Tag Archives: Stock Market

Q: Is This the Beginning of the End of the Bull Market?

A:  Probably not, MarktWatch, if you keep putting headlines like this on page 1 every time the market takes a hiccup.  Click the graphic for the article.

headline

It would be totally normal – even expected – for the market to get a good drubbing into the July time frame.  But much though I abhor the policy that has created and sustained this thing, said drubbing might only quiet down the interest rate hike talk and cement an even longer run for ZIRP.

We just don’t know.  Meanwhile, the market has not even decided yet on the answer to its ‘manic melt up and termination or hard correction prior to new highs?’ question.  Here is the daily SOX (our leading index gauge) for perspective…

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BlackBerry Bonus, Thanks to Citron Research

Well on top of a really good (and notable) day in the precious metals, I got a bonus in that BBRY exceeded whatever bombed out expectation Wall Street had for it.  This is one I have been sitting on for the okay chart pattern and also (hat tip time) the fundamental research of Citron, which was very helpful to me and is linked over there on the right side bar.  I think I hat tipped Citron once before in helping firm my resolve to short the hell out of 3D Systems (DDD).  So you can consider this a hearty recommendation of Andrew Left’s analysis.

bbry

Semiconductor Index Still on a Bullish Signal

Frankly, by daily charts I think the Semiconductor index and several other US markets are too far above the 50 day moving averages and soon due for a breather.  But a big picture signal we first noted in March continues apace.  That would be the SOX similarity (Bollinger Band creep) to its state in 1999.

sox

Per the chart’s question, SOX did indeed close March (and April and May) above decade-old resistance and it continues to creep up along the top B Band.  This and the Tranny can be considered Gate Keepers to the potential for a manic market blow off.

US Treasury Bonds, Gold & Stock Market

The following is one of a wide range of analytical topics covered in NFTRH 293′s 35 pages this week, much of which is straight ahead technical analysis.  But the T Bond market is usually central to an overall macro view at any given time.  This segment is not meant to provide actionable direction (other than perhaps to prepare for a potential rise in T bonds yields), it is meant to dig into the mechanics beneath the financial markets in an effort to have people consider that there is much more going on with markets than simple nominal TA or conventional fundamental analysis (PE ratios, growth metrics, reported economic data, etc.) can account for.

US Treasury Bonds

tnx.tyx

10 & 30yr yields have declined to support as NFTRH projected

Yields on long-term Treasuries have continued to decline in line with our view that was contrary the ‘Great Rotation’ (out of bonds) hype. The [30-year] especially is now close to support and the next play seems like it could be rising yields and declining T bonds.

tyx.mo

Our long-term ‘Continuum’ chart; yields approach support

The 30-year ‘Continuum’ view above makes the simple case that players had to be put offside believing in the ‘Great Rotation’ at 4% yields. The nearly half-year decline since then has now satisfied the chart as yields have come to our 3.1% to 3.2% target range, where there is support.

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“Let’s Be Honest” –Andrew Huszar

“The real issue is that the Fed has expanded its tool kit so dramatically…”  –Andrew Huszar

In line with our theme of outlandish and immoral (in my opinion) Fed policy a former Fed official calls QE a backdoor bailout of Wall Street, which anyone with two functioning brain cells knows to be the case.  The Andrew Huszar Op/Ed (Wall Street Journal) Confessions of a Quantitative Easer is I suppose old news, but it illustrates what we have been hammering on for so long now; that Fed policy is serving to pump the stock market and pump up the wallets of asset owners.

QE gets about 10 times the notoriety of ZIRP, but I’ll still maintain that it is this evil tool in the Fed’s ‘tool kit’ that is the main and continuing blight on the system as it not only rewards asset owners and speculators, but punishes those least able to speculate due to limited funds.

dow.tbill

Please review this chart again and behold the rigged market.  Anyone arguing that the bull market in US stocks is normal is being intellectually dishonest.  Yet like agent Mulder I want to believe in the healthy bull story*, but I have to believe the data that has drawn the lines on the chart above.

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Stock Market: When Bad is Good & Good is Bad

Many people would consider a drop in the S&P 500 to the 1550-1600 area to be a bad thing.  But if the bull is real, and if a secular bull market truly has been created out of manipulation of the T bond market (QE’s bond buying and ZIRP’s 0% rates) then a pullback to test that zone would be normal, would it not?  It would feel bad but in reality a successful test of the big breakout would launch the grand new bull.  SPX has to drop down to test support sooner or later, doesn’t it?

spx

Well no, it doesn’t because the other side of the coin in the post’s title is ‘When Good is Bad’, meaning that an upside blow off in markets – if that is what is fomenting – would be very bad, as in ‘Silver 2011′ bad, for the stock market with a successful test of support unlikely.  That is because a manic blow off would be a terminal event.

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