THE GREAT DIVIDE

http://www.safehaven.com/article/29472/quantifornication-and-an-american-spring

"The class divide
The S&P 500 - an index of 500 large US companies - has finally, after a four year rally, recouped all of its losses from the 2008 global financial crisis.
The S&P 500 became the last major US index to hit a new high. The Dow Jones Industrial average has already climbed past its previous high.
The average net worth of the 400 wealthiest Americans, classified as the super rich, rose to an all-time record of $4.2 billion, up more than 13 percent from a year ago. Collectively, this group's net worth, currently at $1.7 trillion, is the equivalent of one-eighth of the entire U.S. economy.

• The top one percent of the American population controls 42 percent of all financial wealth in the country.
• The top 20 percent control roughly 90 percent of all stock ownership and financial wealth.
• The bottom 80 percent of Americans control less than 10 percent of all stocks owned.
• The bottom 80 percent of Americans hold roughly 5 to 8 percent of all financial wealth (non-housing related).

"The vast majority of Americans are not the beneficiaries of this "buoyant economy." Rather, growing numbers of people have been thrown deeper into poverty and social distress. Long-term unemployment has become entrenched. Working families are saddled with growing debt and struggle to pay for housing and other basic necessities, let alone put aside anything for retirement...
The US Federal Reserve is pumping $85 billion a month in virtually free money into the financial system, fueling the stock market boom.This is more money in a month than the $76.6 billion the federal government spent all of last year to provide SNAP benefits to 47.8 million impoverished Americans." The two sides of the US economic "recovery", wsws.org
Income inequality is the highest it's been since World War II."

What is the definition of stupid? Continuing to do the same thing expecting a different result?
The "WEALTH EFFECT" is like TRICKLE DOWN economics, but in this case, it isn't trickling down.

The Federal Reserve is working from an untried playbook, making this up as it goes. And they are in now $2.5 TRILLION of QE and adding $85B a month, but my friends it is going into the stock market and other RISKY assets, so that is the reason we are not seeing and feeling a greater effect int he real world.

I don't think they are bad people, but I do think they are closed minded and a few people are making decisions that effect 10's of millions....and they may be wrong!

The avg guy on street does not own stocks or owns not enough to FEEL JIGGY, to CASH OUT and SPEND, which spurs economy. Just look at recent CONSUMER SENTIMENT POLLS that show the worst recovery from recession since these records were held.

More people getting government assistance then before crisis. ALL I am saying folks is SOMETHING IS WRONG, we are misallocating resources AGAIN, which are benefiting a very few people at expense of the many.

Now with 0% return on savings, people have been FORCED into the stock market helping it reach new all time highs....if we reach another EVERYONE IS ON THE SHIP MOMENTS.....getting off will bemore like being thrown overboard...that I believe is coming.

D

GOLD APPLE

THROW OVER MOVE?

If this pattern is to play out, the "Megaphone" topping pattern, then there isn't much more room to move with today's large 20 pt SPX vault.

It has that final look of coming out of the smaller wedge pattern, a terminal move, into the triple top, megaphone topping area.

There is no need to philosophize, conjecture, or otherwise, just to witness it.

D

NOT EVERYONE BULLISH

http://finance.yahoo.com/blogs/daily-ticker/p-500-may-fall-more-40-fall-chris-120957460.html

This does NOT include investors of course!,  they are ALL IN THE POOL

D

"CHAMP TO CHUMP CYCLE"

"According to Hussman, corporate profits are near 11% of GDP and 70% above the historical norm. (Hussman agrees with Warren Buffett that one has to be wildly optimistic to believe corporate profits -- as a percent of GDP -- can hold above 6% for a sustained period.)"

http://tinyurl.com/d5qjv6j

MUSICAL CHAIRS AND WHEN DOES THE MUSIC STOP?

http://www.prudentbear.com/2013/04/kuroda-leapfrogs-bernanke.html Doug Noland at Prudent Bear

"Fed, BOJ, BOE, ECB and others have been working desperately to keep investors and speculators fully engaged in global debt, equities and risk markets. With near zero interest-rates and Trillions of monetization, “money” is being methodically devalued around the world. Federal Reserve devaluation is forcing savers out of “money” and into risk markets, apparently believing that asset inflation will spur wealth-creation, risk-taking and economic activity."

Holy print mania Batman! Friends, is printing money the answer to the EVIL that has befallen us??
And they don't seem like they have any intention of stopping.

