Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Implications for Stock Market - Nadeem_Walayat
2.Odds of Winning Walkers Crisps Spell & Go olidays K, C and D Letters - Sami_Walayat
3.Massive Silver Price Rally During The Coming US Dollar Collapse - Hubert_Moolman
4.Pope Francis Calls For Worldwide Communist Government - Jeff_Berwick
5.EU Referendum Opinion Polls Neck and Neck Despite Operation Fear, Support BrExit Campaign - Nadeem_Walayat
6.David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - Mike Gleason
7.British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - Nadeem_Walayat
8.Gold Price Possible $200 Rally - Bob_Loukas
9.The Federal Reserve is Not Going To Raise Interest Rates and Destroy Gold - Michael_Swanson
10.Silver Miners’ Q1’ 2016 Fundamentals - Zeal_LLC
Free Silver
Last 7 days
EU Referendum, Black Vote LEAVE or REMAIN? Which is Worse for Racism for Britain's Ethnic Minorities? - 29th May 16
Billionaire Gross: Jubilee Debt Relief as Prelude to New Global Economic Order - 29th May 16
Wargaming North Korea - Assessing the Threat - 29th May 16
EU REMAIN Population Forecasts - England 4.1 million Explosion, London Migration Crisis - 28th May 16
A Guide to the Trump-Sanders Debate - 28th May 16
Gold And Silver – At Significant Support. New “Story” Developing - 28th May 16
The Next Systemic Lehman Event - New Scheiss Dollar & Gold Trade Standard - 27th May 16
Energy and Debt Crisis Point to Much Higher Silver, Metals Prices - 27th May 16
Gold Junior Stocks Q1 2016 Fundamentals - 27th May 16
These Crisis Markets Are Primed to Deliver Big Gains, Platinum Never Cheaper! - 27th May 16
Operation Black Vote BrExit Warning for the Wrong EU Referendum - 27th May 16
UK Immigration Crisis Hits New Extreme, Catastrophic ONS Migration Stats Ahead of EU Referendum - 27th May 16
Many of the World’s Best Investors Made Their Fortunes This Way…And You Can Too - 27th May 16
The Ugly Truth About Stock Market Manipulation and Gold Prices - 27th May 16
Gold Price Looking Vulnerable While Gold Stocks Correct - 27th May 16
The 5 Fatal Flaws of Trading - 27th May 16
The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why - 27th May 16
A New Golden Bull or Has the Market Gone Too Far Too Fast? - 27th May 16
It Feels Like Inflation - 26th May 16
Negative Interest Rates Set to Propel the Dow Jones to the Stratosphere? - 26th May 16
S&P Significant Low has Occurred – Not Likely! - 26th May 16
Statistics for Funeral Planning in UK Grave - 26th May 16
Think Beyond Oil And Gold: Interview With Mike 'Mish' Shedlock - 26th May 16
Hard Times and False Mainstream Media Narratives - 26th May 16
Will The Swiss Guarantee 75,000 CHF For Every Family? - 26th May 16
Is There A Stocks Bear Market in Progress? - 26th May 16
Billionaires Are Wrong on Gold - 26th May 16
How NOT to Invest in the Gold Market - 26th May 16
The Black Swan Spotter...Which Saw the Oil-Crash coming; now says the “Invisible Hand” will push Brent to $85 by Christmas - 26th May 16
U.S. Household Debt Still Below 2008 Peak - 25th May 16
Brexit: Wrong Discussion, Wrong People, Wrong Arguments - 25th May 16
SPX is at Strong Resistance - 25th May 16
US Dollar, Back From the Grave? - 25th May 16
Gold : Just the Facts Ma’am - 25th May 16
The Worst Urban Crisis in History Could be Upon Us - 24th May 16
Death Crosses Across The Board Are IRREFUTABLE Stock Market Sell Signals - 24th May 16
Bitcoin Trading Alert: Bitcoin Price Stays below $450 - 24th May 16
Stock Market Crash Death Cross Doom Prevails - 23rd May 16
Did AMAT Chirp? Implications for the Economy and Gold - 23rd May 16
Stocks Extended Their Rebound On Friday - Will They Continue Higher? - 23rd May 16
UK Treasury Propaganda Warns of 3.6% Brexit Recession, the £64 Billion Question? - 23rd May 16
Stock Market Support Breached, But Not Broken! - 23rd May 16
George Osborne Warns of 18% Cheaper House Prices - BrExit for First Time Buyers - 22nd May 16
Gold Bull-Phase I Continues to Confound (The Trek to “Known Values”) - 22nd May 16 r
Avoiding a War in Space - 22nd May 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why 95% of Traders Fail

Credit Kills the Stocks Bear for December

Stock-Markets / Stock Markets 2012 Dec 11, 2012 - 12:50 PM GMT

By: Clif_Droke

Stock-Markets Stocks remained buoyant this week as the market believes the Fed will remain accommodative in view of the latest drop in U.S. unemployment numbers. It’s widely expected the Federal Reserve will maintain its easy money policy when it meets on Wednesday.

