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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: http://www.hoalantrangallery.com/MJC2.htm His writing portfolio can be found at:... More
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Clark's Gate Timing System ©
    Apr 28, 2013 2:17 PM


    What do I mean by this? We had a bit of a rally at the end of the week. Some stocks made new highs. Are we not just ready to go higher after a bit of panic-selling spurred by massive liquidation in gold (margin-call on some heavy-hitter, or a central bank?), and horrible earnings coming in from many sources?

    Perhaps. It is very hard to short a market when interest rates are at 0% and central banks are feeding the markets with free money and corporations are buying back their own shares financed by free money.

    Am I still short this market?

    I am cautiously short this market. I have tried to take on Ben Bernanke before; this ended in short-lived tears. Have I not learned anything?

    I have recently developed a market indicator that essentially shows the market pulse. And a market that loses its pulse is vulnerable on the downside.

    Let's look at charts of the DJIA during the Great Depression era and see what I mean by a market losing its pulse.

    The Pulse is the red line in the First Pane. It is surrounded by a blue box that is also a kind of pulse measure. A stock that is climbing will show a very active pulse, both in terms of the blue box rising, and with a dancing red pulse.

    The Second Pane is also useful in that it is at the tope of the chart when a stock or index is making higher highs and higher lows.

    Also the Black line in the Center Pane, CGTS Pre-Basic, is a very useful indicator to keep your eye on. When it tops out, and falls -- always ahead of the price itself -- one should become cautious.

    The Dow Jones Index in 1929 hit the 'no pulse zone' in September, and had a horrible fall -- Black October. Note the pulse coming back after the decline. A small pulse is better than no pulse. But a strong pulse, one that carries the red line up toward the top of the blue box is even better.

    (click to enlarge)

    This looks like a temporary setback for the Dow. The pulse comes back quickly; and the index is soon again making higher highs and higher lows (Second Pane). However, the pulse soon weakens again; and then disappears. In January 1931, the pulse vanishes again; and then stays gone longer. Our CGTS Indicator (black line, Center Panel) does recover and begin climbing. The pulse follows it up for a time; but then both indicators top out again.

    (click to enlarge)

    In 1932, the same story holds: no pulse, with frantic selling; then an attempted recovery, with a stronger pulse; followed by another vanishing pulse.

    (click to enlarge)

    It is interesting that the pulse did not vanish in this way in the 1987 Crash. The 1987 Crash was a fluke. It came near the beginning of a Business Cycle Expansion (1983-2001), so it was swept away by the force of the natural inflation of the economy. But the Great Depression and the Dow Jones collapse came at the very end of a Business Cycle Expansion (or Inflation -- Expansion IS Inflation), which had run from 1911-1929. The market was 'out of energy', and was experiencing entropy -- the energy in the system was leading to increased dis-organization and chaos.

    Today, our expansion ended in 2001 (1983-2001) -- and we have been struggling with an entropic system every sense. Cheap money has propped up asset prices, but it has not defeated entropy; and it will not. The only thing that 'defeats entropy' is time. Entropy comes into a system when the energy quotient flips from creative to destructive (it is very much like sap feeding the life of the tree during the growing season -- this is anti-entropy, where the energy leads to greater forms of organization in the system -- and the sap declining back into the root system when the Business Cycle ends, to protect the root-system -- this is entropy).

    Here is the 1987 chart. There is a slight period of no pulse, followed by a massive implosion of prices. But the index quickly bounces back with rapid increase in pulse and rapid recovery.

    (click to enlarge)

    Here is today's DJIA. Note the lack of a pulse today. Note also that the Second Pane showing the indicator that measures Higher Highs and Higher Lows has turned negative also

    (click to enlarge)

    So what is this telling us about today? The pulse -- the rising sap -- tells us which issues are vital, awake or alive.

    We run a report every day to see which issues have the strongest pulse. Here is today's report -- the top pulses by number. There are a few themes here. The anti-gold ETFs are very strong, as one would expect; Japan Indexes are strong; Japan currency issues are weak. If fact, if you were long all the issues on this list, you would be in excellent shape investment-wise.