You cannot hide under any rock, nor put your monies under you bed nor pillow case, as the CB'ers are determined to destroy our concept of fiat currencies. You have a problem, just print some more money (digitally) and it goes away?

In the history of this country, is there any example you can give me where you can PRINT YOUR WAY TO PROSPERITY? INFLATE DEBT AWAY? Are we fighting DEFLATION?

What happens when people realize that money may not be the trusted store house of value it was supposed to be and not a toy to be played with by the Federal Reserve System built and entrusted with sound money as one of their main reasons for being? Why are they NOT protecting our reserve Currency? Now in competition with others, like Japan in a race to devalue their currency's value to help inflate debts away? Debts incurred partly because of their inept and wrongful policies on interest rates to begin with?

Devalue your currency and watch your risky assets rise by over 20% ? That's the Nikk. Japan one of the most indebted countries in history? 290% of GDP

Fridays "employment" (or lack of) report shows the folly of the current 5 years of FAILED FED POLICY of trying to force every saver from their hole into the stock market. SHAZAAM it worked to rally stocks to new highs......f the fact that the REAL economy didn't come with it.

What will happen when the music stops? doesn't it always? Markets go in cycles, always have, always will. 5 years for cyclical Bull mkt is long int he tooth.

WILL the policies enacted and forced upon us the last 5 years comeback to bite us in the ass? I think so. WHAT happens if the avg Joe finally up and leaves the asset markets for good, realizing it for the PONZI SCHEME IT IS?

It's great when unemployment rate can drop because so many en masse drop out of the labor pool? SEEING NEW LOWS not seen since the 70's in the LABOR PARTICIPATION RATE doesn't bring anyone else to pause or question current policies for their effectiveness.

Where is our country headed where near 0% rates encourage the government to continue its deficit policies and as national debt continues to grow by a $trillion or more each year, added to what we cannot already pay back....ever? This folly is made possible by historical low interest rates.....surely they will last forever.

GETTING CLOSER TO FED'S UNEMPLOYMENT TARGET

Unemployment today DROPPED another.1% to 7.6%. But unfortunately the rate did not drop because of good news and economic vitality, it dropped because a huge number of job seekers just DROPPED OUT of the job seeking market. The labor participation rate dropped to its lowest reading since the 1970'S!

SO we have had a slew of people accepting part time jobs who want full time jobs, now we have a slew of part timers and those who cannot find any job all dropping out.

Waged are stagnant, energy, food and some other costs continue to rise in an atmosphere which I will label DEFLATIONARY.

5 years of failed Government and Central Bank inflationary, money printing policies and after 5 years we have such a flacid economy?

These historic low interest rates do not stimulate INVESTMENT, they DO stimulate risk taking and help support speculation in risky asset classes at the expense of SOUND MONETARY POLICY.

I have expounded for years how I do not like the FED policy of 0% interest rates and how it is helping to misallocate funds to risky investments and away from sound economic growth strategies.
I have complained for years how these same policies unfairly target the Conservative group of investors and have taken away any chance of a SAFE RETURN.

With little else to choose, it causes the vast majority to go in the same direction, crowd the boat so to speak.

This is the preverbial game of MUSICAL CHAIRS, and when the music stops, it isn't going to matter where interest rates are. The HERD has followed the path of least resistance, and when this trend reverses and it always does, when FEAR that 4 letter word creeps back into the market, you are going to witness a MAJOR HAIRCUT to stock prices, IMHO

D

WHO SAW THIS COLLAPSE COMING?

CAW CAW

Black swans? http://finance.yahoo.com/news/three-black-swans-hovering-over-200224264.html

Caw for crows.......

We are hitting this turbulence at the triple top and expanding wedge area I have been posting.....just saying.

D

CONTRASTS ABOUND

"The results of a closely watched business confidence survey in Japan showed that despite a surge in stock prices and a steep fall in the yen, Japanese manufacturers are still largely in a pessimistic mood.
The Tankan survey, Bank of Japan's (BOJ) key economic indicator, came in at minus 8 for the January to March quarter instead of the anticipated minus 7 level. Though the reading was the best in three quarters it was still in negative territory showing that there are more pessimists than optimists among the manufacturers surveyed.
This contrasts with a 34 percent rally in the Nikkei 225 since November when Shinzo Abe, Japan's new prime minister, started pushing for aggressive monetary policy and economic stimulus to end deflation and spur growth. "

http://finance.yahoo.com/news/why-japans-manufacturers-bearish-082814512.html

Risky Assets Are Already In A Bubble

http://www.safehaven.com/article/29231/equity-bubble-is-based-on-unsustainable-earnings

"If market forces were allowed to prevail and the government permitted the economy to deleverage, earnings of U.S. corporations would be in a depression. And the price to earnings ratio would reveal that stock prices are already in a bubble. A bubble that is only becoming more dangerous with each day of the Fed's money printing."

