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street
The former Editor of Ramparts takes on both parties and how they sold out to Wall Street that is even now partying and bonusing on their former mistakes.
Charles Gasparino: Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street
How Wall Street Backed the Administration and Got What It Paid For
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
Dennislelam@gmail.com
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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 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.
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Weekend March 15, 2014
WHat happened to gay marriage is going to happen to marijuana. Give me 24 months.
Justin Hartfield of Weedmaps, the Yelp of Marijuana Dispensaries
I fear that we are feeding imbalances similar to those that played a role in the run-up to the financial crisis,” he said last night in prepared speech for a meeting of the Banks of Mexico Association in Mexico City. “With its massive asset purchases, the Fed is distorting financial markets and creating incentives for managers and market players to take increasing risk, some of which may result in tears.”
In January, Fisher said investors were seeing the world through “beer goggles” because of the liquidity caused by the Fed’s stimulus programs. Yesterday, he noted increasing signs of market distortions in the stock and bond markets.
Richard Fisher Dallas FED Chair
Several other financial advisers told me this past week about clients who are chafing to move most or all of their money into stocks. Often those who lost the most in 2008 and 2009 and begged to be taken out of stocks entirely, are the msot eager to pike back in now.
Jason Zweig, Haunted by the Bull that Got Away Page B 1 Weekend WSJ
This of course is classic socionomics of following the herd instinct.
Corporate Insiders are more bearish than they have ben at least since 1990.
Mark Hulbert, Page B7
How the FED has failed America Good thoughts from Charles Hugh Smith ironically only the one percent have really benefited from the FED's actions.
2014 is Starting to Look Like 2008 by CH Smith - someinteresting graphs on how this time reflating the money supply has not reflated jobs or income for most people.
Rambus.com was right all the way down on gold. Then during December he switched to the bull side. Here are the last 51 days. If you are interested in following metals this is the best site I have found.
NYSE Advance Decline
Our most reliable indicator of all simply got too far ahead of itself. As was the case May 2013, a correction is now taking place. Notice how high the index was above the MAs.
Summation INdex Last May and Now
We shows a chart illustrating the decreasing breadth of the market last weekend. Here it is clear again that the summation index is making a lower high while stocks made a higher high. This bears watching in terms of attempting to time the end of the correction.
Bullish Percent NYSE
Here the down sloping line indicates fewer and fewer stocks are participating. Will we retreat to the February low?
Early Warning Indicator Stocks
Apple, Starbucks, Facebook, and now GM are all broadcasting some eventual trouble ahead, it would be helpful if they came with dates.
Bonds
My guess that bonds had completed their re tracement was premature, here money scurries back to bonds on the stock sell off.
US Dollar
THe buck is still falling, the focus is clearly on whether the October low will hold.
Natural Gas
Natural Gas is coming off its high. But it looks to be forming a higher low. There is considerable urging for the Administration to offer gas exports to Eastern and Western Europe. I doubt that will happen.
Shanghai and Copper
Shanghai continues its fall, and copper falls along with it, that is the whole story.
Central Fund
CEF is a pure play on gold and silver prices. It is still amazingly trading at a 4.2% discount to its NAV.
Gold
Gold breaks out from the double bottom. It moves through last resistance.
GDX is still trading at 2008 prices while the stock market is at new highs. You tell me which is the better deal.
GDX
MY guess is that GDX is in a third wave headed to 31 for its next resistance level.
Monthly PAR SAR Buy Signal on Deck
Monthly charts are slow movers. Their signals can range over a period of years. That is the good thing about them. Stay with the major trend and you should make money. Her. GDX moved to the 2008 lows and it still in that neighborhood.
GDX moves up to 35 before generating a buy signal in 2009. It looks to be on the verge of issuing a buy signal with a monthly close over 30. That is why this is potentially winning trade, One is getting in at what should be the start of a big move.
The Bottom Line
A correction of some significance is now underway in world wide stock markets. A move back to the February lows for the US is certainly possible.
Money moved back to safe havens of bonds, REITs,and Utilities.
Energy moved lower on refinery work and Iraq exports and a generally top of the market condition.
Money moves back to gold after last year's drubbing.
Social Mood
Our thesis has been a return to the mood of 1973-74. POlitically that has been spot on. The stock markets however have held up given the FED's $65 B a month suport, and late arriving individual investors.
