Wednesday January 25, 2012
While my message may not please all our bearish readers I have at least been consistent.
Rather than pick a numeric target I have maintained that the better target is a combination of
- internal indicaotrs peaking such as bullish percent on 200 day MA over 90%
- the VIX at new lows
- TLT dramatically lower causing serious pain for PIMCO and others that have bought at the highest bond prices
- the Dollar off its recent highs as a rally in the Euro stuns eveyrone mesmerized by the negative news out of Europe
Then and only then will the market top out. Those of you citing other figures to justify a bearish position clearly have a different model than I have, now to make the point.
The Dollar
This is UUP an ETF for the US Dollar. The FED anouncement came mid day today, note what happened. UUP immediately dropped from 22.40 to 22.20 The announcement that the FED is not going to fight inflation is negative for the Dollar. it is positive for commodity prices which is why gold and oil both reversed their negative status of the morning to turn quite positive today.
Bonds
This is the same graph for the same time period but for TLT a fund of bonds. Note that both the Dollar above and TLT have been falling the last few days. TLT like UUP fell immediately on the FED news. The fall was only two full points, expect it to accelerate the decline in the next few days. All the stocks I own are moving up indicating TLT is on very borrowed time.
GDXJ
Recall that werecommended going long CEF and GDXJ at the end of December, here is the Jr Miner index GDXJ in the same time frame as UUP and TLT. The Dollar and bonds are slowly tanking, GDXJ took off like the proverbial rocket, and bingo right on the FED announcement! Sootheby's BID, a stock with a phenomenaly high correlation to the overall market did the same thing today.
Readers can go back, please do, the last several days and read my Bear Collection of analysts calling for a top here. TMP is not one of them, ahem....
RIG has now jumped forom 40 to 47.5 since Jan 17 where we recommended it
GM has a full page ad in today's WSJ noting the DOT found the Volt to be perfectly safe, apparently the dim bulb bureaucrat who annoucned an investigation of the Presiden't favorite subsidized car got the memo, eh? It is recovering and I expect it to hit 30 at least before this is al over
QQQ jumped 1.42% today as we predicted last night, anyone could have predicted that on the Apple report but since most poeple who write stuff like this always mention their successes.....
In fact if you believe as I do that TLT is way over valued here, that the quant programs will increase their sell signals i ncoming days for bonds, then billions of dollars in bonds will need to find a new home, well, I suspect that the market can easily take out 1345 and 1370, dobut me? Well
TLT Daily
Today's action is particularly interesting from a technical standpoint. TLT hit its 50 bar MA at 118 and then sharpy reversed. this suggests a retreat to the 200 day MA at 105-6.
For now the rally in stocks continues
Comments