"WHAT'S BEHIND THE BULL MARKET" or HERE COMES THE DUMB MONEY

http://money.cnn.com/2013/01/31/investing/stocks-bull-market/index.html?iid=HP_LN

"What's behind the rally
There are a number of factors at play, including signs of improvement in Europe and sustained growth in China. But analysts say the Federal Reserve's stimulus moves have been the main driver."

HERE COMES THE "DUMB MONEY"
"Meanwhile, after shunning stocks for the past few years, individual investors have started stepping back in.
"People are panicking that they missed the bull market and they're going to get in come hell or high water," said Cote. "But this is not a good time, the party is starting to be over." "

http://buzz.money.cnn.com/2013/01/31/bill-gross-markets/?iid=s_mpm
Listen to Bill Gross
"The world Gross refers to is the monetary system. "Today's near zero bound interest rates cripple savers and business models previously constructed on the basis of positive real yields," Gross writes."

Barry WEIN SEES SELLOFF LOOMING

http://finance.yahoo.com/video/wien-think-major-sell-off-180200462.html;_ylt=Ag4cwMVledulywNIEthU7m2iuYdG;_ylu=X3oDMTJ2MjdwZTZxBG1pdANDTkJDIFRvcCBTdG9yaWVzBHBrZwM5NGUzZWE3OS1kMmM2LTMyNWYtYTRkMS0xMmE5YWVkYTM3MGMEcG9zAzEEc2VjA01lZGlhQkxpc3RNaXhlZExQQ0FUZW1w;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

GDP POST A "SURPRISE" NEGATIVE PRINT

Last QTR GDP contracted .1%. The last 2 times GDP went negative in 2000 and 2007 we enterred Bear Markets.....of course this time could be different but to me ANOTHER warning sign of what MAY lie ahead.

Really, all those TRILLIONS pumped into the STOCK MARKET, I mean to stimulate economy, ZERO RATES for almost 5 years.....this is best we get?

You know what I think they, FED etc should do? MORE OF THE SAME.....

D

FED LEGACY

"LIQUIDITY BUBBLE" AND MY EXPLANATION AS TO WHERE WE ARE

Read this "LIQUIDITY BUBBLE"

http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10752

 

........this guy Noland is pure genius, he cuts thru all the BS. Initially you read and think FK YEAH....all that cash.....it's going into equities, all those bonds cashed out....in to equities........to the f'ing moon Alice!!!!  but that is Dalio....Doug follows with his interpretation.

 

Before you read Doug's piece, look at this chart.
(below "secular and cyclical patterns")

 Since the 2000 and 2007 high's  I have joined those points with the lows of 2003 and 2009, this pattern is called a BEARISH BROADENING MEGAPHONE, because it looks like a megaphone.....2 touches at the top, 2 at the bottom.....IMHO there may be ONE MORE touch at the top near 1550-1,600 S&P (broad measure of price 500 of the best US companies)

Inside of that highlighted is another pattern a rising wedge, and that looks exactly like what preceded the 2000 TOP!!! THE MACD is an algorithm that displays momentum of price...the highs there have been falling for several years even as STOCK PRICES go higher...that's a divergence and CAN lead to a reversal in one or the other, usually price....it shows fewer and fewer are chasing stocks here or the focus on buying is fewer and fewer companies....

 

My point is, this is not science but observation of patterns that repeat. ANY bull ends at the extreme of exuberance and bullishness and then goes to the other extreme of fear and pessimism and back again. Cyclical patterns happen over 3-5 year periods, and they can be held within LARGER degree time frames called SECULAR and they can last 16 years or more.

 

The FED policies on interest rates and QE pulled the mkt out of tailspin, but have not fixed anything, each bubble you see is worse than the next, they never learn about unintended consequences. RISK is being mispriced because of this across a broad spectrum of things.

How it ends I am not sure, should the 10 YR note rate rise above the GDP growth rate, the game is over.

 Our economy is not functioning like it should or would rates still be at 0% 4 years after crisis was averted and so called recovery began?

Also you have the game of selling YEN and converting it onto $'s and Euros...which find its way into risky asset classes

 If money flows into equities from cash and bonds like Dalio suggests....the FALL from that top would be beyond EPIC...already after all that has been done, if it doesn;t work, what next?

YOU HAVE TO SEARCH FOR THE TRUTH

**The PRESS has been highlighting housing during this recovery.....read to bottom chart

 

Tale of 2 realities

 

Purchases of new U.S. homes unexpectedly decreased in December, a blemish as the industry wrapped up its best year since 2009 to emerge as a bright spot for the economy.

