Monday PRE-MARKET -- 11-28-2011
Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Quote of the day
“This is merely a small indication of this vast throng gathered here to once again behold and to perceive that which has gone behind and to that which might go forward into the future...we've got to hurdle these obstacles.”
~ Professor Irwin Corey ~
The World’s Foremost Authority
EuroLand Bond Yields Retreat
Italy 10-year bond yield – 7.11%
Spanish 10-year bond yield – 6.52%
Fear not! The IMF is preparing to throw $799 billion at Italy
The McClellan Oscillator is deeply OVERSOLD @ minus 301
You know who contributes the most (17%) to the IMF? Oh Yea... Uncle Sam does... somehow I knew that was coming... Will that fix it?
One minor problem; the IMF has only $390 billion left in the till... Ho, ho, ho...
It’s just more debt, but it greases the machine that kicks the can down the road a bit further...
I’m sure that Professor Irwin Corey, “The World’s Foremost Authority” would approve of the above mentioned mechanism to allay all the worries that we could ever have... In fact he may be working behind the scenes in Brussels in his quest to save the world.
Item of note: The S&P just downgraded Belgium: The firm is worried about the Belgian government's ability to keep its debt load from rising further, given the extent of private-sector deleveraging within both Belgium and key trading partners. It's also concerned about the de facto nationalization of Dexia's Belgian bank division. S&P's outlook is negative.
And some real good news is that Black Friday retail sales were up sharply. The averages shopper spent $33 more than last year, spending $398. (alcohol sales?)
In any event the S&P futures are up 35 points and the shorts are running for cover. We could have a really big day today coming off horrid sentiment and deep oversoldness...
On Friday the stock market in a “holiday” short session again put in lower lows on little volume. It was the 10th consecutive day of lower highs and the abrupt downstroke took about 8% from the indexes. The market is extremely oversold.
The McClellan Oscillator (my favorite measure of overboughtness or oversoldness) posted a slightly higher read of an OVERSOLD minus 301after posting a hyper Oversold minus 326 on Wednesday; that was the second lowest “pattern” registration of the year, only to be “out-done by the all time lowest ever McClellan Oscillator posting of a minus 426 that occurred on August 8th. The minus 326 was one the top ten lowest readings ever and all came at major bottoms.
I said on Friday that, “the severe deep McClellan read suggests that we should be buying today.”
The (SPX) closed on Friday at it lows (and support) at 1158.67
S&P 500 (SPX) support at the August 8th lows is at 1101.
Support at the October 4th lows is at 1074.
Short term price resistance is at S&P 500 (SPX) 1163 then at 1172
More formidable resistance is at (SPX) 1199 - Then at (SPX) 1222 and 1232.
The 50- moving average "now" resistance is at (SPX) 1206.
The 200-day moving average resistance is at 1267.
Price resistance at the top- tick of the near four month old consolidation is at 1292 then at 1277.
Last Friday’s key indicators and metrics:
· McClellan Oscillator is OVERSOLD @ minus 301
· VIX – 34.47
· Gold (COMEX) $1685.7
· Swiss Franc – 1.0755
· The Treasury 10-year yield 1,97%
· Crude oil (NYMEX) $96.77
· CBOE Put / Call Volume Ratio – 1.32
· Aussie Dollar – 0.9677
· US Dollar Index – 79.83
· 3-month $ LIBOR at 0.523
· Copper – 3.2700
· Silver (COMEX) 31.014
· Brent Crude $108.90
· Euro – 1.3239
· Canadian Dollar – 0.9523
Tracking the Bond Markets $ 91 Trillion –
The BARRON’s Confidence Index ** fell a couple of tenths of a point ticks to 68.4 from 68.9 the prior week.
Two-months ago it posted cycle lows at 67.9.
Just over four-months ago it was a relatively healthy 77.1.
* The on margin “overview” of Bullish Investor Sentiment evaporated. Euro / Italian Bond yields drove the emotion
(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 dramatically to 32.7% from 41.9% the prior week. The week before it was 44.7%
It posted lows of cycle at 25.3% in September.
For perspective last January it ticked new cycle highs in Bullishness at 63.3%.
· The AAII Investor Survey of BEARISHNESS increased to 38.3% from 31.1% the prior week. The week before that it was 24.6%
On August 4th it posted CYCLE HIGHS of 49.9% in Bearishness. Late last December it was only 16% Bearish.
· Consensus Index BULLISH investor sentiment fell to 41% from 46% the prior week.
· The Market Vane (Market Letter Survey) fell to 46% from 53% the prior week.
· The Citygroup “Panic / Euphoria” Model remains just above the Panic zone at 0.12. It was also 0.12 the prior week.
** 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 ability of this key indicator of market health to post near new highs bodes well for the economic recovery and for stocks to continue forward. One year ago the index was 78.7.
For my Best Ideas for 2012 please send an e-mail request to: Dr.Faessel@onthemar.com