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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.

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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.

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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.

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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 SUM Day Before Description
BZQ 78.28 1 1 Short Brazil Shares ETF
DOG 36.07 1 1 Short Dow 30 ETF
DXD 52.54 1 1 Short Dow Industrial ETF
EDU 19.01 1 1 New Oriental Educations and Technology
EPV 32.77 1 1 Short MSCI Europe ETF
FXP 23.03 1 1 Short FTSEChina Index ETF Daily
NFLX 80.9 1 1 Netflix
PSQ 26.99 1 0 Short QQQ Index ETF
QID 33.084 1 0 Short NASDAQ Index ETF
REW 41.68 1 1 Short Technology ETW Daily
SDOW 78.96 1 1 Short Dow ETF
SH 35.9 1 1 Short SP 500 ETF
SMN 64.88 1 1 Short Basic Materials
SPXU 44.65 1 1 Short S&P 500 Index
SSG 48.72 1 1 Short Semiconductors ETF Daily
YHOO 17.86 1 0 Yahoo Inc.
    Scatter SUM Day Before Description
^AORD 4,360.10 -1 -1 All Ordinaries Australian Index
^DRG 354.59 -1 -1 Pharmaceutical Index
^GDAXI 6,950.53 -1 -1 DAX German Index Daily
^GSPC 1,359.88 -1 -1 S&P 500 Index
^HUI 440.848 -1 -1 Gold Stock Index Daily
^KS11 1,860.83 -1 -1 Kospi South Korean Index
^NDX 2,534.16 -1 0 Nasdaq Index Daily
^OEX 619.03 -1 -1 S&P 100 Index
^SSEC 2,014.73 -1 -1 Shanghai Composite
^TNX 1.574 -1 -1 10-Year CBOE Interest Rate
^XAU 165.67 -1 -1 Philadelphia Gold and Silver Index Daily
^XCI 1,022.17 -1 -1 Amex Computer Index Daily
^XOI 1,172.19 -1 -1 Oil Stock Index
ABX 33.72 -1 0 American Barricks Gold
AMSC 2.6 -1 -1 American Superconductor
ANV 32 -1 0 Allied Nevada Gold Corp
ANZ.AX 23.66 -1 -1 Australia/New Zealand Banking
AVL 1.23 -1 -1 Avalon Rare Metals
BBL 60.31 -1 -1 BHP Billiton
BCRX 1.26 -1 -1 BioCryst Pharmaceuticals
BIDU 92.68 -1 0 Baidu
BK 23.64 -1 0 Bank of NY Mellon
BP 40.03 -1 -1 British Petroleum Daily
BWLD 71.39 -1 0 Buffalo Wings
BZF 18.47 -1 -1 Brazilian Real long currency
CDE 22.83 -1 0 Coeur D'Alene Daily
CMP 74.77 -1 -1 Compass Minerals
CVV 8 -1 -1 CVD Equipment
DRYS 1.7 -1 -1 Dry Ships Daily
EPI 17.75 -1 -1 India ETF
EQR 54.31 -1 -1 Equity Residential
EWC 27.1 -1 -1 Canada ETF
EWG 21.7 -1 -1 Germany ETF
EWZ 51.059 -1 -1 Brazil ETF
FST 6.37 -1 0 FOREST OIL
FXI 35.77 -1 -1 FTSE/XINHUA China 25 Index ETF
GD 62.13 -1 -1 General Dynamics
GDXJ 21.51 -1 0 Gold Junior Minors ETF Daily
GE 20.15 -1 -1 General Electric Daily
GG 39.67 -1 -1 Gold Corp
GGB 8.44 -1 -1 GERDAU S.A.
GLEN.L 321.55 -1 -1 Glencore International
GRES 28.713 -1 -1 Global Resources
GSK 41.98 -1 -1 Glaxo-Smith Klein
HAP 34.11 -1 -1 Hard Asset Producers ETF
HL 5.49 -1 0 Hecla Mining
HME 57.75 -1 -1 Home Properties Inc
HMY 7.73 -1 0 Homestake Mining
HPQ 12.85 -1 -1 Hewlett Packard Daily
IYW 67.27 -1 0 US Tech ETF
JJG 54.891 -1 -1 Grains ETF
JNJ 69.19 -1 0 Johnson and Johnson
JOSB 44.78 -1 -1 JOS A. Bank Clothiers
KOL 23.23 -1 -1 Coal ETF
MCD 84.12 -1 -1 Mc Ddonalds Daily
MRK 43.07 -1 0 Merk Pharmaceuticals Daily
MSFT 26.521 -1 -1 Microsoft Daily
MTL 5.84 -1 -1 Mechel Open Joint Stock Company
NAB.AX 23.2 -1 -1 National Bank of Australia
NEM 46.12 -1 -1 Newmont Mining Daily
NFP 16.57 -1 -1 National Financial Partners Insur
NFX 24.26 -1 -1 Newfield Explorations
NILE 35.32 -1 0 Blue Nile
NOC 63.57 -1 -1 Northrup Grumman *
NVDA 11.38 -1 -1 Navidia Daily
PBTH 4.44 -1 -1 PROLOR Biotech
PCL 41.31 -1 -1 Plum Creek Timber
POT 37.28 -1 -1 Potash
PTP 42.54 -1 0 Platinum Underwriters Insur
QLGC 8.8 -1 0 Q-Logic
QQQ 62.3 -1 0 Powershares QQQ
QRM 0.97 -1 -1 Quest Rare Metals
RDS-A 65.03 -1 -1 Royal Dutch
RGLD 80.95 -1 -1 Royal Gold Inc
RVBD 16.48 -1 -1 Riverbed Technologies
SCHN 27.22 -1 0 Schnitzer Steel Indust
SHLD 47.49 -1 0 Sears Holdings
SLGLF 0.002 -1 -1 Silverado Gold Daily
SLW 36.12 -1 0 Silver Wheaton
SLX 42.32 -1 0 Steel ETF
SNDK 39.46 -1 -1 SanDisk Corp
SPG 146.92 -1 0 Simon Property Group
SPY 136.37 -1 -1 Spider S&P 500 ETF
STJ 35.03 -1 -1 St. Jude Medical
TAN 12.78 -1 -1 Global Solar Energy ETF
TEVA 38.29 -1 -1 Teva Pharmaceutical Daily
TNA 48.76 -1 -1 Direxion Daily Small Cap Bull
TNK 2.42 -1 -1 Teekay Tankers Ltd.
TYO 22.34 -1 -1 Short 10-Year TBond ETF
UDOW 48.35 -1 -1 UP DOW ETF
UPS 70.02 -1 0 United Parcel Service Daily
VALE 17.11 -1 -1 VALE S.A.
VNQ 62.44 -1 -1 REIT Index ETF
VZ 41.4 -1 -1 Verizon Communications
WMT 68.03 -1 -1 Walmart Daily
XIDE 2.42 -1 -1 Exide Technologies
XIN 2.99 -1 0 Xinyuan Real Estate China
XME 40.89 -1 -1 Spider Mining Metals ETF
Click to enlarge

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)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.

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

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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