Most equity markets in the world and major sectors currently are in intermediate uptrends. As the saying goes, “The trend is your friend”. Preferred strategy is to accumulate favoured sectors on weakness for an intermediate rally that is likely to last at least until Inauguration Day in the third week in January.

The Fiscal Cliff remains the top issue influencing equity markets. Most likely scenario is a resolution before the end of the year, but in two steps. The first step will handle issues with a deadline at the end of the year (e.g. tax rates on dividends and capital gains). The second step will focus on the “Grand Plan” that will include Tax Reform on the personal and corporate level as well as entitlements and the debt ceiling. Equity markets will respond favourably when the first step is announced (but not with a big upside move) because short term uncertainties are removed. The second step is by far the most important and is likely to create the greatest volatility in equity markets. Will Obama moved toward the middle of the political spectrum during the second step? If he does, confidence in the corporate community will be at least partially restored and large cash position will start to be employed in ways that will help the U.S. economy. On the other hand, if Obama maintains his current antagonistic attitude against capital enterprise, the large cash positions will be employed in other ways (e.g. share buy backs, employment of capital outside of the U.S.). Unfortunately, some corporations already are starting to choose to employ their large cash positions by issuing special dividends and by announcing share buy backs. The completion of the second step will determine the direction for equity markets in 2013.

Historically, the strongest three week period for North American equity markets is from December 15^th to January 7^th. According to Thackray’s 2012 Investor’s Guide, average gain during the period since 1950 was 2.0%. The gain by the NASDAQ Composite Index was better. Average gain per period since 1971 was 3.0%. As the book says, “Santa arrives early and leaves late”. One of the reasons for the Santa Claus rally is the end of tax loss selling pressures (particularly in the gold equity sector this year). Other reasons include upbeat reports released by the investment community predicting encouraging prospects for the next year, lower than average institutional volume and a buoyant mood by individual investors during the Christmas holiday period. This year, the first step toward resolution of the Fiscal Cliff provides an extra “kicker”.

Sectors with positive seasonality at this time of year continue to outperform the S&P 500 Index including Agriculture, forest product equities, lumber, industrials, semiconductors, biotech, Europe, base metals, silver equities, platinum and copper.

The TSX Composite Index added 137.05 points (1.13%) last week. Intermediate trend changed from down to up on a break above 12,252.27. The Index remained above its 20 and 200 day moving averages and moved above its 50 day moving average. Short term momentum indicators are overbought, but have yet to show signs of peaking. Strength relative to the S&P 500 Index has changed from negative to at least neutral.

The S&P 500 Index fell 4.49 points (0.32%) last week. Intermediate trend changed from down to neutral on a move above 1,434.27. Next resistance is at 1,470.96. Support is at 1,343.35. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought and showing signs of rolling over.

The Dow Jones Industrial Average slipped 20.12 points (0.15%) last week. Intermediate trend changed from down to neutral when the average moved above 13,290.75. Next resistance is at 13,661.87. Support is at 12,471.49. The Average remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought and showing early signs of rolling over. Strength relative to the S&P 500 Index is at least neutral and showing early signs of outperformance.

The U.S. Dollar virtually collapsed last week after Congress and the President failed to negotiate a deal on the Fiscal Cliff and after the Federal Reserve unofficially confirmed a Quantitative Easing Infinity program. The Index plunged 90.84 (1.04%). The Index remains below its 200 day moving average and fell below its 20 and 50 day moving averages. Short term momentum indicators are trending down. The Index completes a massive head and shoulders pattern on a break below 78.60.

Crude Oil added $0.73 per barrel (0.85%) last week. Intermediate trend is neutral. Support is at $84.05 and resistance is at $90.33. Response to the OPEC meeting was negligible. Crude remains below its 20, 50 and 200 day moving averages. Short term momentum indicators are trending down. Stochastics already are oversold. Strength relative to the S&P 500 Index remains negative.

Gold slipped $7.70 per ounce (0.45%) last week despite weakness in the U.S. Dollar. Intermediate trend is neutral. Support is at $1,672.50 and resistance is at 1,755.00. Gold remains below its 20 and 50 day moving averages and above its 200 day moving average. Short term momentum indicators are mixed. Strength relative to the S&P 500 Index remains neutral.