5 years of intervention and historical stimulus and manipulation. The Federal Rserve is in uncharted territory and admits it is making it up as they go along. So, a room full of men can make decisions effecting the whole country, the entire world population?
                            And there are NO checks and balances for this room full of men?

This room full of men, known as the Federal Reserve, can set interest rate policy and they serve no man, no country, no President, answer to no one?

If printng of $3 TRILLION and flushing it into risky assets has helped corporate profits, stabilized housing, improved home prices, improved Consumer sentiment, then what will happen when this can no longer be done? If this is not a grass roots movement, if the economy and markets cannot stand on their own 2 feet, what will happen when these policies are reversed?

At the moment, there is little in competition with rising asset prices, as the SAVER has been rubber hosed. A $MILLION in a savings of MM account will net you about $100 !!! A $100 return on your $1 MILLION????

I keep hearing radio ads for seminars which will teach you how to ???? FLIP HOUSES!! WTF???
25% of homes bought are from "investors", not new home owners, this is a huge %. 0% rates,
3% mortgages come with a price...CHEAP MONEY COMES WITH A PRICE. That price is the deleveraging processs was not allowed to take place and the HEALING needed to reset economy has not taken place, what we have instead in the steady IV DRIP from the FED RESERVE.....and other CB'S.

If you think we are at beginning of some new great movement, a new great bull market and SOUND economic expansion, then fear not. If however, you question the current environment, understand how we got here and realize it is NOT ORGANIC, then while you are eating your Organic baby spinach salad, and roasted veggie pizza on a gluten free crust with tofu cheese.....think carefully what you are doing and consider other outcomes are possible in the future other than the rosy scenario.

D

NYSE MARGIN DEBT APPROACHING EXTREMES

http://www.businessinsider.com/first-margin-debt-sell-signal-in-3-years-2013-3

This was generated on March 6th, and by itself is not proof of a top. What this does show is the EXTREME ALL IN SENTIMENT being generated as we are making new highs in the market.

While other data suggests a strong market internal, IMHO it would be prudent to be cautious going forward with new allocations until some froth is removed. Current advance I think is around 4 months old. Would it be the "pause that refreshes"? Could be, many obviously think so.

Wrap your head around this thought. Those who prefer safety for safety sake or because of their age, in retirement, cannot or do not want to take on risk.....these have been FORCED into risky assets, stocks, because of continued FEDERAL RESERVE POLICY.

The idea is to create a wealth effect loop, where rising stock prices beget home purchases, beget rising home values, beget consumer confidence, beget job creation, which in turns feeds the loop and back again. PROBLEM SOLVED!

Balance sheet of FED has grown from $800 B to near $4 T in last 5 years....they make this up as they go along, they have NO exit plan.

The companies in the SPX will see there first qtr of falling ro flat profits since this Bull began I believe. FDX warned and missed their profit target. We will keep close eye on the Transports going forward.

Then there is this http://research.stlouisfed.org/publications/usfd/page3.pdf, unsettling to say the least.

D

DOES THE FED HAVE EXIT STRATEGY?

http://finance.yahoo.com/news/feds-4-trillion-wheres-exit-152851364.html

"The Fed's reticence to divulge their plan for exiting has some of its own members on edge, as a messy exit could throttle a market rally, the ups and downs of which have been closely tied to the asset purchase cycle."

COPPER WEAKNESS

Copper prices have been falling since 2011, bears watching.

D

LONG TERM INVESTING, DYSFUNCTIONAL ECONOMY

http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10772

"There’s no historical precedent for such massive and protracted deficits in a country’s external account. There is no precedent for such a consumption and services-dominated economic structure. And there’s no precedent for anything remotely comparable to the current fiscal and monetary policy regime.
Decades of unfettered global finance have, not unpredictably, fostered progressive financial and economic fragilities. These policy-induced deficiencies have incited increasingly desperate policy measures - and attendant market exuberance. Indeed, it’s all evolved into one epic experiment in unanchored international finance, unchecked speculation and financial leveraging, new paradigm economic structures, ballooning global imbalances and ever expanding monetary inflation. So I especially appreciate Mr. Volcker’s pertinent insights. And to see Greenspan on CNBC touting an equities valuation model and market undervaluation – well, it was just more of the ridiculous."

