Dr. John Faessel's  Instablog

Pre-market - Monday 1-14-2013

Dr. John L. Faessel

ON THE MARKET

Commentary and Insights

Quotes of the day

"the right of the people to keep and bear arms, shall not be infringed."

The Second Amendment

The United States Constitution

&

"Among the many misdeeds of the British rule in India, history will look upon the act of depriving a whole nation of arms as the blackest."

~ Mohandas Gandhi ~

Stocks Rally while Bonds Tip Over

Financials / Banks continue to Surge despite Global Slump…

Last week the S&P 500 (SPX) Index of U.S. stocks broke to new highs adding 0.38% after a few days of back and fill from the prior week's breakout. The technical picture remains solid as there was a broad advance across the board. The McClellan Oscillator is in neutral at plus 122.

Key technical observation for the market going forward is that the bond market looks to be finally tipping over. These yield number to watch is 3.32%. A break down there will put a top the charts and send all that money hiding for safety into a major reconsideration, considering all the Federal Reserve's buying of debt that's running at about 80% of the total spending.

Last week (January 9, 2013) the Market, especially the Financials / banks didn't blink when the Bank for International Settlements [BIS]- Basel Committee issued - final document; "Principles for effective risk data aggregation and risk reporting "Principles for effective risk data aggregation and risk reporting. This has to be good news going forward and suggest that the Financials / banks could have another good year…

Its customers are central banks and international organizations, the BIS does not accept deposits from, or provide financial services to, private individuals or corporate entities.

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Notable:

Thomson Reuters says profit projections for Q4 2012 S&P 500 (SPX) have been cut radically. Analysts now see companies expanding just 1.9% year-over-year-down from 9.9% hoped for three months ago and 13.7% last summer. Companies have squeezed all they can from profit margins and desperately need revenue to keep growing. Wall Street is now bracing for stagnant revenue growth last quarter among nonfinancial companies.

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Chinese exports in December jumped 14.1% over a year earlier.

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The S&P 500 (SPX) closed Friday at 1472. Last Friday it was 1466

The September 2012 top and 'price' resistance at 1474

The October 2007 (SPX) highs and price resistance is at 1576

Short term price support is at 1451

Then at deeper support of 1398.

November retreat lows / and Price support is at 1343.

