Bill King

"In the summer of 2008 or thereabout, we stated that if one is not negative now, except for all-out war, we could not imagine what could make one negative."

"Now we must state that if one is not furious over the statist takeover of the US in which a select few are being enriched as the US is being bankrupt, we cannot envision a scenario that would upset you."

Amen, brother....

McClellan Osc and SPX

Great observation from Cobra...

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2393449&cmd=show[s176705681]&disp=P

Two more... (then I'll stop)

Another 'risk' chart

see the post below too

SPX 120 minute chart

About to generate a TD Sequential Sell signal. This will just add to the many TD Seq. sells that have been piling up on many time frames on many indices.

Our future?

Japan... now and then. (From the WSJ this morning)

charts to watch

Here are some indicators of willingness to take risk. That's about the only trade these days... do you have it on, or off... or worse are you short. Well, to me, taken as a whole I think the willingness to take risk is waning. Anyway, these are some charts to watch.

Crude..... UGLY DAY

Check out a crude chart.... bad day and no real news I can find.

A risk metric not confirming

High beta silver is not making new highs with the stock indices. A case can be made that corporate credit is also diverging and having trouble on a long term resistance level. I know this confidence number was much better than expected, but it usually just follows stocks. The TD Sequential signals are really piling up too in here. I think this is the good news to sell. I am sure there will be an end of month ramp job, but, as Art Cashin always writes... "be nimble, be very nimble."

What does this tell you?

WSJ reports homeowners who fall behind on their mortgage payments have become much less likely to catch up again, a new study shows. The report from Fitch Ratings focuses on a plunge in the "cure rate" for mortgages that were packaged into securities. The study excludes loans guaranteed by government-backed agencies as well as those that weren't bundled into securities. The cure rate is the portion of delinquent loans that return to current payment status each month. Fitch found that the cure rate for prime loans dropped to 6.6% as of July from an average of 45% for the years 2000 through 2006. For so-called Alt-A loans -- a category between prime and subprime that typically involves borrowers who don't fully document their income or assets -- the cure rate has fallen to 4.3% from 30.2%. In the subprime category, the rate has declined to 5.3% from 19.4%. "The cure rates have really collapsed," said Roelof Slump, a managing director at Fitch. Because borrowers are less willing or able to catch up on payments, foreclosures are likely to remain a big problem. Barclays Capital projects the number of foreclosed homes for sale will peak at 1.15 million in mid-2010, up from an estimated 688,000 as of July 1.

Retail_H1N1

Retail sales already blow. What happens when the H1N1 Flu virus rears its ugly head in a major way this winter? I sincerely hope that that virus does not touch anyone reading this in a personal way... but the odds of it being a factor in the economy are good. This whole rally has been predicated on an improvement in the rate of decline. Well, foreclosures are getting worse, commercial real estate is getting worse, banks are still black holes (that got to stop marking their toxic 'assets') and unemployment is getting worse. Now, we are about to throw a major viral outbreak into the mix. Merry Christmas retail.

Sentiment

Look at the spike in Call buying over Puts. Also, the indicators that smooth out the daily movements suggest an important turn area... but that spike in the dailies is huge.

August SPX highs were @ 1018. Below that and we may have a 'fake out' rather than a 'break out'.

Divergence

Look at the other times we have diverged with the average RSI...

Put Call Chart for last post

Long(er) Term Perspective

I still think we are in a bear market rally. Look at the 20 month and 100 week moving averages. Also consider that the 26 week ROC is at one of its highest levels in the past decade. Consider the McClellan Sum Osc (diverging) and the Bullish Percent and Put/Call numbers. Even if you are a bull market convert (and about to be gored in my opinion), you have to be wary of this price level going into the fall. I will try to discuss fundamentals, or lack thereof, in another post...

Morning Comments

The bears have had control of the 'risk trade' for 2 days. Breadth looks oversold on a short term basis ... I am looking for a small bounce.

Below 992

SPX trading below 992 shows a change in character of this market, I think. We may test old highs but I think there are good odds that fall highs are in.

We will see....

A turn on Friday? (another one)

I always watch the McClellan Sum turns... and it turned on many indices (SPX, NYSE, NAZ100, SP100, SP600). That could be significant. Also, credit had a bad week, (http://www.zerohedge.com/article/weekly-credit-summary-august-14) with spreads backing out and high yield taking the brunt of it. Commodity currencies like the Aussie and the Canadian had down weeks, as did Crude and Copper. It was not a good week for the bulls. I also get the feeling from many blogs and sites I hit, that it was a down week... but there is more upside to follow or that people are waiting for further down side to confirm a turn. Thus, I am starting to put more weight on the side of an actual turn... even though cycles suggest a better turn early September. Of course, that could be a lower high turn. Considering all the DeMark Combo signals I have on various indices on the dailies, and one on Naz 100 weekly... I think it is a real possibility we have seen some highs that we can measure in weeks.

Bad assets potential threat to economy, small banks - Mortgage Insider - OCRegister.com

Bad assets potential threat to economy, small banks - Mortgage Insider - OCRegister.com

A Congressional Report.... Of course their conclusions are wrong but at least they are starting to realize they haven't done jack shit to fix the problem. Just kicking the can down the road...

8.12 Outlook

As I think the Dollar may be the most important market right now for direction I will post on that. It looks like we may be in for a short term pullback in the Dollar as we have registered a TD Sequential sell signal on a intra-day chart. This would imply some upside to stocks. Of course, we have a FOMC communique tomorrow... so that should cause a little volatility. Generally, though... its hard to postulate that the bulls will give up so easily, or quickly, after their rampage for the last few months.

