Replies to post #7005 on Your Economy (No Politics) (YE1)

[Bullwinkle]

~:~Market Trend Update for the Week Ahead~:~



OVERVIEW:
Happy Thanksgiving everyone, I trust you all had a pleasant holiday. Not much has changed since the last update, so this may be repetitious in nature. All of the majors are moving in lockstep although the DJIA and R2k are still working on setting new highs for the year. Gold continues on a tear, but a stealth move of sorts as talking heads are preoccupied with the price of crude which may have found a bottom. As stated in last week’s update with which this post replies: What we have in the coming week will be very quiet on the economic front coupled with a trade-shortened week around the Thanksgiving holiday. In light of this I tend to believe we do not see too much action this week although the market is very overbought and Equity P/C ratio is in the 4’s. This may be as good a time as any for the markets to alleviate some of the very overbought condition as many scenarios could play out over the next month or two. The Equity P/C ratio moved back up into the 6‘s, but the overbought conditions remain while no pullback was observed as we move into the month of December in the coming week. The CoT’s data unfortunately has not been updated as of this writing, but can be viewed at #msg-7253670 -- Equity Fund flows as detailed by AMG Data Services reported net cash inflows totaling $4.256B ($28M xETF Activity) in the 4-day week ended Nov 22 with 50% ($2.107B) going to Domestic funds. International Equity funds reported net inflows of $1.994B ($755M xETF’s) to all Emerging and Developed markets. Real Estate funds excluding ETF activity reported net cash outflows of -$37M for the 9th consecutive week. Money Market funds reported net inflows of $3.050B. As for the U$D, Gold and Oil -- the U$D continues to oscillate between 91-92, Gold continues to buck the trend closing out at $496 while Oil bounced off its 200DMA closing just below $59bbl at $58.7. The CRB continues to ride atop its 200DMA at 314 and change with the 10-yrs and 30-yrs T-Note yields continue to weaken to 4.431% and 4.664% respectively…


ECONOMIC #’s:
A rather quiet week although next week picks up considerably…

 
 Help-Wanted Ad Index – Oct    38 vs 38 expected 39 
 Michigan Sentiment – Nov    81.6 vs 79.9 expected 81.0 
 Initial Claims - 11/19      335K vs 305K expected 312K 
 Leading Indicators – Oct    0.9% vs -0.8% expected 0.8%

MBA Mortgage Applications msg-8633909
Oil Inventories as reported by the DoE (Dept of Energy) and API (American Petroleum Institute) #msg-8633924

Econ activity for the week ahead: http://biz.yahoo.com/c/ec/200548.html


What can be said about the market that has not already been said? Not much, but I will give it a shot and attempt to apply physics to the markets. Let’s use Isaac Newton’s Three Laws of Motion otherwise known as Inertia, Momentum and Reciprocation as an analogous example shall we?

Newton’s 1st Law: law of inertia – Unless acted upon by an unbalanced force, an object will maintain a constant velocity. An object may be acted upon by many forces and maintain a constant velocity so long as these forces are balanced. This law may very well apply to the Federal Reserve… The Federal Reserve sets in motion the events which take place through injections of liquidity and interaction with institutions.

Newton’s 2nd Law: fundamental law of dynamics – Originally stated in terms of momentum as an applied force equal to the rate of change of momentum. Objects interact by exchanging momentum and they do this via a force. This law may very well pertain to fund managers, foreign investors and the like who perpetuate momentum and keep the ball rolling.

Newton’s 3rd Law: law of reciprocal actions – All forces occur in pairs, and these two forces are equal in magnitude and opposite in direction. The two forces are of the same type, but accelerations are not. Quite simply put, the Institutions (inertia) sell while fund managers and foreign investors (momentum) become bag holders (reciprocal action).

Lesson Over, Exam On The Way…


WHAT CAN WE EXPECT NOW?:
While I am open to most any scenario taking place, I am finding that the current activity will be rendered unsustainable at some point in the near future unless some issues are resolved by the markets. I am not talking about debts, deficits, bubbles, etc. Sorry for the redundancy, but as mentioned in the last couple of updates: This all looks like one of two things are in the offing; we get a pull back now, consolidate and resume the run or we push the extremes and get a major dump later. Without consolidating or even a pull back of sorts this in itself should be raising some eyebrows. I believe most would find a respite as healthy for the market, but without it the major dump scenario comes to the forefront of my mind. Divergences are now visible on daily charts, not just the weeklies; market breadth continues to be subject to my suspicion and reeks of distribution, panic buying has materialized and we are clearly in overbought territory. Also of note are the many facets of the markets moving up simultaneously such as the U$D, Gold and the market indices making new highs with Oil beginning to reestablish itself. If I am not mistaken the last time we saw similar action a change of trend emerged. Just another pointer in the long list of why what we are seeing is unsustainable. Also as mentioned in the last couple of updates: We have been on the move up since early October and are now a month into a move that historically would not have started until Nov or Dec. What may make perfect sense is that many expect a Christmas rally so to bring it sooner keeps many off their guard for what is generally expected. The flip side of the coin is it could all end earlier than expected, say mid-Dec? It would not surprise me to see us find a new high directly off of this move and continue higher only to sell off prior to what people expect. We are now nearly 2-months into this move without a respite and while a timeframe is inconclusive, I have hinted toward what it is I believe will transpire. Of course I could be wrong and all of this can change as we still have the conclusion of Nov and all of Dec in front of us. With that being said, it will be interesting to see if/how we handle these issues and conditions. As far as Oil, U$D and Gold -- Oil appears to have found a bottom and winter is upon us, the U$D most likely continues to oscillate in the 91-92 range although it looks as if it wants to rollover and Gold is poised for $500.

Technically speaking, Bullish Advisors are at 53.6% with Bearish Advisors at 23.2%. The VIX/VXN are in the high 10’s & 13’s respectively and nearing all-time lows. The CBOE Equity P/C Ratio ended the week at .609 with a 21DMA of .586 and Total P/C ratio at .910 with a 21DMA of .842. The RSI 5-Days remain Very Overbought across the board. The PC ratios, VIX/VXN, $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), stocks above 200DMA and Bullish %'s all can be viewed below along with the major indices…






























HOLDINGS

CORE: QRAAX, RSNRX ,TAVIX, SRPIX, GSX
*Decided to lighten up and sold HSGFX, PCRDX & PRPFX (due to redundancy and looking to add an Int’l Fund)

Speculative Stocks: ANO
*Added DNDN to my speculative plays as I am looking for an FDA approval sometime in the near future. This most likely will end up under speculative swing plays with AGIX

Speculative Swing Plays: AGIX

SWING: USPIX, PMPIX


Disclaimer:
This disclosure is not a recommendation to buy, sell or do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding. I am not a day trader and invest mostly in funds or baskets of stocks and attempt to identify up/down trends while performing occasional swing trades. Data presented may not be 100% accurate as I do make mistakes from time to time.