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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 ©
  • CGTS Daily for 12 August, Thursday. Short-Sell Candidates as Rally May be Capitulating. 4 comments
    Aug 12, 2010 7:26 AM | about stocks: EL, REW, TAN, SYNA, KWT, JPM, IYW, ENP
    CLARK'S GATE TIMING SYSTEM
      FOR: 12 AUGUST 2010
    - THURSDAY

    A.  MARKET MOMENTUM

    CGTS VIEW: So, we finally get the selling we expected two weeks ago.  And it came down hard.  We had been warning readers to be cautious.  The selling is not over, so caution should continue.  Is the rally over?  Short-term it is.  Longer-term?  Well, we'll have to watch and see.  Our momentum indicators below are snap-shots of the market AS THEY ARE TODAY.

    Our more visionary indicators are the M5 3 and M5 3 Average indicators.  They show what is coming.  Our cautionary charts we've been running are pictures of the future to a large extent.

    Our short-term momentum indicator -- numbers hitting +1 (positive) or -1 (negative) changed a -82 today from yesterday.  We now have only 8 issues hitting +1, and 57 hitting -1.  Most issues are in-between.

    The Momentum Trend (those in the positive zone of 1-0 versus those in the negative zone of 0-negative 1) lost 54 points.  Still 230 are positive vs. 80 that are negative.

    The Advance-Decline Line (most recent moves up or down) is at a very low 10% bullish, with a change of -106 today.

    Only 6 issues meet our criteria for a long trade (+1 M4 Sum Plus and Intermediate trend positive), while 32 meet our criteria for a short trade (-1 M4 Sum Plus and IT Trend negative).

    The intermediate-term trend of most issues are still positive (232 to 75), but this is a lagging indicator.

    August 12, 2010
     
     
     
     
     
    Positive
    Negative
     
     
    TRADING MOMENTUM
     
     
     
    PLUS ONE OR NEGATIVE ONE
    8
    57
    <--
    Key
    Yesterday's Reading
    58
    25
    -82
    Short-Term
     
     
     
    diff
     
    MOMENTUM TREND
     
     
     
    ONE/ZERO OR ZERO/MINUS ONE
    230
    80
    <--
    Key
    Yesterday's Reading
    257
    53
    -54
    Long-Term
     
     
     
    diff
     
     
     
     
     
     
    ADVANCE/DECLINE
     
     
    % Bullish
    UP OR DOWN MOST RECENTLY
    31
    279
     
    10.00%
    Yesterday's Reading
    84
    226
    -106
    27.10%
     
     
     
    diff
     
    LONG TRADE VS SHORT TRADE
    6
    32
     
     
    Yesterday's Reading
    47
    18
    -55
     
     
     
     
    diff
     
    Intermediate-Term Trend
    232
    75
     
     
    Yesterday's Reading
    237
    71
    -9
     
     
     
     
    diff
     
    GSPC, SP500, MOMENTUM:
     
     
     
     
     
     
     
     
    GSPC, M2F ALT READING
    12
       oversold
     
     
    Yesterday's Reading
    37
    NEUTRAL
     
     
    Overbought 80-100; Oversold 20-0
     
     
     
     
     
     
     
     
    GSPC M4 Plus 21 Short-Term
    0
    SELLING
     
     
    Yesterday's Reading
    0
    SELLING
     
     
    1 bullish; 0 neutral; -1 bearish
     
     
     
     
     
     
     
     
    GSPC M4 Plus 21 Long-Term Trend:
    1
    POSITIVE
     
     
    Yesterday's Reading
    1
    POSITIVE
     
     
    1 bullish; 0 neutral; -1 bearish
     
     
     
     
     
     
     
     
     
     
    distance from
     
     
    GSPC TRADING RESISTANCE:
    1131.23
    41.77
     
     
    GSPC Current price:
    1089.46
     
     
     
    GSPC TRADING SUPPORT
    1088.01
    1.45
     
     
     




    Comments on GSPC chart:

    The short-term momentum indicator (M2F Alt, Pane 3 from above, brown line) is oversold, so, short-term, we will be approaching an an attempted bottoming
     
    M4 Sum Plus (bottom pane, brown line) continues to reside at 0, having clicked down from +1: selling or a sidways market is likely until it clicks back up. This trend is negative at the moment and suggests selling continuing.
     