The TSX Global Metals and Mining Index jumped 42.73 points (4.53%) last week. Intermediate trend is neutral. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought, but have yet to show signs of peaking. Strength relative to the S&P 500 Index remains positive. ‘Tis the season!

…..much more (46 charts and analysis) HERE

Mark Leibovit’s perspective on the Stock Market is that we are in a trading environment rather than an investment environment. Mark’s long term work right now tells him that we could be trading between 8,000 and 14,000 on the Dow for as much as another 5 years. In his opinion an environment similar to that we’ve seen from 2000 to 2012. In short he thinks it is just going to be big big swings back and forh between those two data points and the key to success is going to be catching the mid-term swings back and forth.

Mark thinks that a lot of what we are seeing in the indexes right now is a manipulation by the “Big Boy” money managers trying to hold the market up until they get paid at the end of each quarter and at the end of the year.

One factor in his calculations is that despite the bad news of fiscal cliff negotiations, and Western Governments soaked in debt, the markets are still holding up. A factor which persuades Mark that the market will still be moving a little bit higher through to the end of the year. After that he then expects a more bearish market from the beginning of 2013 through to the end of the first quarter 2013.

Mark looks at history and what he sees is that when Herbert Hoover and Franklin Roosevelt raised taxes back in the 1930’s during the worst of all possible times, the way Obama plans to raise them in 2013, the net result was a  significant decline in employment, tax revenue and the stock market. So he sees these things as something that is definitely coming in 2013, but it just doesn’t mean there can’t be a Santa Claus rally beforehand.

The Bottom Line as Mark sees it is that with positive seasonality, money managers wanting to get paid, and the tendency for a Santa Claus rally will keep the markets up until the end of the year. After that rally we will then have to brace ourselves for what could be a big slump into mid-2013. That slump likely followed by a bottoming and another rally into year end 2013.

Again, Mark is not taking an investment point of view. He simply sees big tradable swings back and forth, or big money losing swings if you happen to get on the wrong side of them. In his opinion the key to success will be preservation of capital in this big swing kind of an environment he expects to take place for the next 4 or 5 years while all the negatives are getting washed out. All that has to occur before we will find ourselves in an investment market again, a buy and hold market if you will.

Ed Note: In case you missed our latest special bonus, ticket buyers will receive an exclusive opportunity to read the mid term and long term investment views of Mark Leibovit in his new newsletter, Wall Street Raw.
 
This will not be available to the public for another four months but World Outlook ticket buyers will immediately receive a weekly copy that Mark is writing exclusively for us.
 
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Dennis Gartman is bullish on a whole lot these days, including stocks, gold and, most of all, the USA.

“Dennis Gartman is about as raging a bull as you can find these days. At a time when many investors remain beaten down in the volatile “risk-on/risk-off” aftermath of the crash of 2008, and uncertain about how high taxes will go in 2013, the editor of The Gartman Letter looks at rising crude and natural gas production in the U.S. and sees the makings of the most promising economic circumstances in a long time.

Gartman told IndexUniverse.com Managing Editor Olly Ludwig that he’s not exactly pleased about President Obama’s re-election, but that doesn’t mean he’s wallowing in pessimism about the goings on in Washington, D.C. He reckons that while it may take time and great effort, Democrats and Republicans will do the right thing and cut spending, even as the “leftist” president goes ahead and raises taxes on the wealthiest Americans.

In all his optimism, Gartman is also bullish on gold, but not in the way you might expect. He’s not buying gold because he thinks the economy is going to the dogs and that the Federal Reserve is unhinged. Rather, he says that Ben Bernanke’s Fed is doing a fine job, and that investors should buy gold with a weakening Japanese yen. What’s more, Gartman even has his name on a quartet of funds now in registration that will allow investors to own gold in yen, British pounds and euros”.

Ludwig: Could gold end lower this year?

Gartman: No. It ended last year at $1,566 an ounce. The odds of it closing unchanged on the year, I think, are zero.

Ludwig: I ask because you don’t see gold going through the roof these days, in spite of what the Fed is doing to keep bond yields so low. It has been falling and is now around $1,700.

Gartman: Well, the Fed is buying $40 billion to $45 billion worth of securities every month, but we forget that they’re also allowing about $35 billion to $40 billion—if not more—to mature off on the back end. So the monetary base has actually not grown at all in the course of the last year.

