Best of the Week
Most Popular
1.Oil Wars 2016 - US vs Russia vs Saudi Arabia vs Iran - Nadeem_Walayat
2.Crude Oil Price Crash Triggering Global Instability, Trend Forecast 2016 - Nadeem_Walayat
3.Stock Market Crash - Last Week was The 2nd and Final Warning... - Clive_Maund
4.Stock Market Crash Apocalypse or Bull Market Severe Correction? - Nadeem_Walayat
5.TShipping Said to Have Ceased… Is the Worldwide Economy Grinding to a Halt? - Jeff_Berwick
6.Crude Oil Price Crash Catastrophe, Independant Scotland Literally Begging to Rejoin the UK - Nadeem_Walayat
7.Summers: Global Economy Can't Withstand Four 2016 Fed Hikes - Bloomberg
8.Gold And Silver: New World Order: Public Be Damned, Preferably Dead - Michael_Noonan
9.Rigged U.S. Ttreasury Bond Market Double Barreled Hidden Q.E. To Infinity - Jim_Willie_CB
10.Major Stocks Bear Market Awakening - Zeal_LLC
Last 5 days
Is This the Debt Bubbles Last Rattle? - 12th Feb 16
Gold Stocks Upside Targets - 12th Feb 16
Stock Market Observations - 12th Feb 16
Will Capital Controls Return? - 12th Feb 16
Gold, Gold Stocks, and the End Game - 12th Feb 16
Canadian Dollar Now Even Less of a Haven from US Dollar Collapse Than Before - 12th Feb 16
The Stock Market Dow Elevator; 18, 17, 16.... - 12th Feb 16
Will Harry Dent Eat Crow on His $700 Gold Price Prediction? - 12th Feb 16
Where to Hide Your Money From Reckless Governments - 12th Feb 16
The War on Cash is About to Go into Hyperdrive - 11th Feb 16
More Bankruptcy For Your Retirement Portfolio - 11th Feb 16
2016 - Gold & Silver Rising: A Gold And Silver Bottom May Be In - 11th Feb 16
Gain Trading Confidence by Improving Your Elliott Wave Analysis Skills - Video - 11th Feb 16
With A Gloomy Start To 2016, A Bust Seems Just Around The Corner - 11th Feb 16
UK Interest Rates, Economy Forecasts 2016 and 2017 - Video - 10th Feb 16
World Markets Are in Sync - 10th Feb 16
If You Miss Buying Gold – You Will Regret, it Later - 10th Feb 16
The Fed Doesn't have a Clue! - 10th Feb 16
How Far Can Gold Price Go? - 10th Feb 16
It's Stock Market Panic Time! - 9th Feb 16
Gold Stocks Picks for Patient Pickers - 9th Feb 16
Oil Price Collapse U.S. Recession Odds 2016 - 9th Feb 16
Preparing for Crisis - It's About Risk Mitigation and Capital Preservation - 9th Feb 16
Top Silver Mining CEO: Don't Laugh, We Could See Silver $100+ - 8th Feb 16
Gold, Investment Leadership Changes Permanent? - 8th Feb 16
Stock Market Panic Decline Begins... - 8th Feb 16
How to Save Money By Growing Your Own Homegrown Tomatoes Indoors From Seeds - 8th Feb 16
US Economy Slides One Step Further Towards A Recession - 8th Feb 16
Gold Bear Market Bottom : Mr. Bear has left the PM Sector for Greener Pastures - 8th Feb 16
Stock Market At Important Support - 8th Feb 16
David Cameron Humiliated in Poland Over Refusal to Stop Taking UK Benefits, BrExit or Super State? - 8th Feb 16
Why Crude Oil Prices Could Continue FALLING From Here - 7th Feb 16
Stock Market S&P, NAS Best, Most Reliable Answers Come From The Market And You - 7th Feb 16
Stocks Bear Market Continues - 7th Feb 16
Silver COT Paving Way for Sustained Upside Breakout Sharp Rally - 7th Feb 16
US Dollar Double Top, Gold Prospects Brightening Rapidly - 7th Feb 16
Gold And Silver - Is A Bottom In? Nothing Confirmed - 7th Feb 16
Gold Stocks Something has Changed - 6th Feb 16
UK Interest Rates, Economy GDP Forecasts 2016 and 2017 - 6th Feb 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Global Financial Crisis 2016

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

Biggest Debt Bomb in History