Thanks to my budding contrarian of a wife for forwarding this to me, here is what the locals are reading today here in Boston.
Morgan Stanley predicts stock market surge (Investment bank says S&P could crack 3000 by 2020)
Okay, now Channel 5’s got the story and the story is spreading out to the various corners of Main Street (cue the ‘maybe it’s time to invest again’ commercials from John Hancock).
“It’s irrefutable that the U.S. economy is in the best shape it’s been in fundamentally in well over eight years,” said Peter Kenny, chief market strategist at The Clearpool Group.
“Business cycles don’t die of old age,” Parker and Zentner wrote. “Business cycles tend to die of overheating (excessive hubris and debt).”
Translated: ‘We are myopic trend followers extrapolating bromides from a previous era of relatively normal monetary policy and were nowhere to be found when the latest up cycle actually began in Q1 2013.’
Using monthly charts I want to update more big picture views of where we stand in the financial markets. This is just a brief summary [edit; okay it's not so brief. In fact it had to be ended abruptly or else it would have just kept on rambling] and not meant as in depth analysis with finite conclusions.
I was listening to Martin Armstrong talk about his ‘economic confidence’ model and realized that the way he views gold is similar to the way I do (and very dis-similar to the way inflationists and ‘death of the dollar’ promoters do). I don’t love the way he writes, and I usually avoid these weird interview sites, but checked it out (linked at 321Gold) anyway and found him enjoyable to listen to.
Anyway, this prompted another big picture look at gold vs. the S&P 500 and as with the shorter-term views, the picture is not pretty.
Well, it is pretty if you have patience and no need to promote gold as a casino play. Gold will be ready when gold is ready and that will not be until confidence in policy making and by extension the stock market, starts to unwind.
Gold vs. SPX has meandered out of a long Falling Wedge (blue dotted) with 2008’s Fear Gap still lower. On the big picture the risk vs. reward is with gold over the stock market. But it is a funny thing about big pictures; they move real sloooow. A fill of that gap may not feel so good to anyone vested in an immediate conclusion to gold’s bear market vs. SPX.
Moving on, let’s look at some ratios of components of the stock market…
I sold half of my INTC position so as not to be greedy, but am going to hold the other half for a run at the target. This has been a fabulous NFTRH+ trade. There have also been some clunkers (PPLT, CCJ, JNPR) with losses limited, some aborts (SIMG, LSCC, SLV) as funda or technicals changed before buy targets activated and a few decently profitable (CORN, LIT, DBB, SNY, CTRL, SQQQ) ones. Also, BBRY put on a bearish engulfing candle today after my little show of bravado yesterday. Still holding that one. Anyway, here’s Intel improbably enough steaming toward target in a near vertical manner.
I ended up swapping out GOOGL for CTRL, which was bought yesterday on a potential bottom scenario. A mega tech stock of high quality for a company in a market that I am not overly excited about, trying to grab some of the ‘internet of things’ (IoT) hype out there.
It is probably a gap fill play around 17 with a stop below the August lows. CTRL got beat up on earnings as it is pretty richly valued, but the company also has acquisition hype surrounding it (like Google or Apple with respect to the IoT). We’ll see.
“We rate BLACKBERRY LTD (BBRY) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company’s weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.” –TheStreet.com
Why BBRY Stock is Gaining Today
Really TheStreet.com? A sell after the stock has already been bombed out for the reasons you cite? Really? What were you saying about it at $140 or even $70 a share? Was it a sell then? Seriously, I don’t know and don’t have the time or inclination to look. But I’d have my doubts TSC that you were calling ‘sell’ back then.
NFTRH+ had a completely different view the other day. Of course, it was a technical view, not a fundamental one. BBRY is a turnaround play with John Chen at the helm. Indeed, now we find out that they are segregating the future from the past as the re-branding of this device dinosaur moves ahead.
Needless to say, today’s activity is thus far on the plan we laid out by daily and weekly charts in that + update (not linked because it is password protected). Here’s the daily chart from that update, although the weekly is even more interesting in its message.
It’s probably getting about time to take the profit on this one. It’s only 4.5% but it’s my largest single stock position. As noted previously, I have a few fundamental longs, a chart long (bull flag) on a Semi stock and Mr. Bounce Long, Google. It’s always fun when people perceived as bearish like me do their buying amidst bull pukage and it works out.
GOOGL is probably going to boink the lower wedge line, but I may think about profit taking soon. In this racket you never know. When I covered the shorts on EWP, SPY and sold FAZ, I thought I might be leaving something on the table from the short side. Well, no not really. It was a good time to dump the shorts. Now I have the same thing going on with Google here, in reverse. Got to love the markets.  Though a look at the weekly chart and a comparison to the QQQ makes me think twice… dohhh! Be decisive Gary! Well, it’s a free site and thus I am not paid for decisiveness here.
Funny thing about the market; I’ve had this potential 17,500 target on the Dow since early in the year as it formed a bullish Ascending Triangle on this weekly chart we review often in NFTRH. Then the recent mini correction dropped it hard and I felt a little twinge of embarrassment about this chart. Now? Not so much.
This is what happens when market bounces extend off of corrections that came about amidst b/s like the Middle East and Russia/Ukraine tension (i.e. things that have nothing to do with the US stock market other than resetting over bullish sentiment to a healthier state). These bounce backs tend to fix technicals. The market can turn and drop tomorrow, but as of 3:00 on Tuesday, the Dow’s weekly technicals (if you discount MACD) are intact and targeting 17,500.
Okay, here’s the last one of these short-term casino patron updates. I’ve got more important things to keep track of like that short against DSLV, which is testing its limits this morning. SPX 60 minute view…
- Initial objective (targeted back when the average bull was supposedly worrying about Ukraine and Russia) of 1950-1960 (resistance, now tentative support) is in the books.
- Gap is filled.
- Pattern measurement still resides above.
- Typical of these rallies off of bull market corrections, they tend to test to the will of bears so that even those with the most conviction that this is finally the big one, will have a good amount of doubt, Soros Put position or not.
- I have no such conviction, and instead resolve to go with what the market says.
Well what do you know? Guess who’s trying to break the resistance zone, get to the gap and possibly even the pattern measurement? Why, none other than the SPX, fueled by easing Russia-Ukraine tensions according to this headline (try not to get startled when the picture jumps out at you).  They wisely dropped said picture down to the middle of the article.
For all you casino patrons keeping score of the short-term squiggles at home (okay, I admit it, when it comes to the US stock market I am a casino patron too ).
This thing is significantly higher than where I covered my SPY short so… so far so good. It would appear that the pattern neckline – which SPX resides above after dropping through – would be a key. Resistance is a viable candidate to stop the bounce, but as long as SPX is above the neckline so too I guess, are the gap and pattern measurement.
Updating the status of the 60 minute chart we observe the following…
- The anticipated resistance zone has been acheived.
- The gap and bottoming pattern measured target are higher.
- RSI is getting over bought (remember, this is just a 60 min. chart) so some disturbance can come about at the resistance zone.
- But the gap and 1980+ levels remain viable.
- Hey, it’s what the 60 min. chart says.