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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
  • ON THE MARKET - The Yield Number To Watch On The 30-Year Treasury Is 3.32%. 0 comments
    Jan 14, 2013 3:30 PM

    Pre-market - Monday 1-14-2013

    Dr. John L. Faessel

    ON THE MARKET

    Commentary and Insights

    Quotes of the day

    "the right of the people to keep and bear arms, shall not be infringed."

    The Second Amendment

    The United States Constitution

    &

    "Among the many misdeeds of the British rule in India, history will look upon the act of depriving a whole nation of arms as the blackest."

    ~ Mohandas Gandhi ~

    Stocks Rally while Bonds Tip Over

    Financials / Banks continue to Surge despite Global Slump…

    Last week the S&P 500 (SPX) Index of U.S. stocks broke to new highs adding 0.38% after a few days of back and fill from the prior week's breakout. The technical picture remains solid as there was a broad advance across the board. The McClellan Oscillator is in neutral at plus 122.

    Key technical observation for the market going forward is that the bond market looks to be finally tipping over. These yield number to watch is 3.32%. A break down there will put a top the charts and send all that money hiding for safety into a major reconsideration, considering all the Federal Reserve's buying of debt that's running at about 80% of the total spending.

    Last week (January 9, 2013) the Market, especially the Financials / banks didn't blink when the Bank for International Settlements [BIS]- Basel Committee issued - final document; "Principles for effective risk data aggregation and risk reporting "Principles for effective risk data aggregation and risk reporting. This has to be good news going forward and suggest that the Financials / banks could have another good year…

    Its customers are central banks and international organizations, the BIS does not accept deposits from, or provide financial services to, private individuals or corporate entities.

    ~~~~~~~~~~

    Notable:

    Thomson Reuters says profit projections for Q4 2012 S&P 500 (SPX) have been cut radically. Analysts now see companies expanding just 1.9% year-over-year-down from 9.9% hoped for three months ago and 13.7% last summer. Companies have squeezed all they can from profit margins and desperately need revenue to keep growing. Wall Street is now bracing for stagnant revenue growth last quarter among nonfinancial companies.

    ~~~~~~~~~

    Chinese exports in December jumped 14.1% over a year earlier.

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

    The S&P 500 (SPX) closed Friday at 1472. Last Friday it was 1466

    The September 2012 top and 'price' resistance at 1474

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

    Short term price support is at 1451

    Then at deeper support of 1398.

    November retreat lows / and Price support is at 1343.

    The 50-day moving average support is at 1417

    The 200-day moving average support is at 1392.78

    ~~~~~~~~

    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 NEUTRAL at plus 122 - Thursday's was plus and neutral 147.

    · Japanese Yen - 11219 (lowest since mid-2010)

    · 3-month $ LIBOR - 0.311

    · Aussie Dollar - 1.0486 - Thursday's was 1.0550

    · Euro - 1.3346

    · VIX - 13.36

    · Lumber (NASDAQ:CME) - 380.9

    · CBOE Put / Call Volume Ratio - 0.72

    · Natural Gas (Globex) - 3.327

    · US Dollar Index - 79.661

    · Swiss Franc - 1.0962

    · Canadian Dollar - 1.0150

    · Silver (COMEX) - 30.408

    · Gold (COMEX) - $1660.6

    · Copper - 3.6540

    · Crude oil (NYMEX) - $93.56

    · Brent Crude - $110.99

    · The Treasury 10-year yield - 1.88%

    · The 30-year Treasury - 3.05%

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

    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 rose a chunk to 46.5% from 38.7% 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 66% from 68% the prior week.

    · Consensus Index BULLISH rose to 51% from 45% the prior period. Seven -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 fell to 26.9% from 36.2% the prior week. 4-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 0.17. 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 68.3 -. One-year ago it was 67.2.

    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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