The 7.3 percent drop in December sales to a 369,000 annual pace followed the prior month’s 398,000 rate that was faster than previously estimated, Commerce Department figures showed today in Washington. Builders sold 367,000 homes in 2012, the most in three years and the first annual increase in seven.

Sales of New U.S. Homes Decrease to End First Year of RebounConstruction of new properties rose last month to a 954,000 annual rate, the fastest pace since June 2008, according to Jan. 17 Commerce Department figures.

Construction of new properties rose last month to a 954,000 annual rate, the fastest pace since June 2008, according to Jan. 17 Commerce Department figures. Photographer: David Paul Morris/Bloomberg

Jan. 24 (Bloomberg) -- Robert Shiller, a professor at Yale University and co-creator of the S&P/Case-Shiller index of property values, talks about the global economy and the U.S. housing market. He speaks with Tom Keene on Bloomberg Television's "Surveillance" on the sidelines of the World Economic Forum in Davos, Switzerland. (Source: Bloomberg)

Sponsored Links

Mortgage rates near record lows, improved job prospects and a rising number of households should keep stoking demand and benefit builders such as Lennar Corp. (LEN) and KB Home. (KBH) Combined sales of new and previously owned properties last year rose 9.9 percent, the biggest annual gain since 1998 and an indication residential real estate is helping drive growth.

“2013 will show more of an increase in prices and more positive sales activity and housing starts,” said Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a unit of the biggest U.S. mortgage lender. “We expect to see residential investment adding to growth despite a very sluggish overall pace of economic growth.”

Here's your "bright spot" and recovery

 

 

 

SECULAR AND CYCLICAL PATTERNS

I believe we are approaching a MAJOR MARKET TOP. But it could have a bit further to go if the broadening megaphone pattern is still in play.

MACD divergences running now since 2011, as prices continue to rise and momo falls as shown by lower MACD tops on a weekly basis.

A short term correction could be close, but there could be one more push to THE TOP. IMHO

D

10 YEAR YIELDS, DIFFERENT THIS TIME?

A marked rise in rates would be a big issue funding the deficits and stock market parlor game.

D

CURRENT SPX DIV YIELD

http://www.multpl.com/s-p-500-dividend-yield/   Current yield is more like what you find at a market TOP, not anywhere near a bottom of a bear mkt (6% on avg)
Current Yield: 2.09% -0.00 bps

4:36 pm EST, Thu Jan 24

Mean:	4.44%
Median:	4.38%
Min:	1.11%	(Aug 2000)
Max:	13.84%	(Jun 1932)

AAPLE STOCK CHARTED

If AAPL can get a near 40% haircut in a fewm onths, imagine what a new bear market might do?

Here is a response to one of my PERMA BULL readers and comentors...not tormentors as I ENCOURAGE sharing your opinion on this blog.

"Only someone like you would stoop to I told you so's. I'm just here presenting my opinion, and for your amusement only.

Pain is not something I want to see, and when it comes to sitting thru a BEAR MKT correction...stupifyed....not that either.

There is a skill and talent to be able to do that...avoid the WORST of a BEAR, and be OPEN to the joys of a BULL, even a Cyclical move...that is my goal.

There will be a completion to this SECULAR BEAR....which would make sense given the length of time the previous BULL ran, the imbalances and perversions it begot....but now we have the world CB's fighting the results of a credit binge Caligula style...no one wants to pay the piper....no one wants to let the free market correct itself.

So now you get the perversion of rising stock and risky assets, mispricing of risk and manipulated int rates....there WILL be a price to extract.

Stocks tend to go up,when the FED gets involved, but we are now 5 years in.....time to onsider an exit strategy IMHO"
http://finance.yahoo.com/news/apples-weak-results-spark-fresh-113559759.html


D

BULLISH NFLX

CURRENT DOW THEORY NON CONFIRMATION

http://www.businessinsider.com/richard-russell-something-evil-bearish-bubbling-in-guts-of-market-2012-8   "most difficult market" and Richard has been writing for a long long time.

D

TAIL OF 2 TALES

Market is ignoring AAPL'S bear market, as others seem to be enterring a blow off period as momentum and volume dry up.

We do have Dow Theory non confirmation, unless some eager action and volume enter this will lead to at least a short term top, IMHO.

