Though the average person dont see it I think this market is very complexed. Right now we are moving up on very little volume but never the less we are moving higher in price. My general rule is to play light when volume is non existent because that just means the big guys are not playing but I have come to a realization that what has happened is that the equities market is not as lively as it use to be and therefore we have lower volumes.
Only thing working correctly here is the time projections which I had for market highs in April or June. Funny enough we hit it dead on in April but I am still getting one in June. What that tells me is we might get a significant sell off sometimes soon and then charge hard again to a new marginal high June or September (Minor reflection time projection in my analysis) but after these dates the market will fall under its own weight.
I still have 2012/13 being a cycle low so I would be looking at that long time frame as a nice long term short period just as last year I said we would hit highs somewhere 2012 April/ June.
Friday, April 29, 2011
Thursday, April 28, 2011
Divergence
Notice the divergence in the AD line around this 1352/4 area. Remember on the last push up this area was the top. Can this we signaling an early double top? Have to wait and see
Wednesday, April 27, 2011
IMF analysis
The International Monetary Fund has just dropped a bombshell, and nobody noticed.
For the first time, the international organization has set a date for the moment when the "Age of America" will end and the U.S. economy will be overtaken by that of China.
According to the latest IMF official forecasts, China's economy will surpass that of America in real terms in 2016 — just five years from now.
Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world's hegemonic power.
According to the IMF forecast, which was quietly posted on the Fund's website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world's largest economy.
Most people aren't prepared for this. They aren't even aware it's that close. Listen to experts of various stripes, and they will tell you this moment is decades away. The most bearish will put the figure in the mid-2020s.
But they're miscounting. They're only comparing the gross domestic products of the two countries using current exchange rates.
That's a largely meaningless comparison in real terms. Exchange rates change quickly. And China's exchange rates are phony. China artificially undervalues its currency, the renminbi, through massive intervention in the markets.
The Comparison That Really Matters
In addition to comparing the two countries based on exchange rates, the IMF analysis also looked to the true, real-terms picture of the economies using "purchasing power parities." That compares what people earn and spend in real terms in their domestic economies.
Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America's share of the world output down to 17.7%, the lowest in modern times. China's would reach 18%, and rising.
Just 10 years ago, the U.S. economy was three times the size of China's.
Naturally, all forecasts are fallible. Time and chance happen to them all. The actual date when China surpasses the U.S. might come even earlier than the IMF predicts, or somewhat later. If the great Chinese juggernaut blows a tire, as a growing number fear it might, it could even delay things by several years. But the outcome is scarcely in doubt.
This is more than a statistical story. It is the end of the Age of America. As a bond strategist in Europe told me two weeks ago, "We are witnessing the end of America's economic hegemony."
We have lived in a world dominated by the U.S. for so long that there is no longer anyone alive who remembers anything else. America overtook Great Britain as the world's leading economic power in the 1890s and never looked back.
And both those countries live under very similar rules of constitutional government, respect for civil liberties and the rights of property. China has none of those. The Age of China will feel very different.
Victor Cha, senior adviser on Asian affairs at Washington's Center for Strategic and International Studies, told me China's neighbors in Asia are already waking up to the dangers. "The region is overwhelmingly looking to the U.S. in a way that it hasn't done in the past," he said. "They see the U.S. as a counterweight to China. They also see American hegemony over the last half-century as fairly benign. In China they see the rise of an economic power that is not benevolent, that can be predatory. They don't see it as a benign hegemony."
The rise of China, and the relative decline of America, is the biggest story of our time. You can see its implications everywhere, from shuttered factories in the Midwest to soaring costs of oil and other commodities. Last fall, when I attended a conference in London about agricultural investment, I was struck by the number of people there who told stories about Chinese interests snapping up farmland and foodstuff supplies — from South America to China and elsewhere.
This is the result of decades during which China has successfully pursued economic policies aimed at national expansion and power, while the U.S. has embraced either free trade or, for want of a better term, economic appeasement.
"There are two systems in collision," said Ralph Gomory, research professor at NYU's Stern business school. "They have a state-guided form of capitalism, and we have a much freer former of capitalism." What we have seen, he said, is "a massive shift in capability from the U.S. to China. What we have done is traded jobs for profit. The jobs have moved to China. The capability erodes in the U.S. and grows in China. That's very destructive. That is a big reason why the U.S. is becoming more and more polarized between a small, very rich class and an eroding middle class. The people who get the profits are very different from the people who lost the wages."
The next chapter of the story is just beginning.
U.S. Spending Spree Won't Work
What the rise of China means for defense, and international affairs, has barely been touched on. The U.S. is now spending gigantic sums — from a beleaguered economy — to try to maintain its place in the sun.
