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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 THURSDAY 19 AUGUST: RALLY FROM OVERSOLD LEVELS CONTINUES WEAKLY 0 comments
    Aug 19, 2010 5:47 AM | about stocks: TEVA, FXB, BBL, UTX
    CLARK'S GATE TIMING SYSTEM
      FOR: 19 AUGUST 2010
    - THURSDAY

    A.  MARKET MOMENTUM

    CGTS VIEW: The rally back from oversold conditions is in progress but it is not really very impressive.  GSPC (S&P 500) Index is at 77 M2F alt.  90 is overbought.  We expect one or two more days of a rally before selling sets in again.

    Our key short-term momentum indicator -- numbers hitting +1 (positive) or -1 (negative) is now 51% bullish, up from as low as 9% bullish.  It's up + 126 since Monday.

    The key intermediate-term Momentum Trend (those in the positive zone of 1-0 versus those in the negative zone of 0-negative 1) has stabilized at 58% bullish.

    The Advance-Decline Line (most recent moves are either up or down) bounced back up to 73% bullish.  This one is very sensitive and is reaching an overbought level.

    Only 25 issues meet our criteria for a long trade (+1 M4 Sum Plus and Intermediate trend positive) -- while 85 meet our criteria for a short trade (-1 M4 Sum Plus and IT Trend negative).  This is only 8% bullish -- showing how much the last sell-off took out of this market.

    The intermediate-term trend of most issues are still positive (188 to 120), but this iindiator continues to deteriorate, down  -6 from Monday, indicating that this trend is still breaking down.


    August 19, 2010
     
     
     
     
     
    Positive
    Negative
     
     
    Key Short-Term
     
     
     
     
    TRADING MOMENTUM
     
     
    % Bullish
    PLUS ONE OR NEGATIVE ONE
    31
    30
     
    51%
    Yesterday's Reading
    26
    151
    126
    15%
     
     
     
    diff
     
    Key Long-Term
     
     
     
     
    MOMENTUM TREND
     
     
    % Bullish
    ONE/ZERO OR ZERO/MINUS ONE
    181
    129
     
    58%
    Yesterday's Reading
    180
    130
    2
    58%
     
     
     
    diff
     
     
     
     
     
     
    ADVANCE/DECLINE
     
     
    % Bullish
    UP OR DOWN MOST RECENTLY
    225
    85
     
    72.58%
    Yesterday's Reading
    103
    207
    244
    33.23%
     
     
     
    diff
     
     
     
     
     
     
     
     
     
     
    % Bullish
    LONG TRADE VS SHORT TRADE
    25
    15
     
    8.12%
    Yesterday's Reading
    20
    75
    65
    6.25%
     
     
     
    diff
     
     
     
     
     
     
     
     
     
     
    % Bullish
    Intermediate-Term Trend
    188
    120
     
    61.04%
    Yesterday's Reading
    191
    117
    -6
    62.01%
     
     
     
    diff
     
     




    Comments on GSPC chart:

    The short-term momentum indicator (M2F Alt, Pane 3 from above, brown line) is nearing overbought levels again (currently 77; overbought 90 and above).   This is a secondary indicator.
     
    M4 Sum Plus (bottom pane, brown line) 0.  The 0 reading, up from -1, describes buying in a bearish picture.
     
    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.  This indicator shows the recent move up, tepid at best, contained under the heavy weight of the M5 3 Momentum Average hovering overhead it.

    M5 3 Momentum Average (second pane from top, black line).  This key long-term momentum indicator moves between overbought levels (+100 at the extreme) and oversold levels (-100 at the extreme) and trends pretty consistently.  A declining M5 3 Average in overbought levels (above zero) is cause for concern; an advancing M5 3 Average in oversold levels (below zero) is cause for interest.  A declining M5 3 Average in overbought levels that is confirmed by two consecutive days of M4 Sum Plus (bottom pane, brown line) readings below zero is a serious cause for concern; an advancing M5 3 Average in oversold levels that is confirmed by two consdecutive days of M4 Sum Plus (bottom pane, brown line) readings above zero is a cause for serious interest.

    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.  Trends tend to change more slowly and always after momentum indicators change.
     
    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 but epxecting a couple more days of upward momentum.

    B.  THOUGHTS ON THE ECONOMY

    Inflation is one side of the 'evolutionary' coin: growth. I have no problem with growth. I love growth. But it is only one side of the coin. With inflation comes the problem of higher prices for everything, goods and services; and when wages can't keep up, you have the separation of the world into the rich and the poor, the creditors and the debtors.