Ludwig: So what is your general overview of how the Fed is performing?

Gartman: I think the Fed has done yeomen’s work since the autumn of 2008. Publicly, they’re very clear about buying securities on a regular basis; privately, they’re circumspect and quiet about allowing them to mature off. I think they have expanded all that they’ve wanted to. And I think they have done the right thing heretofore.

Ludwig: How might the Fed slowly extricate itself without causing some kind of a crash in the market because of a quick hike up in rates and what have you? I’m guessing you don’t buy that some nightmare scenario will happen.

Gartman: No, I just disagree completely with the nightmare scenario. I’ve only been in the markets for 40 years but I’ve heard nightmare scenarios for every one of those years. But the worst fears never seem to come to fruition. The better hopes almost always seem to come to fruition. And perhaps I’m naive in that respect. But those who have bet upon collapse have made very bad bets for a protracted period of time.

I think that the Fed has said that they intend to keep the overnight Fed funds rate low for a long period of time—into 2015. It’s probably ill-advised, but I’m not surprised that they’ve made that statement.

…..read page 2 HERE

Economy and Elite Use of Religion to Control

The world will end on 21st December! Or so the Mayan calendar supposedly predicts, though is vague on what the actual mechanism for our extinction will be, with the hot money betting on being hit by a rogue planet called Nibiru, whilst many academics argue that the Mayan calendar actually does not predict that the end of world but the end of one cycle and the beginning of another. However these theories have not filtered through to the masses many thousands of miles away in places such as China where some are going so far as building arks to ride out the end of the world, in Russia selling doomsday kits, in France closing access to mountain passes to avoid panic amongst people fleeing to the mountains.

It is no wonder that a mini-mania exists for a look at Amazon shows over 60 books written on the prophecy and probably a similar number of films and documentaries produced on the subject, most notable of which is the 2009 hollywood movie named ‘2012’ that in graphic style promoted the break-up of the earths continental crust and not to mention the tens of thousands of youtube videos on the subject, even NASA has jumped onto the bandwagon by seeking to debunk the various scenarios.

NASA – Skeptic

Whilst the mania is not on the same scale as that which accompanied the millennium (2000) but it is enough to increasingly grip many people and the media as the world counts down to December 21st.

 Religion – End of the World Confirmed by Jesus!

On a serious note, the Mayan prophecy illustrates that virtually all religions have an ‘End of the World’ event built into their script as a means of fulfilling the prophecy of rewarding all of it’s followers and as a warning of the consequences to those who have deviated from their respective paths.

Why Did Humans Evolve Religion?

For religion is clearly an evolutionary development because all societies from before the dawn of history have had a desire for religious belief.

The traditional answer is that humans evolved religion as a means of coping with death of loved ones, which is true, as religion preys strongly on personal crisis in helping cope with the deaths of loved ones by promising that they will see their loved ones again.

Another reason often put forward is for a means of explaining the world around us as being created by an all powerful deity, because it was only until quite recently that we have had any real clue as to the nature of the forces at work around us that have crafted our environment and state of existence.

However, whilst both are important elements of why humanity evolved God and religion, they do not explain the primary purpose of religion and why religions have evolved into the multi-million and even multi-billion user corporate entities, with their respective user manuals, logo’s and ever expanding associated paraphernalia.

The Primary Reason Why Humanity Evolved Religion

For tens if not hundreds of thousands of years humans (homo-sapians) lived in relatively small groups of constantly on the move hunter gathers that numbered no more than a couple of hundred people at most, and these groups tended to be dominated by a single Alpha male who would be the strongest, best warrior / fighter and hunter of the group, the Chief of the tribe who would be responsible for most of the groups offspring, which is what evolution dictates would happen for the survival of the fittest to take place.

However, as humans discovered agriculture and started to settled down, then populations tended to grow far beyond the small hunter gatherer groups, which means that the tribes started to produce far more competing alpha males than used to be case that would result in much conflict within the groups and act as a limiting factor for growth of settlements as they would tend to continuously break into smaller groups each led by an alpha male. It took until human societies started to independently evolve religious ideas as a means of CONTROLING the behaviour of members of society, namely the alpha males such as that of rules of how people should behave that were said to be laid down by an all knowing and powerful deity, the creator, rules such as thou shall not kill, steal, and one man one wife, and off course to pay homage to the creator and follow the teachings and instructions of the deities prophets and priests, that were to be repeatedly recited and ingrained in all members of society, with similar universal rules emerging across all surviving societies, allowing them to expand as religious ideas of control spread to all those settlements that had yet to evolve means of religious control.

