jse17

5 Anomalies in the Current U.S. Markets

The very astute Laszlo Birinyi wrote an interesting piece about one year back reviewing the efficacy of all of the primary market bottoming indicators. This rather comprehensive list included everyone’s darling indicator du jour at that time, the VIX. No surprise, none of the indicators were consistently accurate and in fact, were deemed relatively useless.

We search desperately for the key to unlock the answer. As others have noted, about the time the key is found, they change the lock! Now if only we could have Laszlo deliver the message in John Facenda’s voice.



On Aug 31 09:51 PM Tsy Fox wrote:

> While on the subject of questionable economic improvements, a few
> facts need to be brought to light regarding the track record of the
> Chicago PMI, which is at best a dubious economic indicator. At worst
> outright misleading !! On Sept 30th 2008, when the world's economies
> were moving into the economic collapse phase of the downcycle, the
> Chgo PMI issued the following report. "The Chicago Purchasing Managers
> report that the CHICAGO BUSINESS BAROMETER confirmed the August surge
> with a solid 58.1 reading, up from the 56.2 August 31st reading.
> Then the Chgo PMI proceeds to inexplicably drop to 36.2 in the October
> 31st reading. I find it very interesting that they did not report
> the collapse until after the S&P had collapsed to its 742 interim
> low. Call me conspiratorial but this smacks of market manipulation.
> Only a complete fool with a very short memory would ever trust any
> Purchasing Mgrs Index again.

The Market Bubble Is About to Pop

I am a fan of Dr. Leeb and in fact subscribe to two of his letters. With this said, I follow a proprietary, independent sentiment indicator that simply stated does NOT reflect the US market as at or even near bubble territory. The indicator is certainly no longer in the undervalued zone and perhaps may be characterized as tending toward overbought. Slightly overbought is far different than a bubble scenario and consistent with a tolerable retracement rather than a collapse.

Additionally, dating to the early Ben Graham years, inflation requires: 1) High consumer demand 2) Easy consumer credit 3) Full employment. Try as I may, I cannot determine which of the golden three points are in play ATPIT or the reasonably foreseeable future.