Good Morning. One of the most interesting/difficult aspects of trying to manage money in the stock market is the fact that the game is always changing. And I'm here to say that one of the most dramatic changes I've ever witnessed in my 24+ years in this business has occurred in the past four months. In short, never before has the importance of being flexible been more evident as this market morphed from a violent, bucking bronco that moved hundreds of points on the latest headline or rumor out of Europe into a steady-Eddie, Energizer Bunny.
Ever since I started managing "other people's money" in 1987, I've felt it was important to have a investment process that was repeatable. And for me the first step in the process has always been to identify the environment that you are dealing with. The thinking is that if you know what type of beast you are doing battle with; you might have a shot at choosing the right weapon with which to fight.
For example, investors have likely learned (the hard way) that utilizing the same pedal-to-the-metal approach that was all the rage in the late 1990's was a recipe for disaster during the ensuing Tech Bubble Bear that took a massive toll on tech and growth stocks from 2000-2003. So, while margined dotcom's were the weapons of choice in 1999, it was cash, value stocks, and bonds that made for better holdings for the next three years.
In looking at the current market environment, it is clear that the market environment has changed. The violence that was so pervasive from late-July through mid-December is gone. In its place is a relentless march higher with nary a hiccup seen over the past ten weeks. From an historical perspective, we saw the bull that began on March 10, 2009 end in a violent fashion last August when what will be technically defined as a cyclical bear market occurred. And since the S&P has now moved up more than 24% from the October low, it is important to recognize that we've now got a cyclical bull market on our hands.
So, does this mean we can start doing something else besides watching every headline out of Europe, China and the Fed? And can we perhaps just let our chips ride this wonderful wave for a while? Or will the current joyride end with a bang once Dow 13,000 is eclipsed?
In all honesty, I'm not sure (again, I'm sorry to report that my crystal ball is in the shop). What I can say is that the average cyclical bull market that occurs within the context of a secular bear cycle (the one that began in 2000), tends to last about a year. And in terms of what we might be able to expect out of this bull move - from a big-picture standpoint - it is worth noting that the median gain for cyclical bulls within secular bears is something north of 75% and the average gain is over 105%.
But, before you run out and start buying UPRO's on margin, we should remember that history is only a guide. If one looks closely at the data, you will find that the actual returns for all the cyclical bulls that occur within a secular bear are all over the map. For example, since 1960 there have been five cyclical bulls with returns greater than 85% (two over 100% and one over 290%) and six bulls that sported returns of less than 35%. Thus, given that this market changed costumes so quickly and that there are still a few macro issues out there, one could argue that the current bull may not make it to the mean or median columns.
However, I like to stick with what is instead of worrying about what could be. Therefore, we need to recognize that the market has changed from a news-driven bear to a new cyclical bull. And the key going forward will be to try and identify anything to indicate that our current bull is about to make yet another quick costume change
Friday, February 24, 2012
Wednesday, February 22, 2012
TTT TAKING NEW MEMBERS JOIN TODAY !
Good Morning. I continue to get questions as the reason behind the current run for the roses in the stock market. What about Greece, they ask. Aren't there huge problems with the bailout deal that was finally arranged on Tuesday? What if the private bond holders don't go along with the debt swap? Isn't there a risk that the Germans won't approve the deal? And won't we eventually see a default? What about the rest of Europe? And what about those big problems in Portugal? And on and on and...
Unfortunately, the answers to the questions make those asking them even more befuddled. Yes, there are problems with the bailout deal. Yes, there is a risk that the private bond holders might just walk away after taking it in the shorts yet again. Yes, there is the risk that the Germans and Fins may vote no when asked to approve the money for Greece's bailout loans. And yes, there are other debt bombs lurking in Europe and all over the world, for that matter.
However, the point I try to make to those asking these very good questions is that the focus on the stock market is constantly moving. Sure, the questions are valid, I say. But, I proceed to add that the stock market has moved on - and so should they. It's not that the issues at hand don't matter; they do - just not to the guys and gals running the big money around the world.
If you've been paying attention, the action in the stock market for the better part of the past three months has made this clear. No longer does a rumor out of Nicolas Sarkozy's office move the market 1%. No longer does the German's insistence on more austerity ruin the mood of a good day. Nope, it appears that the days of the Dow moving hundreds of points in a matter of minutes based on news out of Europe may be behind us.
