The ISM Non-Manufacturing report came out with a 42.9 reading within a consensus range of 37 to 44, with the final consensus being 39. This might seem like something to celebrate, but look at the chart. This is far from over.
Don't forget that we have Jobless Claims at 8:30AM EST today. The consensus is 583,000 within a consensus range of 480,000 to 620,000. The previous reading was 588,000. I don't see how claims would decline when many states experienced a systerm overload from an overwhelming number of claims. Just last monday alone, we had 55,000 announced layoffs. Even if claims drop, that's just a blip. The chart below might as well be the VIX in Sept & Oct.
Today, we bounced off of the 20-day MA resistance level. Besides the 20-day, we also have the 30 and 50-day MA's, and 850-855 on the SPX as immediate resistance levels. Once we bounced, it appeared that we were forming a bull flag, but that failed after forming for several hours. From 2PM-4PM, it looks like we're forming a continuation bear flag to the downside. What do we look for today? First, whether we gap up or down in response to the claims, productivity and costs (Also at 8:30AM EST), factory orders (10:00AM EST) and whatever the market speculates ahead of Friday's Employment Situation report.
If we gap up 845-847 becomes initial resistance (20-day + upper trend). If the market breaks out, then we are seeing 850-852 as the next major resistance level. If we breakdown, I would caution unloading some short positions at the 820 level prior to reach the lower tri-line. As you can see, we are in a symmetrical triangle, built over 35 days or so.
Look at the 5-month charts of the SPX and the DJIA. The SPX is forming a symmetrical triangle while the DJIA is forming a descending triangle, the latter of which has a much higher probability of a breakdown. The DJIA only contains 30 stocks, therefore, keep the SPX as your main index. Once you start seeing DJIA components like BAC, GE, C, JPM, etc. breakdown, then we're going to have some major problems. 
We have a massive load of earnings pre-market today. Here they are: AMBD, ATG, LNT, ANR, STST, ARTG, STD, BIP, BPO, BG, BKC, CAH, CSL, CI, CBB, CINF, CNMD, DTPI, UFS, DUK, EXP, ELNK, ELON, EQR, EVR, FLIR, FLO, IT, RX, IPCC, IFF, KIM, KNL, EL, LII, LZ, MAG, MA, MMS, MNI, MD, MV, MF, MCO, MPS, NCR, NTT, NXXI, CHUX, OPTX, PARL, PENN, POL, PBH, RVSN, ROLL, RSTI, RGLD, SWM, SIRO, SON, SE, SPR, SPH, TEN, TBL, UN, UL, WMG, WW, WU ,WNS.There's 2x more than that if you add in the ones intraday and after-hours, but you can go look them up yourself.
As of right now, I am still bearish, especially on the financials, but more so with the regional pieces of shit that are going to sub-$1.
WARNING: Extremely Offensive
Don't forget to try the Free Trend Analysis. It's FREE, so give it a shot!
2 comments:
It really may be different this time. And, bear markets do not always come to an end. Sometimes albeit rarely, civilizations, or at least, still rare but more common than loss of entire civilizations, certain societies come to an end instead.
The SCHIP law signed yesterday, entitled children of illegal aliens to medical insurance. Sounds good on humatarian terms. But, everybody, everywhere, with a sick kid will now want to come over, and why should they not? I would if I were in their shoes.!
But it soon becomes Malthusian in scope. If "card check" passes, and it looks tobe a certainty, those states which are doing well will soon look like Michigan. If California emission standards become the norm, it will have detrimental effects upon the auto industry, already struggling. Amensity for illegals will probably happen, and, perhaps it should fro humanitarian reason alone., but if it does, one is lucking at anywhere, counting relatives, from 30 to 50 million new folks, all demanding their entitlements. And then, another 50 million rushing in behind them. It is now even possible the entire Mexican govt., may well collapse on top of that, given their war with drugs. The Mexican Army is now involved fighting the cartels...and they are not winning.
For whatever reasons, mass migration on this scale is similar in terms of social change, to the German migrations into Rome. And it will of course, given the sheer numbers, change everything forever. At the very least, it will ensure one party rule, not good for anyone.
I am thus afraid, (and sorry for injecting politics), but, how can one discuss these times, given that it is political decisions which are now so economically influencial and dominant,...I am afraid that Fabianism is now here, and that it is a wave which now cannot be stopped. The very fact that the stimulis package simply became an excuse for social engineering on a previously unheard of scale demonstrates the current mood of things. And if that notion is correct, well, the market is not undervalued, it is instead, highly overvalued.
I honestly do not see how we stem the tide of Socialism at this point. I am not even saying it is bad. So folks, please don't flame me.
Perhaps Spengler (DECLINE OF THE WEST) and others were right in that Western societies, being essentially Faustian civilizations, eventually become so complex with their unnatainable goals, such as, Opportunity for all, that they finally collapse of their own weight becoming victims of their own success. Then in time, socialism thus becomes nothing more than an evolutionary inevitability. Perhaps so, perhaps so.
OK, I have my wine and I have my trees!! But in such a case, just don't count on much from the market, becasue all of that so called "Buffetology" is based upon instrinsic value, and in a static to a declining GNP stocks are thereby now...significantly, overvalued. . Buffet is a good stock picker, but he has always been a bad economist.
The only things thus to buy in such a world are only those which stand out if you to go back to a basic Net/Net Graham type approach, and even that then should "originative" that is, before his encounters with Dodd, and thereby look not at intrinsic value, which wolod be no longer even reductive, but simply book value based solely upon assets at today's market. Hence, in that even net/ net will change to the negative, given a decline in relative value, one should not buy anything trading anymore than 50-60% BELOW tangible book. In other words, in a Robert Heilbroner type world, which we might even now be unwittingly creating, one should only invest in things they can at least theoretically actually touch. And as in Africa, eventually even that will be eventually confiscated. I hope and pray we can evade this folly, but it seems as if we now dance with our own destiny. America has traded away its opportunity for the hope of security.
Thanks, Bob.
You should write a book.
Post a Comment