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Sept 1 2013 Weekend Market Comment

Sept 1 2013 - OK so here is where we are, the market is falling, but it is in the area of oversold. Now if you are a high risk taker and play the market with no fear you might go long here, I know trader in NYC who is doing just that. On the other hand for me the rule of thumb is "show me the money". I am not the first to jump in because when you are wrong at times like this it can cost a bundle, and I preserve capital over quick bucks. As you have often heard me say; don't try to catch a falling knife. So as you will see there are still many clouds and some of them are new. Yes there are some good signs but, until things get a bit better I am playing sleepy dividend plays and raising cash.

This week I am going to show you a wide range of my favorite indicators and as you will see I often don't show them all because often they say the same thing.

Lets start with the Nasdaq summation index. As I say this thing is twitchy, and not always right, but when it backs off it is a good time to get nervous. Well when this started to fall at the start of August, it gave the perfect heads up, it was the first of my signals to go off. Like a lot of my signals, you can see we are near where it bounced twice before BUT it has not turned around so that means nothing.

OK lets look at the most important indicator of all, I have not put this up for a while because it has not had much to say, but here is the famous YP primary sell indicator, dropping for weeks but now almost about to breach the negative momentum line. This indicator is powered by the Put/|Call ratio, as the real smart money is in the options market, as they favor buing puts (insurance) over calls (going long) it is a great time to pull in your horns.


But I think anyone can see this is no time to go hog wild.



The NYSE above 50 day MA graph is continuing to advise caution as it has since Aug 1. Clearly we have some potential room to go on the downside.

The related NYSE high low graph also is flat and perhaps rolling over. Again this does not look bullish at all.


This graph above is called the VIX trick, it seldom says much but when it is RED and growing, we are either at the end of a pull back or the start of a huge sell off. The VIX is the so called market fear indicator and clearly people are getting concerned as the VIX hits highs not seen since June.


This brings us to the famous Green Arrows, clearly still not in an up turn.

So those are my favorite broad market indicators. But I also want to show you some secondary indicators that have me concerned.

First off the USA is the most consumer oriented economy in the world. US consumers are why the factories buzz in the third world and they create much of the first world trade. When the U.S.consumer is exhausted the retailers show it first. Here is XRT the ETF that tracks retailers.

Well this retail weakness better brighten up soon with strong Christmas season predictions or there is not much hope for any ho ho in the market.

Particularly concerning is that spoiled teens are not running out and running up daddy's gold card. Here is hip teen favorite American Eagle -- in a nose dive.

Even Chinese demand for bobbles is softening as Tiffany's is selling a few less 1/4 million dollar diamond rings.


The world of materials and commodities got a little boost last week, it faded this week. Below is Dr. Copper clearly not happy about industrial production.

Gold also is selling off, if you are a Gold bug I will not argue this might be an oversold retrace but I am a bear on gold and so I also could argue this is just a dead cat bounce on the way to $800 gold. Too soon to tell and no time to bet either direction.

One final thing to consider in this mix is that according to Daniel Gamba, head of BlackRock's iShares America, ETF funds are seeing a serious out flow of funds this month. So far this has been a banner year for ETF funds, but the main reasons for ETF holders being bearish on the market is continued interest rate volatility, that puts a pin in the bubble notion that valuations continue to be cheap.


Crimes Dose Not Pay -- Being a Rat Does
On Nov. 3 the Securities and Exchange Commission released its proposed rules for implementing the whistleblower provisions established by §922 of the DoddFrank Act. The SEC rules attempt to address the fear that large bounty awards for whistleblowers will create a perverse incentive for tipsters to bypass internal compliance mechanisms and report potential securities violations directly to the SEC.

The Securities and Exchange Commission today announced that three whistle-blowers have been awarded more than $25,000 combined for tips and information they provided to help the SEC and Justice Department stop a sham hedge fund.

In the past, the SEC has had a difficult time bringing insider trading cases against hedge funds given the complex and sophisticated trading strategies that define them. However, the current SEC Enforcement
Division has demonstrated an increased commitment to uncovering insider trading in the hedge fund context, recently filing several cases involving hedge funds based on tipsters and informants. The act’s whistleblower provisions strengthen the SEC’s already enhanced arsenal of enforcement tools against hedge funds by incentivizing citizens to act as government watchdogs. These traditionally opaque institutions are now more likely than ever before to face scrutiny of their practices and allegations of misconduct lodged against them by current and former employees seeking a bounty. Whistleblowers can thus play a critical role in building a case against hedge funds, their employees and their associates.




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Yet another parabolic up week for the markets. Honestly folks valuations are really stretched here. The air is so thin at this altitude. Then again the markets can and do (on a short term basis) anything they want. Still I would expect a little pull-back in the next two weeks.


Lets see what is in the charts this week:

CLICK HERE: To see the 100 and 200 series charts



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