In order to drive the point home, I toss in the idea that the big declines seen in the stock market in 2010 and again in 2011 were the result of worries that a credit event in Europe would create another "Lehman moment" and put the global banking system at risk. So, given that there is no imminent risk of a credit event and that the banks of the world are now stronger than they were last year (and the year before that), stocks have moved on to more mundane things like earnings, valuations, economics and the rest of the basic fundamentals.
My final point to those seeking an opinion or two from yours truly is that the big money is accumulating stocks - and that perhaps they should be doing the same (but only on dips, of course). Remember, hedge funds, which are arguably the biggest driving force in the market these days, came into 2011 underinvested. I saw a report Tuesday that as of the end of November, hedge funds held about 50% less equity exposure than normal (80% vs. 130%). And with the probability of the much feared Lehman moment dwindling this year, the hedgies appear to be moving their equity exposure back up towards more normal levels. According to Hedge Fund Research, after the third worst year on record in 2011, hedge funds are making money again this year - not quite as much as the market mind you, but the momentum of returns seems to be building.
Does this mean that stocks won't encounter a pullback anytime soon or that the current relentless move higher will continue for weeks to come? Of course not. Stocks are extended and are certainly ripe for a setback in the near-term. However, unless there is something meaningful behind the next pullback in stock prices, investors who find themselves underinvested may want to think about doing what the hedgies are doing - moving on.
Unfortunately, the answers to the questions make those asking them even more befuddled. Yes, there are problems with the bailout deal. Yes, there is a risk that the private bond holders might just walk away after taking it in the shorts yet again. Yes, there is the risk that the Germans and Fins may vote no when asked to approve the money for Greece's bailout loans. And yes, there are other debt bombs lurking in Europe and all over the world, for that matter.
However, the point I try to make to those asking these very good questions is that the focus on the stock market is constantly moving. Sure, the questions are valid, I say. But, I proceed to add that the stock market has moved on - and so should they. It's not that the issues at hand don't matter; they do - just not to the guys and gals running the big money around the world.
If you've been paying attention, the action in the stock market for the better part of the past three months has made this clear. No longer does a rumor out of Nicolas Sarkozy's office move the market 1%. No longer does the German's insistence on more austerity ruin the mood of a good day. Nope, it appears that the days of the Dow moving hundreds of points in a matter of minutes based on news out of Europe may be behind us.
In order to drive the point home, I toss in the idea that the big declines seen in the stock market in 2010 and again in 2011 were the result of worries that a credit event in Europe would create another "Lehman moment" and put the global banking system at risk. So, given that there is no imminent risk of a credit event and that the banks of the world are now stronger than they were last year (and the year before that), stocks have moved on to more mundane things like earnings, valuations, economics and the rest of the basic fundamentals.
My final point to those seeking an opinion or two from yours truly is that the big money is accumulating stocks - and that perhaps they should be doing the same (but only on dips, of course). Remember, hedge funds, which are arguably the biggest driving force in the market these days, came into 2011 underinvested. I saw a report Tuesday that as of the end of November, hedge funds held about 50% less equity exposure than normal (80% vs. 130%). And with the probability of the much feared Lehman moment dwindling this year, the hedgies appear to be moving their equity exposure back up towards more normal levels. According to Hedge Fund Research, after the third worst year on record in 2011, hedge funds are making money again this year - not quite as much as the market mind you, but the momentum of returns seems to be building.
Does this mean that stocks won't encounter a pullback anytime soon or that the current relentless move higher will continue for weeks to come? Of course not. Stocks are extended and are certainly ripe for a setback in the near-term. However, unless there is something meaningful behind the next pullback in stock prices, investors who find themselves underinvested may want to think about doing what the hedgies are doing - moving on.
Friday, February 17, 2012
TTT NEW BULL MARKET
Good Morning. During the majority of last year, it seemed that all (yes ALL) the news was bad. Greece was surely going to default, which was going to trigger vast unknown quantities of CDS, which, this time, would tank the global banking system, which, in turn, would send us back to the middle ages bartering for goods and services with grains and livestock, and protecting our homes with guns. In a nutshell, the news flow and the macro outlook was a nightmare as no one could imagine anything positive ever happening again.
As I recall, even if Greece was somehow spared and a "messy default" avoided, the domino effect from the rest of the PIGIS would take over and the world as we know it would cease to exist. And if by some off chance the defaults could be avoided in Europe, then the recessions resulting from the mess this crisis had created would surely plunge even the best economies of the world into something that would make the Great Depression in the U.S. look like a cake walk.