    Note also that the VIX -- the CRB Volatility Index -- is alive. This is generally a negative for stocks.

    Also note the low-priced gold stock LODE appears on this list. This makes me wonder if the second- and third-tier gold stocks (the cats and dogs) might recover ahead of the more established mining stocks.

    I am not bullish on gold yet. My theory is that stocks fall from 2001-2019 and gold rises from 2001-2019; so I am an interested part in this central-bank inspired attempt to murder gold before out very eyes. I think it will fail. But my adversaries are very smart, and very tricky; I believe they are not wise, since they refuse to follow the laws of nature and go-with the natural law of 18-years of Inflation of assets followed by 18-years of deflation of assets. This is for the good of the world, for the balance of prices, and for the balance of wealth between the rich and the poor. Current fed policy is anti-poor, anti-old, and anti-everyone but the very richest people in the world. It will come to a great tragedy.

    STRONGEST PULSES 28 April 2013




    Gold Miners Bear 3x ETF






    Tesla Motors Daily



    Intl Educational Svc



    CRB Volatility Index Daily



    CRB Volatility Index Daily



    Life Technologies



    China Sunergy Daily



    HGS Realty China



    Japan Index



    VIVUS Inc



    Nikei Japan Index



    Dawson Geophysical



    Intesa San Paolo SA



    Freddie Mac Daily






    Comstock/Goldspring Mining



    Fannie Mae Daily



    PROLOR Biotech



    National Financial Partners Insur



    Short Gold ETF Daily



    Core Labs



    Euro/Japanese Yen



    Amicus Therapeutics






    Health-Management Assoc



    Glaxo-Smith Klein



    British Pound/Japanese Yen



    BioCryst Pharmaceuticals



    New Zealand Dollar/Japanese Yen



    Tata Motors



    Zillow Inc



    Swiss Franc/Japanese Yen

    We can show you the issues with the strongest pulse, but not those with the weakest pulse, since zero is zero. We do have another reverse indicator that we call SELLING PULSE. Those issues giving a Selling Pulse reading below zero show up on our Most Negative List.

