HAS THE BEAR MARKET RETURNED?

I know I had many loyal readers, and I am sorry I have not been able to keep up with this blog, I enjoyed writing regularly for many years. But my business I started 4 years ago is thriving and needs most of my attention.

There are many troubling technical reasons to be concerned with the current state of the stock market.
I won't bore you with exact details, but there is so much underlying weakness in stocks BEHIND the large cap leaders to be alarming. More and more stocks are falling into their own bear markets as the major indexes were reaching new highs, that pattern has only gotten much more pervasive and worse.

They like to say you have just a few generals leading, but your army has run off leaving you to fend for yourself. Sector after sector has fallen into their own bear market....and its reaching a point on no return for the major indexes.

There is no way stock valuations make any sense with the profit expectations going forward. QE and all the tricks like ZIRP has helped only the stock market, but not the real economy maybe limping along at a 1.5- 2.0 GDP

The Transport index made its highs last November, that was 8 months ago!

Commodities are in a bear market, what's with OIL at $40???? When economies are HUMMING, so are commodities...if indeed we are consuming them to make things, build things....we need energy...something is wrong.

China.....as reported this AM on the financial channel a respected analyst Chanos stated " it's much worse than you think".....its major FUBB over their....major....and its just beginning as the govt attempts to buy stocks , whatever it takes has hastened the loss of faith.....there is NO such thing as free markets, the more THEY manipulate, the worse the repercussions

APPLE  has fallen down...actually began 2 weeks ago.

Oil in a free fall  USO

VIX, fear index has spiked, worth watching to see if it has broken out of long downtrend. Higher VIX means LOWER stocks.

ZIRP policy has to end sometime, now with stock weakness will the FED even raise .25% this year?
The current policy is already 5 years into CRISIS LEVELS......did we never leave the crisis?

Markets in BULL mode DO correct, so we don't have to jump to conclusions.....that said, the majority of stocks already in downtrends is not what you see in a healthy bull market.

D 

Transports continue to Diverge

This action continues to be monitored, the longer it continues the more meaning it may have. In a market controlled by FED action since 2009, it is hard to envision anything but a sideways to up market. Memories are short lived.

The REAL question we WILL get an answer to EVENTUALLY is, whether the FED'S manipulation helped us DODGE a bullet, or eventually puts one right into investors' head.

Nothing is for FREE, nothing lasts forever.

D

FED MEETING

Everyone is fixated on the statement being issued today by the Federal Reserve. It isn't a matter of if, but when will interest rates begin to " normalize"?

The Financial crisis was back in 2008/2009, but FRD funds rate is still at zero %, crisis levels.
This fixed rate , has screwed savers and gifted investors. Hey, it was a plan, and maybe it worked to stay a worse outcome. But for every yang , there is a YANG. And we don't know yet, what the cost will be, for bailing out the worlds economies, but more so the stock markets.

I believe the market is in the progress of putting in a top, doesn't happen overnight . Underneathe the soaring Netflix and Aaple stocks, are weakness that is broadening.

D

Perfect Storm

I've been gone for awhile hopefully not forgotten.

These are interesting times, IMHO the ship,has sailed on making the easy money. Many stocks have already fallen off the wagon into their own downward bear trends , but these mostly go unseen by the avg investor.

Who cares that hourly wages are falling, and have made a miserable recovery 5 plus years into the zero interest rate manipulated stock market mania. At the same time, in today's report, labor costs are rising which is a bad combo for profits.

A rising US $ is bad for many US company profits , especially the multi nationals.

Unemployment rate is now down to 5.5%, and the feckless FED still has rates pegged at 0%, a CRISIS level. Are we still in a crisis?

Here lies the problem. The world's central bankers are racing each other to lower their rates and weaken their currency, in hopes of stimulating their economy. It should be that easy.

Zirp has made the big players discard any caution and many have levered up large multiples to their cash holding, remember this is what the FED wants...throw caution to the wind and buy buy buy.
And this has caused an historic divergence between the 1% at the top and everyone else! nice going.

Is the weakness in gold, and the plunge in oil prices stemming from overproduction? Weak demand? Or hints of deflation.

Few months ago the Transports did not confirm the new highs in the Dow,  minor in size, but diverge nonetheless.

Now the FED has signaled, it will begin raising rates in 2015, many think this summer. There seem to be a lot more headwinds for US stock prices than there have been in awhile.

The level on the SPX of 1750 I deem important support, and needs to hold.

My own personal indicator has been on a BEAR warning for months. But one additional indicator has yet to confirm.

But I think the easy money has been made ....and one at a time, they must be eyeing the exits....

D

FED SUPPORT. FOR MARKET EVAPORATES

http://www.safehaven.com/article/36258/fed-abandons-stock-markets

Adam. Hamilton does a nice job of outlining what headwinds in esters could face in 2015.

D