As I have written any number of times over the past six months, the negativity had become so thick you probably couldn't cut it with even the sharpest knife. A pall of gloom engulfed the markets and just about everybody on the planet knew we were doomed. It appeared that the leaders of Europe were powerless to fight the contagion that would surely spread throughout the world. And while politicians talked a good line about working together, it became apparent near the holidays that no other country was willing to buck up and lend the trillions needed to "save Europe."
However, as we were allowing our brains to be invaded by the pervasive negative feedback loop, one very simple fact was forgotten. You see, even during the worst of times, good things can occasionally happen. Although even the good news was ignored last year, this year appears to be a horse of a completely different color.
Thus far in 2012, the good news has come in bunches and from the strangest places such as the U.S. housing market (which to hear the bears tell it should be heading down still), corporate earnings, economic output, and yes, even the jobs market. To be sure, things are not peachy keen by any stretch of the imagination. But at the same time, things are FAR better than the doom that dominated the markets near the end of last year.
Thus, the most important lessons to be heeded in 2012 are: (1) Good things can happen - no matter how dark the night may appear, and (2) Investors simply must be flexible enough to change with the times (or at the very least, follow systems that can force them to adapt - even if they don't want to).
Am I saying that things are wonderful in the global economy and that we've embarked on a new secular bull market. Uh, no. But I am saying that when the market discounts the worst and then the sky doesn't actually fall (I know, I know, it's coming, just wait), again, good things can happen. Remember, the stock market is a discounting mechanism of future expectations. And right now, stock prices appear to be suggesting that the U.S. economy is growing, that the deal in Greece is going to get done, that the ECB DID know what it was doing with the LTRO, that there won't be a 'Lehman moment' in Europe, and that Apple may sell more of its products than anyone - including the late Steve Jobs - ever dreamed of.
The key point this morning is that something that everyone knows (such as how the world was going to end because Greece was going to default) isn't really worth knowing in the market. In short, by the time "everyone" knows what's going on, the market has already discounted the potential outcome. And then if something good actually does come along, traders scramble to get back on the right side of the macro view and an unstoppable melt-up ensues.
So, while stocks are indeed overbought and a pullback could occur at any time and for any reason, the fact that the S&P 500 is up +23.5% from its low means that according to the most common definition, this is a new bull market. And as such, one should be flexible enough to play the game accordingly. You never know, good things might just continue to happen.
As I recall, even if Greece was somehow spared and a "messy default" avoided, the domino effect from the rest of the PIGIS would take over and the world as we know it would cease to exist. And if by some off chance the defaults could be avoided in Europe, then the recessions resulting from the mess this crisis had created would surely plunge even the best economies of the world into something that would make the Great Depression in the U.S. look like a cake walk.
As I have written any number of times over the past six months, the negativity had become so thick you probably couldn't cut it with even the sharpest knife. A pall of gloom engulfed the markets and just about everybody on the planet knew we were doomed. It appeared that the leaders of Europe were powerless to fight the contagion that would surely spread throughout the world. And while politicians talked a good line about working together, it became apparent near the holidays that no other country was willing to buck up and lend the trillions needed to "save Europe."
However, as we were allowing our brains to be invaded by the pervasive negative feedback loop, one very simple fact was forgotten. You see, even during the worst of times, good things can occasionally happen. Although even the good news was ignored last year, this year appears to be a horse of a completely different color.
Thus far in 2012, the good news has come in bunches and from the strangest places such as the U.S. housing market (which to hear the bears tell it should be heading down still), corporate earnings, economic output, and yes, even the jobs market. To be sure, things are not peachy keen by any stretch of the imagination. But at the same time, things are FAR better than the doom that dominated the markets near the end of last year.
Thus, the most important lessons to be heeded in 2012 are: (1) Good things can happen - no matter how dark the night may appear, and (2) Investors simply must be flexible enough to change with the times (or at the very least, follow systems that can force them to adapt - even if they don't want to).
Am I saying that things are wonderful in the global economy and that we've embarked on a new secular bull market. Uh, no. But I am saying that when the market discounts the worst and then the sky doesn't actually fall (I know, I know, it's coming, just wait), again, good things can happen. Remember, the stock market is a discounting mechanism of future expectations. And right now, stock prices appear to be suggesting that the U.S. economy is growing, that the deal in Greece is going to get done, that the ECB DID know what it was doing with the LTRO, that there won't be a 'Lehman moment' in Europe, and that Apple may sell more of its products than anyone - including the late Steve Jobs - ever dreamed of.