The 50-day moving average support is at 1417

The 200-day moving average support is at 1392.78

~~~~~~~~

Greek, Spanish and Italian short and long-term bond yields continue to move lower;

· Greek 10-year yields have slipped to 11% - down from a high of 24.41%

· Italy 10-year (gross) bond yield - 4.29% off cycle highs of 7.29%.

· Spanish 10-year (generic) bond yield - 5.05% off cycle highs of 7.41%.

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Friday's key indicators and metrics:

Cycle highs or lows are in red

· McClellan Oscillator is NEUTRAL at plus 122 - Thursday's was plus and neutral 147.

· Japanese Yen - 11219 (lowest since mid-2010)

· 3-month $ LIBOR - 0.311

· Aussie Dollar - 1.0486 - Thursday's was 1.0550

· Euro - 1.3346

· VIX - 13.36

· Lumber (CME) - 380.9

· CBOE Put / Call Volume Ratio - 0.72

· Natural Gas (Globex) - 3.327

· US Dollar Index - 79.661

· Swiss Franc - 1.0962

· Canadian Dollar - 1.0150

· Silver (COMEX) - 30.408

· Gold (COMEX) - $1660.6

· Copper - 3.6540

· Crude oil (NYMEX) - $93.56

· Brent Crude - $110.99

· The Treasury 10-year yield - 1.88%

· The 30-year Treasury - 3.05%

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This week's Bullish Investor Sentiment.

The Bullishness / Bearishness complex is mixed, yet still quite Bullish. Two months ago overall sentiment was indicating distress.

(High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.)

· The American Association of Individual Investors [AAII] Investor Sentiment Survey of BULLISHNESS rose a chunk to 46.5% from 38.7% the prior week. It posted cycle lows of 22.2% on 7/23/2012 the lowest percentile since August 2010.

· The Market Vane (Market Letter Survey) was up a percentile to 66% from 68% the prior week.

· Consensus Index BULLISH rose to 51% from 45% the prior period. Seven -weeks ago it was 60%. It ticked Cycle highs @ 73% three months ago

The exclusive CONSENSUS BULLISH SENTIMENT INDEX is the premium gauge of positions and attitudes of major professional brokerage firms and advisors as interpreted and recorded by CONSENSUS, INC.

· The AAII Investor Survey of BEARISHNESS fell to 26.9% from 36.2% the prior week. 4-weeks ago it was 24.8%%. On August 4th 2011 it posted cycle highs of 49.9% in Bearishness.

The Citigroup "Panic / Euphoria" Model rose a bit to plus 0.17. At the end of June it ticked cycle lows of minus 0.31in the Panic mode. It's still registering in the Neutral zone.

The BARRON's Confidence Index is 68.3 -. One-year ago it was 67.2.

The Confidence Index is the premier measure of how the bond markets trillions (total global is around $91 trillion and USA is 39% of that) are allocated: (The bond market is twice the size of the stock market.) The Index is the High-grade bond index divided by intermediate-grade index. A decline in latter vs. former - generally indicates rising confidence, pointing to higher stocks.

Pre-market - Monday 1-7-2013

Dr. John L. Faessel

ON THE MARKET

Commentary and Insights

Quotes of the day

"A free people ought not only to be armed and disciplined, but they should have sufficient arms and ammunition to maintain a status of independence from any who might attempt to abuse them, which would include their own government."
~ George Washington ~

"It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the [tax] rates now."

~ John F. Kennedy ~

Stocks Rally despite Global Slump…

Last week the S&P 500 (SPX) Index of U.S. stocks added 4.6% in its biggest weekly gain in more than a year. The Stoxx Europe 600 Index advanced 3.2%. Friday' move in the Dow Transports - up 1.17% to 17 month highs - and the Bank Index (BKX) up 1.68% to 21 month highs were the highlights and added a solid punctuation point to the cleansing of the technical picture. And this is good technical news for the market going forward and while the market is overbought and will likely back and fill over the next few days my technical underpinnings suggest we go higher. The McClellan Oscillator is overbought at plus 174. Keeping in mind that this is all built on thin air / or printing press ink. And while the indexes surge and companies continue on their profitable ways it's a bullish technical set up until some reality sets in. Remember when 'TSHTF'- Buy things...

The Emperor Has No Clothes - but lotza ink…

Re Mario Draghi - FT's Person of the Year - "In retrospect, the July declaration (the "bumblebee speech") - which in effect dared financial markets to challenge the ECB's unlimited firepower - may well be seen as a turning point in the three-year-old crisis"

"Within our mandate, the European Central Bank [ECB] is ready to do whatever it takes to preserve the euro," Mr Draghi said, pausing for effect. "And believe me, it will be enough."

So, the proverbial can goes down the road again… and on a grand scale; over the past year, the Federal Reserve has artificially lowered interest rates by purchasing close to 80% of U.S. debt instruments. Policy makers from the Federal Reserve to the People's Bank of China pumped more than $6 trillion into the global economy as they bought everything from Treasuries to gilts, boosting their balance sheet assets to $14.09 trillion as of June 2012 from $4.99 trillion in May 2006." according to Bianco Research LLC research cited by Pimco who oversees $1.9 trillion. Gross's / Pimco's $285 billion Total Return Fund (PTTRX) gained 10.4% and beat 95% of its peers last year, Bloomberg data show. (What they [Pimco] didn't foresee)

It was Marty Zweig who was famous for his "Don't fight the Fed" philosophy - but today's insane global / USA / Japanese / Euro Central Bank expansion of their balance sheets cannot end well.

Expect another S&P downgrade of the USA re the debt bomb - it's only a matter of time..

Hmmm; Between September 2011 and September 2012, China reduced its holdings of U.S. Treasury debt 9%, from $1,270 billion to $1,155 billion.

~~~~~~~~~

Notable:

· Fitch Ratings forecasts that copper consumption will grow about 4% annually through 2014, based on a soft landing in China and a slow recovery in developed nations. European copper consumption is expected to remain depressed through this year. "Fairly balanced markets are expected for 2013, while 2014 could show better supply," said Fitch analysts.

· In 2010 solar energy consumption in the US was 8/100 of 1%.