One thing is for certain... this is becoming an important junction in the markets. I think we are revolving around a pretty important turn date on many markets as we look at the end of summer and start of fall. I think there is a fairly big reversal in here. It may have already occurred... but I bet there is at least a re-test.

Baltic Dry down again

Morning Comments

We have been coiling in the stock indices since the run up on Friday after the employment report. I think trading below 993 on cash SP500 for 30 minutes to an hour will be a big change in character for the market (see earlier post and chart)and a sign that some sort of top is in. I am willing to try shorts if futures are trading below 1005. Above 1005, and I have to give the benefit to the upside.

SP 500

Problems at Fannie

FNM Has .9 Trillion of Troubled Loans - 8K | zero hedge

The Apparent Recovery

UK risks a Japan-style lost decade, BoE will warn - Telegraph

Will the real jobs number please stand up?

Matt Trivisonno’s Blog » Withholding Taxes Chart

What does this tell you about the employment situation in this country?

Debt Burden to Weigh on Stocks - WSJ.com

Debt Burden to Weigh on Stocks - WSJ.com

A real secular headwind.

....one more thing

Concerning my last post on the Dollar. If we give up 79 and keep trading below that level for any meaningful time or in any meaningful fashion, 'risk' trades like commodities and stocks are going to catch a bid again and keep getting people involved to the upside. The TD counts on the Dollar are not complete and suggest a few more weeks of downside. (That doesn't have to happen of course... its just an analysis technique, but there it is.) Other Currencies are still holding important support zones against the dollar as well. If those give on several companion currencies, then I will have more confidence we have a solid intermediate term bottom in. As of now, its watch and wait.

The Most Important Chart?

The Dollar regained important support last week at 79. That is a TD support level off of a TD Sell Set Up on the weeklies. As of now it continues to trade above that level. It gave it up briefly this a.m. and most of the 'risk' markets (I hate that term, but that is the way things trade now... its all one trade... the correlations remain horrendous)like copper, crude, A$, strengthened; it regained the 79 level and pressure came right back on those markets. The Dollar still has some work to do to convince me its put in a bottom... but there are signs on numerous currencies that we could be close. The Gold/Silver ratio is strengthening today as well, which is a sign of risk aversion.

The Aussie Dollar has been a big part of the 'risk trade'. Its a commodity currency, so its a high beta trade on dollar weakness and commodity strength. When it is up, stocks and commodities are usually up, and vice-versa. Well, its charts are getting interesting. I would prefer a divergence in the weeklies, and a count that is further along on the daily sequential. However, when the market is in a 5th wave on the weeklies, and is seriously OB, and is far enough along in the sequential countdown... I have to start looking for some low risk short trades. The point of this exercise is not necessarily the Aussie $; the point is: if it goes, most likely we are very near to the end in the risk trade... they all will go... stocks included.

Sentiment

I am reading that Berstein's DSI (Daily Sentiment Index) is showing the highest number of bulls since the October 2007 top. This put call ratio would tend to back that up. The 10 dma reading is 1 standard deviation from its 3 year average. That, while maybe not always the most timely, has been associated with market tops. The market is really running with this 'better than expected' employment report. Just lets not forget we have lost more jobs in this recession than any other post WWII recession. Calculated Risk does a good job with the report (see the BlogRoll to the right for a link).

Turn?

The Naz 100, the Small Caps, and the SP 100 McClellan Sums all turned yesterday. The SP 500, the NYSE, the Wilshire 5000, and the SP 400 Mids have yet to confirm yet.

Today is NonFarm Payrolls and Unemployemnt... Buckle up!!

Negative Equity

This was posted on Zero Hedge and I read of the report from Briefing yesterday... but it is so astounding (and so important)that I just had to put up this table in case you may have missed it elsewhere.

Naz 100 Charts

Quote of the Day

"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery." - Winston Churchill

Another ramp on the close

There are divergences everywhere, but this market keeps pushing higher in the final minutes. There must be huge performance anxiety if you are an underweighted fund manager (a feeling I have had before). I have done some DeMark Sequential counts and we are very very close to a reversal (like today) on dailies or a tick chart (50,000 vol/bar), or a few weeks away on the weekly charts.

One thing is certain, this market is sucking people back in big time. The risk at these price levels is tremendous for 'investments.' (In my opinion of course... and you know what people say about opinions.)

I also want to remind everyone that this Friday is Non Farm Payrolls / Unemployment. If the BLS ever decides to revise its Birth Death Model (which is is desperate need of revising), then that number may be really ugly and might give the bulls pause on their 'back to previous cycle growth, margins, and multiples' ideas. One would think at the least, the hoovering of stocks would slow before the number.

Calculated Risk: Consumer Products: "No trend of increasing orders"

Calculated Risk: Consumer Products: "No trend of increasing orders"

Great data point.

Divergence

This McClellan Osc divergence is on the Naz 100 too. The bears have been slaughtered for over 100 SP points without a break. Also, note the post yesterday on the hourly Bollinger Bands. I will be very interested in the afternoon session today. Many Elliot Wave guys are calling for a pullback to around 950, and then another spurt higher. One would think we are due at least some pull back... but that sentiment has not paid lately.

SPX Hourly Chart

The SPX just closed back within its Bolliger Band. This has had some good reversal points in the past.