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Michael Clark
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Michael J. Clark was born and raised in Sinclair, Wyoming. He is a poet, novelist, artist, historian, and market analyst. His fine arts portfolio can be found at the following address: His writing portfolio can be found at:... More
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    Nov 18, 2012 9:09 AM


    Over the weekend I read a post by Brett Jensen in which Brett asks "Did Apple Bottom on Friday?" This made me wonder what indicators Brett was using to gauge a bottom. (One of Brett's readers chided me: "Many it's time for you to start using valuation indicators" -- instead of my traditional technical indicators.)

    Brett began his article with an infamous anonymous barb: "It's the man who waits for his ship to come in who's always missing the boat."

    I had begun the weekend by lookiing at my short position charts: all seemed very solid except perhaps UGA, which is trying to bottom. I am considering selling my January puts of UGA. The only thing keeping me from doing so is the strength of the US Dollar.

    When I loaded a chart of Apple Computer, I saw nothing suggesting a bottom. In fact, Apple looks pretty nasty still. I must admit that none of us really know what is coming. We develop instruments to try to help us -- but PRICE MOVEMENT is the only true indicator. This is a psychological indicator that cannot really be measured by scientific instruments. Fear and greed are not really measured by valuation indicators.

    My best indicators for 'foretelling directional change' are the two colored momentum indicators in the top pane (Red: CGTS; BLue: M5). Next are the two trend indicators (green line, top pane;red line, second pane down). All of these are still negative.

    The two bottom panes show very short-term movements in price. One would expect to see some movement up if there really was a price movement of substance occuring. Nothing indicates growing buyer commitment here.

    The CGTS PB Trend for the Week (Green Line, second pane down) will move above zero when the correction is over. It is still below zero, and flat in the negative zone.

    (click to enlarge)

    I am including a more detailed view of the same chart, with a close up view of the two top panes. This shows a VERY NEGATIVE picture. This does not mean this picture cannot change rapidly. It can. That comes about in the psychology of the market, usually indicating when PANIC BUYING replaces PANIC SELLING (Greed trumps Fear) -- and this can and does happen fast.

    (click to enlarge)

    The media has been pumping the markets to stop the correction: 1) Fed considering more QE measures; 2) Fiscal Cliff may be resolved: "Negotiations Constructive," Republicans say... It is private debt that is killing us, not, simply, the government deficit.

    I decided to run a report using my short term BUYING AND SELLING Strength Indicator which shows up in the chart below (third pane down, brown) of SPY, S&P 500 ETF. The chart shows this indicator is predominantly Zero to Plus One in a bull move, Zero to Negative One in a bear move.

    Our M4 21 indicator (black line, second pane down) is our primary momentum indicator -- but we supplement with the shorter indicators to try to get a sense of market dynamics within a primary move in either direction.

    (click to enlarge)

    Our report shows 16 issues giving bullish "+1" readings -- but only three of the 16 issues were NOT inverse ETF issues that gain when stocks retreat: EDU, Netflix and Yahoo.

    101 issues are giving bearish "-1" readings -- many (indexes) with very recognizable names: the Dow Jones Industrial Average; the German DAX Index; the Australian All-Ordinaries Index, the S&P 500 Index; Pharmaceutical Index (DRG); Gold Stock Index (HUI); KOSPI South Korean Index; Shanghai Composite Index (China); Computer Index (XCI); Oil and Gas Stock Index (XOI).

