“Chris Martenson is issuing an official warning of a major stock market correction within the next few months. He's only done this once before (in 2008). He's seeing a convergence of both technical and fundamental data that are flashing oversized risks to the downside for asset prices, despite the Federal Reserve's money printing mania (which is showing signs of hitting diminishing returns).” Full story, guest posted at ZeroHedge at…
http://www.zerohedge.com/news/2013-02-28/guest-post-diminishing-qe-returns-and-coming-40-correction
REAL FAMILY INCOME (Mish Shedlock)
“From 2009 to 2011, average real income per family grew
modestly by 1.7% but the gains were very uneven. Top 1% incomes grew by 11.2%
while bottom 99% incomes shrunk by 0.4%. Hence, the top 1% captured 121% of the
income gains in the first two years of the recovery.I propose that to find a cure, one needs to understand the problem and what caused it. In that regard, it's crucial to understand that inflation benefits accrue to those with first access to cheap money, the banks and the already wealthy.
Consider the housing boom and bust. By the time easy credit was universally available (with sensible income and down payment requirements flying out the window), the party was nearly over.
The root cause of boom-bust cycles (and the associated income inequality distortions) is the Fed's inflationary and reflationary policies. Simply put, the Fed has sponsored bubbles and busts of increasing amplitude over time, and those with first access to cheap money have come out ahead at the expense of everyone else.
It's even worse than that. The Fed's policy of "too big to fail" encourages rampant speculation if not outright manipulation in both directions.” – Mish Shedlock, Global Economic Analysis
http://globaleconomicanalysis.blogspot.com/2013/02/top-1-received-121-of-income-gains.html
MUSINGS
Even if the S&P 500 hasn’t already topped out at 1531, I think the highest it will go is 1545.
A correction should clear the air for another try to
exceed the all-time highs by a meaningful amount later on. Of course, a correction could morph into a
more significant event.
It would take a positive change in the market internals
to make me change my opinion. Currently,
the 10-day moving average of the percentage of stocks advancing is 52% - not a
very bullish number, but the key point is that this stat has been trending down
and that trend is continuing. The new-hi/new-low stats are trending down too.
A fall to the 200-dMA would put the S&P 500 down
about 7% from today’s close. That’s the
basis for the pundits on CNBC who are predicting a small pullback. My guess, and it’s only a guess, is that a
correction could be worse – perhaps in the 15-20% range. Who knows?
The market internals are suggesting a correction, but the market needs
to have some further breakdown before the NTSM numbers indicate a Sell signal
for long-term investments. Needless to
say, I think it is wise to be defensively invested, as I am.
MARKET RECAP
The markets peaked
up about 0.6% around 2PM and tanked after that.
The pros sold the rally hard. Thursday,
the S&P 500 finished down about 1Pt to 1515 (rounded). VIX was up 5%, to 15.51.
NTSM
Thursday, the NTSM analysis remained HOLD at the close.
MY INVESTED POSITION
I took a hedging, short-position Wednesday afternoon with a very tight
stop. I’ll bail on that if the market
moves up much. With longer term funds,
my investments remain the same.
Based on a BUY
signal 7 of 9-days, and more importantly, consecutive closes above the prior
high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14
January. I am currently invested in a
range of near 50% invested in stocks, but I may not hang around too much longer
regardless of the NTSM numbers.