When considering your options and investing strategy, you must consider your goals and time frame.
If you are young, especially if you have established retirement account that is tax deferred, you can keep a LONG TERM perspective and stay IN the market come hell or high water.

Do you find this surprising coming from me?
Don't, I also have funds in a 401K invested in some 15 products across broad spectrum of investments. The MAIN issue I would ever have is if you atrying to get a LUMP SUM in at any given juncture, easing it in would be better call, IMHO.

Are you buying near THE TOP? If long term, meaning 10 PLUS years or more, who cares? The avg, and even above avg person will not cannot try to TIME enterring and exiting. What WILL happen is these decisions will be dominated by EMOTION. You will gamble near the top because of GREED, you will exit near the bottom because of FEAR....this is what drive market behaviour and price...to the extremes of each.

If you looked at what your portfolio could be today over the last 15 years.....using HINDSIGHT, you would have ignored the last 2 BEAR MARKETS......hung tough and continued to avg into the market.

Problem is, we are emotional creatures, so if you want to be a LONG TERM investor and reap those benefits, then you are best not to ponder daily what your account is worth....ON PAPER.

My own personal mistakes were not that I couldn't identify a BEAR MKT, which I have now twice in 13 years, it was in trying to pick THE BOTTOM. Getting out near 14,000 DOW.....8,000 Dow wasn't a sale? Of course it plunged below 7,000 briefly, but my point was....I had saved my ass from a 6,000 point decline...WHEN was I going to reap the rewards of lower prices?

The answer to that was I had NOT YET mastered my own emotions. I did not believe my own charts which told me a bottom was at hand. I did not trust that THE BOTTOM would hold on a test....or the rising tide was real or sustainable!

I have answered this period before in my blog, tried to be as honest as I can, openly sharing what I'm thinking, my own experiences in an attempt to help others.

I argue from both a fundamental and technical viewpoint. I'm not saying I will leave  even my own 401K in under any circumstances, no I will probably go to the sidelines hen I think it appropriate.
But should stock prices go on sale again, and I AM on the sidelines in plenty of time with CASH ON HAND IN WHICH I CAN BUY THE BARGAINS (because what good are bargains if you have NO CASH?)  (I am on sidelines in another account) I WILL be prepared to put money to work at or below certain market price thresholds, NOT because I KNOW the bottom is near. I will buy because I know prices have gotten severe haircut, are on sale, and my chances of making money are very good even in the intermediate term.

Timing with LUMP SUMS is important, if you have shorter horizon, buying in 2007 meant you waited until this year to recoup, but you did. Getting scared out in 2009 would have been a horrible decision.

The GREAT BULL MARKET OF THE 80'S and 90'S began with historic highs in interest rates, then during that entire period, falling interest rates. We had an INDUSTRIAL, MANUFACTURING and TECHNOLOGY LED expansion....real jobs, real economy...limited FED meddling....of course then came GREENSPAN.....we exploded.....but there was a price to pay.

Then came Bernanke, now even more historic FED meddling.....one bubble, two, 3? each bubble bursts and causes financial and market havoc.

Are we on the cusp of another GREAT BULL MKT, or is what we are witnessing just a figment of the FED's intrusive meddling and manipulation and targeting of financial assets?

What then should we expect to happen when that game ends or fails?    


To be continued......

Duratek

SPX TRIPLE TOP? TECHNICAL CROSSROADS?

Triple top and that converges with top in Broadening bearish megaphone I have posted....and all AFTER a possible bottom in yields?

ALL this after some major inflows to stock funds, and the euphoria of 4 straight record highs? Can't say a high degree of bearishness anymore....that's been SWIPED from their faces.

My previous post, where I posit no way we will top here, is and I still feel possibly we are set for a balst off blow off top, where MORE divergences are in place at the NEW highs.....or one DOWN move before last up cycle.

How euphoric can one really be, when unemployment rate drops because of gross number of newly dropped out of work force?

GDP could surprise to upside....companies will be hard pressed to keep a good rate of earnings momentum, IMHO

So maybe, we are at tactical, and technical crossroads?

D

MORE OF WHAT BOTHERS ME

Unemployment Rate Falls To 7.7% As Labor Participation Rate Falls To 63.5%–Lowest in Three Decades–296,000 of Discouraged Americans Leave Labor Force In February

NO TOP IN SIGHT

Fundamentally I have tons of issues, but IMHO we will soon if not now enter the final explosive phase of this bull market.