    See below for complete list:

      Scatter SUMDay BeforeDescription
    BZQ78.2811Short Brazil Shares ETF
    DOG36.0711Short Dow 30 ETF
    DXD52.5411Short Dow Industrial ETF
    EDU19.0111New Oriental Educations and Technology
    EPV32.7711Short MSCI Europe ETF
    FXP23.0311Short FTSEChina Index ETF Daily
    PSQ26.9910Short QQQ Index ETF
    QID33.08410Short NASDAQ Index ETF
    REW41.6811Short Technology ETW Daily
    SDOW78.9611Short Dow ETF
    SH35.911Short SP 500 ETF
    SMN64.8811Short Basic Materials
    SPXU44.6511Short S&P 500 Index
    SSG48.7211Short Semiconductors ETF Daily
    YHOO17.8610Yahoo Inc.
      Scatter SUMDay BeforeDescription
    ^AORD4,360.10-1-1All Ordinaries Australian Index
    ^DRG354.59-1-1Pharmaceutical Index
    ^GDAXI6,950.53-1-1DAX German Index Daily
    ^GSPC1,359.88-1-1S&P 500 Index
    ^HUI440.848-1-1Gold Stock Index Daily
    ^KS111,860.83-1-1Kospi South Korean Index
    ^NDX2,534.16-10Nasdaq Index Daily
    ^OEX619.03-1-1S&P 100 Index
    ^SSEC2,014.73-1-1Shanghai Composite
    ^TNX1.574-1-110-Year CBOE Interest Rate
    ^XAU165.67-1-1Philadelphia Gold and Silver Index Daily
    ^XCI1,022.17-1-1Amex Computer Index Daily
    ^XOI1,172.19-1-1Oil Stock Index
    ABX33.72-10American Barricks Gold
    AMSC2.6-1-1American Superconductor
    ANV32-10Allied Nevada Gold Corp
    ANZ.AX23.66-1-1Australia/New Zealand Banking
    AVL1.23-1-1Avalon Rare Metals
    BBL60.31-1-1BHP Billiton
    BCRX1.26-1-1BioCryst Pharmaceuticals
    BK23.64-10Bank of NY Mellon
    BP40.03-1-1British Petroleum Daily
    BWLD71.39-10Buffalo Wings
    BZF18.47-1-1Brazilian Real long currency
    CDE22.83-10Coeur D'Alene Daily
    CMP74.77-1-1Compass Minerals
    CVV8-1-1CVD Equipment
    DRYS1.7-1-1Dry Ships Daily
    EPI17.75-1-1India ETF
    EQR54.31-1-1Equity Residential
    EWC27.1-1-1Canada ETF
    EWG21.7-1-1Germany ETF
    EWZ51.059-1-1Brazil ETF
    FST6.37-10FOREST OIL
    FXI35.77-1-1FTSE/XINHUA China 25 Index ETF
    GD62.13-1-1General Dynamics
    GDXJ21.51-10Gold Junior Minors ETF Daily
    GE20.15-1-1General Electric Daily
    GG39.67-1-1Gold Corp
    GGB8.44-1-1GERDAU S.A.
    GLEN.L321.55-1-1Glencore International
    GRES28.713-1-1Global Resources
    GSK41.98-1-1Glaxo-Smith Klein
    HAP34.11-1-1Hard Asset Producers ETF
    HL5.49-10Hecla Mining
    HME57.75-1-1Home Properties Inc
    HMY7.73-10Homestake Mining
    HPQ12.85-1-1Hewlett Packard Daily
    IYW67.27-10US Tech ETF
    JJG54.891-1-1Grains ETF
    JNJ69.19-10Johnson and Johnson
    JOSB44.78-1-1JOS A. Bank Clothiers
    KOL23.23-1-1Coal ETF
    MCD84.12-1-1Mc Ddonalds Daily
    MRK43.07-10Merk Pharmaceuticals Daily
    MSFT26.521-1-1Microsoft Daily
    MTL5.84-1-1Mechel Open Joint Stock Company
    NAB.AX23.2-1-1National Bank of Australia
    NEM46.12-1-1Newmont Mining Daily
    NFP16.57-1-1National Financial Partners Insur
    NFX24.26-1-1Newfield Explorations
    NILE35.32-10Blue Nile
    NOC63.57-1-1Northrup Grumman *
    NVDA11.38-1-1Navidia Daily
    PBTH4.44-1-1PROLOR Biotech
    PCL41.31-1-1Plum Creek Timber
    PTP42.54-10Platinum Underwriters Insur
    QQQ62.3-10Powershares QQQ
    QRM0.97-1-1Quest Rare Metals
    RDS-A65.03-1-1Royal Dutch
    RGLD80.95-1-1Royal Gold Inc
    RVBD16.48-1-1Riverbed Technologies
    SCHN27.22-10Schnitzer Steel Indust
    SHLD47.49-10Sears Holdings
    SLGLF0.002-1-1Silverado Gold Daily
    SLW36.12-10Silver Wheaton
    SLX42.32-10Steel ETF
    SNDK39.46-1-1SanDisk Corp
    SPG146.92-10Simon Property Group
    SPY136.37-1-1Spider S&P 500 ETF
    STJ35.03-1-1St. Jude Medical
    TAN12.78-1-1Global Solar Energy ETF
    TEVA38.29-1-1Teva Pharmaceutical Daily
    TNA48.76-1-1Direxion Daily Small Cap Bull
    TNK2.42-1-1Teekay Tankers Ltd.
    TYO22.34-1-1Short 10-Year TBond ETF
    UDOW48.35-1-1UP DOW ETF
    UPS70.02-10United Parcel Service Daily
    VALE17.11-1-1VALE S.A.
    VNQ62.44-1-1REIT Index ETF
    VZ41.4-1-1Verizon Communications
    WMT68.03-1-1Walmart Daily
    XIDE2.42-1-1Exide Technologies
    XIN2.99-10Xinyuan Real Estate China
    XME40.89-1-1Spider Mining Metals ETF