    GNK 0 -0.4815 Genco Shipping Corp
    GSS 0.0347 -0.4118 Golden Star Resource Gold
    ABX 0 -0.407 American Barricks Gold
    NG 0.0295 -0.3755 NovaGold
    AGQ 0 -0.3697 Ultra Silver Leveraged ETF (Bull)
    SSRI 0.0227 -0.3513 Silver Standard Resources
    EXM 0 -0.3488 Excel Maritime Carriers
    ANV 0.0158 -0.3146 Allied Nevada Gold Corp
    INFY 0 -0.299 Infosys
    QRM 0 -0.2716 Quest Rare Metals
    SRPT 0 -0.2247 Sarepta Therapeutics
    MTL 0 -0.2245 Mechel Open Joint Stock Company
    SLW 0.0258 -0.2243 Silver Wheaton
    RGLD 0.0091 -0.2208 Royal Gold Inc
    HMY 0 -0.2208 Homestake Mining
    GDXJ 0.0224 -0.2168 Gold Junior Minors ETF Daily
    AEM 0 -0.1866 Agnico-Eagle Mines
    BMI 0 -0.1841 Badger Meter
    ^XAU 0.0269 -0.1713 Philadelphia Gold and Silver Index Daily
    ^HUI 0.0256 -0.1708 Gold Stock Index Daily
    HL 0.0062 -0.1656 Hecla Mining
    NEM 0.0021 -0.1646 Newmont Mining Daily
    DGP 0.0471 -0.1636 Gold ETF leveraged
    CDE 0.0246 -0.158 Coeur D'Alene Daily
    SLGLF 0 -0.1538 Silverado Gold Daily
    SLV 0.0039 -0.1489 Silver ETF
    KGJI 0 -0.1484 Kinggold Jewelry
    FST 0 -0.1449 FOREST OIL
    TXT 0.0119 -0.1427 Textron Corp
    ENMD 0 -0.1351 Entremed
    AFFX 0 -0.1348 Affymetrics Inc.
    NOG 0.0199 -0.1339 Northern Oil and Gas
    JGBS 0 -0.1201 Short Japanese Govt Bonds
    FLR 0 -0.1149 Fluor Corp
    FLR 0 -0.1149 Fluor Corp
    AVL 0.052 -0.1146 Avalon Rare Metals
    FCX 0.0017 -0.1077 Freeport McMoran Mining
    CTSH 0 -0.1036 Cognizant Tech Solutions
    CBI 0 -0.103 Chicago Bridge and iron
    CBI 0 -0.103 Chicago Bridge and iron
    HPQ 0 -0.0936 Hewlett Packard Daily
    FRO 0 -0.0914 Frontline Limited Shipping
    HMA 0.0607 -0.091 Health-Management Assoc
    GLEN.L 0 -0.088 Glencore International
    TTI 0 -0.0871 Tetra Technologies
    SWN 0 -0.0848 Southwestern Energy Corp
    SCHN 0 -0.0839 Schnitzer Steel Indust
    BBD 0 -0.0811 Banco Brandesco SA
    FNMA 0.0736 -0.081 Fannie Mae Daily
    SFL 0 -0.0805 Ship Finance Intl.
    SGOL 0.0213 -0.0741 Swiss Gold Shares Phyysical
    GLD 0.0212 -0.0739 SPDER Gold Shares
    IAU 0.0212 -0.0734 Gold Daily
    BBY 0.0013 -0.0728 Best Buy Daily
    PALL 0.0219 -0.0726 Palladium ETF
    GG 0.0187 -0.0718 Gold Corp
    IO 0 -0.0717 Ion corp
    LD 0.0395 -0.0714 Lead ETF
    FLIR 0 -0.0712 Flir Systems
    THC 0 -0.0709 Tenet Healthcare
    CLI 0 -0.0704 Mack-Cali Realty Corp
    IMMR 0 -0.0703 Immersion Robotics
    VALE 0.0072 -0.0701 VALE S.A.
    AOBI 0 -0.0667 American Oriental Bioengineering
    BAP 0 -0.0663 Credicorp Ltd.
    SCCO 0.0046 -0.0651 Southern Copper
    JJC 0 -0.0645 Copper ETF
    NTE 0 -0.0635 Nam Thai Electronics
    DSX 0 -0.0614 Diana Shipping
    MWW 0 -0.0604 Monster Worldwide
    XIDE 0 -0.0598 Exide Technologies
    XIN 0 -0.0596 Xinyuan Real Estate China
    VMC 0.0095 -0.0595 Vulcan Materials

    Note all the gold stocks, the industrial materials stocks -- commodity stocks -- and global shipping.

    Here is a list of every index (and a couple of stocks) we follow that gave a Buying Pulse reading of zero today.

    Also, I have begun to keep a record as to % Bullish in the market based on the Pulse Indicator. I do not have enough data to share with you about the accuracy of this indicator as a trading signal -- our Pulse Indicator is fairly new.

    But today's reading is that 45% of the market is above zero. That is, the market is 55% bearish.

    Here are the indexes we follow that gave a bearish 'No Pulse' reading today, with a few stocks we are following thrown in.



    CAC French Index



    Agricultural Bank of China LTD.



    Industrial and Commercial Bank of China



    China Merchants' Bank



    Bank of China



    Banking Index






    FTSE Daily Index



    DAX German Index Daily



    S&P 500 Index



    Philadelphia Housing Sector Index Daily






    Kospi South Korean Index



    Nasdaq Index Daily



    S&P 100 Index



    Russell SMall Cap Index Daily



    Semiconductor Index



    Shanghai Composite



    10-Year CBOE Interest Rate






    Amex Computer Index Daily



    Apple Daily


    Can't this pulse reading change quickly? Yes, it can.

