Market Shadows Newsletter: Decision Points

ilene's picture

Here's this week's MarketShadows Newsletter, featuring thoughts on the market by a number of chartists including Allan Harris, Springheel Jack, Chris Vermeulen and JW Jones. Lots of charts this week. (Click here)

And the usual dose of negativity...


Russ Winter of Winter Watch at Wall Street Examiner commented that, "I feel a trap has been sprung. The market now is textbook example of an Irrational Market. Rational agents are MIA. It is gutted, dead inside, and completely soulless. A good name for it would be ‘the serial killer market.’ It definitely has that rogue trader feel to it too. And my sentiment is pretty widespread among veteran observers. Once you peel away the veneer, the parade of money managers that come on Bloomberg look like and talk like deer in the headlights, and they know something is wrong. The charts look exactly like the summer of 2008"...

Overall, the growth rate for wages and salary has been about going down from 6% in April 2011 to the current level of 3%. As Charles Biderman observed, "Meanwhile all the Fed’s easings have gotten us to here, where the US has to print, borrow or steal $100 billion each month to grow incomes by $20 billion. And the wage and salary growth rate is dropping. For how long can stock prices levitate while the economy slumps? Welcome to the Big Fix." (Biderman’s Daily Edge 8/16/2012: Wage & Salary Growth Drops 50% – Stocks Unchanged, TrimTabs).

The US has become a service oriented society, where a larger portion of the labor force has moved to part-time, lower-wage jobs. July’s increase in spending among U.S. consumers wasn't matched by companies stocking up on goods, suggesting the dial hasn’t moved much for businesses. Businesses either don’t expect a big bump in sales or are too worried about economic volatility to stock up. They are in a “wait-and-see” mode.  On that note, insiders have been selling stock into these rallies. For the week of August 10, insiders sold $1.1B worth of stock, while buying only $54M. The previous week, the difference was even more pronounced at $1.68B sales to $43M buys.

But never mind that. The market keeps going up and we're in awe, waiting for breakout or failure.

Click this link for the newsletter.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
adsanalytics's picture

Latest (after the jump) suggests greater inflows in risky assets at lower volumes - this is generally speaking not a great combination for a sustained rally. Of course the only other alternative (bonds) have been selling off for the past month so is there nowhere to hide for investors outside of gold?


ghenny's picture

This is not a complicated story.  With low yields everywhere investors have no choice but to play the market.  That is exactly what Bernake wanted, drive them to increase their risk.  What people on this site refuse to acknowledge - and I bought into it to my cost - is that the policy makers and central bankers may have it right.  They may actually be engineering a soft landing and positive recovery from our problems.  What a concept.  Maybe they are a lot smarter than the doom and gloomers.  As my friend at Raymond James told me recently, in the long run optimists always win.  

AurorusBorealus's picture

"drive them to increase their risk"

You go on believing your buddy at Raymond James, and you go right on increasing your risk... better hold the actual stock certificates and not at a brokerage account.  No matter how optomistic the folk who traded through Sentinel and MFGlobal may have been, they did not win.  "optimists always win..." what complete rubbish.

Wm the Shrubber's picture

Investors do have a choice; they can choose not to play.  And I am sorry to tell you, Bernanke et al do not "have it right".  All they have engineered is more time.  Fundamentals continue to deteriorate.  There is simply no pro-growth solution to a deleveraging/deflationary dynamic.  Optimists may ultimately win, but realists will survive wtih capital intact to enable them prosper in better days.

jeff montanye's picture

like the optimistic romans about 550, the optimistic arabs about 1000, the optimistic inca and aztec about 1500, the optimistic turks and spanish about 1700, the optimistic chinese about 1800, the optimistic british about 1900, the optimistic u.s. about 2000 ....

are you sure the raymond james employee is your "friend"?


aleph0's picture

" policy makers and central bankers may have it right."

LOL ... you mean needing 10$ of New Debt for every 1$ increase in GDP ?

I think you may be missing the big picture ... the debt load of sovereigns and Debt in total is already well up the exponential curve.


"They may actually be engineering a soft landing and positive recovery from our problems."

"Their mistakes" .... are now "our problems" .

The Govt./FED are only interested in one thing IMO ... maintaining their own power-matrix.

CompassionateFascist's picture

You're absolutely correct, Ghenny. Eventually  there'll be made-in-China monuments to Bernanke and Krugman standing right next to M.L. King's. 

DogSlime's picture

How did you "buy into it"?  The general sentiment on this site seems to be "avoid buying into anything - just try to get your money safe"  (or as safe as possible).

How can the central bankers have it right when the debt burden is so high and rising with no solid solution being implemented?  We seem to be accelerating toward the ground - how does this result in a "soft landing"?