The key point this morning is that something that everyone knows (such as how the world was going to end because Greece was going to default) isn't really worth knowing in the market. In short, by the time "everyone" knows what's going on, the market has already discounted the potential outcome. And then if something good actually does come along, traders scramble to get back on the right side of the macro view and an unstoppable melt-up ensues.
So, while stocks are indeed overbought and a pullback could occur at any time and for any reason, the fact that the S&P 500 is up +23.5% from its low means that according to the most common definition, this is a new bull market. And as such, one should be flexible enough to play the game accordingly. You never know, good things might just continue to happen.
Saturday, February 11, 2012
TTT SELL SIGNAL IN FULL BLOOM
Hi ,
We have done a good job stockpicking this year !
Symbol CP Chng % Price Gain since 1/1/12 % Gain Since 1/1/12 Entry
.
DE 87.55 -0.38 -0.43 8.43 11% 79.12
.
CF 180.15 -5.18 -2.8 30.40 20% 149.75
.
POT 44.7 -1.17 -2.55 1.96 5% 42.74
.
CRM 128.44 2.83 2.25 24.26 23% 104.18
.
USG 13.99 -0.7 -4.77 3.45 33% 10.54
.
RIO 59.33 -1.42 -2.34 7.77 15% 51.56
.
FCX 44.94 -1.48 -3.19 6.67 17% 38.27
.
VALE 25.75 -0.45 -1.72 3.13 14% 22.62
.
SYMC 17.78 -0.24 -1.33 1.79 11% 15.99
.
GLW 13.6 -0.19 -1.38 0.35 3% 13.25
.
PTEN 17.98 -0.47 -2.55 -2.38 -12% 20.36
.
FXI 38.93 -1.16 -2.89 2.12 6% 36.81
.
NFLX 123.93 -0.91 -0.73 53.65 76% 70.28
.
SCCO 33.69 -1.14 -3.27 2.53 8% 31.16
.
PCL 39.18 -0.17 -0.43 2.11 6% 37.07
.
UBS 13.9 -0.55 -3.81 1.60 13% 12.3
.
LUK 29.18 -0.24 -0.82 5.72 24% 23.46
.
MAN 44.96 -0.87 -1.9 8.19 22% 36.77
.
BX 16.04 -0.55 -3.32 1.66 12% 14.38
.
LVS 51.59 -0.96 -1.83 7.90 18% 43.69
.
Short Avg 16%
.
2/11/2012 14:24:09
We have done a good job stockpicking this year !
Symbol CP Chng % Price Gain since 1/1/12 % Gain Since 1/1/12 Entry
.
DE 87.55 -0.38 -0.43 8.43 11% 79.12
.
CF 180.15 -5.18 -2.8 30.40 20% 149.75
.
POT 44.7 -1.17 -2.55 1.96 5% 42.74
.
CRM 128.44 2.83 2.25 24.26 23% 104.18
.
USG 13.99 -0.7 -4.77 3.45 33% 10.54
.
RIO 59.33 -1.42 -2.34 7.77 15% 51.56
.
FCX 44.94 -1.48 -3.19 6.67 17% 38.27
.
VALE 25.75 -0.45 -1.72 3.13 14% 22.62
.
SYMC 17.78 -0.24 -1.33 1.79 11% 15.99
.
GLW 13.6 -0.19 -1.38 0.35 3% 13.25
.
PTEN 17.98 -0.47 -2.55 -2.38 -12% 20.36
.
FXI 38.93 -1.16 -2.89 2.12 6% 36.81
.
NFLX 123.93 -0.91 -0.73 53.65 76% 70.28
.
SCCO 33.69 -1.14 -3.27 2.53 8% 31.16
.
PCL 39.18 -0.17 -0.43 2.11 6% 37.07
.
UBS 13.9 -0.55 -3.81 1.60 13% 12.3
.
LUK 29.18 -0.24 -0.82 5.72 24% 23.46
.
MAN 44.96 -0.87 -1.9 8.19 22% 36.77
.
BX 16.04 -0.55 -3.32 1.66 12% 14.38
.
LVS 51.59 -0.96 -1.83 7.90 18% 43.69
.
Short Avg 16%
.
