I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Friday, June 29, 2012

June 29

Skunked again. Huge gap up and main indicator upturn forces an emergency short cover / buy signal.

More 'interesting' action ....

Thursday, June 28, 2012

June 28

Interesting week? check.

Crazy gap down, with a reversal and run up until Wed to close the gap, and now trading down again.

The 60-min sell signal (sub-cycle) since 6/20 is still in effect and today we got a Down Cycle signal. The reason this is of interest is that I am now expecting a 90% chance (63 of 70 similar occurrences) of a lower low below Monday's low before the next 60-min buy signal will be issued (when a Down Cycle signal is given after a sub-cycle top signal).

That is what I am seeing at the moment.

Thursday, June 21, 2012

Warren Mosler: Macro Take

Fantastic interview with Warren Mosler. He discusses QE, earnings, cash flows, demand leakages, and the potential fiscal cliff.

I completely agree with his take that current levels of deficit spending are still sufficient to maintain aggregate demand (and hence corporate revenues and profits) to a level that is 'good for stocks'. I don't think we are seeing a 'major top' in the stock market. I think the real risk to the stock market and the economy is the *potential* 'fiscal cliff'. But as I said here at the beginning of June this would be the mostly widely telegraphed macro event ever. And like Mosler says, I am highly doubtful that is being 'priced in' to stocks right now.

Which means that I think the current pullback since May (and that we are still potentially in) is a correction and the cyclical bull market will continue, not the start of a cyclical bear market.

Early Thought follow up… A conversation with Warren Mosler

Please click on the link below to listen to a conversation with Warren Mosler. Topics include: Demand leakage (how to fix end-demand), Fed Policy (QE is counterproductive) and overall market/econ outlook for US, Europe and China.

Warren Mosler Interview Audio

June 21

Very interesting/odd week:

Monday: Gap up and breakout of the last week's congestion

Tuesday: Strong move up right to critical resistance. The Daily System *almost* issues a buy signal (just a couple of points shy), but midday the market pulls back.

Wednesday: Usual Fed day shenanigans, but the second move in the afternoon was strong enough to issue a 60-minute sell signal. The Daily System is still holding just short of a buy signal

Today: Huge sell off. The market turns away from the Daily buy signal.

Lot of weirdness at play here, but the 60-minute system looks like it could be leading the way. The Daily System is showing the market has lost its nerve right at a critical resistance level and so the sell signal from 6/01 still remains intact (despite continuing to be pretty far underwater).

Looks like next week will be another 'interesting' week.

Sunday, June 17, 2012

June 17

Perfect week to be out. No new signals given (very sideways / consolidatory week). 60-min buy signal is still intact and the Daily system will likely issue a buy signal next week with any more strength.

Friday, June 8, 2012

June 8

I will be out next week, so I will not be able to send out any signals real-time. What I will do instead is send out the retroactive signals at the end of the week. Obviously imperfect, but that's what it is.

Here are a few thoughts and observations as I look ahead to the possibilities for next week:

1. More upside on the 60-min System.

We had a buy signal on Wednesday morning (see: https://twitter.com/binve01/status/210369520337039360) from a sub-cycle bottom. And today that signal was further confirmed with a Cycle bottom. Which means that a significant divergence is required before a sell signal will be issued, which means I expect another high above this week's high.

That high doesn't have to come next week. In fact it would be very healthy if the market too a breather early next week to consolidate the reversal (and maybe set up an inverse head and shoulders).

But however it manifests, I don't think this upmove is over.

2. Potential bottom on the Daily System.

As I said on June 1 there were a large number of reasons why I thought the Daily sell signal was suspect. We made a lower low on Monday after last Friday's sell signal, reversal on Tuesday, and then traded up the rest of this week. As it stands, we now have a divergence at the Tuesday bottom over the last down sequence since May. The Daily system is obviously slower than the 60-min system so my indicators have not turned around to give a buy signal yet. But another week like this past week and it likely will.

Monday, June 4, 2012

June 4

With the sell signal on Friday from the Daily System I have been doing a lot of thinking about the current count. Like I said on Friday there are still a lot of reasons why I think this correction is 'suspect' (see Friday's post and comments), but we have a sell signal and I am respecting it.

But the count is ambiguous. We did not make a higher high above the March high in May (although the Dow did), which my system was expecting. I was thinking that the move up in May was part of the correction, but now I think it is a failure (something that E-T was pointing out) with all the evidence considered combined with the Daily sell signal.

Here are my current thoughts on what could be happening. I am not hard over on any count at the moment because I am seeing conflicts on so many charts, but for many reasons that I have elaborated upon previously I still don't think this cyclical bull market is over.

Friday, June 1, 2012

June 1

Sell signal was issued on the Daily System today. This was not a normal exit signal, which is what this setup was looking for Apr 7 - Daily and 60-min Cycles, Looking for an Edge. It was a forced sell because a Down Cycle signal was given (which is uncommon, the signals are typically a sub-cycle top/bottom signals).

The way this signal was made is 'suspect' (non-normal moves relative to significant MAs, some secondary signal non-confirmations, etc.). And I think the fundamental environment is also very 'suspect'. But the signal is given and I am respecting it.