Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Update - Nadeem_Walayat
2.Will Deutsche Bank Crash The Global Stock Market? - Clif_Droke
3.Gold Price In Excess Of $8000 While US Dollar Collapses - Hubert_Moolman
4.BrExit UK Economic Collapse Evaporates, GDP Forecasts for 2016 and 2017 - Nadeem_Walayat
5.Gold Stocks Massive Price Correction - Zeal_LLC
6.Stock Market Predicts Donald Trump Victory - Austin_Galt
7.Next Financial Crisis Will be Far Worse than 2008/09 - Chris_Vermeulen
8.The Gold To Housing Ratio As A Valuation Indicator - Dan_Amerman
9.GDXJ Gold Stocks - A Diamond in the Rough - Rambus_Chartology
10.Gold Boom! End Game Nears As Central Banks Buying Up Gold Mining Companies! - Jeff_Berwick
Last 7 days
Gold’s Moving Averages and Long-Term Outlook - 26th Sept 16
September Stock Market - The Not So Silent Demise of Deutsche Bank - 26th Sept 16
SPX sell signal confirmed - 26th Sept 16
SPX is testing the next level of support - 26th Sept 16
Outrageously Entertaining US Presidential Campaign Final Stages - What Happens Next? - 26th Sept 16
BoJ, FOMC and Where To Now? - 26th Sept 16
Stock Market New All Time Highs Next - 26th Sept 16
Why Trump Will Win US General Election 2016 Prediction Forecast - 26th Sept 16
Martial Law Rolls Out Across the US As Jubilee Nears - 26th Sept 16
Stock Market More Correction Likely - 25th Sept 16
US Presidential Election Forecast 2016 - Trump Riding BrExit Wave into the White House - 25th Sept 16
US Economy GDP Growth Estimates in Free-Fall: FRBNY Nowcast 2.26% Q3, 1.22% Q4 - 24th Sept 16
Gold and Gold Stocks Corrective Action Continues Despite Dovish Federal Reserve - 24th Sept 16
Global Bonds: Why Our Analyst Says Things Just Got "Monumental" - 24th Sept 16
Where Did All the Money Go? - 23rd Sept 16
Pension Shortfalls Could Be 4X To 7X Greater Than Reported - 23rd Sept 16
Gold Unleashed by the Fed - 23rd Sept 16
Gold around U.S Presidential Elections - 23rd Sept 16
Here’s Why Eastern Europe Is Doomed - 23rd Sept 16
Nasdaq NDX 100 Big Cap Tech Breakout ? - 23rd Sept 16
The Implications of the Italian Banking Crisis Could Be Disastrous - 22nd Sept 16
TwinLakes Theme Park Summer Super 6 FREE Return Entry for Real? - 21st Sept 16
Has the Silver Bullet Run Out of Fire Power? - 21st Sept 16
Frack Sand: The Unsung Hero Of The OPEC Oil War - 21st Sept 16
What’s Happening With Gold? - 21st Sept 16
Gold vs. Stocks and Commodities, Pre-FOMC - 20th Sept 16
BrExit UK Inflation CPI, RPI Forecast 2016, 2017 - 20th Sept 16
European banks may be more important than the Fed this week - 20th Sept 16
Gold, Silver, Stocks and Bonds Grand Ascension or Great Collapse? - 20th Sept 16
Mass Psychology in Action; Instead of Selling Gilead it is Time to Take a Closer Look - 20th Sept 16
Hillary - Finally Well Deserved Recognition for Deplorables - 20th Sept 16
Fascist Business Model: Reich Economics - 19th Sept 16
Multiweek Correction in Gold and Silver Markets Continues - 19th Sept 16
Stock Market May Turn Ugly This Week - 19th Sept 16
China Is Digging Itself into a Deeper Hole - 19th Sept 16
Yellen’s Footnote 8 Would Put Interest Rates on Autopilot - 19th Sept 16
Central Bank Digital Currencies: A Revolution in Banking? - 19th Sept 16
UK Government Surrenders to China / France to Build Nuclear Fukushima Plant At Hinkley Point C - 19th Sept 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

Ominous Stock Market Warning Signs - Sell in May and Go Away

Stock-Markets / Seasonal Trends Apr 20, 2013 - 07:57 PM GMT

By: Sy_Harding

Stock-Markets

As the potential Sell in May and Go Away influence approaches, problems for the stock market are stacking up from both the fundamental and technical sides.

On the fundamental side;


  • New home sales fell 4.6% in February, the biggest decline in two years.
  • Durable Goods Orders ex-aircraft orders fell 2.7% in February.
  • The Conference Board’s Consumer Confidence Index unexpectedly plunged from 68.0 in February to 59.7 in March.
  • The Thomson Reuters/University of Michigan Consumer Sentiment Index plunged to a nine-month low in April.
  • The ISM Mfg Index unexpectedly dropped from 54.2 in February to 51.3 in March, its third straight monthly decline. The ISM Non-Mfg Index, covering the services sector, also declined in March.
  • Retail Sales fell 0.4% in March, the biggest decline in 9 months.
  • Only 88,000 new jobs were created in March, much worse than the forecast for 200,000 jobs.

This week we learned that the Conference Board’s Leading Economic Indicators fell 0.1% in March versus the consensus forecast for an increase of 0.2%.

And while overall housing starts were up in March, single-family home starts fell 5.0%, and permits for futures starts fell 3.9%.

Meanwhile, the economic problems are being confirmed by commodity prices, including the price of oil. Declining commodity prices usually indicate demand for goods is dropping and the economy is in trouble.

For instance, the CRB Index of Commodity Prices fell 15% in the summer of 2010 and the S&P 500 fell 15% in that summer’s correction. In 2011, the CRB Index fell 15% and the S&P declined 19.5% in that summer correction. Last year the CRB Index fell again, and the S&P 500 fell 11% in its correction to the early June low.

So it’s not comforting that even as the Dow and S&P 500 have been making new highs this spring, the CRB Index is already down 11.5% from its last peak and making lower highs on its rally attempts and lower lows on the pullbacks, no bottom in sight yet.

On the technical side there is a negative divergence shaping up between the Dow and the DJ Transportation Average, and between the blue chips of the S&P 500 and the small stock Russell 2000 Index. The Dow and S&P 500 remain near recent highs and comfortably above their 50-day moving averages, while the Transportation Index and Russell 2000 Index have both come down from their March highs and broken beneath the previous support at their 50-day moving averages.

Meanwhile global markets tend to move pretty much in tandem with each other, and an even more ominous divergence has been in place for a while between the resilient U.S. market and numerous important global markets, on which technical indicators triggered sell signals a month or more ago. They include Brazil, China, Hong Kong, India and Russia, which are already down an average of 12% from their recent peaks.

Even the largest and strongest stock market of Europe, Germany, which had been making new highs right along with the Dow, has been in a correction over the last few weeks, now down 7%, with short-term support levels broken and looking like more downside ahead.

As the old saying goes, the market does like to climb a wall of worry.

But with the economy stumbling again as it has in each of the last three summers, commodity prices tumbling, and important global markets giving up, it’s no time to be made complacent about the U.S. market by its continuing resilience, which seems to now be on shaky underpinnings.

In fact, investors should be preparing for the potential that downside positioning may become the way to go before long.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2013 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Sy Harding 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