“...the ugliest number of the day was the year over year change in factory orders ex transports, which is perhaps the best coincident indicator of general business spending, and in line with the non-defense capital goods ex aircraft series from the Durables report. This posted a -0.2% nominal drop in December, the first decline since July.” Commentary at ...
MARKET LOOKS LIKE AUGUST 1929 - HUSSMAN
“Present market conditions now match 6 other instances in history: August 1929 (followed by the 85% market decline of the Great Depression), November 1972 (followed by a market plunge in excess of 50%), August 1987 (followed by a market crash in excess of 30%), March 2000 (followed by a market plunge in excess of 50%), May 2007 (followed by a market plunge in excess of 50%), and January 2011 (followed by a market decline limited to just under 20% as a result of central bank intervention). These conditions represent a syndrome of overvalued, overbought, overbullish, rising yield conditions that has emerged near the most significant market peaks – and preceded the most severe market declines – in history.” – John Hussman, PhD, Weekly Market Comment, 4 February 2013 at
http://www.hussmanfunds.com/
The “market conditions” to which John Hussman refers are: high Shiller PE (PE10), overbought S&P 500; high sentiment; and rising yields on 10-yr treasuries. I am also seeing signs of a top although at present I am fully invested. My signals include high sentiment of ?%-bulls (I’d expect to see that number hit 67% within a couple of weeks after the top. My sentiment indicator usually peaks shortly after the market does because the buy-the-dip crowd pushes sentiment up after the top occurs). Another sign of market topping is a statistical anomaly in market action (volatility, but not related to VIX), observed last week. That statistical check of market action has correctly predicted corrections of between 7% and 19% from 4 to 34-days in advance of the market top over the past several years.
THE BEAR IS OVER? (Barron’s)
Responding to comments in the Barron’s article that money was flowing out of bonds and into stocks and that it is only the first inning of the rally, here are some comments from Mish Shedlock:
THE BEAR IS NOT OVER (Mish Shedlock)
“First Inning? For starters, are the forward earnings estimates any better now than they were in 2007? (before the last crash)Second, let me point out that money does not flow from stocks to bonds or vice versa. For every buyer of stocks there is a seller, so the statement on rotation from bonds to stocks is point blank absurd. There can be a re-pricing of bonds, a re-pricing of stocks, a re-pricing of both, or a re-pricing of neither, but there is no flow.
Third let me ask "Does it get any more extreme than someone calling this the first inning after stocks have had more than a 100% rally in a few years?...
...Supposedly we are only in "the first inning" of a rally. Hmm. Are stocks supposed to rise 900% more? This may not be "the top" but it's close enough for me. I'm calling it.” - Mike Shedlock / Mish, Global Economic Advisors
Read more at http://globaleconomicanalysis.blogspot.com/2013/02/extreme-sentiment-barrons-cover-get.html#APYIlmEKi6Lv12ZV.99
SECULAR BEAR IS OVER (Chris Puplava)
“...there are likely two large forces at work that will propel stocks higher in the coming decade, one of which is favorable demographics out to 2028, and the other is the slow glacial movement of institutions rotating out of bonds and into stocks. With the benefit of hindsight, looking back at historical cycles suggests that the March 2009 low was not only a bear market low for the 2007-2009 bear market, but THE low for the secular bear market that began in 2000 with the technology bubble. Looking at demographic trends and prior secular cycles, the new secular bull market in stocks could continue well into the 2020s.”http://advisorperspectives.com/dshort/guest/Chris-Puplava-130202-Secular-Bear-is-Over.php
SUPERBOWL INDICATOR – BEAR!
The AFC won the super bowl: the average return when an AFC team wins (based on 21-AFC wins) is 3%. The stock market is typically up 10% when the NFC wins. Since the markets were down 15% the last time the Ravens won (2001), this could be a rough year! ...just kidding...
MY VIEW – BEAR IS NOT OVER, MORE TO COME
The above market comments demonstrate a phenomenon I have mentioned before: the views of current market participants couldn’t be more extreme. It has always been possible to find bears, but currently, bears include thoughtful investors, not just the perma-bears. What’s new over the past 6-months or so is that a larger number of “experts” either on CNBC or elsewhere seem to be making a “bear-is-over” prediction. I tend not to agree with that overly bullish view, based partly on market history. Market history suggests it is too soon for the bear to be over and it also suggests that 3-major declines are likely to be required before the bear ends. In other words, we may see another 50% decline before it would be reasonable to consider the bull case.
Then there is also the case for the economy made by Rogoff and Rheinhart in their economic treatise, “This Time is Different.” They point out that countries as indebted as the US undergo slow growth, stagnation or downright recession. That’s hardly the recipe for extreme market optimism. Just ask the Japanese how optimistic they are. Their debt to GDP ratio exceeded 100% in 1998. The Nikkei is half what it was in 1998 and it is now one-fourth what it was in 1990. Their current debt to GDP ratio exceeds 200%.
Closing with some good thoughts...I don’t think we’ll ever have as many problems as Japan because of our strong natural resources.
MARKET RECAP
Monday, the S&P 500 was down 1.2% to 1,496 (rounded). VIX rose nearly 14%, to 14.67.
NTSM
The NTSM analysis switched back to HOLD on Friday because VIX rose dramatically.
Sentiment rose again and was 61%-bulls as of the close on Friday {calculated from selected Guggenheim (formerly Rydex) bull/bear funds}.
MY INVESTED POSITION
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. 
