Pre-market - Monday 3-25-2013
"The most important single central fact about a free market is that no exchange takes place unless both parties benefit."
Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Quotes of the day
"The deficit is indeed a major problem."
Feb. 11, 2005 - when the deficit was running at 2.6% of GDP
"Worries about the deficit are, in fact, greatly exaggerated"
Jan 31, 2013 - The deficit is expected to run at 5.3% of GDP
Food For Thought
If you can get arrested for hunting or fishing without a license, but not for being in the country illegally ...you might live in a country founded by geniuses but run by idiots.
~ Junius P. Long ~
S&P 500 futures are up 3 points
Be sure to buy some platinum and palladium…
BULLISH SENTIMENT continues to run Bullish*and registering in the RISK zone - conversely the McClellan Oscillator remains in Neutral @ Minus 22
'Price' in the S&P 500 (SPX) fell slightly last week on 'still' declining and below average volume. Price is about mid-way in the channel at (SPX) 1556. The Dow Transports remain hyper extended at 18% above the moving average - the same as the top of May 2010. The McClellan Oscillator is in Neutral at minus 22 - recall we briefly visited oversoldness at minus 151 on February 25th. Stochastic's configuration are indicating a possible market drop is evolving after last week's visit into the higt 90's - Fast (77.80) and Slow (85.79)
Therefore - my favorite overboughtness / oversoldness indicator suggests more upside could be absorbed by the market, however still high bullish sentiment suggests lightening up.
The Market is 'cheap' but the 'why' is the Question? The S&P 500 (SPX) trades at less than 14 times projected profits, higher than the 12.9 times a year ago, but still below the 15-year average of 16.6. S&P 500 forward earnings rose to yet another record high last week of $115.04 per share. Analysts expect (SPX) companies to report per-share quarterly operating profits in 2013 of $25.74, $27.67, $28.56 and $29.90 and sets up year-over-year profit growth of 1.5%, 6.2%, 10.3%, and 13.6%. S&P 500 companies produce almost twice as much in profit today versus 13 years ago, but the market only pays half the price for it. The real earnings for the S&P 500 are near record highs, but real stock prices are 23% below their 2000 peak and about 10% below their 2007 highs.
The S&P 500 (SPX) closed Friday at 1556.89
The October 2007 (SPX) all-time highs and price resistance is at 1576
Channel support off the lows of January low is at 1536
Should be good price support at 1485
Watch out for any break of the1485
Short term price support is at 1538 and 1545
Then deep channel and trend line support of 1432.
November retreat lows / and Price support is at 1343.
The 50-day moving average support is at 1516
The 200-day moving average support is at 1430.06
Greek, Spanish and short and long-term bond yields are ticking up off their January 11th lows. Italian yields have ratcheted up, making an allowance for the EU ordered Cyprus bank deposit confiscation.
· Greek 10-year yields have slipped to 11.18% - down from a high of 24.41%
· Italy 10-year (gross) bond yield - 4.49% off cycle highs of 7.29%.
· Spanish 10-year (generic) bond yield - 4.85% off cycle highs of 7.41%.
* This week's Investor Sentiment.
The Bullishness / Bearishness complex is continuing to post highly Bullish reads suggesting HAZARD and a significant possibility of a market retreat setting up.
(High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.)
· Consensus Index BULLISH fell to 73% from the new Cycle highs of 76% registered last week. On 10/11/2007 it top ticked at 77%
· The Market Vane (Market Letter Survey) slid 3% to 66% off from 69% that matching the multi-year high of 69% posted four weeks ago. In October 2007 it topped at 70% bullish.
· The AAII Investor Survey of BEARISHNESS rose a tick to 33% from 32.0% last week. On August 4th 2011 it posted cycle highs of 49.9% in Bearishness.
· The American Association of Individual Investors [AAII] Investor Sentiment Survey of BULLISHNESS was 38.9% off from 45.4% last week The survey posted recent highs of 52.3% seven-weeks ago. It posted cycle lows of 22.2% on 7/23/2012 the lowest percentile since August 2010.
· The Citigroup "Panic / Euphoria" Model slid again to plus 0.18 [neutral zone] from 0.22%. It posted a Cycle Highs of plus 0.43% registered in mid-February. At the end of June 2011 it ticked cycle lows of minus 0.31 in the Panic mode.
The BARRON's Confidence Index is 68.1 - Last week it was 69.1 - One-year ago it was 68.3.
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.