2/11/2012 14:24:09
Tuesday, February 7, 2012
Sunday, February 5, 2012
TTT SELL SIGNAL HIT
New unemployment claims in the U.S. fell to a lower level than most experts had expected according to figures released by the Labor Department. For the week ending January 28, the DOL reported a seasonally adjusted level of 367,000 initial claims for unemployment. That marks a decrease of 12,000 from the previous week's revised figure of 379,000 - slightly higher than the 377,000 initially reported. graphs - RTTNews
Payrolls expanded by much more than economists had predicted in January, while the unemployment rate declined. The U.S. economy added 243,000 jobs in January, according to statistics released by the Department of Labor on Friday. Economists had expected an increase of 135,000
The report showed that the unemployment rate came in at 8.3 percent. Economists were looking for the jobless rate to hold steady at 8.5 percent
The Institute for Supply Management-Chicago Inc. said this week its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth. Economists forecast the gauge would rise to 63.
Orders to factories rose in December, supported by a rebound in business investment in capital goods. In addition, service companies grew at the fastest pace in 11 months in January as companies started hiring to keep up with rising demand. Factory orders rose 1.1 percent in December after gaining 2.2 percent in November, the Commerce Department reported Friday. For the year, total orders were up 12.1 percent after a gain of 12.9 percent in 2010.
The Institute for Supply Management said Friday that its index of non-manufacturing activity jumped to 56.8 percent in January from 53 percent in December. The survey's employment index soared to its highest level since February 2006. Any reading above 50 indicates expansion.
Friday, the Labor Department reported that nonfarm payrolls (jobs) increased by a significant 243,000 in January. This chart provides some perspective on the US job market. Note how the number of jobs steadily increased from 1961 to 2001 (top chart). During the last economic recovery (i.e. the end of 2001 to the end of 2007), job growth was unable to get back up to its long-term trend (first time since 1961). More recently, the number of nonfarm payrolls has been working its way higher but at a pace that is not fast enough to close the gap on its 1961 to 2001 trend. In fact, the current number of US jobs is still below its 2001 peak.
This past week's top sectors.
This past week's indices - the small caps gained the most.
The monthly charts are still looking quite bullish. The NASDAQ has broken to multi-year highs, the Dow not far from moving towards that 13,000 mark from 2010. If it breaks to the upside there it could also eventually test the 2007 highs at 14,200. The S&P 500 needs to move over 1380 and the Russell 2000 is nearing its all-time highs as well.
On the 60 min chart we see how bullish the indices have been, breaking out over the top band, going sideways and then running back up to it again. It is very bullish when they push the bands up in this way and you want to see that the Center Bollinger band holds on pullbacks.
A standalone view of the Dow monthly chart and the overhead challenge towards the 2007 high.
The weekly chart shows it just moving back inside the ascending parallel channel.
The daily shows how close it is to closing over the 2010 highs. The MACD is flattening out and the histogram rather flat. The RSI is close to overbought territory but when it made its 2010 high it was a bit over 70.
The 10 min renko chart shows the steep move up at the start of the day on Friday when the jobs report numbers came out. Then it stayed flat for most of the day.
There are two sets of Fibonacci projections on this two-day-per-bar Dow futures chart. The first projection based off the last dip had a 161.8% target that was reached on Friday. The longer term projection is based from the 2011 low and has the first 127.2% target at 13,313.
A closer view on the 120 min chart shows that big move and the breakout of trendline Friday morning and how the Fibonacci level was also R3 pivot and both together gave too much resistance to allow it to move higher
The transports moved up only half a percent this past week, still well under the top weekly Bollinger band.
Utilities stayed in a tight range right on dual moving averages.
The black chart monthly view of the NASDAQ showing that December volume was up over the November volume. It was not by a lot, but enough to help it along to close in this new territory by a bit.
And the weekly chart shows it about midway inside the parallel channel so plenty of room to move for a while. It is short term overbought but RSI also has room to run.
The moving average of number of new high son the Nasdaq made an impressive run to and slightly over the peak it hit in July. This is just what you want to see in a bull market.
The NASDAQ summation index is now almost 100 points away from its five day EMA as the index rapidly moved to new high levels.
The NASDAQ 100 closed right at the top Bollinger band So a bit of a pullback this week could be expected. You can see it's rapid rise this year has basically been pushing that band up. At 78 the RSI is short term overbought.
The daily NASDAQ 100 futures with two sets of Fibonacci projection levels both short and longer-term.