All religion’s seek to exert total control over every member of society as it was/is believed that all events that happen are as a consequence of the pleasure or displeasure of the Gods such as natural disasters in which respect societies even went so far as to sacrifice fellow humans to please their gods, and sacrifice remains at the fundamental core of all religions i.e. that humans sacrifice independant free will in this life for freedom in the next life, and to a achieve entry into the afterlife humans need to obey the will of the Gods as set down by those that purport to represent the deities such as Emperors, Kings & Queens and Priests under the fear of what would happen to them if they did now obey the will of the Gods as iterated by their representatives on earth.

This trend took place over tens of thousands of years, long before the Egyptian Pharos first appeared on the scene, and as we see in history that religions have gone through many innovations over the subsequent thousands of years, where each religion built upon what went before it, incorporating technologically advancements as a consequence of the increase in the size of populations as larger settlements become more productive in terms of food production, industry (tradable goods) and innovation, with the greatest innovation of all being the written alphabet by the Phoenicians that emerged some 4000 years ago and that literally lit the fuse under all religions as it that allowed religious ideas to spread far more rapidly and in ever greater intensity than was ever possible during the preceding 50,000 years where religions went on to document the word of god in a series of books.

Complete religious control even upto the point of self sacrifice (martyrdom) went hand in hand with expansion of the size of societies with many tweaks along the way that allowed some religions to better able to compete against other religions such as Judaism innovation of there being one God, rather than many gods that tended to be the norm some 2000-3000 years ago, which was followed by the next big innovation of Christianity that promised life after death for all and that anyone could become a Christian, which allowed it over the next 400 years to go from an small persecuted Jewish sect to replace all of the myriad of gods of the Roman Empire as the ultimate means of the lever for control by the Elite over the tens of millions of Roman citizens. Which eventually itself was challenged by the next great innovation that was Islam that presented it’s followers with an even more unified highly ritualistic way of life and accompanied by just as dire consequences for those that did not follow Islam’s teachings.

Obeying a Societies Elite is Genetic – We are Born Followers!

The larger a society becomes the more intense the unifying rules and rituals become that aim to break down the ethnic and tribal barriers between peoples of a society, where for much of civilisations march though time it has been the prevailing belief that mans every actions are being constantly monitored by an all knowing, and infinitely powerful deity who will pass judgement on the day the world ends.

God and religion are an evolutionary survival mechanism which is why we are where we are today, for without god and religion we would never have progressed beyond the small hunter gather groups dominated by single Alpha males that is the case with the Great Apes today and can be seen in recently discovered isolated rain forest tribes who have literally stood still for tens of thousands of years due to failure to make the religious leap that allows groups of greater size than that controlled by a single Alpha male.

We have seen this in built tendency in all human societies, we have seen this in large empires such as the Soviet Union, and Communist China, that whilst officially stating themselves to be atheist, never-the-less still created their own religions around their prophets such as Lenin and Mae Tse Tung, and then utilised state security apparatus to perpetuate the threat and fear of an the all seeing and knowing state that knew of the general populations every actions so demanded complete obedience.

Over time this control of the masses through technology has continued to develop and intensify the hold on the general population’s actions, making it far easier for the elite to control every aspect of life through monetary mechanisms namely such as debt, as God in the West has gradually given way to the all seeing and knowing power of the Elite controlled State.

In today’s society we are manipulated from cradle to grave by the state to serve the interests of the elite, we are educated to be docile citizens that will go on and work for the elite, to perform all of the duties that the elite request of us for pieces of paper.We are forced to work for the state for 1/3rd of our working life is spent paying taxes. We are forced to work for the elite as 1/3rd of our working life is spent servicing our debts.

We are constantly being bombarded with propaganda to be good citizens or face the dire consequences, because our every action is being watched and monitored 24/7 by technology from millions of CCTV cameras, internet browsing logs, phone conversation, mobile phone networks, GPS positioning, financial card transactions, and in your every interaction with the state’s apparatus and private corporations that is logged and which the state has constant access to determine whether our behaviour is subversive or not.