Maureen Dowd notes relations between Congressional Dems and the Administration are at new lows. THat is precisely what happened to Nixon in 1973-74. Once he lost the Republicans he had no where to go when the Impeachment Threat rolled out. Well not quite, he went back to California.
The WSJ Weekend Report noted that Dems are running on a We will Fix Obamacare idea but Sebellius nd Obama are doing nothing of the sort. Again this is precisely the same intransigence that befell Nixon. I am not hammering on Obama from a political standpoint just pointing out the similarity of then and now. Eventually this turned social mood negative as the US lost is long war in Viet Nam. Now the US loses Afghanistan and Iraq. Our friends at Socionomics point out that one Dictator used poison gas and won, staying in office. Russia returns to its Cold War Self. While the media says the outcome of the vote in Crimea might roll markets, interviews on the ground there say it is a forgone conclusion. After plotting his non violent incursion does anyone think Putin will lose the election? Meanwhile
China jousts with Japan
Iraq moves on its nuclear ambitions
Europe waffles while Putin advances, after looking to the US for a military umbrella for decades now Europe is alone in the Russian Rain
the Middle East continues to melt down
Another front in the The New Civil War is Energy. The Former National Security Advisor and Marine General James Jones calls for approving the Keystone XL Pipeline. This is qute the issue for Mary Landrieu in energy dependent Louisiana. AFL CIO suports Keystone. Unions have poured millions into the Obama campaigns. But Dem contributor billionaire opposes it.
I hope you are seeing what I am trying to demonstrate. Obama cannot please everyone and does not face re election. Will his personal opposition to fossil fuels win over the economic and strategic benefit, at least in appearance, of approving the pipeline?
These are the classic elements of a New Civil War. Various sections of the country and the political spectrum now find themselves at odds with one another.
And on another Civil War Front, Senator Feinstein accuses the CIA of spying on the Senate and Congress. Obama attempts to stay neutral. Good luck on that one!
THis would be an easy call, IF the Republicans were coherent and organized. They are not. So we have the perfect storm of a New Civil War. Internal stife in both parties leads to close outcomes like the Florida election this past week. Note a Libertarian candidate took over 4% of the vote making hte outcome much closer than it would have been.
The stock market is supported by the FED and late arriving investors. I linked to Warren Buffet's comment that he would be surprised to see the stock market fall 50%. I wondered what he was thinking in the Fall of 2007 but apparently no one asked. WE don't need a 2007 2008 Financial Crisis for markets to fall. We just need a continued lack of confidence, in everyone and everything. Welcome to 1973-74.
Thanks for reading The Market Perspective
Dennislelam@gmail.com
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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 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.
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Weekend Nov 17, 2013
Note to Readers, Apparently we failed to click on publish last weekend, the post is up now.
For well over a year we have been predicting a parallel with the political stage of 40 years (two generations) ago. Richard Nixon was re elected in a landslide as the Dow Industrial topped 1,000 again for the first time since 1966 but then within an 18 year bear cycle for the markets. The Dow dropped from 1,000+ to 577 by December 1974. Just weeks ago Democrats were holding fast as the Republicans looked to be disintegrating over whatever it was that Ted Cruz was doing on television. And then the Obamacare Roll out Began with the President predicting, exclaiming that on Oct 1 Americans could shop like they do on for insurance bargains.
Jonah Goldberg sums it up nicely here.
It is one thing to promise a positive, health care exchange, it is another to destroy millions of policies that did not need fixing. It is the latter that is coming home to roost. Support for ACA had been at 50%, until the last two weeks.
Opposition on all fronts, Presidential approval, health care, direction of the country, and foreign policy is solidly double digit negative. after one year into a second term, Obama's raings are starting to look like Nixon's. IN the past week both Secretary of State Kerry and Obama found themselves using the phrase, '
we're not stupid' in response to criticism of their positions. This is hardly encouraging as House Democrats finally start to split from the President.
Lest readers think I am just trashing Obama, he is doing pretty well compared to Congress.
In fairness I suppose we get this result from all the Dems voting against their Republican foes and vice versa, no one likes the other side and so they all vote in the negative.
But we are finally at the moment of social negativism I have been expecting. And how. So how is it that the markets are spinning yet another Dow Theory Buy Signal? Perhaps our answer is in the next chart.