    Let's look at pictures of the indexes I follow to get a sense of what they look like in terms of pulse.

    The S&P 500 Index (Pending:GSPC). We show the current picture, and a picture in 2008, before the Global Market Collapse.

    Today the GSPC has no pulse.

    (click to enlarge)

    In 2008, the GSPC ran out of pulse; and then the market collapsed.

    (click to enlarge)

    The Australian AORD does have a tiny pulse. But it is not much of a pulse. Note the CGTS indicator (black line, Middle Pane) is still trending lower.

    (click to enlarge)

    The Bank Index (BKX) has rallied back this past week -- but it's pulse is gone.

    (click to enlarge)

    The Bovespa is decidedly negative; and has been so since September 2012.

    (click to enlarge)

    The Dow Jones Transportation stocks are clearly faltering. The recent bounce-back rally notwithstanding. The Light Brown Line in the Central Pane (our M2F ALT indicator) is a momentum indicator showing the current rally has taken the Dow Jones Transportation stocks to an oversold condition (100); oversold is at zero. The Orange Lines in the Central Pane are the short- and the intermediate-trends; both are generating negative patterns.

    (click to enlarge)

    We finally get to an index that is positive. DRG, the Pharmaceutical Index, does have a pulse, and 'has had a pulse' since it first began climbing in November 2012. You will notice that every selling point is accompanied by a lack of pulse. The lack of a pulse is not, in an of itself, a reason for alarm. Each stock has periodical pullbacks; this is normal and healthy; what is not 'normal and healthy' is when a rally following a normal pullback does not generate a rising pulse. This is a time for concern.

    Also, remember, the CGTS indicator (black line, central panel) has a very distinctive uptrend pattern when a rally is in process (shown above nicely); it then begins to breakdown very noticeably when a period of selling approaches.

    I'm not showing individual stocks today: but BMY, Bristol Meyers, had a very noticeable collapse of CGTS over the last few days; and its pulse disappeared.

    The CGTS indicator in the DRG chart appears to be at the beginning of a possible breakdown. This needs watching.

    (click to enlarge)

    FCHI, the French Index, has had a joyous rally from a very negative chart pattern on absolutely no pulse. What does this mean? The pulse indicator is NOT connected with volume. One might argue this has been a rally on low volume, which may be true. But this pulse indicator ignores volume. What it does suggest is that the selling is not over.

    (click to enlarge)

    The FTSE Index, Great Britain's stock index, is very similar to the French Index chart: a nice rally with no pulse and continued down-trending of the CGTS indicator.

    (click to enlarge)

    The German Index, GDAXI, is almost exactly the same as the other two charts. The Brown Line (M2F ALT) suggests the bounce-back rally should end or has already ended (is overbought) and the next decline will determine if we are going lower. If the CGTS indicator (black line, central pane) makes a new low, then we will go lower.

    (click to enlarge)

    What about housing? Housing stocks have been impervious to pullback. But the rally in HGX has reached overbought levels with a rally having no pulse. It should go lower. Of course, betting against a market that is being fueled by Ben Bernanke with direct infusions is difficult and dangerous. But I ask again: where is the pulse?

    (click to enlarge)

    The next index HAS a pulse. Note the very obvious pulse in the Japanese Index, the Nikkei.

    (click to enlarge)

    We follow this picture with a picture of an index that very definitely has had a very small pulse for some time: HUI, Gold Stock Index. The HUI has had no pulse (or, at best, a tiny pulse) all through this massive decline in Gold Stocks. This shows how this Pulse Indicator can presage a major decline.

    We expect Gold Stocks to begin to bottom. Note the uptick in our long-term T11 Sunmarry indicator in Pane Four. This suggests the real beginnings of a bottoming process; but we are not buying gold stocks yet.

    (click to enlarge)

    Japan's indexes are soaring. But China's are not. The Shanghai Index (SSEC) has shown an utter lack of a pulse for the last six weeks; and its CGTS (black line, central pane) is heading lower.

