We look at some parameters to a stock market melt up vs. interim correction scenario. The SOX will play a key role there. The Semi’s put us on the lookout for economic strength last year and can still play a canary in the coal mine role now.
Global stocks, precious metals, commodities and the all important messages coming out of the bond market are also reviewed. 32 pages with lots of charts. NFTRH 280, out now.
Improbably enough, the stock market vs gold (SPY-GLD) looks like a chart I’d be watching for a potential buy if it were a stock (ref. yesterday’s post on FTEK and GOGO). It is constructive at least.
With the gold sector having been a good performer so far in 2014 and with some Ukraine static at least partially baked into gold (the old geopolitical crisis hedge canard), I guess the above is viable.
Also, as we noted in NFTRH last weekend, public opinion on silver (the PM leader) was way too bullish and the CoT data were gathering toward a structure where a reaction could happen. We were well prepared for that.
So while I remain oh so bearish the market on a risk vs. reward basis, the possibility is that preparation for a burst up in stocks vs. gold may be warranted as well.
Just about the only thing standing in the stock market’s way is that the SOX, which we used as a leader to the entire rally out of Q4 2012, is still deciding whether or not to decisively break that long term resistance we reviewed the other day.
The charts are the charts.
1929 Crash Analog? That was so February 21, 2014. This morning MarketWatch has a headline that can neuter the bullish effects of the Analog and its brethren that have littered the media at the slightest hint of trouble in the stock market. This gives me more bearish feelings than any red futures would on any given day. The market eats those for breakfast.
Meanwhile, the dumb money is lapping it up again…
And I continue to love the quiet beauty of this chart…
Still not a word about it outside of this little corner of the interwebs. Nice and quiet… ssshhhh…
If the monthly chart of the COMP is to be believed, 4% is the ‘reward’ side of the risk/reward equation in tech stocks. COMP could gobble that up in 3 days.
Bulls have surely won. The market has gone much higher than I for one thought it would when I got bullish on its prospects in late 2012. Much higher; but then I am not a bubble chasing momo. I am a conservative player with a negative view of the mechanics that have produced this bubble. Still, there is no use denying its reality.
A bear case of some magnitude was partially indicated by TLT-SPY breaking out of a falling wedge pattern in January. It then zoomed up too fast (as players got over bearish too quickly) to the 200 day moving averages. Unsurprisingly, the stock market bull regenerated and tamped the bearishness down but good.
For the bear case to regenerate now, TLT-SPY (along with many other would-be bear indicators) needs to turn up. It is at a logical support point at the 50 day averages. The rest is now up to the herd.
We’ll preface this with a thought that the damn 1929 Crash Analog chart was perfect too. But once MarketWatch got it in their teeth they kept Gnawing at it like a junkyard dog, neutering any bearish effect it may have held. What everybody sees coming and all? It ain’t gonna happen.
So I really hope they ignore the bull’s 5th birthday (in March) from a bearish perspective. Or at least feature more bullish touts than bearish doomsayers.
S&P 500 weekly, from NFTRH 278
As NFTRH 279 noted…
“Now if only that 1929 Crash Analog chart would get out of the media! I mean yes, Biiwii.com posted it back in November but this is ridiculous. Seriously, there was Mark Hulbert again on Friday ruminating about it on MarketWatch. Just put it away MSM… Pretty please with sugar on top?
Man, we’ve got a market full of contrarian wise guys. Everybody’s a contrarian now. Cue Phil Gramm… “Ah’s conservateeve before conservateeve was kewwwl”. Well, contrarianism is now kewwwl. But it won’t be for long because the herd is always the herd… always. It is a law of markets.”
So up to the plate for the Bad News Bears steps the 2007 top and an eerily similar setup happening 5 years later. 5 years… that was the rough duration of the bubble phase of the secular bull, RIP 2000 and the entirety of the cyclical bull, RIP 2007.
With today’s little show of enthusiasm and bump to new highs the S&P 500 has now replicated the 2007 specimen. What it does with that is now up to fate. I did not blink on my bearish bets today. I’ll not let it get out of hand, but I want to let this situation breathe a little.
The original intent was as noted here at the site last week, to allow some room to build a bearish case for 3D Systems (DDD). But even with 30 pages that did not happen. Maybe I’ll find time to do it as a public post.
What did happen was a well rounded look at the precious metals along with the usual markets. Also this somehow got into the ‘Wrap Up’ segment…