There are many chart
formations that are used to predict the future direction of the stock
market. They often have esoteric names
like “head-and-shoulders”, “cup-and-handle”, “double-top” or “triple-top” that
refer to a specific chart pattern, each with its market interpretation. One of the worst is the dreaded “Kitty-Cat”
formation (SHOWN ON THE ABOVE CHART) that predicts an imminent market crash of
more than 100-percent...OK, it’s a sick joke.
There is no such thing as a “kitty-cat” formation. Writing a stock market blog is pretty dull
stuff and many a poor soul has gone bloopy over the effort.
The point of this chart
(current as of Tuesday’s close) is to show that the market is currently within
a downtrend bounded on the top by the upper trend line at the top of the cat’s
tale. I’m going to ignore this holiday
week and wait for Monday. Monday may be
a critical day to see if the market will break trend and move,and/or stay,significantly above the trend line. The
key question is simply: Will the kitty’s tail twitch up?
BULL/BEAR HISTORY IN
1-CHART
(From dshort.com - Actionable
Advice for Financial Advisors)In his 1 Nov monthly market commentary, Doug Short asks the question, “Was the 2009-low the end of the secular (long-term) bear market? “ While he doesn’t answer the question definitively (no one can), he presents some fascinating charts and discussion that imply his answer is “NO”.
The most troubling part of
his presentation is the chart below that shows secular bull/bear trends (blue
and red respectively), adjusted for inflation with a regression line that
divides the data in half. It shows the
market is now well above trend. If the
market follows its past history, a simple reversion to trend would put the
market at 1,000. Since it often
overshoots to the downside, another run to 850 or even the prior 677 closing
low is not without precedence. That’s
not my prediction…it’s just that we need to keep in mind that market collapses
of this magnitude are not only possible, as shown in the chart, they have
occurred regularly in the past.
As I said above, this is
not a prediction; we don’t know when, or if such a massive correction will occur,
but there is cause for concern. When we
look at current events, potential triggers that have the potential to bring
about such a crash are the World-wide Debt Crisis, World-wide recession, or
even Middle East War that causes an immediate and dramatic spike in energy
prices. This is one reason I am very
conservative now – I would rather err on the side of caution and be out of the
market when there is increased risk indicated by an NTSM sell signal.
http://www.advisorperspectives.com/dshort/updates/Secular-Bull-and-Bear-Markets.php
DON’T WORRY, BE HAPPY
None
of this stock market stuff is worth worrying about since the latest information
from NASA indicates that the Earth will collide with the planet Nibiru soon….Sorry…I
am in a weird mood tonight. 
Weekly
World News at
JOBS
(CNBC)
”Super
storm Sandy drove the number of people seeking unemployment benefits up to a
seasonally adjusted 439,000 last week, the highest level in 18 months.”
Story
at…
CONSUMER
CONFIDENCE (Newsmax)
“The Conference Board’s sentiment index increased to 72.2, the
highest since February 2008, from a revised 68.4 in September…”
Full story from Newsmax.com at …
Full story from Newsmax.com at …
MARKET
RECAP
Wednesday the S&P 500
was up 1/4% to 1391 (rounded). VIX rose 1.5%
to 15.31.
NTSM
The
NTSM analysis switched to HOLD Wednesday.
MY INVESTED POSITION
Based on the SELL signal,
7 November 2012, I moved out of the stock market at 1377 on the S&P
500. Because of the extreme negativity I
have noted from Hussman and others, I am currently invested in a range of near
15% invested in stocks. I also took
short positions on the morning of the 8th that make me currently net
short the S&P 500. (I am using
Guggenheim (formerly RYDEX) funds and 2x Short ETF, SDS. Those are dangerously volatile so I don’t
recommend them unless you have a BIG tolerance for risk. Also, if they are held too long they may not
perform well.