    (click to enlarge)

    Japan has been up, China down; and South Korean stocks have also been suffering from a diminished pulse. And continue to do so.

    (click to enlarge)

    The NDX, Nasdaq Index, has been struggling. Apple Computer has kept it down. It has battled to gain back territory. We have been short Apple for many months. We are still short Apple. The NDX is overbought and has pushed higher with almost no pulse for the last two months. We think CGTS will lead the NDX lower over the next few weeks.

    (click to enlarge)

    What about small-cap stocks. The RUT is very much like the other indexes we've been viewing: struggling back after a sell-off; but no pulse. Meaning lower prices are almost guaranteed. Note below in the Central Pane I put in a downtrend line on the CGTS indicator, indicating where I think the index is heading.

    (click to enlarge)

    Semiconductor stocks? The SOX did generate a bit more pulse than most other indexes when it rallied this week. But it still looks dismal, when compared with real rallies in the chart. It is overbought now, and should go lower -- unless Bernanke unleashes a new round of purchases of index futures to make sure the indexes go up.

    (click to enlarge)

    Both the ten-year and the thirty-year TBonds have been rallying, as shown by the two ETF's that measure appreciation of yield, TNX and TYA. These declining ETF's, suggest, perhaps, more money leaving stocks and moving back into bonds. Interest rates are going lower. This suggests the global economy is not fixed by all the money-spending of the central banks; and global depression will continue.

    Also, the other index doing well in terms of appreciation 'with a pulse' is the UTY, the Utility Index, suggesting the same: yield is still attractive. Note in the UTY chart how a declining CGTS Indicator pivots at its bottom and reverses back up to lead the Index on a long climb up the ladder of appreciation, begun in December 2012, and still continuing.

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    Ok; here's a picture of the VIX. This issue describes the amount of volatility in the markets -- that is, the anti-stock volatility -- the selling energy. The VIX seems to be waking up.

    It is almost impossible to trade the VIX, with its short rapid movements up and down. But its 'liveliness' is a warning to those complacent about stock gains.

    (click to enlarge)

    Our last two indexes, the XCI, the Computer Index, and the XOI, Oil and Gas Index, are both showing a paucity of pulse. The XCI's decline began last October, when Apple Computer started to come down. It is quite likely it will continue until Apple really bottoms and begins rising. But many computer companies have come down, based on weaker sales in a weakening global marketplace: IBM has tanked; DELL is getting ready to tank (after a buyout offer fell through); EMC is in a long decline; HPQ is attempting to resist the coming decline; QCOM is beginning its descent.

    (click to enlarge)

    XOI looks ready for another leg of decline. It is overbought; overbought on no pulse. And CGTS looks to be heading lower.

    (click to enlarge)

    Here's a few bonus charts for those who made it through the entire report: Apple Computer; and some Chinese banks we've been following. When will Apple bottom? Nobody knows. It is going lower, based on its lack of pulse. It is overbought in terms of M2F ALT (brown line, central pane). It has not bottomed. And there is a chance it could go as low as 366 or even 360 before testing support there.

    At least Apple has shown a pulse during its most recent rallies in attempts to bottom.

    (click to enlarge)

    We have been following the Chinese banks lately, having called their demise about a month ago. They all had a huge jump on Friday, creating an upside gap.

    The strangest chart I have seen, in terms of our PULSE INDICATOR, is the Agricultural Bank of China (1288. HK). Note the absolutely 'dead pulse' since late February. The gap-up on Friday did nudge the CGTS indicator up, suggesting a bottom. But the other bank stocks look even worse than this one.

    (click to enlarge)

    The Bank of China (3988.HK) also looks bad; and the CGTS looks even more likely to continue down.

    (click to enlarge)

    The HSI, Hang-Seng, Hong Kong Index, shows a series of up-gap islands during this decline, that all closed as prices headed lower. It also has shown as absolute lack of a pulse over the last two months.