The volatility index closed the week at 17.
The semiconductor index is back over the trendline and shorter-term horizontal resistance.
The moving average of the number of new highs minus new lows on the NYSE (lower section) continued to climb and very near former resistance from February of last year. The NYSE itself however has broken above resistance.
89% of all stocks on the NYSE are now trading over their 50 day moving average. This is quite bullish though it is at levels where we often have begun some pullback in the past but it has can remain above these levels for a month or more.
The lazy S&P 500 is 136 points above the last buy and within pennies of the 1345 resistance level. RSI on this weekly chart is only at 61 so it has room to run.
The weekly chart shows it closing at its high and right at former resistance.
Here a closer view on a daily chart and you see it at the top Bollinger band with RSI over 70. Putting it in overbought territory short term.
On the 60 min chart RSI is also high but medium term it is only at about the center of this ascending parallel channel.
The S&P 500 ETF 2X long dipped to sell and below the channel for a couple of days and then switched back to a buy for February.
The S&P 500 futures chart showing both longer and short term Fibonacci projection levels if it breaks over the the 1357 resistance.
Here a 120 min chart with its move to R3 Pivot on Friday, which coincided with this 127.2% projection. In this timeframe, we see the 161.8% just over 1350.
The standalone Russell 2000 monthly chart showing its current relation to its all-time high set in 2011. The histogram in this timeframe is still slightly negative and the MACD is just about to cross over bullishly. If those happen, this could start a larger move on a breakout above the all-time high.
On the daily chart we see the close over the top Bollinger band with RSI over 70 so a candidate for an overbought pullback.
The move on Friday brought the Russell back up and over this 60 min parallel channel it has been in since mid December. Note that it also took it very close to the measured move of the inverse head and shoulders we pointed out in December
The 15 min Russell 2000 faster to respond, had a crossover on its MACD and RSI dropped back under 70 by the close on Friday.
The 3X bullish ETF for the Russell broke above its ascending parallel channel and moved to a secondary one above which was also at the R3 Pivot Friday its RSI remained at elevated levels at the close.
The retail sector ETF continued its move higher closing at its high for the week.
The banking sector got a boost this week, moving over resistance as shown. This pattern shows a possible resistance projection at 48 at the 161.8% projection.
A closer view of the breakout on Friday as it moved up over 3%.
The 10 year treasury note yield moved up strongly on Friday closing at the 50 day EMA - yield of 1.94%.
The Dow Jones world market index gained 2.4% for the week and above horizontal resistance.
The emerging market ETF also closed well above resistance as a continuation from last week's move over the 50 week EM a.
Payrolls expanded by much more than economists had predicted in January, while the unemployment rate declined. The U.S. economy added 243,000 jobs in January, according to statistics released by the Department of Labor on Friday. Economists had expected an increase of 135,000
The report showed that the unemployment rate came in at 8.3 percent. Economists were looking for the jobless rate to hold steady at 8.5 percent
The Institute for Supply Management-Chicago Inc. said this week its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth. Economists forecast the gauge would rise to 63.
Orders to factories rose in December, supported by a rebound in business investment in capital goods. In addition, service companies grew at the fastest pace in 11 months in January as companies started hiring to keep up with rising demand. Factory orders rose 1.1 percent in December after gaining 2.2 percent in November, the Commerce Department reported Friday. For the year, total orders were up 12.1 percent after a gain of 12.9 percent in 2010.
The Institute for Supply Management said Friday that its index of non-manufacturing activity jumped to 56.8 percent in January from 53 percent in December. The survey's employment index soared to its highest level since February 2006. Any reading above 50 indicates expansion.
Friday, the Labor Department reported that nonfarm payrolls (jobs) increased by a significant 243,000 in January. This chart provides some perspective on the US job market. Note how the number of jobs steadily increased from 1961 to 2001 (top chart). During the last economic recovery (i.e. the end of 2001 to the end of 2007), job growth was unable to get back up to its long-term trend (first time since 1961). More recently, the number of nonfarm payrolls has been working its way higher but at a pace that is not fast enough to close the gap on its 1961 to 2001 trend. In fact, the current number of US jobs is still below its 2001 peak.
This past week's top sectors.
This past week's indices - the small caps gained the most.
The monthly charts are still looking quite bullish. The NASDAQ has broken to multi-year highs, the Dow not far from moving towards that 13,000 mark from 2010. If it breaks to the upside there it could also eventually test the 2007 highs at 14,200. The S&P 500 needs to move over 1380 and the Russell 2000 is nearing its all-time highs as well.