Franklin Federal High Yield Tax Free
Millions of investors took refuge in municipals and REITs as a result of the FED low rate policy. This is about as clear as an Elliott Wave Pattern can be. In short, we need a fifth wave to finish the pattern That would be to the upside. That would be another confirmation of an expectation of lower rates from the Fed's New Chief Ms. Yellen. IF anyone has a better explanation of what is happening, I am certainly interested.
Yellen Full Speed Ahead on Stimulus
The Dollar
I supsect what happens next hinges on the Dollar. It is exhibiting a cup and handle formation. Oil, bonds and the dollar have fallen together the last few months. More often the dollar moves opposite oil and bonds.
Bonds
TLT and the thirty year bond chart are virtually the same. Each exhibits a series of higher lows since Sept 1. Last week I thought rates would be going up. This week I am of a different mind. So far this charts shows encouraging signs of bottoming. It needs a close over 107. If our analysis of the Franklin Chart shown earlier is correct we are in for another bond price rally.
MUB
The S & P National Municipal Bond Fund issued a crossover buy signal in September and is still climbing. This too supports our idea that we have one more bond rally, and presumably stock rally ahead.
Crude Oil
Crude Oil got too far ahead of itself. It has now returned to test the 200 week MA. This has clustered the other MAs together. Looks like it is set to move up again now that it has corrected the excess from 112.
Real Estate
Like municipal bonds, Real Estate looks to have corrected from its recent highs.
Municipal Bond Funds
This shows the money flow coming back to closed end municipal bonds. This too shores up our idea that we have another bond rally coming. AT top the On Balance Volume indicator has moved over its 50 day MA. The yields here are around 7 percent.
SUmmation Index
The Summation Index has room to run to the upside again. RSI is back to the 50% level. And again, we haver a Dow Theory Buy Signal with all three indexes up.
The Bottom Line
We suspect another bond rally is beginning. Stocks move higher along with energy. See page B7 of the Weekend WSJ, Are We In Another Bubble? This suggests avoiding extended moves like Amazon which is trading at an amazing 1337 price earnings ratio. We are suggesting moves into municipal bonds and energy which at least have had considerable pullbacks. We also still like EEP, OKS, and TCP, all pipelines paying fat dividends.
The New Civil War
It's Obama's fault! While the line sounds like Ted Cruz, read the article to learn it is from students at Bowie College an Historically Black College in Maryland. The loss of support in this demographic that was solidly behind him just weeks ago is revealing of just how rapid the change in social mood is going to be now that it is clearly unnderway. '
Thanks for reading The Market Perspective
Dennislelam@gmail.com
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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 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. |
Weekend March 30 2013
Socionomics - Our lead this weekend rather than end of the post
The market's record-breaking spree has raised a new fear in many American households—dread that they are missing out on big gains.
When stock prices collapsed in 2008, the bear market wiped out half of the savings of Lucie White and her husband, both doctors in Houston. Feeling "sucker punched," she says, they swore off stocks and put their
remaining money in a bank.This week, as the Dow Jones Industrial Average and Standard & Poor's 500-stock index pushed to record highs, Ms. White and her husband hired a financial adviser and took the plunge back into the market. What really tipped our hand was to see our cash not doing anything while the S&P was going up," says Ms. White, a 39-year-old dermatologist in Houston. "We just didn't want to be left on the sidelines.
Mom and Pop Run with the Bulls, WSJ, Weekend Page B1
What a socionomic moment! One wonders just where the doctors think the market is headed with 89% of stocks in bullish position, the very opposite of when they exited in 2008. Readers, this is the classic herding of investors at precisely the wrong time, when market internals look just as they did at the peak of March 2000 and Fall 2007. Oh well, clearly this couple does not read The Market Perspective. Should I call their office and offer them a link to TMP?
A letter to the editor sums up where we think the stock market is about to be headed.
Similarly all the bond buying under "QEternity" has enriched stock market high-speed traders (not investors) since Ben Bernanke's Fed balance-sheet deficit is approximately equal to the monetary value of the Dow's gains. But one more example of what's coming lies in the administration's favoring legislation to allow the lower-on-average, chain-weighted CPI to replace the CPI in the calculation of entitlement benefits. My work shows inflation, as hinted by the most recent CPI reading, is running at a real rate of more than 5% as we near the blow-off stage of too much easy money for the wrong reasons.
Thomas L. Ashton
As a matter of fact the price of oil has jumped 7.7 percent in the last month as we will show in the charts. The race to an inflation spike is well underway,not nonticed by most.