    One of the most 'horrible' pictures of this group of indexes is the SSEC, the Shanghai Index, China. This index was a darling of the DEBT BUBBLE rally, reaching a high of 6124 in 2007. It is trading now at 2014, a loss of 66%. And it is going lower.

    Note our M2F ALT Scatter Sum indicator showing buyer strenngth did not tick up at all during the 'rally" from September to November of this year.

    (click to enlarge)

    An even more devastating picture of the Shanghai Index is shown below, from 2007-2012. This shows how the Chinese, at least, feel about Chinese stocks. The Shanghai Index is open for trading for Chinese nationals only -- the Hong Kong (Hang Seng) Index can be traded by global investors.

    And we are told by the media and Wall Street 'cheerleaders' (they are not analysts any longer, they are cheering so that we will all send them our money and buy their financial products so they won't have to get a real job) that "China MIGHT avoid a hard landing..." (fingers crossed).

    Is the chart below not a very graphic picture of a HARD LANDING?

    And China is going to save the world from the current Global Collapse? They followed America and Bernanke's gospel. Look where it's leading them.

    This picture is very similar to Japan's Nikkei collapse after its housing bubble, when Japan lied about its cancer, and used taxpayer money to try to buy off the private debt collapse. Is the West heading in the same direction?

    SSEC, Shanghai Index: Post Housing Bubble 2007-2012.

    (click to enlarge)

    Nikkei Index, Japan -- Post Housing Bubble Stock Market: 1989: 2012.

    (click to enlarge)

    Hard to see how this is not the future of America and the West also.

    Protecting debt and pretending it isn't debt -- calling it revenues, savings, "it's different this time' assets -- is just a sophisticated lie.

    Does this mean we are in the first stages of the Post-Lie Housing Bubble Stock Market Collapse in America and Europe? That is not clear.

    Our doctor is lying to us, telling us we don't have cancer. He's telling us we have a cold, and we need to treat it with plenty of fluids. But we are already drowning in the Flood. We need dry land. Only dry land will save us. Noah send out the black bird at least. Where is Mount Ararat?

    Yes, of course, the world is upside down, turned inside out. The mountain top we are seeking we will find at the bottom of the ocean, 2019.

    Food for thought. Best wishes,

    Michael J. Clark

    CGTS, Hanoi, Vietnam

    18 November 2012

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