It's a lesson we could learn more cheaply from the sad story of the British, Spanish and other empires. It doesn't work. You can't stay on top if your economy doesn't.
Equally to the point, here is what this means economically, and for investors.
Some years ago I was having lunch with the smartest investor I know, London-based hedge-fund manager Crispin Odey. He made the argument that markets are reasonably efficient, most of the time, at setting prices. Where they are most likely to fail, though, is in correctly anticipating and pricing big, revolutionary, "paradigm" shifts — whether a rise of disruptive technologies or revolutionary changes in geopolitics. We are living through one now.
The U.S. Treasury market continues to operate on the assumption that it will always remain the global benchmark of money. Business schools still teach students, for example, that the interest rate on the 10-year Treasury bond is the "risk-free rate" on money. And so it has been for more than a century. But that's all based on the Age of America.
No wonder so many have been buying gold. If the U.S. dollar ceases to be the world's sole reserve currency, what will be? The euro would be fine if it acts like the old deutschemark. If it's just the Greek drachma in drag ... not so much.
The last time the world's dominant hegemon lost its ability to run things singlehandedly was early in the past century. That's when the U.S. and Germany surpassed Great Britain. It didn't turn out well.
Updated With IMF Reaction
The International Monetary Fund has responded to my article.
In a statement sent to MarketWatch, the IMF confirmed the report, but challenged my interpretation of the data. Comparing the U.S. and Chinese economies using "purchase-power-parity," it argued, "is not the most appropriate measure… because PPP price levels are influenced by nontraded services, which are more relevant domestically than globally."
The IMF added that it prefers to compare economies using market exchange rates, and that under this comparison the U.S. "is currently 130% bigger than China, and will still be 70% larger by 2016."
My take?
The IMF is entitled to make its case. But its argument raises more questions than it answers.
First, no one measure is perfect. Everybody knows that.
But that's also true of the GDP figures themselves. Hurricane Katrina, for example, added to the U.S. GDP, because it stimulated a lot of economic activity — like providing emergency relief, and rebuilding homes. Is there anyone who seriously thinks Katrina was a net positive for the United States? All statistics need caveats.
Second, comparing economies using simple exchange rates, as the IMF suggests, raises huge problems.
Currency markets fluctuate. They represent international money flows, not real output.
The U.S. dollar has fallen nearly 10% against the euro so far this year. Does anyone suggest that the real size of the U.S. economy has shrunk by 10% in comparison with Europe over that period? The idea is absurd.
China actively suppresses the renminbi on the currency markets through massive dollar purchases. As a result the renminbi is deeply undervalued on the foreign-exchange markets. Just comparing the economies on their exchange rates misses that altogether.
Purchasing power parity is not a perfect measure. None exists. But it measures the output of economies in terms of real goods and services, not just paper money. That's why it's widely used to compare economies. The IMF publishes PPP data. So does the OECD. Many economists rely on them.
For the first time, the international organization has set a date for the moment when the "Age of America" will end and the U.S. economy will be overtaken by that of China.
According to the latest IMF official forecasts, China's economy will surpass that of America in real terms in 2016 — just five years from now.
Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world's hegemonic power.
According to the IMF forecast, which was quietly posted on the Fund's website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world's largest economy.
Most people aren't prepared for this. They aren't even aware it's that close. Listen to experts of various stripes, and they will tell you this moment is decades away. The most bearish will put the figure in the mid-2020s.
But they're miscounting. They're only comparing the gross domestic products of the two countries using current exchange rates.
That's a largely meaningless comparison in real terms. Exchange rates change quickly. And China's exchange rates are phony. China artificially undervalues its currency, the renminbi, through massive intervention in the markets.
The Comparison That Really Matters
In addition to comparing the two countries based on exchange rates, the IMF analysis also looked to the true, real-terms picture of the economies using "purchasing power parities." That compares what people earn and spend in real terms in their domestic economies.
Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America's share of the world output down to 17.7%, the lowest in modern times. China's would reach 18%, and rising.
Just 10 years ago, the U.S. economy was three times the size of China's.
Naturally, all forecasts are fallible. Time and chance happen to them all. The actual date when China surpasses the U.S. might come even earlier than the IMF predicts, or somewhat later. If the great Chinese juggernaut blows a tire, as a growing number fear it might, it could even delay things by several years. But the outcome is scarcely in doubt.
This is more than a statistical story. It is the end of the Age of America. As a bond strategist in Europe told me two weeks ago, "We are witnessing the end of America's economic hegemony."