On the 60 min chart we see how bullish the indices have been, breaking out over the top band, going sideways and then running back up to it again. It is very bullish when they push the bands up in this way and you want to see that the Center Bollinger band holds on pullbacks.
A standalone view of the Dow monthly chart and the overhead challenge towards the 2007 high.
The weekly chart shows it just moving back inside the ascending parallel channel.
The daily shows how close it is to closing over the 2010 highs. The MACD is flattening out and the histogram rather flat. The RSI is close to overbought territory but when it made its 2010 high it was a bit over 70.
The 10 min renko chart shows the steep move up at the start of the day on Friday when the jobs report numbers came out. Then it stayed flat for most of the day.
There are two sets of Fibonacci projections on this two-day-per-bar Dow futures chart. The first projection based off the last dip had a 161.8% target that was reached on Friday. The longer term projection is based from the 2011 low and has the first 127.2% target at 13,313.
A closer view on the 120 min chart shows that big move and the breakout of trendline Friday morning and how the Fibonacci level was also R3 pivot and both together gave too much resistance to allow it to move higher
The transports moved up only half a percent this past week, still well under the top weekly Bollinger band.
Utilities stayed in a tight range right on dual moving averages.
The black chart monthly view of the NASDAQ showing that December volume was up over the November volume. It was not by a lot, but enough to help it along to close in this new territory by a bit.
And the weekly chart shows it about midway inside the parallel channel so plenty of room to move for a while. It is short term overbought but RSI also has room to run.
The moving average of number of new high son the Nasdaq made an impressive run to and slightly over the peak it hit in July. This is just what you want to see in a bull market.
The NASDAQ summation index is now almost 100 points away from its five day EMA as the index rapidly moved to new high levels.
The NASDAQ 100 closed right at the top Bollinger band So a bit of a pullback this week could be expected. You can see it's rapid rise this year has basically been pushing that band up. At 78 the RSI is short term overbought.
The daily NASDAQ 100 futures with two sets of Fibonacci projection levels both short and longer-term.
The volatility index closed the week at 17.
The semiconductor index is back over the trendline and shorter-term horizontal resistance.
The moving average of the number of new highs minus new lows on the NYSE (lower section) continued to climb and very near former resistance from February of last year. The NYSE itself however has broken above resistance.
89% of all stocks on the NYSE are now trading over their 50 day moving average. This is quite bullish though it is at levels where we often have begun some pullback in the past but it has can remain above these levels for a month or more.
The lazy S&P 500 is 136 points above the last buy and within pennies of the 1345 resistance level. RSI on this weekly chart is only at 61 so it has room to run.
The weekly chart shows it closing at its high and right at former resistance.
Here a closer view on a daily chart and you see it at the top Bollinger band with RSI over 70. Putting it in overbought territory short term.
On the 60 min chart RSI is also high but medium term it is only at about the center of this ascending parallel channel.
The S&P 500 ETF 2X long dipped to sell and below the channel for a couple of days and then switched back to a buy for February.
The S&P 500 futures chart showing both longer and short term Fibonacci projection levels if it breaks over the the 1357 resistance.
Here a 120 min chart with its move to R3 Pivot on Friday, which coincided with this 127.2% projection. In this timeframe, we see the 161.8% just over 1350.
The standalone Russell 2000 monthly chart showing its current relation to its all-time high set in 2011. The histogram in this timeframe is still slightly negative and the MACD is just about to cross over bullishly. If those happen, this could start a larger move on a breakout above the all-time high.
On the daily chart we see the close over the top Bollinger band with RSI over 70 so a candidate for an overbought pullback.
The move on Friday brought the Russell back up and over this 60 min parallel channel it has been in since mid December. Note that it also took it very close to the measured move of the inverse head and shoulders we pointed out in December
The 15 min Russell 2000 faster to respond, had a crossover on its MACD and RSI dropped back under 70 by the close on Friday.
The 3X bullish ETF for the Russell broke above its ascending parallel channel and moved to a secondary one above which was also at the R3 Pivot Friday its RSI remained at elevated levels at the close.
The retail sector ETF continued its move higher closing at its high for the week.
The banking sector got a boost this week, moving over resistance as shown. This pattern shows a possible resistance projection at 48 at the 161.8% projection.