0% on savings, no other alternatives, what is being presented as positive economic and job data, 4 straight days of new all tme highs....fence sitters won't be able to hold off much longer......it will be everyone in the pool soon.....could be 6 months, a year or longer.....til we get there...then.....burst.

In the data today , just so you know, LESS people in the workforce, participation fell, so maybe 230K found jobs...a bunch more left and gave up.

Just my 2 cents....more later

D

CHINA'S REAL ESTATE BUBBLE

60 minutes piece, in a word, SHOCKING

D

APPROACHING MEGAPHONE PATTERN TOP

HOME DEPOT CEO QUOTE ON MARKETS

"The Fed is printing a lot of money. They are forcing people into markets. You shouldn't be buying securities because you're forced to buy them by zero rates. you should buy them because you think they're great value. They're great value only relative to zero interest rates. they're not great value on an absolute basis."

Think about it, 5 years of HISTORIC rally from abyss, 5 years of historic FED printing.

D

WHAT'S WRONG WITH ALCOA?

STOCKS AT RECORD HIGHS AT CLOSE

I take no pleasure on being pessimistic on the underpinnigns of the whole house of cards, but I am happy to see those who STUCK IT OUT have regained ALL that had been lost in the near depression of 2009, pretty amazing.

Chances are you don't make that kind of BOTTOM without lots of the little guys jumping out and who knows if they ever came back, though they tend to come back near the highs.

As stocks have closed at (let me say again) NEW ALL TIME HIGHS , here are 2 stats you might find perlexing

 

2007  27 M on food stamps
2013  47 M on food stamps

 

2007 7.5 M unemployed
2013  12.5 M unemployed

And I cannot find anyone other than robert prechter (bearish longer than me! haaa) that doesn't think stocks are at EARLY stages of a GREAT BULL MARKET!!!

To those who never waver, or worry, or avg in month after month....none of any of this will really matter, the wild swings and bull and bear tops and bottoms always occur from extremes in emotion greed and fear and back again.

These can be short term or cyclical (3-5 years) or secular (15-20 years like move from 1974-2000)

The bigger question is, are we in a LONG TERM BULL or are we still stuck (or have we ever been in) a Secular Bear market? Though it may sound crazy, that is possible.

The economy has plenty of slack, so I can see the room for optimism it can get better.
They say 2.5-3% growth is all we need to create more jobs, profits will rise, so might stocks.


Below I'm going to show you the mother of all SECULAR BULL MARKETS....10 year treasuries....price is up, yields is down, since before 1980.

AM I the ONLY one that think the direction of stocks over this same time frame and again today has also been UP and now at new highs.

ALL BULL MKTS END....30 PLUS years of FALLING YIELDS....bears watching

HOUSING RECOVERY MIRAGE

Have you seen the headlines, heard the news "HOUSING IS ROCKING", NEW HOME SALES SKYROCKET"," HOME PRICES INCREASE AGAIN AND ON THE MEND"

Here's the reality

Think again of where interest rates are right now.....it took rates at 3% to accomplish what you see in the chart above. Median home prices in 2005 were $231,000, they HAVE recovered to $173,000. SO MOST if not ALL the homeowners since 2005 are STILL under water.

With all this talk about a housing recovery, it is logical to consider many of these people who want to get away from the housing boat anchor will LIST THEIR HOME, when MORE supply comes onto market than demand, what happens to price?

AT least 50% of homes sold are still foreclosed homes.....we have a LONG WAY to go.

In the meantime, we have inflationary pressures, we have a FED who started just 5 years ago with $800B and now has around $3 TRILLION in holdings....almost none of it is LIQUID. DO the math

D

APPL IN BEAR MARKET

. Traders seems to have jumped on the other side, and haven't let up. Stocks are rebounding but APPL isn't, not good sign.

 

The chart only shows you a possible set up...it COULD go down and test that price level and hold...but if it breaks that line....$420 minimum..closer to $380. Stock could be $1500 in 5 years, this is just current setup.

 

There is bearish death cross in play, trend has turned bearish on APPL, $350-420 here we come.

 

NOTICE how the blue line (50 SMA) hasn't crossed the red line (200 SMA) since 2009!!

IS APPLE FORMING HEAD AND SHOULDERS?

I think it is, and should it break the neckline, I think it falls below $420.

D

OUR GREAT RECOVERY FINDS AVG NEW CAR PRICE OUT OF RACH FOR MANY!