We have lived in a world dominated by the U.S. for so long that there is no longer anyone alive who remembers anything else. America overtook Great Britain as the world's leading economic power in the 1890s and never looked back.
And both those countries live under very similar rules of constitutional government, respect for civil liberties and the rights of property. China has none of those. The Age of China will feel very different.
Victor Cha, senior adviser on Asian affairs at Washington's Center for Strategic and International Studies, told me China's neighbors in Asia are already waking up to the dangers. "The region is overwhelmingly looking to the U.S. in a way that it hasn't done in the past," he said. "They see the U.S. as a counterweight to China. They also see American hegemony over the last half-century as fairly benign. In China they see the rise of an economic power that is not benevolent, that can be predatory. They don't see it as a benign hegemony."
The rise of China, and the relative decline of America, is the biggest story of our time. You can see its implications everywhere, from shuttered factories in the Midwest to soaring costs of oil and other commodities. Last fall, when I attended a conference in London about agricultural investment, I was struck by the number of people there who told stories about Chinese interests snapping up farmland and foodstuff supplies — from South America to China and elsewhere.
This is the result of decades during which China has successfully pursued economic policies aimed at national expansion and power, while the U.S. has embraced either free trade or, for want of a better term, economic appeasement.
"There are two systems in collision," said Ralph Gomory, research professor at NYU's Stern business school. "They have a state-guided form of capitalism, and we have a much freer former of capitalism." What we have seen, he said, is "a massive shift in capability from the U.S. to China. What we have done is traded jobs for profit. The jobs have moved to China. The capability erodes in the U.S. and grows in China. That's very destructive. That is a big reason why the U.S. is becoming more and more polarized between a small, very rich class and an eroding middle class. The people who get the profits are very different from the people who lost the wages."
The next chapter of the story is just beginning.
U.S. Spending Spree Won't Work
What the rise of China means for defense, and international affairs, has barely been touched on. The U.S. is now spending gigantic sums — from a beleaguered economy — to try to maintain its place in the sun.
It's a lesson we could learn more cheaply from the sad story of the British, Spanish and other empires. It doesn't work. You can't stay on top if your economy doesn't.
Equally to the point, here is what this means economically, and for investors.
Some years ago I was having lunch with the smartest investor I know, London-based hedge-fund manager Crispin Odey. He made the argument that markets are reasonably efficient, most of the time, at setting prices. Where they are most likely to fail, though, is in correctly anticipating and pricing big, revolutionary, "paradigm" shifts — whether a rise of disruptive technologies or revolutionary changes in geopolitics. We are living through one now.
The U.S. Treasury market continues to operate on the assumption that it will always remain the global benchmark of money. Business schools still teach students, for example, that the interest rate on the 10-year Treasury bond is the "risk-free rate" on money. And so it has been for more than a century. But that's all based on the Age of America.
No wonder so many have been buying gold. If the U.S. dollar ceases to be the world's sole reserve currency, what will be? The euro would be fine if it acts like the old deutschemark. If it's just the Greek drachma in drag ... not so much.
The last time the world's dominant hegemon lost its ability to run things singlehandedly was early in the past century. That's when the U.S. and Germany surpassed Great Britain. It didn't turn out well.
Updated With IMF Reaction
The International Monetary Fund has responded to my article.
In a statement sent to MarketWatch, the IMF confirmed the report, but challenged my interpretation of the data. Comparing the U.S. and Chinese economies using "purchase-power-parity," it argued, "is not the most appropriate measure… because PPP price levels are influenced by nontraded services, which are more relevant domestically than globally."
The IMF added that it prefers to compare economies using market exchange rates, and that under this comparison the U.S. "is currently 130% bigger than China, and will still be 70% larger by 2016."
My take?
The IMF is entitled to make its case. But its argument raises more questions than it answers.
First, no one measure is perfect. Everybody knows that.
But that's also true of the GDP figures themselves. Hurricane Katrina, for example, added to the U.S. GDP, because it stimulated a lot of economic activity — like providing emergency relief, and rebuilding homes. Is there anyone who seriously thinks Katrina was a net positive for the United States? All statistics need caveats.
Second, comparing economies using simple exchange rates, as the IMF suggests, raises huge problems.
Currency markets fluctuate. They represent international money flows, not real output.
The U.S. dollar has fallen nearly 10% against the euro so far this year. Does anyone suggest that the real size of the U.S. economy has shrunk by 10% in comparison with Europe over that period? The idea is absurd.
China actively suppresses the renminbi on the currency markets through massive dollar purchases. As a result the renminbi is deeply undervalued on the foreign-exchange markets. Just comparing the economies on their exchange rates misses that altogether.
