SY HARDING PREDICTS ANOTHER LEG DOWN
Sy Harding is a fellow engineer so at least we have that in common. He also believes that this bear market is not over so there’s another point in common. He recently wrote:
“The secular bear market that began in 2000 continues to track similarly to the secular bear markets of 1900-21, and 1966-82...As in the 1970's, it is taking unusual stimulus measures, record budget deficits and debt loads, to recover from the disastrous decade...And though each step has resulted in slow recovery, it will take at least one more setback for the economy and market (probably caused by austerity measures to tackle the debt problem), before the secular bear ends.” – Sy Harding, StreetSmartPost, Asset Management Research Corp.
http://www.streetsmartpost.com/
Chart from
http://www.streetsmartpost.com/
As I often note: The likelihood is very high that there will be another significant decline in this bear market, we just don’t know when. Based on past history, we can see that during secular bear markets the markets remain “range bound” bouncing roughly between prior highs and lows. The prior high was around 1560, only about 7% below Tuesday’s close. I have read several crash-predictions for 2013 or 2014 and I suspect those opinions come from history rather than current market conditions.
On a related note, the CNBC fear-mongers can’t stop talking about a Bond bubble and the coming crash in bond prices. If equity prices go thru another round of contraction, as I suspect they will, bonds will again be a safe haven. A good time to sell bonds will be at the bottom of the next downturn.
MARKET RECAP
Wednesday the S&P 500 was UP about 0.3% to 1461 (rounded). VIX was UP 1.4% to 13.81.
NTSM
No change from yesterday: The numbers in the NTSM analysis are BUY Wednesday because the Sentiment reading has improved to neutral, leaving positive numbers for Price, Volume and VIX; but, as I’ve suggested before, I will not get back in the stock market until the market breaks its prior high. “The trend is your friend” and so far, the market has not shown me that the trend can get above the old highs of 1466.
With the added positive number in the NTSM system, I’ve seen 3 BUY ratings and 3-HOLD ratings in the past 6-trading days. Markey internals are looking up. Late day buying seems to indicate the pros are buying. The only remaining test is; can we break thru the 1466 ceiling? II suspect we may do it.
I’ll buy back in the market when we have two successive closes at or above 1467. I think the market will have a tough time getting past the 1550 level and then there is a potential Debt ceiling issue ahead so even getting in comes with some risk.
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 negativity I have noted from Hussman and others, I am currently invested in a range of near 15% invested in stocks.