Required Reading
Looking several months ahead, What Could Go Wrong?, here is our short list of must reads in the Weekend WSJ
Page A11 Why China is reading your E Mail
Page A 11 The Debt Bomb that Taxpayers Won't See Coming - this article on municipal debt that Mert Whitney did see coming, I widened her definition to the more likely outcome of multiple defaults to stakeholders, debtors, and municipal employees.
Page A 12 Liberal Medicare Advantage Revolt - the Uproar over Medicare Obamacare is just beginning
And finally on A11, an interesting retort to what passes for exceptional ism by a rejected high school student Suzy Lee Weiss to All the Colleges that Rejected Me
Okay our view is that the stock market is closing in on a final top, we will check on whether wave five has equalled one yet, this is likely leading to a rally in the sectors that have not participated thus far, commodities, and that will lead to a final 2008 like high preceding a two year bear market much like 1973-74, okay, got all that? let us begin.
Crude Oil on the Rise
Note the embedded comments, a rise of 16% in three months, now in an apparent Wave Three oil is up 7.7% in one month! This is the result of printing $85 B a month from thin air and injecting it into a moribund economy, prices will be rising. We never claim to be Elliott Wave Experts but
If Wave One = 14 points then
Wave Three might = 14 x 1.618 == 23 or 90 + 23 = 113
since Wave Two was hard down Wave Four is likely sideways, but another 14 points might carry oil to over 130 By that point regular pump gasoline will be well over $4 and creating ominous headlines. I had not been thinking of such high prices but the 16% and then 7% moves in such a short period of time are giving me reason to think of higher numbers. So what did I do, I purchased 9 July at the money calls on USO for about $100 each, they are up nicely already.
2008 Analog Comparison for Oil and Stocks
The parallels are remarkable. Crude oil in the main panel took off exactly five years ago in March 2008, just as it is doing right now! Stock put in their usual seasonal peak after tax time April 15, topping out in May. That seems a very reasonable analogy to where we are now, particularly if stocks make the round number of SPX 1600 by say April 15. I speculated this past week on that very time frame. but the3 50% rise in oil prices in a mere three months collapsed the economy's ability ot pay for energy. Then as debt came due, funds cashed in all speculative bets sending commodity prices plummeting world wide, stocks too.
SPX
Wave five equals Wave one at 1585, but heck with all the giddiness I fell like 1600 is an easy number. That again could easily take us to April 15 and beyond the same as in 2008 and very often a seasonal pattern. Seasonally stocks usually top after tax day.
MYSE Summation Index
We have an old saying in Texas, You can't fool a Mesquite! While other plants may blossom early only to be caught by a late freeze, a mesquite tree is a much more reliable indicator. Once the Mesquite blooms one can reliably bet that in fact winter has ended and spring has begun. Actually in San Antonio I think spring and summer just recede, not much winter to account for. But, my analogy is that the Summation Index is much like the Mesquite Tree, it is rarely fooled. While the bullish percent indicators are stuck at 89-90%, the NYSE AD Volume has soared to new heights but the Summation index shows a divergence. The Index in the main panel and RSI at top is gently turning down, the MACD at bottom is flat, this is perhaps an early warning sign of the top I have been expecting by May in stocks.
TLt The move out of bonds
Make no mistake, the trend in bond prices is to the downside. MMoney is moving out of bonds and into stocks.
Copper
There is yet another negative article on copper on page B 12 of the weekend journal as there have been many on Market watch and such. The upshot of all of them is that demand for copper has collapsed. Now that copper has fallen just under its 200 week MA, this would be about where one would expect a rally to begin. In fact since its low in October 2011, copper is now making its third higher low. Steve Kaplan at www.truecontrarian.com notes the Commitment of Traders report shows huge expansion by commercial for copper as of the end of this week.
How Negative is Sentiment Towards Commodities- the Worst Since, You guessed it, 2007!
the ratio chart of the CRB to Stocks, SPX, is even lower than the low of 2007! RSI has finally reached similar oversold readings as then. So we have negative articles and the kind of gloomy sentiment and oversold readings that typically accompany a multi-year bottom just before a rally begins. Note this measure has fallen below all four moving averages now as then.
FXC
My average price in FXC a Canadian Dollar ETF is 97.20. I suggested this was a conservative play on the dfurrency of a commodity producing country. I expected a 4-5% gain in about three or four months which is a nice annual return.