Purchasing power parity is not a perfect measure. None exists. But it measures the output of economies in terms of real goods and services, not just paper money. That's why it's widely used to compare economies. The IMF publishes PPP data. So does the OECD. Many economists rely on them.
Tuesday, April 26, 2011
On Target
So on target - time cycles told me months ago April possibly June of a high in the market. Today we hit such highs with just a few trading days left in the month. I am still doing some analysis before I put out my next prediction but it will be in the opposite direction of the last move.
Stay Tune
Stay Tune
Sunday, April 24, 2011
1425
Still getting this target on my work- Obviously I am then going to infer we will see this number close to the June time cycle high or soon after.
Will that be the top? Maybe but one thing is for sure it will be a significant number
Will that be the top? Maybe but one thing is for sure it will be a significant number
Thursday, April 21, 2011
Target achieved
So the April or June high has hit but I think we can go a bit higher. We truly wont be at a high till the S&P also achieves the same. As most would have found out, this week is a holiday week and most traders are out including myself so don't be satisfied with this movement without any volume but we will take it if you a bull.
I would be lightening up on any longs today since tomorrow is a holiday.
I would be lightening up on any longs today since tomorrow is a holiday.
Wednesday, April 20, 2011
Now I know
Now I know why we are moving so strong today: we got a three day weekend: None of the big traders are trading and the smaller guys are pushing us higher.
Strong move
Strong move to the upside I guess all is well and their is nothing wrong with being downgraded. Gotta love it
Tuesday, April 19, 2011
Oil May Hit $150, Gold $2,000: Risk Assessor
Oil prices are likely to hit $150 while gold may go above $2,000 longer term, Nick Bullman, a managing partner at research-based risk assessment service firm CheckRisk, told CNBC Tuesday.
In the Middle East and North Africa, "the genie is out of the bottle" and the unrest is " very likely to continue for some time," Bullman said, adding that over the short term oil, which currently trades around $105 for US crude and $119 for Brent crude, is likely to spike to $135.
Demand from Asia is high, the glut in WTI crude is temporary and Saudi Arabia is unlikely to be able to make up for the difference in output from other countries in the Middle East and North Africa where exports decreased, he said in support for this bullish call on oil.
Gold as a store of value will continue to go up because "the monetization of debt is a big problem," Bullman added.
The precious metal is likely to hit $1,625 for this year but "it's going to go above $2,000" longer term, he predicted.
UK real estate is an area where prices will go down, according to Bullman, who expects them to fall between 20 percent and 25 percent from current levels this year and the next, because of high food and basic products inflation combined with unemployment and high debt levels.
In the Middle East and North Africa, "the genie is out of the bottle" and the unrest is " very likely to continue for some time," Bullman said, adding that over the short term oil, which currently trades around $105 for US crude and $119 for Brent crude, is likely to spike to $135.
Demand from Asia is high, the glut in WTI crude is temporary and Saudi Arabia is unlikely to be able to make up for the difference in output from other countries in the Middle East and North Africa where exports decreased, he said in support for this bullish call on oil.
Gold as a store of value will continue to go up because "the monetization of debt is a big problem," Bullman added.
The precious metal is likely to hit $1,625 for this year but "it's going to go above $2,000" longer term, he predicted.
UK real estate is an area where prices will go down, according to Bullman, who expects them to fall between 20 percent and 25 percent from current levels this year and the next, because of high food and basic products inflation combined with unemployment and high debt levels.
Bulls or Bears
Well I am still hanging that the bulls have the market in full control though we sold off yesterday. I got crushed by the news yesterday but that's how it goes as news always rule. Today I am looking for a turn around tuesday and maybe a possible remount of friday's high.
Monday, April 18, 2011
Thursday, April 14, 2011
Inflection Point
Market at a real inflection point- I would be very careful here. The Euro should get a pullback in a bullish pattern and it will be interested to see how Oil reacts in the next few days.
Tuesday, April 12, 2011
S&P
Looking what will happen if we touch 1304 today on the June contract on the S&P. A close below will bring in the bears.
Oil wow
Called Oil here months ago to $113 and that was the top so fr- we have dropped $7 since it hit $113 and I think we will go lower since the projection has been fulfilled.
Monday, April 11, 2011
Market
S&P trading weak here- see if they try and tag that overnight lows 1318 area. I do have this as a significant number in my analysis
Oil
So Oil hit my $113 projection and has been in pullback mode since then. I do expect it to fall below $108 and when it does i will draw up new projections to see what next might happen in the medium to long term. In the mean time we are doing a whole lot of NOTHING in the market. This is worse than watching paint dry
Busy week for me so posts will be limited.