And it won’t be many more years before people are convinced that it is good to have chips implanted directly in our heads under the guise of the benefits of augmented reality, heads up information displays overlaying the real world, so that a persons every action and ultimately thoughts will be recorded and monitored, so as to reinforce the idea of only thinking good thoughts that the State / elite wants you to think else you will be subject to the wrath of the all powerful state’s thought police.

The only mechanism people actually have to see through the propaganda and the means of control, is pain, be it physical pain or financial pain, which is usually why those that experience pain tend to rebel against the elite, which is why the elite / State either tends to inflict severe pain on some sectors of society as a warning to the rest (i.e. Jews in 1930’s Germany, Gazans 2012 Palestine) so that fear motivates compliance from the rest, or the elite buys the compliance of the masses by means of printing money coupled with all pervading economic propaganda such as 2% Inflation is good that results in an stealth inflation theft of wealth and purchasing power and thus the independence of ordinary people for inflation benefits the state and the elite and not the masses who become reliant on state handouts to fill the ever widening gap between rising prices and earnings.

Economics is the Religion of Today’s Political High Priests

Economics is a form of religion, a means for controlling the masses, the fact that it is difficult for most people to recognise this despite the fact that economists have time and time again proven to be near 90% wrong, illustrates how successful economics is as a tool for state propaganda as the State continues to print money in its various forms such as debt to maintain its power over people. Know this the cause of inflation is pure and simple government money printing that benefits those that are leveraged to inflation i.e. the elite who own the means of production and assets.

The only mechanism that humans have for seeing through the propaganda is to experience PAIN and REWARD, which is something that vested interest academic economists and pseudo economists in the mainstream press rarely tend to experience as a consequence of another evolutionary development which is that people tend to easily forget when people are wrong if they experience little pain to imprint those memories.

Therefore people need to recognise a fundamental fact that as humans we are very easily susceptible towards being controlled by the state / elite because it is an evolutionary development and therefore it is hard wired in our genes. We have evolved into easily controllable individuals so that societies could be built in size that go far beyond the small hunter gather tribes as mentioned earlier.

The Problem with Evolving Religion

Whilst the God / religion evolutionary adaptation has in large part proved highly successful as illustrated by how far humans have progressed in full filling the primary purpose of life which is to spread. However as we have seen numerous times in history it can also go horribly wrong, such as Nazi Germany as the elite use fear to control the actions of people to their bidding.

The logical answer is for humans to evolve beyond the current prevailing set of religious beliefs that imply doomsday is inevitable, as illustrated by today’s obsession with the Mayan Prophecy, this despite the fact that the Mayan religious doctrine went extinct over a thousand years ago as Mayan peasant slaves saw through the smoke and mirrors of the Mayan elite and rebelled. As ultimately technology will at some point allow religious fanatics of whatever persuasion to manifest the doomsday that they so ardently await as prophesied by all religions.

The Future

Humanity is clearly starting to evolve out of a requirement for doomsday cults, which means traditional religions based on thousands of year old ideologies are increasingly likely to diminish in influence.

However ultimately this also means that human’s will complete the evolutionary transition towards the manifestation of every action and thought being monitored and known to an all powerful state. To those reading this today this may sound like a science fiction fantasy but this is how God will be replaced by technology, as technology fulfills what is written in our genes, as such a situation will not be something that is outside of human experience but actually mark a continuation of human evolution towards being able to create ever larger and more unified societies far removed from cultural and ethnic differences towards which evolution has been pushing mankind towards for tens of thousands of years.

The Day After – December 22nd

I think most reading this will agree that the Mayan end of the world calendar will pass without event, towards which the response of vested interests (book writers and religious fanatics) will be just as every response has been following such events which is to reinvent history and say that it meant something totally different, i.e. the beginnings of a new cycle, transformation of the world into … what ? And thus there will be a need for many more Mayan books to be written and sold that will imply that the Mayan calendar really meant that the world would end not this month but many centuries from now as the religiously motivated crave the next end of the world myth to focus upon and some even contemplating ways of manifesting it so that they can achieve their rapture.

Source and Comments: http://www.marketoracle.co.uk/Article38020.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2012 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem’s forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook’s – The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.