The stock market had a lot to contend with yesterday and it didn’t contend very well.
DOW – 185 on 2350 net declines
NASDAQ COMP – 37 on 1350 net declines
TSX -205 on 1,166 declines
SHORT TERM TREND Bearish
INTERMEDIATE TERM TREND Bearish
After an up opening helped by better than expected earnings from Intel, it was downhill from there. Violence in Europe over austerity. Renewed tensions in the Middle East after a top Hamas official was killed by the Israelis, prompting Egypt to recall its ambassador.
Also hurting was a hard line on taxes taken by Obama in an exercise of brinksmanship.
Regarding Europe. I know exactly what has to be done. They need to start manufacturing things again and return to growth. Everything is now made in China. But, just like the U.S., they have bought into the “free trade” nonsense that is pushed by economists who happen to be wrong about almost everything. Sorry. I had to get that out.
Germany is the only country that still makes things in Europe and curiously enough they have the only really healthy economy.
Fourteen day RSI is oversold for the first time since the major low in early June (arrows), but let’s not jump the gun. We still have a pattern of lower lows and lower highs.
TORONTO EXCHANGE: Toronto was hit for a whopping 205 points. This will change our posture.
GOLD: Gold was up $2.
BONDS: Bonds were marginally lower.
THE REST: The dollar was higher again. Gold, silver and crude oil were up. Copper was lower.
BOTTOM LINE:
Our intermediate term systems are on a sell signal.
System 2 traders We had a buy. On Thursday buy the E-mini S&P 500 and or the SSO at the open, but do not pay more than 1353.00 for the former and no more than 54.38 for the latter. If it’s trading up in the morning, wait for it to come to you. The market almost always trades lower at some point the day after a session like this.
System 7 traders are in cash. Stay there on Thursday.
NEWS AND FUNDAMENTALS:
Retail sales was down 0.3%, more than the expected drop of 0.1%. PPI was negative 0.2%. the consensus was plus 0.2%. On Thursday we get CPI, initial claims, the Empire State index, Philadelphia Fed and oil inventories.
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We’re on a buy for bonds as of October 23.
We’re on a buy for the dollar and a sell for the euro as of November 2.
We’re on buy for gold as of November 8.
We’re on a buy for silver as of November 8.
We’re on a sell for crude oil as of September 25.
We’re on a sell for Copper as of October 12.
We’re moving back to a sell for the Toronto Stock Exchange TSX as of today November 14.
INDICATOR PARAMETERS
Monetary conditions (+2 means the Fed is actively dropping rates; +1 means a bias toward easing. 0 means neutral, -1 means a bias toward tightening, -2 means actively raising rates). RSI (30 or below is oversold, 80 or above is overbought). McClellan Oscillator ( minus 100 is oversold. Plus 100 is overbought). Composite Gauge (5 or below is negative, 13 or above is positive). Composite Gauge five day m.a. (8.0 or below is overbought. 13.0 or above is oversold). CBOE Put Call Ratio ( Below .80 is a negative. Above 1.00 is a positive). Volatility Index, VIX (low teens bearish, high twenties bullish), VIX % single day change. + 5 or greater bullish. -5 or less, bearish. VIX % change 5 day m.a. +3.0 or above bullish, -3.0 or below, bearish. Advances minus declines three day m.a.( +500 is bearish. – 500 is bullish). Supply Demand 5 day m.a. (.45 or below is a positive. .80 or above is a negative).
No guarantees are made. Traders can and do lose money. The publisher may take positions in recommended securities.
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