from KingWorldNews:
“Twenty years would be a long time for a bear market, even a secular bear market. Therefore, you should know that I do not expect the market to head straight down for 20 long years. Actually, in the coming 20 years I expect to see a number of short cyclical bull and bear markets (much like the 1956 to 1974 period), and I expect to see many periods of boring trading ranges — all occurring within the overall pattern of a secular bear market.
by Guy Lerner, The Technical Take
When it comes to market sentiment there are 3 basic tenets that suggest to me that the current market dynamics will lead to a market top as opposed to a launching pad for the next bull market. First, investor sentiment at the recent lows (7 weeks ago) was not extreme. Therefore, the subsequent rally was expected to be weak as the “rubberband was not stretched to tight”. Second, when considering the price cycle, which is the path prices take from low to high and back to low again, every sell signal should be followed by a buy signal. Our models have had their sell signal (April 20, 2012), but we have not had a proper buy signal yet. Third, consecutive sell signals (without intervening buy signals) are a sign of a market top. This observation is consistent on both a daily and weekly time frames, and it is consistent with the kind of price action we are currently seeing.
When we put this altogether, it is difficult to see substantially higher prices without investors becoming more bearish. The best way to see increasing bearishness is to have lower prices. Lower prices will certainly bring the Federal Reserve into action. As a variant to these observations, I think the Federal Reserve has been laying the ground work over the past couple of months based upon the unemployment situation, and this may prompt action prior to a stock market fall. In fact, the only thing that can circumvent the price cycle is QE3. The question becomes: will we get Fed intervention before equity prices fall or after.
The “Dumb Money” indicator (see figure 1) looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investors Intelligence; 2) MarketVane; 3) American Association of Individual Investors; and 4) the put call ratio. This indicator is neutral.
Figure 1. “Dumb Money”/ weekly
Figure 2 is a weekly chart of the SP500 with the InsiderScore “entire market” value in the lower panel. From the InsiderScore weekly report: “Market-wide insider sentiment was Neutral last week as insider trading activity hit a seasonal low-point. In fact, the number of unique non-10b5-1 plan buyers and sellers was the second-lowest in our 445-week (dating back to January 1, 2004) tracking period, bested only by the third week of April this year. Activity will begin to pick-up late this week/early next week and transactional volume will increase significantly as insiders at the first-round of earnings reporters are free to buy/sell again. “
Figure 2. InsiderScore “Entire Market” value/ weekly
Figure 3 is a weekly chart of the SP500. The indicator in the lower panel measures all the assets in the Rydex bullish oriented equity funds divided by the sum of assets in the bullish oriented equity funds plus the assets in the bearish oriented equity funds. When the indicator is green, the value is low and there is fear in the market; this is where market bottoms are forged. When the indicator is red, there is complacency in the market. There are too many bulls and this is when market advances stall. Currently, the value of the indicator is 67.52%. Values less than 50% are associated with market bottoms. Values greater than 58% are associated with market tops. It should be noted that the market topped out in 2011 with this indicator between 70% and 71%.
Figure 3. Rydex Total Bull v. Total Bear/ weekly
beaconequity.com / By Dominique de Kevelioc de Bailleul /
Zerohedge.com once in a while posts a bombshell. The latest, This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied – The Sequel, proves once again that Trends JournalFounder Gerald Celente should top investors’ Google News alerts for his latest outlook and commentary.
“You don’t own your money unless you have it in your possession.
—Gerald Celente Nov. 2011 (following MF Global’s sudden bankruptcy, Oct. 31)
And to put some official sanction to an already corrupt banking system, the safest of safe assets, cash, will shockingly turn out to be not safe after all when the big reset nears. In fact, cash, too, will be confiscated through, maybe, another Obama Executive Order, more un-prosecuted fraud and consolidation to benefit JP Morgan, or just an old-fashion overnight currency devaluation, which is usual and customary—and is, presently, the odds on favorite after all attempts by the Fed to jury-rig the banking system fails.
