It’s
always good, when the market is going up, to consider the opposing view that
may result in a market turn-around. So,
we have the following from John Hussman, PhD.
“Once
again, we now have a set of market conditions that is associated almost
exclusively with steeply negative outcomes. In this case, we're observing an
"exhaustion" syndrome that has typically been followed by market
losses on the order of 25% over the following 6-7 month period (not a typo).
Worse, this is coupled with evidence from leading economic measures that continue to be associated
with a very high risk of oncoming recession in the U.S. - despite a modest
firming in various lagging and coincident economic indicators, at still-tepid
levels. Compound this with unresolved credit strains and an effectively
insolvent banking system in Europe, and we face a likely outcome aptly
described as a Goat Rodeo….In short, market action is presently showing
features associated with "exhaustion rallies", which have often been
followed by deep losses over the following 6-7 month period….
Last
week contained very little to alter our view that a global economic downturn is
likely here …To the contrary, a concerted global downturn that includes the
U.S. remains the most likely outcome.” – 30 January 2012 Weekly Market Comment,
John Hussman, PhD, at http://www.hussmanfunds.com/weeklyMarketComment.html
He
went on to note that the optimistic employment numbers we have seen recently
may be caused by “seasonal adjustments” in the data. That data, argues Mr. Hussman, is skewed by
the poor numbers over the past several years and may be wrong. Even without the
employment numbers, he remains negative on the market.
Well, rather than argue, it does look like we may have the beginnings of a pullback under way. The bottom of the channel for the S&P 500 (remember the market goes up in a saw-tooth pattern described as a channel between the tops and bottoms of the saw-teeth) is around 1280. We could see a pullback to the 1280 region. If we do, I think we go up from there.
It
is possible that the Greece news that came out late today may give us a boost
too, so we might avoid the slight downturn for a while.
SAN FRANCISCO
(MarketWatch) – “President of the European Council Herman Van Rompuy said late
Monday that 25 out of 27 European Union member states will sign off on a fiscal
responsibility pact. The United Kingdom and the Czech Republic are not
supporting the pact, which will go into effect after 12 nations ratify it, Van
Rompuy said in a press conference.” - Full
story at… http://www.marketwatch.com/story/european-rescue-fund-gets-support-of-25-nations-2012-01-30?dist=afterbell
We’ll
see how that turns out tomorrow. At this
point I can’t even guess how the markets may react.
For
now, the NTSM remained BUY today.
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.). (See the page “How to Use
the NTSM System” – the link is on the right side of this page).