D

HIGH BETA BLOWOFFS ABOUND

NFLX and friends, all kinds of stocks are running higher, some dramatically as shown here with NFLX. A double in 3 months?

Because of the FED interference with the FREE MARKETS, RISK is once again MISPRICED and cannot find it's own level.

Price rockets higher as momentum slows, and volume dries up....good luck with that.

D

MARKET EXPERT WEIGHS IN FOR 2013

A confluence of factors suggests the Dow Jones Industrial Average is heading for a 20 percent decline this year, Citi FX Technicals Global Head Tom Fitzpatrick says.

A confluence of factors suggests the Dow Jones Industrial Average is heading for a 20 percent decline this year, Citi FX Technicals Global Head Tom Fitzpatrick said Thursday on CNBC.
"While there's a little bit left to the top side in the near-term, we're still on the same page we have been for the last three months or so, which is, that we're going to peak out around these levels and see a (decline) probably in excess of 20 percent," he said on "Fast Money."
Fitzpatrick looked at Dow performance charts from 1973-1977 and from 2006-present for the analysis.

http://www.cnbc.com/id/100388241?__source=yahoo|headline|quote|text|&par=yahoo  full story

WEAK BEGETS WEAKNESS

WASHINGTON (MarketWatch) — Manufacturing activity in the New York area contracted for the sixth straight month in January as orders dried up given uncertainty over the economic impact of U.S. fiscal policy, the New York Federal Reserve Bank said Tuesday.
The index fell to negative 7.8 in January from a revised negative 7.3 in December, originally reported as negative 8.1.
Economists polled by MarketWatch expected the index to stay in negative territory at negative 2.8 in January. See comprehensive economic calendar.

LINK TO FED CHART
http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html

Smoke and mirros economy continues, lining the pockets of the CONENCTED, bending ocver most everyone else.

D

ALCOA IN THE COAL MINE

 

This is VERY bearish action on this valuable industrial metal.

LABOR PARTICIPATION RATE

http://data.bls.gov/timeseries/LNS11300000

Is lower than it was in 2009.

http://www.economicpopulist.org/content/word-labor-participation-rates

D

ROUBINI

"In the piece, Roubini said the fiscal adjustment would translate as a drag on the economy during the year, warning "the U.S. could quite easily come perilously close to stall speed this year" or worse if the euro zone begins to unravel once again.
He goes further to argue the longer term is likely to be much worse than any short term woes.
"Neither Democrats nor Republicans recognize that maintaining a basic welfare state... implies higher taxes for the middle class as well as for the rich," Roubini writes."

http://finance.yahoo.com/news/roubini-despite-deal-us-soon-145950181.html

CRACK ADDICT ECONOMY

Market melt up. Understand this as you count your new shillings.....FED is pumping $85 B a month into the system (not to mention the rest of the world's banks), this 4 years PLUS into so called recovery, we can't walk on our own...CRACK ADDICT economy.

WHAT THIS DOES is MISPRICES RISK...when rates are manipulated to 0%,...FED has our backs? NO they are sticking a knife in it. Can you or I just charge shit into stratosphere with NO WORRIES ever to pay it back? if you are USA you just keep borrowing MORE and MORE and MORE.

SO whoopdifuckingda we have a deal, well shut me up I love it when all the uncertainty is gone, don't you?

Those who provide jobs get bent over, grab ankles boheeca, don't worry those getting soaked aren't us and can afford it, right?

The whole stsyem is a fraud, one day that can will be kicked and it will explode in their faces.

We continue to add $1T plus each year to current deficits, longer term unfunded liabilities are not even brought up or mentioned to the tune of another $50 T. We increase taxes on the job producers, take $117,000 EXTRA from a company or person who earned that Million and that is going to be felt....they will find a way to get it back, by cutting costs.

Jobs being created are mostly RETAIL, lower paying jobs, or ones where you hang out a window to get order. There is NO inflation, there is NO inflation, repeat often until you believe it as truth.

No consequence to FED balance sheet rising by $3T, and pumping another $85 B per month into system. They have no idea where it's going? You are SEEING where it's going, into RISK ASSETS.

This is the answer to all our problems, keep pushing the stock market higher, but folks it keeps getting pushed FARTHER away from its base fundamentals. BUYING because prices are going higher is recipe for pain.

Actions taken by the FED are mispricing risk, last time we had Real Estate mortgage bubble....what this time? There is no free market, nor free economy, and that can down the road is going to get very very costly.

D