· China electricity consumption - data from the National Energy Administration showed electricity consumption in China rose 7.6 percent year-on-year to 413.9 billion kilowatt-hours in November, up from October's increase of 6.1 percent - Shanghai Daily

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The S&P 500 (SPX) closed Friday at 1466

The September 2012 top and 'price' resistance at 1474

The October 2007 (SPX) highs and price resistance is at 1576

~~~~~~~~

Greek, Spanish and Italian short and long-term bond yields continue to move lower;

· Greek 10-year yields have slipped to 11% - down from a high of 24.41%

· Italy 10-year (gross) bond yield - 4.29% off cycle highs of 7.29%.

· Spanish 10-year (generic) bond yield - 5.05% off cycle highs of 7.41%.

---------------------------------------

Friday's key indicators and metrics:

Cycle highs or lows are in red

· McClellan Oscillator is OVERBOUGHT at plus 174 - Thursday's was plus and neutral 118.

· Japanese Yen - 11352 (lowest since mid-2010)

· 3-month $ LIBOR - 0.311

· Aussie Dollar - 1.0419

· Lumber (CME) - 376.0

· CBOE Put / Call Volume Ratio - 0.82

· Natural Gas (Globex) - 3.287

· VIX - 13.83

· US Dollar Index - 80.610

· Silver (COMEX) - 29.946

· Canadian Dollar - 1.0117

· Euro - 1.3080

· Gold (COMEX) - $1648.9

· Copper - 3.6935

· Crude oil (NYMEX) - $93.09

· Brent Crude - $111.31

· The Treasury 10-year yield - 1.91%

· The 30-year Treasury - 3.11%

· Swiss Franc - 1.0822

~~~~~~~~~~~~~~~~~~~

This week's Bullish Investor Sentiment.

The Bullishness / Bearishness complex is mixed, yet still quite Bullish. Two months ago overall sentiment was indicating distress.

(High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.)

· The American Association of Individual Investors [AAII] Investor Sentiment Survey of BULLISHNESS fell to 38.7% from 44.4% the prior week. It posted cycle lows of 22.2% on 7/23/2012 the lowest percentile since August 2010.

· The Market Vane (Market Letter Survey) was up a percentile to 68% from 63% the prior week.

· Consensus Index BULLISH fell to 45% from 49% the prior period. Three weeks ago it was 51%%. Six-weeks ago it was 60%. It ticked Cycle highs @ 73% three months ago

The exclusive CONSENSUS BULLISH SENTIMENT INDEX is the premium gauge of positions and attitudes of major professional brokerage firms and advisors as interpreted and recorded by CONSENSUS, INC.

· The AAII Investor Survey of BEARISHNESS rose to 36.@% from 30.2% the prior week. 3-weeks ago it was 24.8%%. On August 4th 2011 it posted cycle highs of 49.9% in Bearishness.

The Citigroup "Panic / Euphoria" Model rose a bit to plus 0.11. At the end of June it ticked cycle lows of minus 0.31in the Panic mode. It's still registering in the Neutral zone.

The BARRON's Confidence Index is 68.7 -. One-year ago it was 67.7.

The Confidence Index is the premier measure of how the bond markets trillions (total global is around $91 trillion and USA is 39% of that) are allocated: (The bond market is twice the size of the stock market.) The Index is the High-grade bond index divided by intermediate-grade index. A decline in latter vs. former - generally indicates rising confidence, pointing to higher stocks.

Pre-market - Tuesday 12-11-2012

Dr. John L. Faessel

ON THE MARKET

Commentary and Insights

Quotes of the day

"It would be thought a hard government that should tax its people one tenth part."

~ Benjamin Franklin ~

&

"Do not blame Caesar, blame the people of Rome who have so enthusiastically acclaimed and adored him and rejoiced in their loss of freedom and danced in his path and given him triumphal processions. Blame the people who hail him when he speaks in the Forum of the new wonderful good society which shall now be Rome's, interpreted to mean more money, more ease, more security, and more living fatly at the expense of the industrious."

~ Cicero ~

106-43 BC

Yikes - A First > Three (3) consecutive back-to-back-back narrow range postings in McClellan hints of a big move in the offing…

Market:

Yesterday's (Monday) McClellan Oscillator (favorite overbought / oversold indictor) was a neutral plus 69 and Friday's neutral plus 67 and Thursday's neutral plus 67 registered a that was one (2) ticks below Thursday's plus and neutral 66 postings meet the requirements of a Narrow Range configuration that in McClellan Oscillator lore has historically foretold big market moves of 2% to 3 % in a few days. Three (3) consecutive back-to-back-back narrow range postings in McClellan are very rare… In fact, I can't ever recall one… Usually this "big move" occurs within a few days and most often in the direction of the recent short-term trend; in this case it would be up - but this time as the market has came off its dead-cat bounce and Bollinger band picture indicates 'price' is near the top and the short and longer term stochastics are above 80 plus the Williams %R is toppy too - I think the chances are for a retreat…

We've had a nice dead cat bounce off the OVERSOLD low on Thursday, November 15th when the McClellan Oscillator reached an OVERSOLD low of MINUS 283. I've repeatedly said over the last few weeks - "I remain bearish - and don't think we will get a decent bounce till the McClellan gets well oversold - likely in the' high' MINUS 200's of past MINUS 300. Three weeks ago Friday the stock market put in a hammer candle reversal (hammering in a low?) at the end of a long down trend and the move was on increasing and well above average volume. I said that - "It's highly likely we get a short term bounce from the deeply oversold condition."

