Pre-market – Monday 1-7-2013
Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Quotes of the day
“A free people ought not only to be armed and
disciplined, but they should have sufficient arms and ammunition to maintain a
status of independence from any who might attempt to abuse them, which would
include their own government.”~ George Washington ~
is a paradoxical truth that tax rates are too high and tax revenues are too low
and the soundest way to raise the revenues in the long run is to cut the [tax]
~ John F. Kennedy ~
Stocks Rally despite Global Slump…
week the S&P
500 (SPX) Index of U.S. stocks added 4.6% in its biggest weekly gain in
more than a year. The Stoxx Europe 600 Index advanced 3.2%. Friday’ move in the
Dow Transports – up 1.17% to 17 month highs – and the Bank Index (BKX) up 1.68%
to 21 month highs were the highlights and added a solid punctuation point to
the cleansing of the technical picture. And this is good technical news for the
market going forward and while the market is overbought and will likely back
and fill over the next few days my technical underpinnings suggest we go
higher. The McClellan Oscillator is overbought at plus 174. Keeping in
mind that this is all built on thin air / or printing press ink. And while the
indexes surge and companies continue on their profitable ways it’s a bullish
technical set up until some reality sets in. Remember when ‘TSHTF’– Buy
Emperor Has No Clothes – but lotza ink…
Mario Draghi – FT’s
Person of the Year – “In retrospect, the July declaration (the “bumblebee
speech”) – which in effect dared financial markets to challenge the ECB’s
unlimited firepower – may well be seen as a turning point in the three-year-old
“Within our mandate, the European
Central Bank [ECB] is ready to do whatever it takes to
preserve the euro,” Mr Draghi said, pausing for effect. “And believe me, it
will be enough.”
the proverbial can goes down the road again… and on a grand scale; over the
past year, the Federal Reserve has artificially lowered interest rates by
purchasing close to 80% of U.S. debt instruments. Policy makers from the Federal Reserve to the
People’s Bank of China pumped more than $6 trillion into the global economy as
they bought everything from Treasuries to gilts, boosting their balance sheet
assets to $14.09 trillion as of June 2012 from $4.99 trillion in May 2006.”
according to Bianco Research LLC
research cited by Pimco who oversees $1.9 trillion. Gross’s / Pimco’s $285 billion Total Return
Fund (PTTRX) gained 10.4% and beat 95% of its peers last year, Bloomberg
data show. (What
they [Pimco] didn’t foresee)
was Marty Zweig who
was famous for his "Don't fight the Fed" philosophy – but today’s
insane global / USA / Japanese / Euro Central Bank expansion of their balance
sheets cannot end well.
Expect another S&P downgrade of the USA re the
debt bomb – it’s only a matter of time..
Between September 2011 and September 2012, China reduced its holdings of U.S.
Treasury debt 9%, from $1,270 billion to $1,155 billion.
forecasts that copper consumption will grow about 4% annually through 2014,
based on a soft landing in China and a slow recovery in developed nations.
European copper consumption is expected to remain depressed through this year.
“Fairly balanced markets are expected for 2013, while 2014 could show better
supply,” said Fitch analysts.
In 2010 solar
energy consumption in the US was 8/100 of 1%.
consumption - data from the National Energy Administration showed electricity
consumption in China rose 7.6 percent year-on-year to 413.9 billion
kilowatt-hours in November, up from October's increase of 6.1 percent –
S&P 500 (SPX) closed Friday at 1466
The September 2012 top and ‘price’ resistance at
The October 2007 (SPX) highs and price resistance is
Greek, Spanish and Italian short and
long-term bond yields continue to move lower;
· Greek 10-year yields have slipped to 11% –
down from a high of 24.41%
· Italy 10-year (gross) bond yield – 4.29% off
cycle highs of 7.29%.
· Spanish 10-year (generic) bond yield –
5.05% off cycle highs of 7.41%.
Friday’s key indicators and metrics:
Cycle highs or lows are in red
Oscillator is OVERBOUGHT at plus 174 - Thursday’s was plus and neutral
Japanese Yen – 11352 (lowest since mid-2010)
· 3-month $ LIBOR – 0.311
Aussie Dollar – 1.0419
· Lumber (CME) –
CBOE Put / Call Volume Ratio – 0.82
Natural Gas (Globex) – 3.287
· VIX – 13.83
US Dollar Index – 80.610
Silver (COMEX) – 29.946
Canadian Dollar – 1.0117
Euro – 1.3080
Gold (COMEX) – $1648.9
Copper – 3.6935
Crude oil (NYMEX) – $93.09
Brent Crude – $111.31
The Treasury 10-year yield – 1.91%
The 30-year Treasury – 3.11%
Swiss Franc – 1.0822
This week’s Bullish
The Bullishness / Bearishness
complex is mixed, yet still quite Bullish. Two months ago overall sentiment was
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 Sentiment Survey of BULLISHNESS
fell to 38.7% from 44.4% the prior week. It posted cycle lows of 22.2% on
7/23/2012 the lowest percentile since August 2010.
· The Market Vane (Market Letter
Survey) was up a percentile to 68% from 63% the prior week.
· Consensus Index BULLISH fell to 45%
from 49% the prior period. Three weeks ago it was 51%%. Six-weeks ago it was 60%. It ticked Cycle highs @ 73% three
exclusive CONSENSUS BULLISH SENTIMENT INDEX is
the premium gauge of positions and attitudes of major professional brokerage
firms and advisors as interpreted and recorded by CONSENSUS,
· The AAII Investor Survey of
BEARISHNESS rose to 36.@% from 30.2% the
prior week. 3-weeks ago it was 24.8%%. On August 4th 2011 it posted cycle highs of 49.9% in Bearishness.
The Citigroup “Panic / Euphoria” Model rose a
bit to plus 0.11. At the end of June it ticked cycle
lows of minus 0.31in the Panic mode. It’s still registering in the
The BARRON’s Confidence Index is 68.7 -. One-year ago it was 67.7.
The Confidence Index is the premier measure of
how the bond markets trillions (total global is around $91 trillion and USA is
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.