Most intelligent and insightful. When I look at your charts I see parabolic moves across the board. Banks and Energy are carrying the SPX, and it has the false appearence of strength or unwillingness to decline.
I believe current makeup of profits for the SPX are rather unhealthy and unsustainable as is our economy under its current foundation of excesses and imbalances.
SHOULD there be any retrace in housing values caused by any number of reasons, the cookie will crumble. And it's possible the current "energy crisis" could be the fuse.
Our facts are right, even if the future somehow turns out different than the implied outcome the historic extremes portend. I am in 100% Cash just in case.
Paul's response....."I think you are onto something."
Indeed I am! More random thoughts:
Cash levels at mutual funds now 3.9%, a tad below the 4% at bubble mania top.
Bond yield curve near to inverting= rcession=weakening corporate profits=lower prices.
Bullish plurality string remains unbroken approaching 150 consecutive weeks. only 9 bearish weeks since bear market began. Last bear market saw over 40 consecutive bearish plurality weeks.
AT last bear bottom SPX dividends appproached 6% they are now below 2%. PE ratio was single digits, now near 20, was 30 at OCT bottom. Dividend tax deductions have done little to raise this avgh.
Economy is sustained only by ability of consumers to take on more debt and expand credit beyond historic extremes.
Doug Noland writes: Broad money supply (M3) surged $59 billion to a record $9.898 Trillion (week of August 22). Year-to-date, M3 has expanded at a 6.8% rate, with M3-less Money Funds expanding at a 8.3% pace. M3 has expanded $273 billon over the past 14 weeks, or 10.5% annualized.
So no matter what Greenspan says or does, this is what matters. $59 B in one week is extroadinary and is a CRISIS level.
Inability to get long rates to rise, especially if now FED halts puny .25 short term moves, is perpetuating and exaserbating the Housing BUBBLE. Halt rates and is sign economy is in deep Kimchee, halt rise and watch the dollar tumble.
Gold remains below its 2004 highs.Silver as well, has the reflation attempt lost steam and is failing?
Hasn't energy crisis and housing fueled inflation in many sectors at same time we have world overcapacity feeding deflation?
Cost of fuel has nearly doubled in weeks, not months, strongly affecting consumers as seen in weak WMT stock. Financials are weak. ENERGY holds the SPX from tumbling profits, as I said early on, the SPX earnings are imbalanced and concentrated in a few issues.
BDI index has declined from std FIB retrace of initial plunge.Transports are weak, high fuel and less travel spell trouble for Airlines.
Institutions desperate for returns have flooded Hedge Funds with cash.
Beginning next week, traders at full strength, approaching markets weakest seasonal.
Large speculators historic long in gold, yet price below previous highs, what ammo left long?
It is taking exceedingly more and more fiat trash to stimulate less and less in the economy NOT more bang for buck.
Cash is OUTPERFORMING stock market since 1999!!!!!!!! Couldn't tell from bullish readings.
The whole world expects energy to continue higher, money flows into energy are dramatic and extreme ovebrought, ripe for correction.High prices could curtail consumption, less demand leads to lower prices just as extreme piling on long.
I am 100% cash, what are you?
Duratek
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