Pre-market – Monday 10-14-2013
"The most important single central fact about a free market is that no exchange takes place unless both parties benefit."
~ Milton Friedman ~
Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Quotes of the day
"No pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt."
~ George Washington ~
Stocks boom on declining and below average volume
Up trend remains intact
ALERT:
1.A divergence in New Highs vs. Price in indexes suggests significant internal weakness. Link here.
2.McClellan Summation Index also suggests that there is not sufficient liquidity in the market to continue the uptrend. Link here for the details.
3.The 50-day moving average in the S&P 500 (SPX) has turned down.
MARKET
The Market / S&P 500 price advances again above the 50-day moving average.
The McClellan Oscillator is in Neutral at a plus 37. Tuesday's McClellan Oscillator was into the oversold at a minus 193. The weekly picture puts in a solid 'end of trend' Hammer candle. Key channel support off the trendline from November 2012 at (SPX) 1667 violated but the advance keeps "price" trendbound.
Today another down day looms as the Obama administration / House Republican Senate Democrat 'shutdown' debt / spending impasse grinds on. In three days the government's borrowing authority lapses.
However stock market indexes remain in strong uptrends and continue to look constructive, but there are some technical underpinnings that are deteriorating. Add that top line revenue has turned down as havw earnings.
Also very important - the important Bank Index (BKX) "price' remains below the now declining 50-day moving average and has the look of a failing chart.
After "price" in the S&P 500 (SPX) slid in a 16 session retreat off the channel top trendline from the March 2009 lows, (while coincidentally on that high tick day on 9/18/2013 the McClellan Oscillator posted the highest read in the last 12-months at an OVERBOUGHT plus 268) we has a nice 3-day reversal off a hammer candle when on Wednesday the McClellan posted a minus and oversold 193 on an increase in volume that was above average. On Friday volume fell sharply on both major exchanges. Nasdaq, trading was the slowest in almost three weeks. Weekly volume also remains in decline and below average.
It's all about jobs
Unemployment numbers rose 21% last week to 374,000, up 66,000 from 308,000 the previous week. And the markets love the fact that the $85 billion monthly mortgage and bond securities buying will continue. So much for the tapering….
Weekly S&P 500
The S&P 500 (SPX) closed Friday at 1703.20 - the prior Friday it was 1690.50
The 50-day moving average support is in decline at 1678 - the prior Friday it was 1679
Short term 'Price' support is at 1692. Then at 1682
The a bit further out 1646 and 1627
The 200-day moving average support is at 1602
Channel and trend line support of (November 2012) is at 1667
Then deep channel and trend line support of (October 2011) is at 1573.
Then the deepest channel and trend line support of (March 2009) is at 1375
Reality re Debt Limit - WSJ
"According to the Congressional Research Service, Congress voted 53 times from 1978 to 2013 to change the debt ceiling. The debt ceiling has increased to about $16 trillion from $752 billion. Of these 53 votes, 29 occurred in a Congress run by Democrats, 17 in a split Congress, and seven in a Republican-controlled Congress." "While large increases that give the U.S. Treasury a healthy amount of borrowing space happen occasionally, small short-term increases are common. In 1990 alone, while Republican George H.W. Bush was in the White House, a Democratic-controlled Congress voted to increase the debt limit seven times." "Republicans today are playing a role that has been played many times. While the debt-limit kabuki inevitably roils markets as deadlines approach, the alternative absence of fiscal discipline would make government insolvency more probable in the fullness of time." Link here for WSJ article.
This Week's Investor Sentiment
In general the Bullishness / Bearishness complex overview is in the high end of a mid-range
(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 Survey of BEARISHNESS moved up to 33.6% from 30.1% the prior week. 13-weeks ago it posted its lowest read since 1/12/2012 when it slipped to 18.3%. Cycle highs of Bearishness of 54.5% were posted 13 weeks ago. Long-Term Average: Bearish: 30.5%
The American Association of Individual Investors [AAII]Investor Sentiment Survey of BULLISHNESS slid to 41% from 33.8% the prior week.
The "Bullish" survey posted recent highs of 52.3% 8-months ago. It posted cycle lows of 22.2% on 7/23/2012 the lowest percentile since August 2010. Long-Term Average: Bullish: 39.0%
Consensus Index BULLISH is 41% up from last week's 37%. New Cycle highs in Bullishness of 77% were posted 4-months ago matching the top tick of 77% on 10/11/2007.
The Market Vane (Market Letter Survey) slid a bit to 57% from 61% the prior week. In October 2007 it topped at 70% bullish.
The Citigroup "Panic / Euphoria" Model remains in neutral 0.25. Cycle Highs (and Euphoria zone) of plus 0.49 occurred in February and that posting was the highest since May 2008. At the end of June, 2011 it ticked cycle lows of minus0.31 in the Panic mode.
The BARRON's Confidence Index is 73.6.Last week it was 72.9 - One-year ago it was 67.1.
The Confidence Index is the premier measure of how the bond markets trillions (total global is around $93 trillion and USA is about 39% of that) are allocated: (The bond market is twice the size of the stock market.) The Index is the High-grade bond index divided by intermediate-grade index. A 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 37
·3-month $ LIBOR hangs at new lows of 0.24885%
·CBOE Put / Call Volume Ratio – 0.95
·VIX – 15.72 - the cycle high was on June 20th at 21.32
·Aussie Dollar –0.9430
·Natural Gas (Globex) – 3.776
·Copper – 3.2690
·Gold (COMEX) – 1268.2
·Crude oil (NYMEX) 102.02– cycle and 2-year highs at 110.53 were ticked in August
·Brent crude 110.47
·The Treasury 10-year yield – 2.68% - cycle high was on 9/10/2013 at 2.98%
·The 30-year Treasury – 3.73% - cycle high was on August 22nd at 3.93%
·Canadian Dollar – 0.9654
·US Dollar Index – 80.45 – 8-month lows were ticked a week ago Thursday at 79.72
·Silver (COMEX) – 23.891
·Japanese Yen – 1.0157
·Swiss Franc – 1.0979
·Euro – 1.3557
·Platinum 1375.6
·Palladium 713.30
·Lumber (CME) – 331.20
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