"The typical new vehicle is now more expensive than ever, averaging $30,500 in 2012, according to TrueCar.com data, and heading up again as makers curb the incentives that helped make their products more affordable during the recession when they were desperate for sales.
According to the 2013 Car Affordability Study by Interest.com, only in Washington could the typical household swing the payments, the median income there running $86,680 a year. At the other extreme, Tampa, Fla., was at the bottom of the 25 large cities included in the study, with a median household income of $43,832.

The study looked at a variety of household expenses, such as food and housing, and when it comes to purchasing a new vehicle, it considered more than just the basic purchase price, down payment and monthly note, factoring in such essentials as taxes and insurance."

http://finance.yahoo.com/news/cars-increasingly-reach-many-americans-145957880.html

"BERNANKE'S BIG BET"

http://finance.yahoo.com/blogs/breakout/bernanke-big-bet-collapse-dollar-strengthens-zucchi-131248460.html

"I am somewhat concerned that our economy, for better or for worse, may be heading down the path where it relies on artificially low rates," Zuchhi says, adding that he thinks it's going to be "very very difficult for the Fed to work its way out of it balance sheet without causing some serious problems."
As he sees it, the front line in this battle is not the bond market or interest rates, it's currency."The dollar is, in fact, the whole thing," Zucchi says, adding that he "thinks Bernanke probably goes to sleep every night thinking about if he is going to wake up with the same dollar that he had today, and that's his big worry."
As much as Bernanke has commented that the problem is manageable, Zucchi is unconvinced.
"Debt bubbles ultimately end, in fiat currencies, when the trust that outside investors have evaporates." It is not only something that has happened before, it is also the kind of crisis that tends to happen rather quickly when it does.

END GAME

The saved us in 2009 from a 1930's style Depression, saved the banking system and jolted the stock market off the canvas and perhaps to NEW ALL TIME HIGHS.

It put a bottom in the housing market and has allowed many to refinance at MUCH LOWER RATES, slowing down the dominoes of foreclosures. STILL, as many as 25% of all homeowners are still under water, owing more than they paid. Taking out home equity loans was one of the underpinnings of consumer spending and fueling our economy until the bubble burst.

Before 2009, there were options for investors, especially those near or in retirement to get a safe return on their money through Bonds, money market funds, savings in general. The landscape has changed dramatically, and if you didn't play the REFLATION GAME, you were left at best running in place at near 0% returns on anything lock solid safe.

The FED targeted stocks for price appreciation, can one really blame them faced with financial annihilation?

Now it's 2013, still 5 years later Fed Funds rate is at effectively 0%, savings return.....the principal, not much else. The Fed has been buying up MBS and Treasuries at a monthly $85B clip, take this away and the cookies crumble. There is a HUGE GULF disconnect in stocks and the fundamentals.

Yes, it could have been worse so it seems. but have we just kicked the can down the road, and if we come to that financial fork in road again, what more can the FED DO? It's more of the same QE strategy has been returning less and less. if you hadn't noticed, last years GDP was barely 1.5%,
and last qtr was just barely, but was negative. Unemployemnt is still near 8%, and gas prices are at record high this time of year, avg price $4 a gallon. Wages are stagnant, Americans are just keeping up wth rising costs, not getting ahead, not saving....not spending like they used to. COnsumer Sentiment is NOWHERE near its normal levels, and that along with most of the data are at historical lows for a recovery.

Now the Gov't is forced to some level of austerity, at same time trying to raise more revenue. Businesses are reluctant to add employees, health care costs rising.

I don't know how this will turn out, but I feel like the Bear market has been fought tooth and claw, and maybe the piper in the end will be paid in a lesser amount due to CB'er actions.

OR, on top of failing policies that won't reignite a BULL MKT ECONOMY vs just a BULL MKT in stocks, the gas will have to come off the pedal, and where will the eventual correction take us? i think a lot lower, somewhere below SPX 800, though I am not sure if any NEW low will be seen in our lifetime.

There is one powerful formation still IN PLAY, the bearish megaphone pattern that began in 2000, top is near SPX 1600.....that is an area, should we muddle up there will be exciting to see how that plays out.

I've always felt, you cannot print yourself to prosperity, you can forstall certain events....but maybe not avoid them altogether

D

5 YEARS INTO "RECOVERY"

"We cannot grow the nation's economy until consumers consume," said NRF chief executive officer Matthew Shay in a statement."  still not consuming like there is no tomorrow?????

Stock rally makes the already wealthy feel more so, but the avg American is not so influenced by that overt manipulation.

