Market Shadows Newsletter: Decision Points
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.