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Thursday: Investing Wisely -- Market Update & Commentary - - July 26, 2012


Thursday: Investing Wisely -- Market Update & Commentary - - July 26, 2012

To support my archive of articles that are published by, I write two weekly Instablog postings that you may wish to follow.

This Thursday edition is simple, it provides more in-depth information and data than can be put in each article on the General Market. It is titled: Thursday: Investing Wisely -- Market Update and Commentary.

Just Scroll Down for my Market Update and Commentary.

On Friday night or Saturday morning, I publish my Saturday format entitled: Saturday Update: Investing Wisely - Forecasts / Confirmations = Results ! This posting review a number of bellwether companies and gives my current opinion, Buy - Sell or Hold.

You will have no trouble finding these postings when you enter my Instablog postings.

Please Scroll Down for My Current General Market Opinion - and - further down for My Short-Term Horizon

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Note: This General Market Update & Commentary is a bit limited. It is completely focused on the Standard & Poors 500 Index. My reason is simple; this Index is the most followed by all investors and professional advisors. The many other Indice Indexes are also important in my analytics. You can be assured that if I make securities recommendations to my Clients, those Indexes are carefully researched.

My Current General Market Opinion

In my articles I clearly have been bearish since early April. Calling this Bearish Cycle Inflection Point on the button was important and profitable to my Clients.

So, Bears are now in control of the marketplace for the foreseeable future.

Of the many proprietary indicators that have been so accurate over the years, not one is showing any indication that a meaningful bullish cycle is coming. That means the marketplace will continue to erode moving from one sector / industry group venue to another. This rotation will, or should continue until all have been sufficiently hurt. Some will begin to rebuild earlier than others. That guidance is reserved for my Clients.

On the economic front, there is mounting evidence that the U.S. will join Great Britain in being in a full recession. I suggest that the U.S. is currently in a recession and it will be some time before it is announced by Washington. Remember there is an election coming. Washington and the media, as usual will be slow to acknowledge this fact.

As for the general market, my fundamentals are over-valued. My technicals are over-bought. My consensus opinions are much too bullish. The economy is in much more peril than is being reported by the media. All the stimulus that Washington can muster will likely, and as usual be politically driven in the coming months. With the elections coming, I suggest that the marketplace will be suffering and in need of another false promise / hope by the President.

At this time, I am bearish on the general market and the economy for the foreseeable future.

If you are in mutual funds or holding long securities positions, you are going to have a very hurtful summer and perhaps beyond.

Understand from the above General Market opinion that my Guidance for most all securities is also bearish. In my articles I include the following statement: "My analytic focus is investing wisely, e.g. taking advantage of the bull / bear cycles as they occur within the overall marketplace. Integrating conservative fundamental analytics within these technical cycles means maintaining a process of the thorough and on-going analytics of many companies, sectors and industry groups."

The Bigger Picture with Supporting Charts with Comments

Most Current Real S&P 500 Returns

The above chart provides an excellent long-term perspective of the S&P 500. I earned my first research dollar in 1957. I did very well through the late 1960s, just like the herd; it was a long-term bull market, and I didn't know it. I was just completing my doctorate and feeling very smart. I then did very poorly in the 1970s, staying even, just like the herd; it was a long-term bear market, and I didn't know it. Guess what, with all that education, reading over 400 books in the market that 13.5 year bear market still did a job on me. During that time, I wrote my Methodology and have had excellent performance since. I simple stopped listening to the herd of people and their advice and focused on doing it my way.

I lived those days with manual charting and a very slow feed of data. I believe those days taught me more than the last ten years of being immersed in the "information age."

The marketplace will soon break down again with another declining top bearish cycle. That should be clear to everyone.

Corporate Profits Chart

The above chart is correct, with the red line addition. I never put objective prices or time frames in on my forecasts, do not believe exactly what you see. PC apparently agrees with my analytics, that Corporate Profits and hence earnings will be on the decline for some time to come.

I would like to thank PC - Pragmatic Capitalism for their fine work and supporting charts and data.

The General Market On the Shorter-Term Horizon

The accuracy of this Shorter-Term Horizon Forecast as well as the above is as good or better than you will find on the Web. Note the hour of posting and make some measurements of what I share. This information is NOT for traders, but they would do well to follow these forecasts. My more frequent forecasts in my personal blog have been terminated. With over one thousand investors from over 54 countries in the world reading my blog each week, it is time for me to stop the (gratis) and ask for your subscriptions and annual fees.

I need to hear from you via Email if this effort is to continue.

Since late May, the S&P 500 has retraced over two months of the April / May pull back. I called this pull back on the button. I had expected a greater initial drop before the turn-up five weeks ago. We have had a brief pause (mini-rally) but . . .

The coming few days and into next week should produce yet more upside. That should be the final termination of this May / June rally.

The internals (Breadth) of the marketplace is and has been in severe peril since early February. Clearly a resumption of the downside is forth coming. I have been bearish based on the (Breadth) since early this year. Perhaps you have breadth Indicators to confirm that the internal market has already been hurt badly. I suggest that the best support for these remarks is for you to look at your last several months of your mutual fund holdings. If you don't own mutual funds (congratulations) and you own small or mid cap companies you have felt the pain and therefore should know what is going on.

My S&P 500 Company Valuations are clearly in the minus 20+ percent ( - 20+% ) range for the foreseeable future. That is a minimum valuation calculation from peak to trough. I believe putting target figures or objectives and dates in play for you to consider -- is just plain "foolish." Many financial analysts and bloggers do, and those "many" are nearly always wrong!

Don't be lead by this kind of forecasting and data, just listen carefully to the marketplace and you will always profit.

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You may want to read my bi-weekly blog - Update and Commentary in my Wednesday and Sunday blog. It is followed by Investors in over 54 countries around the world. Try it:

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Smile, have Fun - "Investing Wisely",

Steven H. Bauer, Ph.D.