Monday, December 2, 2013

ON THE MARKET - Danger lurks - Bullish sentiment perking to multi year highs*

Pre-market – Monday 12-2-2013

"The most important single central fact about a free market is that no exchange takes place unless both parties benefit."

~ Milton Friedman ~

Dr. John L. Faessel


Commentary and Insights

Quotes of the day


"The law is applied according to whim, which means there is no law."

~ Mark Steyn ~


"U.S. power is growing weaker every year"

~ Brigadier General Hossein Salami ~

Lieutenant Commander of Iran's elite Islamic Revolutionary Guard Corps



Consensus Index of BULLISH sentiment was up tonewcycle and multi-year highs of 77% from last week's posting of 75%. These new cycle highs in Bullishness of 77% matched the post of 7-months ago and that matched the top tick of 77% Bullish posted on 10/11/2007. *

Last weeks sentiment alert >

The Citigroup "Panic / Euphoria" Model moved well into the Euphoria Zone at a plus 0.52. Last week's post was in high Neutral at plus 0.42. These weeks post is the highest since January 2001. *


A quiet but positive week for the major stock markets on declining and well below average volume in the holiday shortened week. "Price" remains extended and is very close to the maximum distance above the 50-day moving average where pull-backs occur - yet the McClellan Oscillator is in neutral at a plus 40 - so the market is not overbought and more upside could be 'absorbed.' Bullish / bearish sentiment overview* is showing a building froth - well above a simmer - so beware - we are now in the land of the lightheaded and giddy market sentiment. There is "no fear" in the market.

Be aware

The debt ceiling is 5-weeks away and that 'it' won't flow thru congress / administration well. The Market will twitch at every "to-and-fro" of the political play out… Be prepared for a market retrench soon.

Hello? Ck this 1929 analog chart from McClellan -

Nobel Prize economist Robert Shiller warns of U.S. stock market bubble

An American who won this year's Nobel Prize for economics believes sharp rises in equity and property prices could lead to a dangerous financial bubble and may end badly, "I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable," Shiller said, describing the financial and technology sectors as "overvalued." Link Reuter's story here.

Some Sanity in the Middle East?

The Egyptian authorities have begun revoking the citizenship of Hamas leaders, according to reports in Palestinian and Egyptian media outlets. Link Jerusalem Post article here

Must read!

Free fall: How government policies brought down the housing market

"In less than twenty-five years, affordable housing" and other housing policies have turned a healthy (housing) market into a financial ruin. In 1989, for example, only 1 in 230 homebuyers made a down payment of 3% or less; by 2007, it was 1 in 3. Meanwhile, average home equity plunged from 45% to 7%. The policies that caused the financial crisis are still in force. Until they and the government's role in housing are eliminated, the US housing market will not return to health."

Peter J. Wallison, Edward J. Pinto | American Enterprise Institute

Link the American Enterprise Institute report here

S&P 500

The S&P 500 (SPX) closed Friday at 1805.81 The prior Friday it was 1804.76

The 50-day moving average support is 1742

Short term 'Price' support is at 1801 / 1802 /1799/

The a bit further out 1762 / 1746 / 1740 / 1716 / 1646 and 1627

The 200-day moving average support is at 1650

The top trend line of the channel that goes back 2009 to at (SPX) 1762 is now support ('that' previous resistance was breached on October 22nd.)

Channel and trend line support of (November 2012) is at 1713

Then deep channel and trend line support of (October 2011) is at 1602

Then the deepest channel and trend line support of (March 2009) is at 1420

* This Week's Investor Sentiment

The Bullishness / Bearishness complex overview mixed, but alarmingly high.

(High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.)

Consensus Index of BULLISH sentiment was up to cycle and multi-year highs of 77% from last week's posting of 75%. These new cycle highs in Bullishness of 77% were posted 7-months ago and that matched the top tick of 77% Bullish posted on 10/11/2007.

The Citigroup "Panic / Euphoria" Model registered a plus 0.49 in the Euphoria Zone. Last week's post was a plus 0.52, the highest since January 2001. In early 2000 it ticked its all-time high at plus 0.72. At the end of June, 2011 it ticked cycle lows of minus0.31 in the Panic mode.

The American Association of Individual Investors [AAII]Investor Sentiment Survey of BULLISHNESS jumped to 47.3% from 34.4% the prior week.

The "Bullish" survey posted recent highs of 52.3% 9-months ago. It posted cycle lows of 22.2% on 7/23/2012 the lowest percentile since August 2010. Long-Term Average: Bullish: 39.0%

The American Association of Individual Investors [AAII] Investor Survey of BEARISHNESS lost a few percentile to 28.3 from last week's 29.5% - three weeks before that it was 21.8 -- 8- weeks ago it registered the lowest read since 1/12/2012 at 17.6%. Cycle highs of Bearishness of 54.5% were posted 16 weeks ago. Long-Term Average: Bearish: 30.5%

The Market Vane (Market Letter Survey) up a percentile to 67% from last week's 66%. In October 2007 it topped at 70% bullish.

More bogus Obamacare lies – a new compilation

Ck this link to IBD' detail here

Again - the Truth According to the Congressional Budget Office [CBO] re the number of uninsured

Of the "46 million uninsured" 71% were without insurance for a year or less. Only about 16% were uninsured for two or more years. More than 9 million of those counted among the uninsured were not citizens. Another 6 million who said they were without insurance actually were signed up with Medicaid, and 4 million more were eligible for Medicaid but had failed to enroll. The true number of uninsured individuals was closer to 15 million (5 million of whom were young, single adults). The CBO estimates that even ifObamaCare were fully implemented and worked smoothly, the number of uninsured Americans in 2023 would be, drumroll please, 30 million. Link here

Isolated bits of relevance

Friday's key indicators and metrics:

Cycle highs or lows are in red

·McClellan Oscillator is in Neutral at plus 40

·3-month $ LIBOR was 0.23910%. The prior Friday new lows of 0.23660% were posted.

·CBOE Put / Call Volume Ratio – 0.81

·VIX – 14.70

·Swiss Franc – 1.1028

·US Dollar Index – 80.66

·Euro – 1.3587

·Japanese Yen – 0.9761 (new 7-months lows) and close to lowest lows of 0.955 posted in May.

·Canadian Dollar – 0.9407 collapsing to at multi-year lows

·Aussie Dollar –0.9092

·Crude oil (NYMEX) 92.72

·Brent crude 109.60

·Copper – 3.2050

·Gold (COMEX) – 1250.6

·Natural Gas (Globex) – 3.954

·The Treasury 5-year yield – 1.36%

·The Treasury 10-year yield – 2.74% - cycle high was on 9/10/2013 at 2.98%

·The 30-year Treasury – 3.81% - cycle high was on August 22nd at 3.93%

·Silver (COMEX) – 19.981

·Platinum 1368.8

·Palladium 719.65

·Lumber (CME) – 364.80


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