A closer view of the breakout on Friday as it moved up over 3%.
The 10 year treasury note yield moved up strongly on Friday closing at the 50 day EMA - yield of 1.94%.
The Dow Jones world market index gained 2.4% for the week and above horizontal resistance.
The emerging market ETF also closed well above resistance as a continuation from last week's move over the 50 week EM a.
Thursday, February 2, 2012
TTT FUNNY BUSINESS ? GET SHORT TOMORROW
Recently released transcripts from the Federal Reserve’s Open Market Committee meetings between 2000 and 2006 indicate a comparable increase in the rise in housing market prices and subsequent laughter amongst the committee members.
Blogger Kyle Akin of The Daily Stag Hunt did an interesting study of the FOMC meetings. Akin tracked the number of times the official record contained a pause for laughter among the group. He found that the FOMC averaged 16.5 pauses for fits of giggles per meeting in 2001.
By 2006, the Case-Shiller 20 City Home Price Index peaked, interest rates were low, the stock market was booming and housing prices were exploding; meanwhile, the FOMC cracked up a recorded 44 times each meeting.
The blogger noted one particular outburst when Vice Chairman Timothy Geithner spoke to former chairman Alan Greenspan during his final meeting:
“With the near-term monetary policy path that’s now priced into the market, we think the economy is likely to grow slightly above trend in ’06 and close to trend in ’07.”
In hindsight, Obama’s current U.S. Secretary of Treasury could not have been more incorrect.
The Fed’s chipper atmosphere mirrored the cheerful complacency on Wall Street and Main Street.
But then there was 2008: the greatest financial crisis since The Great Depression developed; the housing market crashed and burned and the value of derivatives evaporated. According to the S&P/Case-Shiller Home Price Index, at its lowest point, home prices fell nearly 20 percent in a single month.
Though FOMC minutes are released three weeks following the group’s gatherings, full transcripts that record details are not available to the public for five years thereafter.
While we cannot know for certain, it might be reasonable to assume a hush has fallen over the formerly funny FOMC crowd since 2008.
Even after a brief 2010 recovery, home have continued to fall despite present Chairman Ben Bernanke’s best efforts to boost the market with low interest rates. It is estimated that this past November’s Case-Shiller Index will show an additional 3% drop.
Hilarious or humorless? Regardless, the true point of interest is the Fed’s increased transparency, ultimately.
Unfortunately, “we can never know within a reasonable period of time if the FOMC actually knows what it is doing… [and] we are not laughing,” Alan Newman said in response to the laughter count.
Blogger Kyle Akin of The Daily Stag Hunt did an interesting study of the FOMC meetings. Akin tracked the number of times the official record contained a pause for laughter among the group. He found that the FOMC averaged 16.5 pauses for fits of giggles per meeting in 2001.
By 2006, the Case-Shiller 20 City Home Price Index peaked, interest rates were low, the stock market was booming and housing prices were exploding; meanwhile, the FOMC cracked up a recorded 44 times each meeting.
The blogger noted one particular outburst when Vice Chairman Timothy Geithner spoke to former chairman Alan Greenspan during his final meeting:
“With the near-term monetary policy path that’s now priced into the market, we think the economy is likely to grow slightly above trend in ’06 and close to trend in ’07.”
In hindsight, Obama’s current U.S. Secretary of Treasury could not have been more incorrect.
The Fed’s chipper atmosphere mirrored the cheerful complacency on Wall Street and Main Street.
But then there was 2008: the greatest financial crisis since The Great Depression developed; the housing market crashed and burned and the value of derivatives evaporated. According to the S&P/Case-Shiller Home Price Index, at its lowest point, home prices fell nearly 20 percent in a single month.
Though FOMC minutes are released three weeks following the group’s gatherings, full transcripts that record details are not available to the public for five years thereafter.
While we cannot know for certain, it might be reasonable to assume a hush has fallen over the formerly funny FOMC crowd since 2008.
Even after a brief 2010 recovery, home have continued to fall despite present Chairman Ben Bernanke’s best efforts to boost the market with low interest rates. It is estimated that this past November’s Case-Shiller Index will show an additional 3% drop.
Hilarious or humorless? Regardless, the true point of interest is the Fed’s increased transparency, ultimately.
Unfortunately, “we can never know within a reasonable period of time if the FOMC actually knows what it is doing… [and] we are not laughing,” Alan Newman said in response to the laughter count.
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