Emerging Economies - Indonesia
Indonesia is the world's fourth largest country Its 17, 504 islands are a treasure trove of rubber, oil,and other natural resources. It made its fourth lower high in the past few years and is nw moving well above both MAs. A bit late to buy but indicative of what is about to happen world wide.
Silver and Silver Miners
The blue box contains the rally from late last summer. Look at just how fast it happened. Thsi was not the train leaving the station this was an F 18 being thrown off the deck witha steam catapult. the 33% nine point rally happened in 45 days. Now that the correction has drug on for months, most have lost interest or given up which is what corrective waves do to our psyche. Let the price of silver jump from $28 to $35 and the value of silver miner reserves will soar, as will their stock prices.
Late to the Party Laggards
Markets top at different times. Here KOL at top is encountering accumulation at 22.50
REMX is the real laggard, no one is interested in rare earth metals, why not, China was buying all they could buy in Africa not long ago
COPX Copper Miners are out of favor amid all the negative publicity
Bottom Line
We should be near a bottom for commodities versus stocks, see CRB versus SPX chart. It is quite possible we have one more pullback to discourage anyone from buying here. But the stage seems to be set, refer back to 2008 analog of oil and stocks, for a repeat of just that event. Our scenario
Stocks rally to a new high over the next month or so
Commodities experience a come out of nowhere stunning rally
This is a complete surprise to Wall Street, and to our two doctors in Houston, now back in the market at all time highs.
It will be necessary to monitor our indicators for signs of July 2008 top, but after all, that is why you read TMP.
What I am Reading
The Fractalist is reviewed by no less than Nassim Taleeb at Amazon. It is the autobiography of Benoit
Madelbot, who is responsible for discerning the fractal arrangement of nature, in everything from nature to finance. I stumbled on a copy at our local public library, and will give it a go. I admit that I gave up on Stephen Hawking's A Briefer History of Time. I am just not fascinated by physics or the universe, fractals and their relation to our investing minds may be a different story.
Frankly I don't find Woolthat fascinating, still trudging through the Silo stories. It may well be that the determination of politicians like Barack Obama and Mike Bloomberg to control every facet of our lives has spurred interest in Wool which is clearly a story of an attempt to control society.
I received a wonderful e mail from a reader who mentioned that she had recommended some of my suggestions to her college aged son. in hopes that I will spur more interest in such reads, I mention these in this update.
Thanks for reading The Market Perspective
Dennislelam@gmail.com
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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 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. |
Tuesday August 28, 2012
In Boomerang financial journalist Mike Lewis visits Iceland, Greece, and then Ireland before finishing
with a, surprise, bike ride with Arnold S, who reflects on our version of those countries, California.
After reading his account of how the Greeks operate, Germany can attempt a bail out but I would not expect the outcome to be any different. Greece has been in default of half of its modern existence, since 1823, and no wonder. In an election year the politicians pull the tax collectors off the street. No credit cards, people pay cash and under rerport their income, even corporations. Hundreds of occupations got themselves categorized as arduous and obtained a retirement at age 50 something.
Recall my comment this past weekend about Turkey, as many billionaires as in Moscow or London, a lavish spread in the weekend WSJ. Money never sleeps and it moves to productive economies. As Mark Steyn observed in his latest book After America, the Europeans are all demonstrating for the government to 'rescue them.' In America the Tea Party demonstrates for the government to leave them alone. In Turkey and the Eastern Bloc countries they are all thrilled to be working. And so the money marches East.
Weekend August 18, 2012
To the Reader
For some reason I keep spacing the paragraphs apart but after saving my work typepad runs them together. This looks bad and is difficult tor ead, not my fault, sorry bout that. I have tired several times but always get the run together look.
Overview
GDXJ and XME for example have both flashed buy signals on the weekly parabolic indicator. There is little else to say about specific recommendations other than to ask new readers to review the last few weeks of posts. My holdings include
CEF - mvoing out to more aggressive positions like XME
COPX - COPPER MINERS
EWI - ITALY
EWZ - BRAZIL
FCG - NAT GAS PRODUCERS
GDXJ - JR GOLD MINERS
GM - GENERAL MOTORS, SEE POSTS THIS PAST WEEK, SOMETHING IS UP
GSB - SAN ANTONIO BASED SECURITY SOFTWARE
KOL - COAL PRODUCERS
PBT - PERMIAN BASIN ROYALTY TRUST
RAX - RACKSAPCE SAN ANTONIO BASED SERVER
REMX - RARE EARTH METALS
SIL - SILVER MINERS
TLT - 122, 125 PUTS
XES - ENERGY SERVICE
XME - METALS AND MINING
Overall we look for commodities to top last as they did in 2000 and 2008. Various indexes should begin topping after Labor Day.