    Deflation is built-in to the system to lower prices when they have gone too high, to punish over-indebtedness, the reduce the division of the society into haves and have-nots.

    We need both inflation, growth, the filling up with goods, services and debts and deflation, rest, the emptying out of goods, services and debts. But we can't have only one side of the coin. We have had inflation/growth from 1983 through 2001 when it was supposed to end, and now it is being extended through manipulation of monetary policy by frightened monetary bureaucrats, which is only making our problems worse.

    We have day and night to regulate the earth. We have inflation and deflation to regulate the economic earth. Idiots who want growth 12 months of the year are like cancer cells devouring the body out of fear of not having enough. Greed. Ambition for personal gain no matter what it does to the body its is serving, a body through which it is given life.

    What was it John Maynard Keynes said about inflation -- and this was not in praise of inflation:

    “By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
    -- John Maynard Keynes

    If we're really lucky and succeed in rebelling against deflation (the night), we might get hyperinflation. Hyperinflation, as in....a suitcase of money for a loaf of bread, street battles between fascists and communists, a fascist victory in the streets, the rise of an Adolph Hitler who is going to raise the country back up to an earlier image by idealizing the country's historical/mythological values and by killing his neighbors and stealing all their gold and expensive artwork and natural resources.

    Is this what Ben Bernake is engineering so subtly behind that cute innocent beard?

    I've got nothing against inflation if you have nothing against deflation also.

            *         *           *        *          *           *             *          

    Stocks have topped short-term.  We'll see if the buy-the-dips philosphy continues to work.  I believe stocks will seek a much lower bottom, based on an economy that can't be fixed, and a Fed Chair who has run out of ideas and ammunition.


    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.  STOCK WATCH

    We like to keep our eye on stocks that meet certain long-term criteria.  "Caution criteria" are a topping M5 3 Average indicator confirmed by two consecutive days of M4 Sum Plus negative trend (-1); "Interest' criteria consist of an oversold M5 3 Average indicator moving up and being confirmed by two consecutive days of M4 Sum Plus positive trend (+1).  These are not necessarily buy or sell signals -- but they allow us to pull up stocks that could be chainging intermediate or long-term trends.

    ARE THESE STOCKS BOTTOMING?



    I''m not sure TEVA Pharmaceutical is bottoming.  It meets our criteria of generating "interest" -- but its trends are still in a negative pattern (lower lows and lower highs) -- See pane two from the top, blue and red lines.  However, TEVA is trying to bottom.  Note how M5 3 Test (brown line, Pane One) is indicates the future movement of an issue.  It is climbing now; the price is in a holding pattern.  Note how in March this indicator declined BEFORE the price declined.  We expect a rally in TEVA -- but we're not sure it will be a sustained rally.  There is reason to believe that health-care's protected status has been lost and won't ever really be regained.  A protected status is not really good for consumers in terms of inflationary costs.  The cost of health-care (insurance, mediacations) has been killing America's middle class now for many decades.  Seeing stock prices coming down is really a good sign for this protected bubbly cartel.  (I realize Teva is really not a part of the protected class, the bubble cartel.  It is an anti-bubble, generic drug manufacturer.  But many health-care stocks are retreating because of this lost protected class status.  I'm quite fond of Teva as a company -- and wish it well in the future.)

    ARE THESE STOCKS TOPPING?

    If you read my post on Tueday, you'll realize I'm expecting hard sailing for many currencies: Euro, Australian Dollar, Great British Pound...  FXB is the Pound ETF and it seems to be running out of gas.  Trends are still positive, so I think this 'top', if it is a top, will take a while to develop.  I think support at 150.61 will eventually be tested.



    UTX, United Technologies: Short-term trend has popped down (blue line, second pane from the top).  UTX is right at short-term support now, and seems ready to drop through that level.  65.75 is next level of support.



    BBL, BHP Billiton.  I'm a couple days late in posting this.  It gave a 'caution' signal two days ago, and has since fallen through a support level.  M2F alt, bottom pane, is short-term momentum: it attempted to participate in the oversold bounce with other stocks and was not able to.  This is a negative.  Next support at 54.89.




    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

    Disclosure: Nothing to disclose.
    Stocks: TEVA, FXB, BBL, UTX
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