IS THE SELLING OVER? DOES NOT APPEAR TO BE. APPLE SELLOFF CONTINUES TO GAIN STEAM; SHANGHAI INDEX OFF 66% SINCE HOUSING BUBBLE TOP; NIKKEI INDEX OFF 77% SINCE HOUSING BUBBLE TOP
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.
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.
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.
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:
|SYMBOL||CLOSE||M2F ALT||M2F SSum||Issue|
|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|
|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|
|SYMBOL||CLOSE||M2F ALT||M2F SSum||Issue|
|Scatter SUM||Day Before||Description|
|^AORD||4,360.10||-1||-1||All Ordinaries Australian Index|
|^DJI||12,588.31||-1||-1||DOW JONES INDUSTRIAL AVERAGE|
|^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|
|^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|
|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|
|BK||23.64||-1||0||Bank of NY Mellon|
|BP||40.03||-1||-1||British Petroleum Daily|
|BZF||18.47||-1||-1||Brazilian Real long currency|
|CDE||22.83||-1||0||Coeur D'Alene Daily|
|CRBQ||42.29||-1||-1||CRB GLOBAL COMMODITIES|
|DRYS||1.7||-1||-1||Dry Ships Daily|
|EOC||45.65||-1||-1||EXPRESA NATIONAL DE ELECT.CHILE|
|FXI||35.77||-1||-1||FTSE/XINHUA China 25 Index ETF|
|GDXJ||21.51||-1||0||Gold Junior Minors ETF Daily|
|GE||20.15||-1||-1||General Electric Daily|
|HAP||34.11||-1||-1||Hard Asset Producers ETF|
|HME||57.75||-1||-1||Home Properties Inc|
|HPQ||12.85||-1||-1||Hewlett Packard Daily|
|IYW||67.27||-1||0||US Tech ETF|
|JNJ||69.19||-1||0||Johnson and Johnson|
|JOSB||44.78||-1||-1||JOS A. Bank Clothiers|
|MCD||84.12||-1||-1||Mc Ddonalds Daily|
|MRK||43.07||-1||0||Merk Pharmaceuticals 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|
|NOC||63.57||-1||-1||Northrup Grumman *|
|PCL||41.31||-1||-1||Plum Creek Timber|
|PTP||42.54||-1||0||Platinum Underwriters Insur|
|QRM||0.97||-1||-1||Quest Rare Metals|
|RGLD||80.95||-1||-1||Royal Gold Inc|
|SCHN||27.22||-1||0||Schnitzer Steel Indust|
|SLGLF||0.002||-1||-1||Silverado Gold Daily|
|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|
|VNQ||62.44||-1||-1||REIT Index ETF|
|XIN||2.99||-1||0||Xinyuan Real Estate China|
|XME||40.89||-1||-1||Spider 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.
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.
Nikkei Index, Japan -- Post Housing Bubble Stock Market: 1989: 2012.
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