Internals
Notice how the weekly High Low pulled back this week, tested the MAs, and the pink uptrend line, and now is heading higher. I believe we will regain 2250 which supports my idea of SPX 1500 or thereabouts.
NASD Summation Index
The NASD is lagging the NYSE but turnign up through the ribbons of MAs. Note this indicator is only half way to the top, plenty of room left for upside.
VIX
An alert reader asks about the low level registered by the VIX, one of the lowest in years. A great question, here is my take.
about the economy. This will be enough positive mood to push the SPX higher, yes I am still focused on a potential 1500. The Ferrari F 12 at left is the most powerful model ever built at $330 K per copy. Such excess takes place prior to market tops. Note the bright positive colors in both photos, but then 40% of Ferrari production is in Italian Red.
Our take on the article, Six Investment Moves to Make Now on page B7. the article recommends buying all these. TMP does not. OUr comments after the dash
Dividend Paying Stocks - These stocks are topping now, the article is way behind the curve.
Cyclical Stocks - They mention energy and tech, I like energy metals gold silver
Municipal Bonds - New high prices make these a sale. With three cities in CA recently taking Chapter 9, there is a potential floodgate waiting. We have mentioned this numerous times, the cities will default in kind either to dwellers, bond holders, or employees or probably to all three before this is done by 2015.These chapter 9s are not getting much attention now, just wait a year.
Mortgage Backed Securities - Just four years ago no one could figure out how backed what, why on earth get into that risk basket again?
Emerging Market Bonds --We are long EWI and EWZ and Fidelity's Emergin Market Fund, but the bonds will no doubt be heavily marked down in two years, that will be the time to buy. We expect to exit our positions in a few months.
High Yield Bonds - No way, Jose, these typically top along with stocks, a junk bond is a stock hoping you will believe Mike Milken was right after all
Below that is an article on Where to Find the Next Crop of Dividend Paying Stocks. This is typical Wall Street linear regression thinking, the trend never ends. The trend is ending, those stocks are turning down, as we showed a few days back, commodities topped last in 2008 and 2000. These stocks already have or will soon top, period. Stay tuned for an article in the WSJ titled, Time to Buy Miners now, after the group has advanced 40% or so.
We have consistently highlighted the next Big Bust - the College Loan Meltdown, first cousin to the sub prime bust of 2008. My weekly newspaper column outlines a new plan for college, I will put it up tomorrow when it will appear in the papers that run it. When the Kids Return Home notes that three of ten parents say one adult child has returned home. The article suggests counselling, budgeting, and networking but, as I noted earlier, some social actions lag mood more than others. Today there is this article about college graduate children right back in the bedroom where they started. Earlier this week the same paper featured an article on Marketing Pros, Big Brand on Campus. Rather than coming up with affordable alternatives and cutting bloated staffs, the fixed cost of college goes up to convince the other seven of ten parnets that an expensive college degree is still a great deal. Eventually mood will catch up with reality. When it does, there will be a trillion reasons for a meltdown.
While this has nothing to do with investing, on page D7 Burrata, a cream filled ball of mozzrella, with roasted nectarines and pistachio heb oil, would surely require one to hit the Jack in the Box Drive in Window on the way back home....
So What Could Go Wrong
Quite a bit if Israel Attacks Iran. Trouble in Iran ended Carter's Presidency. Then it was the failure of an attemepted hostage resuce not to mention the hostage situation in the first place. Now, such an attack would spike the price of oil. I have no idea where the Administration would be on such an issue and suspect they don't either.
Bottom Line
We look for TLT to continue its melt down, the Aussie and Loonie have rallied nicely, the Euro will do a bit better, commodity stocks are just beginning a strong run back to at least the highs of earlier this year, and gold should make yet another multi-year high by Christmas. Stay long our recommendations and suggest TMP to a friend.
Thanks for reading The Market Perspective
Dennislelam@gmail.com
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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 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.
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