“The latest monthly figures showing investors’ preference (or lack thereof) for cash have been released. Like most other months during this bear market, they showed a drop in cash levels. Unlike most other months, the rate at which that cash is dropping has picked up. This is most notable in the margin figures from the NYSE. Debt increased, cash decreased, and that pushed the “available cash” or “net worth” of investors to the worst level ever.”

….continue reading HERE

Available Mon- Friday after 6:00 P.M. Eastern, 3:00 Pacific.

DOW                                                 – 37 on 600 net declines

NASDAQ COMP                                 – 9 on 300 net advances

SHORT TERM TREND                          Bearish

INTERMEDIATE TERM TREND            Bullish

STOCKS:  The market was down sharply in the early going, but the low was reached after a couple of hours and it started to make its way back

Part of the problem on Thursday was the fact that the Shanghai market dropped 6 /2%. Also, the Greek situation declined again after hope was expressed yesterday. The latter gets so tiresome.

Tomorrow could be somewhat choppy. Several indices are due for reconfiguring.

GOLD:  Gold was higher by $2. Probably because the dollar had a slight pullback.

CHART: The 5 day m.a. of the CBOE put call ratio is back over 1.0. At that level, we tend to rally in the near term.

BOTTOM LINE:  (Trading)

Our intermediate term system is on a buy from Feb. 20, 2015.

   System 7   We are in cash. Stay there.

   System 8   We are in cash. Stay there.               

GOLD  We are in cash. Stay there.     

News and fundamentals:  Jobless claims came in at 282,000, more than the expected 270,000. Pending home sales rose 3.4%, better than the consensus rise of 0.8%. On Friday we get Q1 GDP which is expected to be negative plus Chicago PMI and consumer sentiment.

Interesting Stuff   Greece. The gift that keeps on giving. Things are getting better. No, they’re getting worse. It depends on which day it is. Why traders buy or sell based on this is unknown.

TORONTO EXCHANGE:   Toronto dropped 3.

S&P/TSX VENTURE COMP: The TSX was up 2.   

BONDS:  Bonds pulled back slightly.                             

THE REST:  The dollar pulled back somewhat. Silver and crude oil had a mild rebound.           

We’re on a buy for bonds as of May 15.                    

We’re on a buy for the dollar and a sell for the euro as of May 19.                   

We’re on a sell for gold as of May 19.                       

We’re on a sell for silver as of May 19.                        

We’re on a sell for crude oil as of May 19.                            

 Wednesday Report Posted at 10:17 pm –

Tonight I would like to show you some really big consolidation patterns in regards to some big cap tech stocks mainly the networking and semiconductors. I have shown you some of these big bases in the past but now I’m going to create a brand new portfolio based just on these big patterns. It definitely won’t be as exciting as  trading in and out all the time as the game plan will be to hold these stocks for a minimum of two years, no trading. This will be an investment portfolio based on these massive consolidation patterns. Big base or consolidation patterns equals big moves.

I’m seeing too many of these big bases breaking out and the stocks moving higher without our participation. This will be a low stress way to make some serious money if you have the discipline to hang on when there is a correction. Think if you had bought some of the better stocks back at the 2009 crash low and held on over these last six years or so. It’s much easier said than done. At any rate I’m going to show you some stocks that I think have a great future regardless of why the stock markets are going to crash and burn any day now. That’s is basically all we’ve heard since the 2009 crash low and here we are now with many stock market indexes making multi year highs.

For most folks I would think that they should have at least a minimum of 50% of their portfolio in some of the better long term stocks. With the stock markets consolidating for long periods of time this will keep you out of trouble trying to catch every twist and turn that is virtually impossible to trade.

The two areas I’m going to focus in on are the semiconductors and the networking areas as I believe they have some catching up to do compared to some other areas of the markets like the biotech and healthcare that have and are still a good place to park some capital.

Lets start by looking at the two indexes the $SOX semiconductor index and the $NWX networking index. I have shown you this long term monthly chart for the SOX several times in the past which is showing us one of those massive consolidation pattern, the 10 year bullish falling wedge. From a Chartology perspective it’s a pretty as it gets. Note the breakout from the black dashed horizontal support and resistance line about a year and a half ago with the backtest from the top which found support during the October low of last year and the quick bounce to the present. Also note the very last bar on the right hand side of the chart which shows the SOX hitting new multi year high this month.

MT Ed Note: Great Report – for the best look at these 9 charts click HERE or on Chart (each click increases size)

MT Ed Note: For the best visible charts (9) click HERE or on Chart above (each click increases size)

Former Fed chairman Ben Bernanke will be remembered by future generations as the guy who didn’t see a housing bubble while he was creating it.

That is, unless he says something even dumber, like this:

Bernanke: No risk of hard landing in China

(CNBC) – Former Federal Reserve Chairman Ben Bernanke said that China’s economic slowdown should not worry markets as there was no risk of a hard landing, and emphasized that a move to raise U.S. rates should be viewed as a positive sign for the world’s largest economy.