But HOUSING DOES

http://finance.fortune.cnn.com/2013/01/25/why-americans-still-feel-poor/?iid=obnetwork
"Why Americans Still Feel Poor"

FORTUNE – U.S. stocks have reached new highs, but most Americans probably don't feel any wealthier. That's because the prices of our homes have a bigger influence over how rich we feel and, therefore, how much we're willing to spend, suggests a recent study by the National Bureau of Economic Research.

DOGGIE DOWNER

Today was a 90% down volume day, this coming just 1 day after the 1525 HURDLE was clipped. Coming so soon after that "monumental" achievment, that was looking like a LOW VOLUME throw over a that move is now in question and rebuked.

That doesn't mean higher prices wont come later after some sort of correction. Remember IMHO stock prices are now far removed from any fundamental value, so when you buy I think you buy with HOPE prices go higher....for no good reason

D

GENERATIONAL THEFT

http://finance.yahoo.com/news/langone-obamas-debt-fix-generational-131645600.html

WHERE ARE WE?

Ponder this. Are the moves made by Draghi in Europe going to create similar market performance that we have seen here in the US from FED actions that began late in 2008? Will 2013 be another sharp UP year for stocks in general? Are we enterring an era of another great long term BULL?

Japanese authorities were able to create a 20% 4 month decline in their currency, Soros said he made about $1B on this bet, which may have included a long Japanese stocks trade.

The EURO made a similar move but with a 20% increase in value.

Historic LOW interest rates in this country allow the US to continue floating $Trillion deficits year after year and do not put ANY pressure on our Gov't to live within its means.

0% savings accounts leave the small investor with NO PLACE LEF TO HIDE or gain returns, so they must, and have been flocking BACK TO EQUITIES.

In a world of supply and demand, this pretty much rules all markets......so as we go forward, we will do our best to keep that in mind and front and center. The days of fundamentals effecting the markets are destroyed with historic intervention and manipulation.

In a world that was finanacially nearly destroyed by the banking crisis, real estate bubble popping........NOT ONE SINGLE PERSON has been brought to justice....

D

ADJUSTED MONEY BASE TO NEW HIGHS

http://research.stlouisfed.org/publications/usfd/page3.pdf

Same moon shot last year this time.....not a coincidence. Remember when $20,000 a year was considered pretty good pay? Now it's barely above poverty....thank the FED Reserve for destroying our currency.

D

LIST OF THOSE DUMPING APPL STOCK LAST QTR

http://tech.fortune.cnn.com/2013/02/15/which-funds-sold-apple-q4/?iid=HP_LN

There is also inquirey into unusual activity in HEINZE stock before the Buffet announcement.....there will always be the have's and the not's.

Money flowing back into equities after 4 years plus of small investor doubting......

D

TROUBLING DATA

Sucker alert

 

"Insiders have been pulling out of stocks just as small investors are getting in.

Selling by corporate executives has surged recently as the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) hit 14,000 and retail investors flooded into stocks. The amount of insider selling has usually preceded market selloffs.

"In almost perfect coordination with an equity market that was rushing toward new all-time highs, insider sentiment has weakened sharply - falling to its lowest level since late March 2012," wrote David Coleman of the Vickers Weekly Insider report, one of the longest researchers of executive buying and selling on Wall Street. "Insiders are waving the cautionary flag in an increasingly aggressive manner."

There have been more than nine insider sales for every one buy over the past week among NYSE stocks, according to Vickers. The last time executives sold their company's stock this aggressively was in early 2012, just before the S&P 500 (^GSPC) went on to correct by 10 percent to its low for the year.

"Insiders know more than the vast majority of market participants," said Enis Taner, global macro editor for RiskReversal.com. "And they're usually right over a long period of time."

 

NO BUDGET

President Barack Obama, having missed the statutory deadline for submitting his budget to Congress, is proposing instead that Congress pass a short-term plan to delay across-the-board spending cuts due to take effect March

 

Rick Santelli:

I would like to read something that richard favre wrote about a month ago. payroll's lag population growth for all but one more in 2012. including the january census adjustment, jobs trail population growth by 1.9 million. and that's in 2012. welcome risk

 

RECORD STOCK BUYING BINGE

Investors didn't just put aside their aversion to stocks in January: They tossed it out the window.

Investors flooded traditional stock funds and exchange-traded stock funds with a record $77.4 billion in January, according to TrimTabs.com, which tracks flows in and out of the stock market. January's inflow was $23.7 billion higher than the previous record, set in February 2000.

