Pre-market – Monday 1-13-2014
"The just price is the price established by the 'common estimation' [17] of buyers and sellers."
Saint Thomas Aquinas
1225 -1274
Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Quotes of the day
"Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive."
~ Joe Biden ~
&
"Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies."
~ Groucho Marx ~
Groucho
***
MARKET
On Friday stocks zoomed in the final hour after digesting some awful news on the jobs front. For the week, volume rose, but was below average.'Price' has not yet taken out the recent new highs established on New Year 's Eve and 'overboughtness' remains in neutral with the McClellan Oscillator in Neutral at plus 103. We remain extended with 'price' about 30% above the 200-day moving average (that's hyper extended. Participation is beginning to wane as evidenced by the Advance / Decline line. Importantly we are yet in the backwash of the seasonal strength of the Santa Claus rally. Plenty of support lies at the breakout pivot at 1812 / 1813. The long term trend and short term trend are up. So, no problem - right?
But, hello! Multiple sentiment models are now at decade highs in bullishness* and the prevailing sentiment re market downturns that suggest that the world's Central Banks have divined a way to end market slumps by goosing the global economies with trillions of 'funny' money is becoming the predominant belief. Haven't we heard this sirens song many times before? Indeed, it keeps the party going and the punch bowl full with the illusion of stability going but this new experiment / manipulation by the central banks to flood $ into the economy will end badly, so says the wisdom of the ages… When, is the question? The 'recovery' is bogus; hyper debt conditions never last forever and the citizenry is under a spell that 'all is well' – a la 1999 and 2008.
"Nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before."Richard W. Fisher, President and CEO Federal Reserve Bank of Dallas.
Terrible Jobs Report:
"If everybody gave up looking for a job, the official unemployment rate would fall to zero." Thomas Sowell
Notable re China:
China's Yuan touched 6.0443 per dollar, a 20-year high after the central bank raised the currency's daily reference rate to a record. Also,the Shanghai Composite Index sank 0.3 percent to its lowest level in 5 months. The gauge has lost 5.1 % this year amid signs of slowing economic growth and concern the resumption of share sales will divert funds from existing equities.
Re: Our Lousy Media
According to Scott Whitlock of the Media Research Center, "In less than 24 hours, the three networks have devoted 17 times more coverage to a traffic scandal involving Chris Christie than they've allowed in the last six months to Barack Obama's Internal Revenue Service controversy."
Video of Note
House of mirrors market distorts value:
James Grant – Link here
S&P 500
The S&P 500 (SPX) closed Friday at 1842.37 - the prior Friday it was 1831.37
Price resistance is at the top tick of 1849 registered on Tuesday 12/31/2013.
Intermediate price resistance is at 1843
Lots of support at breakout point is at 1812
The 50-day moving average support is 1800
Short term 'Price' support is at 1823
The a bit further out 1818 / 1806/ 1792
The 200-day moving average support is at 1689
The top trend line of the channel that goes back 2009 to at (SPX) 1784 - 'that' previous resistance was breached on October 22nd.
Channel and trend line support of (November 2012) is at 1751
Then deep channel and trend line support of (October 2011) is at 1628
Then the deepest channel and trend line support of (March 2009) is at 1415
* This Week's Investor Sentiment
The Bullishness / Bearishness complex overview is 'sky high 'with multiple models at decade highs in Bullishness. Danger lurks …
(High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.)
The Citigroup "Panic / Euphoria" Model rose to decade new highs to a plus 0.66 in the Euphoria Zone up from last week's 0.60.In early 2000 it ticked its all-time high at plus 0.72. At the end of June, 2011 it ticked cycle lows of minus0.31 in the Panic mode.
The Investor's Intelligence Index a week ago Monday was at 81%. That's the highest level since January of 1987. The Investor's Intelligence Index is a combination/comparison of that survey's bullish and bearish percentage scores. The bullish percentage is at 59%, which is the highest level since September of 2008. The bearish percentage now stands at 14%, which is the lowest reading since early 1987.
The Hulbert Financial Newsletter Sentiment Index for all stocks a week ago Monday was at 82%... the highest reading in at least 15 years.
The American Association of Individual Investors [AAII]Investor Sentiment Survey of BULLISHNESS rose a fraction to 43.6% from last week's 43.1%. Three weeks ago it ticked a 55.1% the highest post in 11-months. It posted cycle lows of 22.2% on 7/23/2012 the lowest percentile since August 2010. Long-Term Average: Bullish: 39.0%
The American Association of Individual Investors [AAII] Investor Survey of BEARISHNESS slid to 25% from last week's 29.3% .
14- Weeks ago it registered the lowest read since 1/12/2012 at 17.6%. Cycle highs of Bearishness of 54.5% were posted 19-weeks ago. Long-Term Average: Bearish: 30.5%
Consensus Index of BULLISH sentiment is at 74%, that's down from last week's 75% and from the cycle and multi-year highs of 78% established 6-weeks ago. The new cycle highs in Bullishness of 78% topped the top of 77% Bullish posted on 10/11/2007.
The Market Vane (Market Letter Survey) slipped to 65% from the prior last week's posting of 67%. In October 2007 it topped at 70% bullish.
The BARRON's Confidence Index slid a couple of fractions to 73.5 from 74.00 the prior week, one-year ago it was 68.3
| The Confidence index (High-grade index divided by intermediate-grade index; decline in latter vs. former generally indicates rising confidence, pointing to higher stocks.) |
Friday's key indicators and metrics
Cycle highs or lows are in red
·McClellan Oscillator in Neutral at plus 103
·3-month $ LIBOR was 2.42%.Lows were in November 2013 at 0.23660%
·CBOE Put / Call Volume Ratio – 0.76
·VIX – 12.14– on 12/26/2013 it ticked 11.69 near 5-year lows of 11.05 on 3/4/13
·Natural Gas (Globex) – 4.053 two weeks ago gas ticked 3-year highs at 4.530
·Swiss Franc – 1.1076
·US Dollar Index – 80.75
·Euro – 1.3660
·Japanese Yen – 0.9615 – the prior week it posted new 5-year lows at 0.9475
·Canadian Dollar – 0.9166 –posts 4½ year lows
·Aussie Dollar –0.8954
·Crude oil (NYMEX) 92.72 – 2-year support lows are at 92.00
·Brent crude 106.78
·Copper – 3.3415 – 3 weeks ago Wednesday it ticked three-year highs of 3.44
·Gold (COMEX) – 1246.9
·The Treasury 5-year yield – 1.62%
·The Treasury 10-year yield – 2.86 - cycle highs were 2 weeks ago at 3.01%
·The 30-year Treasury – 3.80% - the cycle highs of 3.93% were two weeks ago
·Silver (COMEX) – 20.223
·Platinum 1436.9
·Palladium 746.05
·Lumber (CME) – 368.60
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