Weekly Market Summary
Apr 19, 2014 Urban Carmel 

Click to view The set-up coming into this past week was clean: SPX and NDX exhibited breadth extremes from which they usually bounce and April Opex is a seasonally strong week.

In the event, SPX rose nearly 3%. In the process it exhibited a familiar pattern: overnight gaps in the past 4 days accounted 60% of the week’s gain. Cash hours, when liquidity is greatest, was not where the meat of the gains took place. That was even more true for RUT and NDX which only posted cash hour gains during two of the four days.
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5 Things To Ponder: Income Inequality
Apr 18, 2014 Lance Roberts 

Click to view Since Easter is a time of family, compassion, forgiveness and resurrection I thought this would be a good weekend to think about the income inequality/wealth gap which will be part of the mid-term election debate. There are many questions that must be answered from not only "how" to solve the issue, but also "should" it be?

There is no historical evidence that wealth redistribution leads to stronger economic outcomes as it discourages "hard work." However....
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Getting Technical: Weekend Update
Apr 18, 2014 Serge Perreault 

Click to view Here’s the latest weekend update from Serge Perreault, a Chartered Professional Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.
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Case Study: IBM Stock Buybacks and Debt Issuance
Apr 18, 2014 John Bougearel 

Click to view ...we want to overlay IBM’s stock buyback and Debt Issuance with the NY Fed models assuming "excess high returns" for the US stock market through 2018 and the GMO 7 year expectancy models at 2013 year end assuming negative US equity returns through 2020 year end. I am going to postulate in what follows that both models can be right, and further that much of the "excess high returns" forecast by the NY Fed are already behind us. It is important to note that the NY Fed models were written in early 2013 before the US stock market rallied an additional +20%.
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A New Look at the Total Return Roller Coaster
Apr 18, 2014 Doug Short 

Click to view Note from dshort: I received a recent email requesting an update to my Total Return Roller Coaster series. I’ve now updated the charts below based on monthly data through the March close.

Here’s an interesting set of charts that will especially resonate with those of us who follow economic and market cycles.
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Joe Friday: This took place in 1987, 2000 and Now
Apr 18, 2014 Chris Kimble 

Click to view The lower section of the chart below measures five-year rolling performance of the S&P 500. This great chart comes from Shortsideoflong.com.

In the past 50-years, five-year rallies of 170% or more have only taken place in 1987 and 2000.
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Historical Market Comparisons Are Meaningless
Apr 17, 2014 Lance Roberts 

Click to view As Chief Strategist for STA Wealth Management, I start each and every day by consuming copious amounts of a heavily caffeinated beverage and a data feed from a litany of web and blog sites. Over the last couple of days in particular, they have been numerous articles on whether the market is currently in a bubble. Here are a few as an example that I just grabbed from RealClearMarkets.com:
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S&P 500 Snapshot: Best Weekly Gain Since July of Last Year
Apr 17, 2014 Doug Short 

Click to view The pre-market announcement of new jobless claims continues to beat expectations with its four-week moving average now the lowest since early October of 2007, two months before the last recession. Despite the good claims number, the S&P 500 opened fractionally lower with some options expiration volume and sold off to its modest -0.30% intraday low 25 minutes later. The index slowly recovered to its 0.39% intraday high early in the final hour of trading. It closed with a trimmed gain of 0.14%, the fourth day of gains and a hefty 2.71% advance for the holiday-shortened week.
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Philly Fed Business Outlook Again Beats Forecast
Apr 17, 2014 Doug Short 

Click to view The Philly Fed’s Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. The latest gauge of General Activity came in at 16.6, an increase from last month’s 9.0. The 3-month moving average came in at 6.4, up from 4.0 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. However, today’s six-month outlook at 26.6 is the lowest in 12 months.
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How Long to the Next Recession? iM’s Weekly Update
Apr 17, 2014 Anton Vrba and Georg Vrba 

Click to view The BCI remains unchanged from last week’s upward revised level of 169.2. BCIg, the smoothed annualized growth of BCI, is slightly down at 16.9 from last week’s upward revised 17.0. This week’s BCI shows no recessionary trends.

Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.
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New Jobless Claims Fall to Pre-Recession Levels
Apr 17, 2014 Doug Short 

Click to view The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 304,000 new claims number was an increase 2,000 from the previous week’s 302,000 (revised from 300,000). The less volatile and closely watched four-week moving average, which is usually a better indicator of the trend, fell by 4,750, now at 312,000, the best since October 2007 -- two months before the onset of the last recession.

Today’s seasonally adjusted number at 304K came in below the Investing.com forecast of 315K.
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The Big Four Economic Indicators: Real Retail Sales and Industrial Production
Apr 16, 2014 Doug Short 

Click to view With yesterday’s release of CPI data for March, we can now calculate Real Retail Sales. As the adjacent chart shows, this indicator has recovered from its December-January slump and has now hit a record high. The real series was up 0.94% in March and 2.21% year-over-year.