    M4 Sum Plus Trend (bottom pane, black line):  The intermediate Momentum Trend  is +1  -- positive.

    M5 3 Momentum (second pane from top, brown line) This key indicator has broken support and is suggesting we are at a major top and will have a substantial decline.  The difference between my call two weeks ago for the end to this rally and today is that two weeks ago M5 3 was not in a freefall.  Today it seems to be entering a freefall.  Time will tell.  It is breaking support, which usually means selling is coming.
     
    T5 Short-Term Trend (second pane from bottom, red line) is in a positive trajectory but a slightly negative pattern (lower low); but it has taken out overhead resistance, which is a positive.
     
    T11, Intermediate-Term Trend (second pane from the top, red line): negative.  It is hard to sustain a rally in the opposite direction of this trend line.
     
    Overall: negative at the moment, in the short-term.  A look at a couple more charts helps to explain the negativity.



    AORD has seen its M4 Sum Plus break down to negative 1.  It is overbought in terms of M5 3 average (top pane) -- and the price has lagged the M5 3 average indicator.



    The Nikkei Japan Index continues to paint a horrible picture technically.  M4 Sum Plus is negative and has been negative since April.  Short-trend and intermediate trends are both negative; and the pattern of the short-trend (second pane from below, red line) is negative with lower lows and lower highs.



    Taiwan Index: Good rally.  But it seems to be breaking down here.  It may make another attempt to rally back; but it seems to be making a top here.




    B.  THOUGHTS ON THE ECONOMY

    It's a very strange dependent relationship now. Wall Street expects the Fed to keep the market from declining. Is that the role of the Fed, to keep the bulls in control of the markets, by spending taxpayer money to do so? I thought the Fed was supposed to regulate the economy by raising rates when an Economic Growth Season ends and lowering rates when an Economic Growth Season begins, stimulating the natural cycles. The control freak wants GROWTH all the time. Wants a Bull Market ALL the time. Wants CREDIT EXPANSION (and debt) all the time. That's what happens when the Fed has too much fiscal testosterone and not enough philosophy.

    Audit the Fed, follow the money trail, see what they've been doing all these years. It's not going to be pretty. It's organized crime, wearing a white shirt and tie.


    The Economy.  Capitalism has a destructive final stage; the Winter season of deflation, depression and destruction of matter. We can't have the first three seasons of planting, flowering and fruiting without the destruction season also. Let's not be moral cowards. Let's take our medicine so we can get on with our rebirth.

    I like Reagan's quote: "No easy answers; but there are simple answers." Higher interest rates; higher savings rate; higher taxes, lower spending are some of the simple answers. Some will squirm at the higher taxes part -- but it's designed to pare our debt, and it can't hurt our growth rate because in the Winter there is no growth anyway.

    Growing cycle begins again around 2019 (which is actually Midnight/Winter) at which time the light is born and slowly begins to grow. Then lower interest rates, lower taxes; and hopefully we will have a storehouse of cash for consumers to take out of their savings accounts to invest in American business through Wall Street -- investing saved money instead of debt.


    Stocks have topped short-term.  We'll see if the buy-the-dips philosphy continues to work.


    Some pictures tell a thousand stories -- this picture tells us two.  (1) Ben Bernnanke is running on empty. And (2) he is running out of time.

    C.  TRADING SIGNALS

    Today we're looking at some more issues that are M5 3 Average in a dangerous position -- in fact we're watching them for short-selling opportunities.


    Estee Lauder seems to be breaking down here.  M4 Sum Plus (bottom pane) also has turned to -1.



    Encore Energy Partners: Has turned negative on top, and also in the bottom pane.



    Short IYW, US Technology ETF.  This rally has not been especially impressive for tech stocks and IYW flattened out hard in August, unable to make a new high.  Now it's started down.  See the Short-Technology ETF below, for a reverse picture.



    No rally at all for JP Morgan -- now the stock is breaking down.



