It looks to me like there are three-classes of people who own stocks. At the bottom we have the sheep. These folks are the lost, dazed and confused who plan to buy-and-hold, but actually panic out at the bottom and buy back at the top. Surprisingly, it is a large group.
One need only to review the Investment Company Institute data to see that for the last 2-years
there has been outflows from US equity stock funds. Now that we are at new highs, about 22-billion
dollars have come into these stock funds over the last 6-weeks. The prior inflows, 2-years ago, were at a top,
right before a 20% correction.
At the other extreme, we have the wolves masquerading as shepherds. These are the Wall Street investment houses
that can manipulate the markets by adjusting their computers to vary volume and
sales. (I am not accusing anyone; but it looks like they have the capability. If a Flash crash can be caused by
a few of these guys turning off their computers, then it would be an easy game
for them to manipulate prices).
In between there are the pros, semi-pros and serious market followers
who don’t want to be shorn-sheep, but aren’t in a position to be
shepherds. They’re the Border collies –
smartest dogs in the pack.
So, what are the Border Collies saying?
Here’s what I say: We have a correction near (or now). The upside is 5% above 1545 (my sell
point). The downside is in the vicinity
of 10% lower, but if the news goes sour it could get a lot worse. Here’s more from some Pro Border
Collies.
TAKE CHIPS OFF THE TABLE, MARKET CATASTROPHE BREWING: PRO (CNBC)
"You should take chips off the table," (Stanley) Nenner
said..."The insiders were buying [in 2012] and now the insiders are
selling," he said...."I've been warning about the bond market also,
there's going to be a catastrophe soon. And Gold, people tried to buy in every
dip which was too early and you have to get used to [the fact] that sometimes
the situation is dangerous and you cannot make the profit. Try to keep the
money you have for better times," he added...there were hardly "any
bright spots" in asset markets, until 2018.” - The Charles Nenner, Research Center focuses on the cycle analysis of
markets. Full story at...http://www.cnbc.com/id/100526315
MARKET MUSIC HAS STOPPED, I’M OUT: GARTMAN (CNBC, 21 Feb 2013)
“Fed easing has helped fire up one of the strongest stock market
rebounds in three-years with the S&P 500 rising from lows its March 2009
low of 666 to 1,540 currently. Now the party could be over, Gartman said,
likening the sell-off to a game of musical chairs... When the music
stops,everybody dashes to find a seat and many people get left behind. Now you
have a lot of people scrambling to find a seat," he said. "It is
always astonishing to me, after decades in the business, to understand how the
psychology can change so quickly — it almost leaves you gasping for air."
– Dennis Gartman, Publisher of the Gartman letter, a daily commentary on the
global capital markets. Full story at...
http://www.cnbc.com/id/100478119
THE BIG GAMBLE (CNBC) - Druckenmiller
Stanley Druckenmiller : “... the Federal Reserve’s easy money policy is
forcing investors into stocks: "They're great value only relative to zero
interest rates. They're not great value on an absolute basis....It's one thing
to control short-term interest rates," he said. "It's another thing
when you're taking 75 to 80 percent of the bond supply and holding that price
down. … This is a big, big gamble to be manipulating the most important price
in free markets, [interest rates]...Maybe we're in the 7th or 8th inning of the
stock market rally...” - Stanley Druckenmiller, former chairman & CEO, Duquesne
Capital ManagementFull story at...
http://www.cnbc.com/id/100522303
MARKET
RECAP
Tuesday, the S&P 500 finished up about 1Pt to 1541 (rounded). VIX rose about 0.4%, to 13.53.
Tuesday, the S&P 500 finished up about 1Pt to 1541 (rounded). VIX rose about 0.4%, to 13.53.
The market
internals look a little more positive, so perhaps the S&P 500 will head higher. With ongoing Federal Reserve intervention
perhaps my 1345 estimate will turn out to be too low.
NTSM
Wednesday, the NTSM analysis remained HOLD at the close;
but as noted below, I sold down to 20% invested in stocks because my target for
the S&P 500 is 1545.MY INVESTED POSITION
I took a hedging, short-position Wednesday afternoon, 27 Feb 13 – I’ll cover if S&P breaks above 1545 - yes, really.
With longer term funds, I cut back to about 20% invested in stocks as I went to
cash in the retirement account on 5 March due to my risk tolerance rather than
the NTSM analysis. To put it bluntly, I
currently have no tolerance for risk.