The number of stocks making new 52-week lows has remained under 40 for the last two weeks now and the major indices are all above their rising 15-day moving averages. That shows that the market has stabilized enough to allow rising short-term internal momentum to begin to have a lifting effect on the market.



Elsewhere it was announced today that According to the Federal Reserve, consumer credit increased by $14.2 billion in October. This follows prior month's reading of a $11.4 billion increase, and is higher than the $9.9 billion that had been broadly expected among economists polled by Briefing.com. The increase in consumer credit underscores the continued positive readings in our New Economy Index (NEI), which indicates a positive overall holiday retail sales season for December.

Much of the impetus behind the NYSE market’s short-term strength is coming from the improvement in the short-term internal momentum. Specifically, the short-term directional indicator component of our internal momentum index (HILMO) is gradually turning up. This particular indicator measures the rate of change in the NYSE new 52-week highs and lows, which in turn reflects the incremental demand for stocks. When this particular indicator is rising after being in decline for several weeks, it implies the stock market’s short-term internal path of least resistance is turning up.



There are several indicators which point to the December-January bullish seasonality effect taking root. One such indicator worth mentioning is the euro currency, which has regained its footing after a brief excursion below its 15-day trend line last month. The euro currency ETF (FXE) is now above its rising 15-day MA and is closing in on a quarterly high. That’s a sign that in spite of the continued headline fears surrounding the euro zone, investors aren’t inordinately worried about the fallout in the near term. This in turn should help to create a fairly stable environment for equities in the near term.

In recent years there has been a fairly close relationship between the euro and the short-term direction of the U.S. stock market with the euro currency leading the way in most cases. The most recent example of this relationship was the peak in the euro ETF in late February, which preceded the major peak in the S&P 500 by at least a month. The following graph highlights this relationship and underscores the tendency for strength in the euro to beget strength in U.S. equities.

The next example of a leading indicator is the China 25 Index Fund ETF (FXI), which has also been a leading indicator of sorts for the S&P in recent years. FXI made a new multi-month high today and is feeding off strong internal momentum currents within its sector.



Another favorable indicator is the recent strength in the NYSE Broker/Dealer Index (XBD). When this sector shows leadership it typically bodes well for the broad market outlook. XBD has not only recovered above its rising 15-day MA, it’s also closing in on a fresh 3-month high and looks to soon test, if not overcome, its previous high from September.



I would add to this observation the recent improvement in the Bank Index (BKX), another important gauge of broad market strength. Note the improvement in the 15-day moving average as well as the positive MACD structure in the following chart.



Another bright spot on the immediate horizon is the mid-cap stocks. Unlike the SPX chart, the technically significant 30-day and 60-day moving averages for the S&P 400 Midcap Index (MID) have both flattened out and are on the verge of turning up. The MID is also above both moving averages as of this writing. Stock Trader’s Almanac tells us that the small-cap and mid-cap stocks tend to start outperforming beginning around the middle of December. This is something we’ll be watching closely in the days ahead. If the NYSE short-term internal momentum index turns up and gives us the anticipated buy signal we’ll likely see the next tradable move in the mid-caps, which has the best chart of any of the major indices.

On the investor psychology front the latest AAII investor sentiment statistics showed a 1% increase in both the bulls and bears from last week. The bullish percentage rose to 42% and the bearish percentage rose to 35%. Granted there are more bulls than bears, which from a contrarian perspective is sometimes troubling, but this is actually a normal progression from an excessively bearish psychology last month. Only when the percentage of bulls starts to approach 50% will we need to be concerned.

Here are the newsletter advisory sentiment figures from Investors Intelligence. The editors at Investors Intelligence largely agree with my take on the AAII sentiment numbers: “There was an increase for the BULLS to 43.6%, from 39.3 %. At present the BULL count is not a danger sign, and could grow further before becoming a concern. Showing their largest weekly change in almost four months, the BEARS fell to 25.5%. With more BULLS and fewer BEARS, the SPREAD between them jumped to 18.1%. The current increase is normal and not a problem until it nears that almost 30% reading again.”

2014: America's Date With Destiny

Take a journey into the future with me as we discover what the future may unfold in the fateful period leading up to - and following - the 120-year cycle bottom in late 2014.

Picking up where I left off in my previous work, The Stock Market Cycles, I expand on the Kress cycle narrative and explain how the 120-year Mega cycle influences the market, the economy and other aspects of American life and culture. My latest book, 2014: America's Date With Destiny, examines the most vital issues facing America and the global economy in the 2-3 years ahead.

The new book explains that the credit crisis of 2008 was merely the prelude in an intensifying global credit storm. If the basis for my prediction continue true to form - namely the long-term Kress cycles - the worst part of the crisis lies ahead in the years 2013-2014. The book is now available for sale at: http://www.clifdroke.com/books/destiny.html

Order today to receive your autographed copy and a FREE 1-month trial subscription to the Gold & Silver Stock Report newsletter. Published twice each week, the newsletter uses the method described in this book for making profitable trades among the actively traded gold mining shares.

By Clif Droke
www.clifdroke.com

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit www.clifdroke.com

Clif Droke Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife