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Dr. John Faessel
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Dr. John L. Faessel is a seasoned and respected Wall Street professional with industry-wide recognition for expertise in market strategy and analysis. He is widely recognized for his insights in public companies. For over 20-years Dr. Faessel’s ON THE MARKET reports have been widely distributed... More
  • Stocks Rally Despite Global Slump… - The Money Faucet Is ON! 0 comments
    Jan 7, 2013 11:20 AM

    Pre-market - Monday 1-7-2013

    Dr. John L. Faessel

    ON THE MARKET

    Commentary and Insights

    Quotes of the day

    "A free people ought not only to be armed and disciplined, but they should have sufficient arms and ammunition to maintain a status of independence from any who might attempt to abuse them, which would include their own government."
    ~ George Washington ~

    "It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the [tax] rates now."

    ~ John F. Kennedy ~

    Stocks Rally despite Global Slump…

    Last week the S&P 500 (SPX) Index of U.S. stocks added 4.6% in its biggest weekly gain in more than a year. The Stoxx Europe 600 Index advanced 3.2%. Friday' move in the Dow Transports - up 1.17% to 17 month highs - and the Bank Index (BKX) up 1.68% to 21 month highs were the highlights and added a solid punctuation point to the cleansing of the technical picture. And this is good technical news for the market going forward and while the market is overbought and will likely back and fill over the next few days my technical underpinnings suggest we go higher. The McClellan Oscillator is overbought at plus 174. Keeping in mind that this is all built on thin air / or printing press ink. And while the indexes surge and companies continue on their profitable ways it's a bullish technical set up until some reality sets in. Remember when 'TSHTF'- Buy things...

    The Emperor Has No Clothes - but lotza ink…

    Re Mario Draghi - FT's Person of the Year - "In retrospect, the July declaration (the "bumblebee speech") - which in effect dared financial markets to challenge the ECB's unlimited firepower - may well be seen as a turning point in the three-year-old crisis"

    "Within our mandate, the European Central Bank [ECB] is ready to do whatever it takes to preserve the euro," Mr Draghi said, pausing for effect. "And believe me, it will be enough."

    So, the proverbial can goes down the road again… and on a grand scale; over the past year, the Federal Reserve has artificially lowered interest rates by purchasing close to 80% of U.S. debt instruments. Policy makers from the Federal Reserve to the People's Bank of China pumped more than $6 trillion into the global economy as they bought everything from Treasuries to gilts, boosting their balance sheet assets to $14.09 trillion as of June 2012 from $4.99 trillion in May 2006." according to Bianco Research LLC research cited by Pimco who oversees $1.9 trillion. Gross's / Pimco's $285 billion Total Return Fund (MUTF:PTTRX) gained 10.4% and beat 95% of its peers last year, Bloomberg data show. (What they [Pimco] didn't foresee)

    It was Marty Zweig who was famous for his "Don't fight the Fed" philosophy - but today's insane global / USA / Japanese / Euro Central Bank expansion of their balance sheets cannot end well.

    Expect another S&P downgrade of the USA re the debt bomb - it's only a matter of time..

    Hmmm; Between September 2011 and September 2012, China reduced its holdings of U.S. Treasury debt 9%, from $1,270 billion to $1,155 billion.

    ~~~~~~~~~

    Notable:

    · Fitch Ratings forecasts that copper consumption will grow about 4% annually through 2014, based on a soft landing in China and a slow recovery in developed nations. European copper consumption is expected to remain depressed through this year. "Fairly balanced markets are expected for 2013, while 2014 could show better supply," said Fitch analysts.

    · In 2010 solar energy consumption in the US was 8/100 of 1%.

    · China electricity consumption - data from the National Energy Administration showed electricity consumption in China rose 7.6 percent year-on-year to 413.9 billion kilowatt-hours in November, up from October's increase of 6.1 percent - Shanghai Daily

    ~~~~~~~~~~~~~~

    The S&P 500 (SPX) closed Friday at 1466

    The September 2012 top and 'price' resistance at 1474

    The October 2007 (SPX) highs and price resistance is at 1576

    ~~~~~~~~

    Greek, Spanish and Italian short and long-term bond yields continue to move lower;

    · Greek 10-year yields have slipped to 11% - down from a high of 24.41%

    · Italy 10-year (gross) bond yield - 4.29% off cycle highs of 7.29%.

    · Spanish 10-year (generic) bond yield - 5.05% off cycle highs of 7.41%.

    ---------------------------------------

    Friday's key indicators and metrics:

    Cycle highs or lows are in red

    · McClellan Oscillator is OVERBOUGHT at plus 174 - Thursday's was plus and neutral 118.

    · Japanese Yen - 11352 (lowest since mid-2010)

    · 3-month $ LIBOR - 0.311

    · Aussie Dollar - 1.0419

    · Lumber (NASDAQ:CME) - 376.0

    · CBOE Put / Call Volume Ratio - 0.82

    · Natural Gas (Globex) - 3.287

    · VIX - 13.83

    · US Dollar Index - 80.610

    · Silver (COMEX) - 29.946

    · Canadian Dollar - 1.0117

    · Euro - 1.3080

    · Gold (COMEX) - $1648.9

    · Copper - 3.6935

    · Crude oil (NYMEX) - $93.09

    · Brent Crude - $111.31

    · The Treasury 10-year yield - 1.91%

    · The 30-year Treasury - 3.11%

    · Swiss Franc - 1.0822

    ~~~~~~~~~~~~~~~~~~~

    This week's Bullish Investor Sentiment.

    The Bullishness / Bearishness complex is mixed, yet still quite Bullish. Two months ago overall sentiment was indicating distress.

    (High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.)

    · The American Association of Individual Investors [AAII] Investor Sentiment Survey of BULLISHNESS fell to 38.7% from 44.4% the prior week. It posted cycle lows of 22.2% on 7/23/2012 the lowest percentile since August 2010.

    · The Market Vane (Market Letter Survey) was up a percentile to 68% from 63% the prior week.

    · Consensus Index BULLISH fell to 45% from 49% the prior period. Three weeks ago it was 51%%. Six-weeks ago it was 60%. It ticked Cycle highs @ 73% three months ago

    The exclusive CONSENSUS BULLISH SENTIMENT INDEX is the premium gauge of positions and attitudes of major professional brokerage firms and advisors as interpreted and recorded by CONSENSUS, INC.

    · The AAII Investor Survey of BEARISHNESS rose to 36.@% from 30.2% the prior week. 3-weeks ago it was 24.8%%. On August 4th 2011 it posted cycle highs of 49.9% in Bearishness.

    The Citigroup "Panic / Euphoria" Model rose a bit to plus 0.11. At the end of June it ticked cycle lows of minus 0.31in the Panic mode. It's still registering in the Neutral zone.

    The BARRON's Confidence Index is 68.7 -. One-year ago it was 67.7.

    The Confidence Index is the premier measure of how the bond markets trillions (total global is around $91 trillion and USA is 39% of that) are allocated: (The bond market is twice the size of the stock market.) The Index is the High-grade bond index divided by intermediate-grade index. A decline in latter vs. former - generally indicates rising confidence, pointing to higher stocks.

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