“Greek vote rattles world markets”…Uh-oh…
from (CNNMoney) – “Investors around the world reacted badly to
news that Greek voters will get to hold a national referendum on the recent bailout deal...Bank
stocks around the globe were hit particularly hard in trading Tuesday…Gary
Jenkins, head of fixed income, at Evolution Securities…said “European traders
are rightly worried that the continent's financial system could be on the
precipice of a complete meltdown.
"What happens next is a complete unknown and unknowns are not liked
by the market," he said. "It raises the chances of a disorderly Greek
default, and the one thing they were trying to avoid was a disorderly default."
– From http://money.cnn.com/2011/11/01/markets/world_markets/index.htm?iid=HP_Highlight
The
ISM numbers…Uh-oh…
The
Institute for Supply Management (ISM) numbers dropped to 50.8 from 51.6 last
month. Economists had expected it to be 52.
A reading below 50 indicates expansion.
John
Hussman, PhD…Uh-oh…
Paraphrasing
Mr. Hussman: For the simple set of
conditions when ECRI Weekly Leading Index growth rate is less than -7; ISM
Purchasing Managers Index< is less than 52; and the S&P 500 was below
its level of 6-months earlier the economy…has been in recession within 13
weeks, 100% of the time (at least for every post-war recession for which data
is available). “This is the combination, incidentally, that we observe today.”
Regarding
the stock market Mr. Hussman said, “The overall ensemble of evidence places the
current market among a set of historical counterparts that is best
characterized as a "whipsaw trap" - an overbought rally in an
unfavorable overall Market Climate, about 70% of instances which fail to follow
through.” - from John Hussman, PhD, Weekly Market Comment (1 Nov 2011) The full
article at http://www.hussman.net/wmc/wmc111031.htm
is highly recommended.
As
Mr. Hussman often points out, an “unfavorable climate” doesn’t necessarily mean
we can’t have good short-term returns in the stock-market.
I
moved 50% of the trading portfolio to Long using the QQQ ETF based on 3-items:
(1) the NTSM recent BUY recommendation; (2) we were due for a pullback after
the straight up move since 3 Oct; (3) big down days are often followed by
upward movement. That’s a nervous trade
that I will dump quickly if we don’t see some upward follow-thru.
It
is hard to buy when everyone else is selling, but as noted by my actions, I am
still Bullish. We’ll see.
The
NTSM analysis dropped to HOLD today.
(If
the S&P continues down, NTSM analysis will switch to a sell – perhaps in a few days. It may just as well turn
up and I prefer not to try and guess the market or the NTSM system. Unfortunately, the NTSM system is not good in
a quick market turn-around.)
I bought back into the stock market at
S&P 500 1155 on 7 Oct after the 6 Oct NTSM buy signal. I remain 100% long in the long term portfolio
(100% stocks in the 401k.).
I am now 50% long in the trading portfolio
using QQQ (no 2x-ETF this time to limit some risk).
(See the page “How to Use the NTSM System” – the link is on the right side of this page).
