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Friday, August 28, 2009
Stock advisors sentiment index hits late-2007 levels
An indicator of investor sentiment on Wednesday showed stock market optimism had hit levels last reached in late 2007, the start of the last bear market and a possible sign that the recent rally is ready for a pullback.
The Investors Intelligence Advisors Sentiment index, which gauges the stock advice of about 150 newsletters and other paid market-advice outlets, said the portion of positive stock advisers jumped to 51.6% in the past week, the highest since December 2007.
Bears fell to 19.8%, the first time since October 2007 that the percentage fell below 20%.
A parallel with October 2007 is notable because the S&P 500 /quotes/comstock/21z!i1:in\x (SPX 1,031, +2.86, +0.28%) hit a peak that month and then tumbled for 17 months, losing nearly two-thirds its value by the time it hit a March low. (more)
S&P 500 Approaches 200-Month Moving Average: Technical Analysis
A decline in the Standard & Poor’s 500 Index below its 200-month average would probably signal an additional slump of as much as 6.5 percent, according to Chicago-based Technical Analytics Inc.
The measure finished at 1,028.12 yesterday. That’s 1.2 percent more than 1,015.58, its average close on the 26th day of the past 200 months, according to data compiled by Bloomberg. Falling below that level would presage a drop to about 990, said Al Bicoff, the president of Technical Analytics. If that is breached, the S&P 500 might slip to 950, he added.
The S&P 500 plunged 25 percent from the start of the year through March 9 before rallying 52 percent in the steepest advance since the Great Depression. The index has traded higher than its 200-day moving average since July 13 and rose 17 percent above it yesterday, the most since April 1999. That distance has increased the importance of the 200-month average, which is less studied by analysts, Bicoff said. (more)
Hummel: The US Will Default On Its Debt
The flood of debt that the US is taking on in its efforts rescue to economy will combine with huge social insurance obligations--Medicare, MedicaidSocial Security--to create an unsustainable level of public indebtedness, economist Jeffrey Rogers Hummel argues in at length here. Faced with this mountain of debt, policy makers will have just two choices: repudiate the debt or engage in hyper inflation to monetize it, Hummel writes. And faced with that choice the Treasury will likely protect the currency and default on Treasuries. (more)
"In the Tank Forever": U.S. Consumers, Retailers in a "Death Spiral,"
Retail maven Howard Davidowitz paid another visit to Tech Ticker this week. And despite signs of improvement in consumer confidence and retail stocks rising, Davidowitz is steadfast in his belief the consumer is dead.
Rather than summarize, let me just highlight some of his best one-liners:
On retail:- "The retail business is terrible... It's almost all negative."
- "We're going to close hundreds of thousands of stores."
On the consumer:
- "They’re still over leveraged, they're losing jobs, their credit has been cut back." (more)
Green Shoots or Greater Depression?
While we aren't contrarian for the sake of being contrary, more often than not that is the position in which we find ourselves. Today, with the media falling all over itself to paint a rosy outlook for the economy while simultaneously voicing encouragement to the new administration in its remake of the nation in previously unimaginable ways, it's hard not to question our conviction that the worst is yet to come.
Could the economy really recover this quickly from the traumatic trifecta of a record real estate bubble, leviathan levels of debt, and a global credit collapse? We don't see it as remotely possible, but yet... but yet... there for everyone to see are countless happy headlines and breathless exhortations that the worst is behind us.
So, is it Green Shoots or Greater Depression? (more)
Poll Reveals 34 Percent of U.S. Workers Surveyed Have Only One Week or Less of Savings to Cover Expenses if Laid Off from Work
Despite the fact that most financial advisors caution workers to save the equivalent of six months’ salary in preparation for troubled economic times, a recent Monster Meter Poll reveals more than one-third of U.S. workers surveyed on Monster.com admit they have only one week or less of savings to cover living expenses if they were to be laid off from work. Monster.com is the leading global online career and recruitment resource and flagship brand of Monster Worldwide, Inc. (NYSE: MWW).
Over a one week period beginning July 6 and running through July 13, more than 16,000 visitors to Monster.com participated in the Monster Meter Poll question “If you were laid off without severance, how long would your savings cover your living expenses?” Thirty-four percent of U.S. workers report their savings would last one week or less if they were laid off, compared to 20 percent who say their savings would last six months or longer, according to a nationwide poll conducted by Monster.com®. (more)
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