Market drivers:

Germany's Bundesbank, has cut its growth forecast for next year, saying the country's economy might be entering a recession.

Industrial output fell a steeper-than-expected 2.6% in October.

Mario Draghi, European Central Bank president cut his forecast for Eurozone growth.

~~~~~~~~~

Notable:

The median net worth of American households has dropped to a 43-year low as the lower and middle classes appear poorer and less stable than they have been since 1969. According to a recent study by New York University economics professor Edward N. Wolff, median net worth is at the decades-low figure of $57,000 (in 2010 dollars).

* 1 out of 2 college grads - about 1.5 million, or about 53.6 percent, of bachelor's degree holders age 25 or younger - were unemployed or underemployed in 2011.
* For high school grads (age 17-20), the unemployment rate was 31.1 percent from April 2011-March 2012; underemployment was 54 percent.
* For young college grads (age 21-24), unemployment was 9.4 percent last year, while underemployment was 19.1 percent.

* More college graduates are getting low-level jobs, period. U.S. bachelor's degree holders are more likely to wait tables, tend bar or become food-service helpers than to be employed as engineers, physicists, chemists or mathematicians combined - 100,000 versus 90,000.
* According to new U.S. government projections, only three of the 30 occupations with the largest projected number of job openings in the next eight years will require a bachelor's degree or higher. Most job openings by 2020 will be in low-wage professions like retail sales, fast food and truck driving.

When you have a half an hour to kill ck this excellent video of John Mauldin on the fiscal mess and income investing >> click here now.

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The S&P 500 (SPX) closed Yesterday (Monday) at 1418

Month old Declining tops resistance at 1421

Short term price resistance is last Mondays high of 1420 / 1423 / 1433

More formidable price resistance at the top ticks in September @ 1474 / 1470

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Support off the lower trend line is at 1416

Support at the 50-day moving average - now pointed down - also at (SPX) 1416

Decent hourly support is at 1410

The 200-day moving average support - pointed up - at (SPX) 1386

Decent Daily Price support also at 1386

Trendline support off the October low is at 1370

And better yet at "Friday 3-week's ago low of 1343

Longer out term price support is at 1325 /1320/1313/ 1309

Stronger 'Price' support in the (SPX) is at the June 4th lows of 1266 and will be the battleground zone if the market tests its lows.

~~~~~~~~

Greek, Spanish and Italian short and long-term bond yields continue to move lower;

· Greek 10-year yields are up one% from last week at 13.10% - down from a high of 24.41%

· Italy 10-year (gross) bond yield - 4.74% off cycle highs of 7.29%.

· Spanish 10-year (generic) bond yield - 5.46%. Three months ago yields ticked cycle highs of 7.41%.

---------------------------------------

Notable:

73% of the new civilian jobs created in the United States over the last five months are in government, according to official data published by the Bureau of Labor Statistics.

Re Friday's 'unemployment' report:

The rate dropped to 7.7% because some 542,000 people left the workforce. If labor participation remained the same as it was in January 2009, headline unemployment would be 10.7%. And post-election - hmmmmm - The September and October numbers were revised down by a total of 49,000 jobs.

The number of long-term unemployed remains at sky-high 40.1%, the same as in August. 5. Since the beginning of this year, employment growth has averaged 151,000 per month, about the same as the average monthly job gain of 153,000 in 2011. At that pace, the U.S. would not return to pre-Great Recession employment levels until after 2025....

November jobs report,

California Fiscal Insanity:

In California, a state psychiatrist was paid $822,000, a highway patrol officer collected $484,000 in pay and pension benefits and 17 employees got checks of more than $200,000 for unused vacation and leave. Data compiled by Bloomberg.

My running list of global nightmares... or if you like; "The Wall of Worry"

The USA is closing in on the Fiscal Cliff.