RECORD AMOUNT

http://finance.fortune.cnn.com/2013/02/05/mutual-funds-individual-investors/?iid=HP_LN

"That's the lens through which I'm looking at some fascinating statistics from TrimTabs Investment Research. Last month, TrimTabs says, retail investors put a record $39.3 billion into U.S. mutual funds and exchange traded funds.

The previous one-month record, you'll be glad to know, was $34.6 billion, set in February of 2000. That was at the height of the tech-telecom stock bubble, which began to burst the following month"

The Fed’s Worst Fear "BONDZILLA"

The Fed’s Worst Fear

EYE POPPING CHARTS OF REAL ECONOMY AND US SITUATION

http://budget.senate.gov/republican/public/index.cfm/charts

Here's ONE SIMPLE question that cannot have an answer from OBAMA ADM or FEDERAL RESERVE enslaving MILLIONS of middle class Americans, and bringing the GULF between POOR and the 1% to Historic levels.

WAIT, wasn't this Administration supposed to help those MOST in need? WTF????

HOW CAN people getting FOOD STAMPS be at an ALL TIME HIGH as the unemployment rate comes down? AS the labor participation rate as I have shown is at near historic lows?

There is but ONE aim to current policies, and be damned or hell and high water, as the very FEW who sit on the board of Federal Resrerve vote to keep interest rates at historic lows....benefiting the growth of gov't spending, and the top 1%.

No, let Obama sit on his thrown, rubbing his septor, and declaring he is the President of the people, and at the same time allows more and more freedoms to be stolen from the people?

D

WHY IS THE UNEMPLOYMENT, EMPLOYMENT DATA MISREPRESENTED?

http://www.infowars.com/shocking-numbers-that-show-the-media-is-lying-to-you-about-unemployment-in-america/

A LOOK AT ECRI INDICATOR

http://advisorperspectives.com/dshort/updates/ECRI-Weekly-Leading-Index.php

BULLISH ON 14,000

http://www.cnbc.com/id/100420112  Congrats to those newly minted millionaires, the 1% er's who have substantial stock holdings, while the other 99% eat it.

And now, without another vehicle to get returns, the masses are back in a big way. A market with shorts decimated who won't need to cover to slow decline down, a market with a all in mentality, a market with TRILLIONS of NEWLY PRINTED FED FIAT being funneled into the assets to make things look like new again.

WHat we see is PROOF that each bull mkt ends with a bear, and fighting it we get money priniting and historic low rates and we get? A resucitation of stocks, but where are the jobs? SInce topping in 2000, the labor participation rate continmues to fall, explain that? (people give up!)

You see, no one will ask until a crisis comes again, how did we get here? WHAT will be the end byline for a market that misprices risk? 5 years at 0%, TRILLIONS of new dollars to take the place of the old ones that got fucked over...it's a miracle hon.


Oh almost forgot to add, when the MUSIC stops, there have been FEW pullbacks to act as support along the way.....when she blows, the roof will come off and it will get very dark and ugly as people try to cash out. You have to know when to BUY, and you also have to know when enough is enough and take your chips off the able.....they will NOT RING A BELL.

Now more than ever I feel the need to offer caution and warning, I am in a tiny minority amid all the loud voices screaming its all a buy man buy....this is not a 100% science...I just call it like I see it, right or wrong...


D

LABOR PARTICIPATION RATE< FOOL ME ONCE

here is your fing recovery....these jackasses on the hair channel flap their gums and tell you why this is such a great recovery a the unemployment rate just inched up to 7.9%!!!!

The chart above cannot be manipulated or explained away. The stock market can continue to move to a point to make it look like we are rocking and rolling, but there is ROT underneathe the surface.

D

DOW IN REAL MONEY TERMS

BEAR SPEAKS OUT

I'm all for manipulation if it leads us to the end game, growth. ALL we mostly have is growth of stock prices. Fed has stated they targeted stocks. Rates say no other options.

From lows of 666 we are at 1500 plus? Nice ride! BUT I think we have seen PEAK in earnings cycle, int rates seem to have bottomed (though with stock collapse that could change again), there are many signs that suggest bull mkt of 5 years is in latter stages.

 

When does it make sense to buy into a bull in last stages, fundamentals not supporting it, complacency of holders and now late comers piling on......

 

Most near retirement have VERY little saved,  going forward what a drag it could be, falling stocks mkt, aging population needing even more govt assistance, workers taxed out the ass along with business to help pay for the gap...that only gets wider with the HUGE unfunded liabilities.....pass the plastic bag and twisty ties....

You CAN delay the inevitable, you cannot avoid it.

"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