    (click to enlarge)

    What am I saying by all of the 'pulse nonsense'? I am suggesting that the buyers are played out, that prices are overbought, and that we need a real sell-off in order to make stocks attractive again. This rally has been a fake rally, purchased by artificial interest rates, massive margin-buying (more debt) and fueled also by corporate buy-backs...which are all a part of the Bernanke Doctrine of feed the super-rich and starve everyone else. It is shameful Barack Obama has bone along with this. This will tarnish the reputation of his presidency in a way that Bill Clinton's sell-out to the Wall Street banks tarnished his presidency (much more than Monica Lewinsky and the cigar incident, and the perjury that followed). Clinton essentially betrayed America's democracy to the rich corporate establishment, leaving America without a political conscience -- leaving Goldman Sachs owning all the political power in America. Who was left to speak for the average non-rich American, now that the Democratic Party had sold its soul to the devil?

    Clearly, in my mind today, the Devil lives on Wall Street. A very interesting movie that develops this idea is The Devil's Apprentice, starring America's greatest actor, Al Picino. If you have not seen this movie, please see it.

    Margin levels are approaching levels last seen (historic highs) in 2009, before the Market Crash. Bank of America analyst, Mary Ann Bartels writes that her margin-based market indicator, based on margin vs. cash levels in margin accounts has given the first market sell signal since 2010. She writes:

    Net Free Credits from the NYSE Margin Debt data shown in the chart below is essentially a measure of cash levels in margin accounts. Current levels have fallen to levels that have generated a tactical sell signal based on a 2-standard deviation Z-Score reading.

    The last time a sell signal was generated was on April 2010 and the S&P 500 subsequently corrected by 16% in two months. Net free credits for January were at a negative $77.2 million or cash balances are negative and the Z-Score indicates the cash draw down has been excessive. So a contrarian sell signal is given.

    Cash balances are plotted as black bars on the bottom graph in the chart below (click to enlarge).

    (click to enlarge)


    The pictures below show the correspondence between margin-debt and stock price appreciation; and historical margin levels (those who say we are deleveraging should look at this chart and the student loan debt increase picture before claiming we are winding down our debt -- it might also be nice to look at government indebtedness as well -- along with unfunded liabilities. Look how all three stock bubbles of this past twelve years coincide with debt-bubbles in margin also: 2001, 2008, 2013.

    (click to enlarge)

    Look how stock margin-debt was not a problem until the last inflation cycle sponsored by FED mania for debt -- for enslaving the public with debt.

    This picture of margin-debt is just another picture of the debt-inflation bubble engineered by Greenspan and Bernanke, which has endangered the life of the American Democracy.

    Corporate buy-backs cannot occur except because of artificially low interest rates. So Ben Bernanke has chosen to feed money to the corporations and take money from the mouths of the retired Americans who need safe yield in their investments -- he has made a choice for the rich and against the poor and elderly in America. Nothing could be clearer.

    The income gap between the very rich and everyone else has more than tripled since Alan Greenspan came to power at the Fed.

    America's soul is on trial. And so far the trial is not going very well for America.

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    I realize not all my readers share my political bias. I am conservative fiscally and liberal in terms of social policy -- in the 1960's we had liberal Republicans who filled this role: Nelson Rockefeller and George Romney, to name a couple.

    The times are going to radicalize all of us.

    One last bonus chart, to show you how the PULSE INDICATOR can tell an investor what to buy and how long to stay in a stock. The Number 1 issue on our list (above) was DUST, which is an Inverse ETF that is short gold stocks. Let's look at a picture of DUST with a special emphasis on the indicators we have discussed in this epistle.

    (click to enlarge)

    Michael J. Clark, CGTS



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  • doubleguns
    , contributor
    Comments (9711) | Send Message
    When the pulse stops Benny will be coming in with the 85 billion defib yelling "CLEAR". AGAIN!!! Each and every month. Maybe there should have been a DNR on file and he would not be allowed to resuscitate.....but who am I fooling.
    This is not about us, its about the filthy rich and well connected......not dying of a heart attack. Financially speaking of course.
    29 Apr 2013, 04:49 PM Reply Like
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