Bernanke also said the economic slowdown in China is necessary as it needs to change its growth model to be more sustainable in the long term.

“China was growing 10 percent a year. And it was doing that through heavy capital investment, steel plants and so on. Very export oriented,” he said.

“As the country gets more rich and sophisticated that kind of growth is no longer successful.”

He added he was “optimistic” China’s economy would not experience a hard landing.

Annual economic growth in the world’s second-biggest economy slowed to a six-year low of 7 percent in the first quarter, prompting a range of stimulus measures from Beijing.

That these bland assertions are unencumbered by any actual data might be because the numbers are terrifying. Just yesterday Zero Hedge posted a long, must-read analysis of exactly how much debt China’s infrastructure/export capacity build-out required. Here’s one representative chart: 

What this means is that the Chinese economic miracle of the past decade has been driven by a huge increase in borrowing, much of which went to projects — including entire “ghost cities” — that aren’t now generating much in the way of cash flow. In the absence of even more debt those projects will default, leading to…who knows what. China has never been through a major credit crisis so it’s not clear how its mostly brand-new and untested institutions will manage. 

So to say “there’s no chance of a hard landing” implies an understanding of a situation that can’t be understood, since it has no historical precedent. In other words, it’s even dumber than dismissing the obviously-raging housing bubble in 2005, and therefore even more likely to be wrong.

The Chinese stock market’s spectacular run is turning into a stagger:

Two more Hong Kong stocks collapse after Hanergy crash

(AFP) — Two of Hong Kong’s best-performing stocks plunged more than 40 percent Thursday, a day after a mysterious crash of almost 50 percent in Chinese solar firm Hanergy that saw almost $20 billion wiped off its market value.

Goldin Financial sank 43.34 percent to HK$17.48 and Goldin Properties crashed 40.91 percent to HK$14.36, after soaring more than 300 percent since the start of January, according to Bloomberg News.

The drop slashed the firms’ combined market value by more than $20 billion.

The companies, which have interests ranging from property development in Hong Kong and China to vineyards in

California and France are owned by Chinese tycoon Pan Sutong.

 

The dramatic sell-off came after a 47 percent dive in Beijing-based solar energy firm Hanergy Thin Film Power (HTF).

Trading in the firm was suspended after 24 minutes, but not before $19 billion was struck off the firm’s value. The company said it would make an announcement containing “insider information” in the wake of the suspension, although it has not yet done so. HTF had surged more than sixfold in the past year, making it the world’s largest solar power company by market value, but prompting questions over its valuation and revenue sources.

Even by tech standards, those are big, fast moves. And the bull market in which they occurred is also pretty epic. From London’s Telegraph:

China’s stock market bubble shows no sign of bursting yet

Last week I wrote that the market in German Bunds had become a bit too exciting for some investors. By the orderly standards of fixed income investing, the ups and downs of bond prices may have been a bit frisky. But they pale into insignificance compared to what’s going on in Shanghai and Shenzhen. China is becoming the Wild West of investment.

Since the start of the year, the Shanghai index has risen by 37pc and its sister exchange in Shenzhen is up by 53pc. Over the past year the two markets have risen by 122pc and 96pc respectively. That’s punchy enough, but it fails to tell the whole story. Many individual shares have done much more. Beijing Baofeng Technology, a video company, rose by 44pc on its first day on the Shenzhen market in March and then by the 10pc daily limit each day every day for a month. It is currently worth more than 40 times its IPO price. The flotation was nearly 300 times oversubscribed.

Consider, too, that around half the stocks listed in Shenzhen are valued at more than 50 times their expected earnings and nearly a fifth at more than 100 times. Margin trading, where investors buy shares with borrowed money, has more than quadrupled since last summer to be worth nearly £200bn. At 8pc of total trading volumes, these risky trades have reached a level that not even previous manias in Taiwan and Japan approached. The average valuation multiple on Shenzhen’s index for start-ups, ChiNext, is over 100 despite (or because of) the fact that one in five of the companies listed there is not even covered by any investment analysts.

There’s more. The volume of trading on China’s major exchanges has reached nearly £140bn on several days this year. That’s around four times the value of daily deals on the New York Stock Exchange. In one week recently, a record 3.3m new trading accounts were opened. There are now more than 200m accounts being used by an estimated 100m investors. Worryingly, half of these new investors received no education beyond high school against a quarter of existing account holders. The shoe-shine boys are tipping stocks again.

Why this bubble now? Because of the usual mix of catalysts: Aggressive government borrowing abetted by a central bank that most people expect will shortly join the global currency war, and, as the Telegraph article notes, deregulation that has allowed millions of new players (most with a limited understanding of how share prices normally relate to underlying earnings) to belly up to the buffet.

What happens next is also pretty standard, and it generally begins with a few notable high fliers that never should have been reverting to their true value. We won’t know if these are them until after the fact, but today’s numbers do make the inevitable look imminent.