As the following excerpts of the NY Fed proposal to Bernanke and Co. reveals, plans for coping with a banking crisis in the U.S. via some form of dollar devaluation are underway, including capital controls to stem a bank run—of course. Therefore, it’s necessary to make changes to Money Market Rule 2a-7.
. . . This paper proposes another approach to mitigating the vulnerability of MMFs to runs by introducing a “minimum balance at risk” (MBR) that could provide a disincentive to run from a troubled money fund. The MBR would be a small fraction (for example, 5 percent) of each shareholder’s recent balances that could be redeemed only with a delay. The delay would ensure that redeeming investors remain partially invested in the fund long enough (we suggest 30 days) to share in any imminent portfolio losses or costs of their redemptions. However, as long as an investor’s balance exceeds her MBR, the rule would have no effect on her transactions, and no portion of any redemption would be delayed if her remaining shares exceed her minimum balance. [her? Politically-correct thieves.]
EQT Corporation, together with its subsidiaries, operates as an integrated energy company in the United States. It operates in three segments: EQT Production, EQT Midstream, and Distribution. The EQT Production segment engages in the exploration, development, and production of natural gas, natural gas liquids, and crude oil in the Appalachian Basin. The EQT Midstream segment provides gathering, processing, transmission, and storage services to the independent third parties in the Appalachian Basin. This segment has approximately 10,450 miles of gathering lines. The Distribution segment distributes and sells natural gas to residential, commercial, and industrial customers in southwestern Pennsylvania, West Virginia, and eastern Kentucky. This segment serves approximately 276,500 customers consisting of 257,700 residential, and 18,800 commercial and industrial customers.
Please take a look at the 1-year chart of EQT (EQT Corporation) below with my added notations:
Over the last (5) months, EQT always seems to find support or resistance on or at the increments of $5. First, notice the $55 support (black) that, prior to last week, was previous resistance. Next, you can see the common level of $50 (blue) and the lower level of support at $45 (red). The nice thing about EQT is that it shows you how to trade it no matter what direction the market moves.
The Tale of the Tape: EQT finds the levels of $5 important. If the stock pulls back to the $55 support you could enter a long play. If it breaks below $55, you could enter a short play. In that case, you could then buy EQT if it comes down to $50. Etc., etc., etc!
Investment banker and Wall Street insider James Rickards says the Libor rate rigging scandal “is the greatest fraud and greatest potential liability in history.” He thinks rate rigging banks could be on the hook for “$2.5 trillion,” and “The potential damages could destroy the banking system.” Join Greg Hunter of USAWatchdog.com as he goes One-on-One with James Rickards.
from usawatchdog:
dailyreckoning.com / By Bill Bonner /
Paris, France – From one ragged country to another. We are on a tour of Europe’s unraveling economies. Ireland…Spain…and now France.
Spain was in the news again yesterday. Its borrowing rate rose to 7.5%…a level that everyone says in “unsustainable.” We haven’t done the math ourselves, but we will take their word for it.
Policy makers in Madrid were rattled. Naturally, they took no responsibility for the mess. Instead, they blamed…short sellers! Yes, and banned short selling for 3 months.
That ought to do it, right? Everybody knows markets go down because people sell. So make selling illegal. Problem solved!
Now our travels have brought us back to France. At the heart of Europe…and at the heart of the alliance with Germany and the whole European Union project, if France can’t keep itself together…the whole EU is doomed.
The "Chart of the Day" is Toll Brothers (TOL), which showed up on Monday's Barchart "52-Week High" list. Toll Brothers on Monday posted a new 5-1/2 year high of $31.19 and closed up 1.04%. TrendSpotter has been long since June 28 at $28.39. In recent news on the stock, Goldman on Monday upgraded homebuilders to Attractive from Neutral, saying that the homebuilder group is at the beginning of a long-term positive trend and that housing starts will be boosted by rising housing prices. Toll Brothers, with a market cap of $5 billion, designs, builds, markets and arranges financing for single-family detached and attached homes in middle and high income residential communities in thirteen states and five regions around the country.