Busy week for me so posts will be limited.
Friday, April 8, 2011
Oil
Called Oil to $113 months ago and here it is - $112.91 :) close enough. Stocks are going to get their pullback here for sure I would be watching next week carefully to see how the leading stocks pull in.
Thursday, April 7, 2011
1342
I am getting a bunch of projections to that number. Now I dont know if that will be the secondary highs of the last highs or just where they would like to push the market to here. We will see- A whole lot of nothing going on this week except of the move caused by the second quake over in Japan. I think it is a good thing we pause right here and consolidate but the market will do what it wants to do.
No Action
We are in a period of consolidation here. Yesterday was brutal to watch as we were in a tight range for the whole day. The S&P traded within a 2 point range for two hours, crazy. On a different note I do see some of the Nasdaq leaders show relative weakness, for example GOOG and AAPL and this makes me cautious here especially with the low volume. Stay light here this the market tips its hands or play long term time frames, it is just not worth it.
Wednesday, April 6, 2011
No action
So I am around these computer screens all day and ZERO action. Just one of those days, where the volume is just not there. The S&P IN A 3 POINT RANGE SINCE 10:30.
Tuesday, April 5, 2011
Correction
Not FED metting- FED minutes from the last meeting- Anyways we are lifeless here in the markets
FED
Fed meeting today- I have been sick with my allergies for the last 4 days so I am not 100%, not even 75% :) so posts will be limited this week till I get back my health.
Today is a non trading day as it is FED meeting day and after yesterday's extreme low volume I expect today to be worse.
Today is a non trading day as it is FED meeting day and after yesterday's extreme low volume I expect today to be worse.
Friday, April 1, 2011
Prediction- Oh yes!!
Now I have been on the fence a lot these days on the markets and some might question why and what am I thinking. Well here it goes(short version :)).
Well I think the market is trying to suck in the last of the mom and pops accounts before it takes a turn down. Right now if you look at the volume trading it shows very little participation on the part of the retail investors. What I think will happen to the market is the exact same thing that happened to investors in the real lestate hype. The big boys are much smarter and they know if they all head for the doors at once they will all get burnt, so what are they doing? waiting on hand and knees for the average guy to get in so they can leave them with the bag. My notion is that the big boys didn't even want the market this high, they thought the small time investors would have got in but they have not so they will push it up (melt up) till they get someone in the market to sell the baggage to.
Now I believe since the volume is still low, the market will therefore go higher, it sounds crazy but this is my analysis here, they got to get it higher so people can give up and say hey it is ok to get back in. Now what level does this happen, is that magic answer. I have done some work and I have a number in mind and I will say it here though it might prove the death of me :), but this site is my option and not to be used for investing, so who cares :). My magic number is 1425 on the S&P. I think that will be the first real test and beyond that maybe we need to get to new all time highs somewhere around 1650 but that would be really bad for the retail investor because the fall will be worse, so for me I am hoping for just 1425.
In the meantime we look like we can get about 80 -90 points more on the S&P so I would be think about what I will be shorting the higher we go and what I want sold if I am holding.
Well I think the market is trying to suck in the last of the mom and pops accounts before it takes a turn down. Right now if you look at the volume trading it shows very little participation on the part of the retail investors. What I think will happen to the market is the exact same thing that happened to investors in the real lestate hype. The big boys are much smarter and they know if they all head for the doors at once they will all get burnt, so what are they doing? waiting on hand and knees for the average guy to get in so they can leave them with the bag. My notion is that the big boys didn't even want the market this high, they thought the small time investors would have got in but they have not so they will push it up (melt up) till they get someone in the market to sell the baggage to.
Now I believe since the volume is still low, the market will therefore go higher, it sounds crazy but this is my analysis here, they got to get it higher so people can give up and say hey it is ok to get back in. Now what level does this happen, is that magic answer. I have done some work and I have a number in mind and I will say it here though it might prove the death of me :), but this site is my option and not to be used for investing, so who cares :). My magic number is 1425 on the S&P. I think that will be the first real test and beyond that maybe we need to get to new all time highs somewhere around 1650 but that would be really bad for the retail investor because the fall will be worse, so for me I am hoping for just 1425.
In the meantime we look like we can get about 80 -90 points more on the S&P so I would be think about what I will be shorting the higher we go and what I want sold if I am holding.
Time Projection
Remember I have been noting I have a time projection of Highs in the market being in April or June.
Here we go
Here we go 1329 on a range expansion from the two last days consolidation. Bracket the first hour and see if we get more going.
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