The latest Industrial Production data includes the Fed’s extensive annual revisions published at the end of last month. The March month-over-month increase of 0.7% beat the Investing.com forecast of 0.5%, and the February MoM was revised upward from 0.6% to a whopping 1.2%.
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Disturbing Charts: New Update
Apr 16, 2014 Ted Kavadas 

Click to view I find the following charts to be disturbing. These charts would be disturbing at any point in the economic cycle; that they (on average) depict such a tenuous situation now -- 58 months after the official (as per the September 20, 2010 NBER BCDC announcement) June 2009 end of the recession -- is especially notable.

These charts raise a lot of questions. As well, they highlight the "atypical" nature of our economic situation from a long-term historical perspective.
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Two Measures of Inflation and Fed Policy
Apr 16, 2014 Doug Short 

Click to view I’ve updated the accompanying charts with yesterday’s Consumer Price Index data from the Bureau of Labor Statistics. The annualized rate of change is calculated to two decimal places for more precision in the side-by-side comparison with the PCE Price Index.

The BLS’s Consumer Price Index for March shows core inflation below the Federal Reserve’s 2% long-term target range at 1.66%. The Core PCE price index at the end of the February (the most recent data), is significantly lower at 1.10%. The Fed is on record as preferring Core PCE as its inflation gauge.
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A Long-Term Look at Inflation
Apr 15, 2014 Doug Short 

Click to view The April Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the March year-over-year inflation rate at 1.51%, which is well below the 3.88% average since the end of the Second World War and 37% below its 10-year moving average.

Let’s take a step back and look at the history of inflation over the past 140 plus years.
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The Economy In Pictures
Apr 15, 2014 Lance Roberts 

Click to view It is sometimes helpful to view the various economic indicators and draw your own conclusions outside of someone else’s opinion.

With the economy now more than 5 years into an expansion, which is long by historical standards, the question for you to answer by looking at the charts below is:

"Are we closer to an economic recession or a continued expansion?"
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Inflation: A Five-Month X-Ray View: New Update
Apr 15, 2014 Doug Short 

Click to view Here is a table showing the annualized change in Headline and Core CPI for each of the past five months. I’ve also included each of the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation.

We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.
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What Inflation Means to You: Inside the Consumer Price Index
Apr 15, 2014 Doug Short 

Click to view Let’s do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart below illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U, which I’ll refer to hereafter as the CPI.
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Empire State Manufacturing Doesn’t Meet Expectations
Apr 15, 2014 Doug Short 

Click to view This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions was flat, posting a reading of 1.3, down from 5.6 last month. The Investing.com forecast was for a much stronger reading of 8.0. The Empire State Manufacturing Index rates the relative level of general business conditions New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.
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Real Retail Sales Per Capita: Another Perspective on the Economy
Apr 15, 2014 Doug Short 

Click to view In real, population-adjusted terms, Retail Sales are now at the level we first reached ten years ago in March 2004.

Yesterday the Advance Retail Sales Report showed that sales in March rose 1.1% month-over-month and 3.8% year-over-year, as I reported in my real-time update.

With today’s release of the Consumer Price Index, we can now dig a bit deeper into the "real" data, adjusted for inflation and against the backdrop of our growing population.
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Headline Inflation Up Slightly As Shelter and Food Costs Rise
Apr 15, 2014 Doug Short 

Click to view The Bureau of Labor Statistics released the March CPI data this morning. Year-over-year unadjusted Headline CPI came in at 1.51%, which the BLS rounds to 1.5%, up from 1.13% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.66% (rounded to 1.7%), up from the previous month’s 1.57%.

The BLS headline calls attention to a rise in shelter and food costs. Here is the introduction from the BLS summary, which leads with the seasonally adjusted data monthly data:
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GMO 7-Year Real Return Forecast: US Equities Negative For 7 Years
Apr 14, 2014 Mike Shedlock 

Click to view Here is a chart from GMO Asset Forecasts that expresses how I feel as well....

Estimated returns are negative for US large caps, US small caps, and REITs for every period shorter than seven years.

If accurate (and I believe it is), what will that do to pension plans?
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Weekly Gasoline Update: Prices Continue to Rise
Apr 14, 2014 Doug Short 

Click to view It’s time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny, Regular and Premium are both up five cents, the tenth week of increases. Regular is up 46 cents and Premium 42 cents from their interim lows during the second week of November.