    Solar ETF: no rally and now an apparent top.



    Synaptics has now gone south with our M4 Sum Plus indication (bottom pane).



    Solar stocks breaking down.



    REW makes money when technology stocks go down.  It's look more like a buy now, as M4 Sum Plus has gone positive.


    More information on the CGTS systems can be found at:

    http://home.mindspring.com/~mclark7/CGTS09.htm

     

    MICHAEL J CLARK
    Clark's Gate Timing System
    Hanoi, Vietnam

    84 4 221 92210







    Disclosure: No positions to disclose.
    Stocks: EL, REW, TAN, SYNA, KWT, JPM, IYW, ENP
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Comments (4)
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  • S. R. Miller
    , contributor
    Comments (3) | Send Message
     
    I'm fascinated by your cyclic analysis of the market-- but I have a quesion. After the "destructive final stage" of capitalism, if I understand what you are saying, there is an anticipated "growing cycle". Would that not be a good time to re-imagine our economic system, rather than jump back into business as usual, inviting the same kinds of abuses to occur over another cycle? Your Reagan quote reminded me of another quote from H. L. Menken: "There is
    always an easy solution to every human problem--neat, plausible, and wrong."
    12 Aug 2010, 12:06 PM Reply Like
  • Michael Clark
    , contributor
    Comments (11835) | Send Message
     
    Author’s reply » I think we DO build a better model each time through. And it is most perfect when we first build it. And I expect more tearing down and building up to occur during the next decade, which should be the time for the most creative destruction.

     

    I want a better system also. I'm disgusted by what we just went through and are still going through. However, we are trapped in Time. And when Time wakes up again, we will pick up the beast we are carrying and take it another few steps forward.

     

    Most of the real reforms come during the creative destruction phase, when capitalism destroys itself, only to be reborn shortly thereafter with new reforms and new laws and new ethics (we hope). But it runs to an extreme. The new capitalism will also run into a self destructive credit crunch in 2037. It will include bank corruption, theft on a grand scale (hard to imagine theft on a scale grander than today), there will be head holding and table pounding and expressed consternation that 'it was supposed to be different this time". Then the crises, the collapse of the middle class, the depression, perhaps a large war...

     

    As I say, each model will be an improvement, but each model has a life cycle that includes the seed, the flowering, the fruit, and the decay (and self-destruction).

     

    Eventually, America will follow Rome into a Dark Age that will last for 1,000 years or so. And then America will give birth (as Rome did) to children, city-state, in a medieval condition, like the city-states of Florence and Venice, France, and Spain, etc.,, and true culture will rise up in America instead of the instant civilization we've been saddled with at this point in time.

     

    Jefferson wanted us to follow the Greek model; Washington and Hamilton wanted us to follow the Roman (and British) model. Jefferson will get his wish, but it will take a long time for him to get it.
    12 Aug 2010, 02:35 PM Reply Like
  • S. R. Miller
    , contributor
    Comments (3) | Send Message
     
    Thanks, Michael-- mind-blowing ideas that deserve some pondering! While I ponder... navigating this creative destruction phase with joy seems tricky, knowing that another self-destructive cycle is just around the corner. Maybe a grand lesson in non-attachment??
    12 Aug 2010, 03:36 PM Reply Like
  • Michael Clark
    , contributor
    Comments (11835) | Send Message
     
    Author’s reply » My calculations give us 18 years of growth and 18 years of contraction. Contraction being a word that describes both the big crunch we are currently going through AND the process of rebirth, by which we come back in to the light.

     

    We have a rough road ahead of us, especially for those of us who are no longer young. Rebirth begins in 2019 -- that is, the light of expansion is born and begins to grow again. It grows strong until 2037.

     

    The Dark Age we've entered is not all bad. Material expansion of comfort and possessions has a shadow side; material contraction has a light side also. Our understanding of how the world works seems to expand as we detach ourselves a bit from the conquests of everyday living. God is found on the inside, in the Dark Zone. We get a vision of the future, a vision of who we are to be when the next cycle of daylight re-commences.
    12 Aug 2010, 03:48 PM Reply Like
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