A payroll tax cut benefiting 160 million workers to expire at the end of the year.

Tax unknowns / and new $billions in Obama care taxes -

Unfunded pension's tsunami of $ trillions.

Israel / Gaza not over yet as Hamas rearm

Egypt and the Muslim Brotherhood not quite working out as the 'street' goes nuts again'

Iran / Israel conflict could ignite any day / hour.

Al-Qaeda terrorists are flourishing in Africa and the Middle East.

Muslim nutcases world-wide in general are running totally amuck.

Syria & Turkey could blowup anytime.

China / Japan still nose to nose over some Japanese islands (oil there.)

Hurricane Sandy damage has slowed the economy in the Northeast and the Mid-Atlantic

And the following Storm also slowed recovery

An Obama Care tidal wave of taxes and regulations

Sequestration

Obama considering a new tax on carbon emissions

EuroLand is in a deepening recession.

German Economic slowdown on

Corporate earnings growth is slowing.

A major swoon going on in technology stocks (and earnings) is underway.

China slowdown, but perking up?

Japan debt at 220% GDP.

A global economic slowing is underway.

The IMF cut global economic growth to 3.3% from 3.5%

The risky features of global monetary easing (out of control printing) by ECB / USA Fed / Bank of Japan yet loom.

A 2nd USA Debt Downgrade.

French debt downgrade

Election can go either way - More Socialism or Free Markets.

Regulatory situation continues to deteriorate.

Savings rates close to nothing and the middle class goes deeper in the hole daily.

Add in here that the moral / ethical / spiritual compass of the USA is now close to only being but a memory.

And throw in investors abandoning stock markets due to Flash Crashes, Naked shorting etc

California citizens leaving state in droves…

Plus you name it…

Monday's key indicators and metrics:

Cycle highs or lows are in red

· McClellan Oscillator is NEUTRAL at plus 69. Fridays plus 67 - Thursday's was plus 66

· 3-month $ LIBOR - 0.311

· Aussie Dollar - 1.0480

· Lumber (CME) - 344.0

· CBOE Put / Call Volume Ratio - 0.80

· Natural Gas (Globex) - 3.460

· VIX - 16.05

· US Dollar Index - 80.330

· Silver (COMEX) - 33.377

· Canadian Dollar - 1.0128

· Euro - 1.2939

· Gold (COMEX) - $1714.4

· Copper - 3.7060

· Crude oil (NYMEX) - $85.56

· Brent Crude - $107.95

· The Treasury 10-year yield - 1.62%

· The 30-year Treasury - 2.80%

· Swiss Franc - 1.0717

· Japanese Yen - 12146

~~~~~~~~~~~~~~~~~~~

This week's Bullish Investor Sentiment.

The Bullishness / Bearishness look was about the same as last week - relatively still Bullish came back a bit last week. A Month ago it was indicating distress.

(High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.)

· The American Association of Individual Investors [AAII] Investor Sentiment Survey of BULLISHNESS rose to 42.2% from 40.9% the prior week. 3-weeks ago it was 35.8%. Only 4-weeks ago it was 28.8%. It posted cycle lows of 22.2% on 7/23/2012 the lowest percentile since August 2010.

· The Market Vane (Market Letter Survey) was up a percentile to 62% from 61% the prior week. It was at Cycle highs of 69% ten-weeks ago.

· Consensus Index BULLISH fell a tick to 46% from 47%. Three weeks ago it was 42%. Six-weeks ago it was 60%. It ticked Cycle highs @ 73% three months ago

· The AAII Investor Survey of BEARISHNESS was at 34.6%, It was 34.4%the prior week. 3-weeks ago it was 48.8% On August 4th 2011 it posted cycle highs of 49.9% in Bearishness.

The Citigroup "Panic / Euphoria" Model rose a bit to 0.01 from a minus 0.12 the prior week. That's well off from cycle highs of plus 0.33 three months ago. At the end of June it ticked cycle lows of minus 0.31in the Panic mode. It's still registering in the Neutral zone,

The BARRON's Confidence Index is hanging just above multiyear support at 66.0 - Cycle lows of 64.7 were established 16-weeks ago. One-year ago it was 69.3.

The Confidence Index is the premier measure of how the bond markets trillions (total global is around $91 trillion and USA is 39% of that) are allocated: (The bond market is twice the size of the stock market.) The Index is the High-grade bond index divided by intermediate-grade index. A decline in latter vs. former - generally indicates rising confidence, pointing to higher stocks.

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