According to GasBuddy.com, California and Hawaii remain the only states with regular above $4.00 per gallon, with Hawaii now at $4.28 and California at 4.17.
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Forecasting GDP: A Look at the WSJ Economists’ Collective Crystal Ball
Apr 14, 2014 Doug Short 

Click to view One of the big economic numbers this month will be the Q1 Advance Estimate for GDP, due out on April 30th. With this morning’s first glimpse of March Retail Sales now in hand, let’s take a look at Q1 GDP forecasts from the latest Wall street Journal survey of economists conducted earlier this month. For some context, Q4 2013 Real GDP went from 3.2% in the Advance Estimate to 2.4% in the Second Estimate to 2.6% in the Third Estimate. And of course it will be subject to an annual revision in July.

Here’s a snapshot of the full array of WSJ opinions about Q1 GDP.
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The Message from the Fear Index
Apr 14, 2014 Chris Kimble 

Click to view By now we all know Bio Tech and Social media darlings have been hit hard of late, which could be masking that the broad market is NOT! So far the S&P 500 is off less than 4% from its record high. Is that much reason to be fearful?
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March Advance Retail Sales Beat Expectations
Apr 14, 2014 Doug Short 

Click to view The Advance Retail Sales Report released this morning shows that sales in March rose 1.1% month-over-month, up from 0.7% in February, which was upwardly revised from 0.3%. Core Retail Sales (ex Autos) was up 0.7% in March following an unrevised 0.3% in February.

Today’s headline and core numbers came above the Investing.com forecasts, which were 0.8% for Headline and 0.5% for Core.
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Gauging Investor Sentiment with Twitter: Weekly Update
Apr 13, 2014 Blair Jensen 

Click to view The Downside Hedge Twitter sentiment indicator for the S&P 500 Index (SPX) is on the verge of a consolidation warning. Previous warnings in the last year have resulted in one successful signal and three whip saws. This speaks to the strong nature of the 2013 rally. The first consolidation warning in 2014 came late as traders on Twitter were slow to abandon a market where people have bought every dip. If we get a signal early next week it will be another late warning.
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World Markets Weekend Update: A Bizarre Spread
Apr 13, 2014 Doug Short 

Click to view This past week saw the biggest spread so far this year in the weekly performance of the top and bottom indexes on my watch list. The Shanghai Composite turned in the best performance for the week, up 3.48%, and Japan’s Nikkei suffered a dramatic 7.33% selloff. The general skew was downward with five of the eight indexes posting losses, ranging from the -2.00% of the FTSE 100 to the aforementioned Nikkei plunge.

At this point, five of the eight indexes are in the red, up from four last week.
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Dow Jones Industrial Average Drops Again
Apr 13, 2014 John Nyaradi 

Click to view Dow Jones Industrial Average and other major indexes have another bad week.

Market volatility continues with the Dow Jones Industrial Average (NYSEARCA:DIA) falling 2.4%, the SP500 (NYSEARCA:SPY) shedding 2.7% and the Nasdaq Composite (NYSEARCA:QQQ) losing 3.1%.

The major indexes are now well off their recent record highs with the Dow Jones Industrial Average down 3.7%, the Nasdaq Composite (NYSEARCA:QQQ) down 8.5% and the S&P500 (NYSEARCA:SPY) off 4.3% from recent record levels.
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Weighing the Week Ahead: A Volatility Cocktail!
Apr 13, 2014 Jeff Miller 

Click to view This week brings the makings of an explosive volatility cocktail:

  1. Important economic data;
  2. Key Q1 earnings reports;
  3. Options expiration;
  4. A short trading week; and
  5. An edgy market environment.
This is a very unusual combination, and the various elements will compete for attention.
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Weekly Market Summary
Apr 13, 2014 Urban Carmel 

Click to view Last week ended with a failed break-out higher in SPY and with RUT and NDX plumbing below their 50-dma. This was our conclusion: "Often, having failed to break out higher, an index will test the bottom of the range (183), also the area of its 50-dma".
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Best Stock Market Indicator Ever: Weekly Update
Apr 12, 2014 John Carlucci 

Click to view The $OEXA200R Monthly (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money.

According to this system, the market is now Un-Tradable. The OEXA200R ended the week at 72%, down from 90% last weekend.

All three secondary indicators are negative.
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Buy These Dips and Breakouts from Depressed Prices?
Apr 12, 2014 Chris Kimble 

Click to view Do you believe in buying the dips? Do you believe in buying breakouts above resistance lines? Do you believe in buying when an asset breaks above a moving average? If the answer is "yes" to any of these, the 3-pack below might be of interest to you.

Remember the 3-pack below is inverted....
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5 Things To Ponder: Is This ’’THE’’ Correction
Apr 12, 2014 Lance Roberts 

Click to view On Tuesday of this past week I posted an article entitled "No One Rings A Bell At The Top" wherein I stated:

"The current levels of investor complacency are more usually associated with late stage bull markets rather than the beginning of new ones. Of course, if you think about it, this only makes sense if you refer back to the investor psychology chart above....
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Miss Housing Nirvana Cries ’’Uncle’’
Apr 11, 2014 Logan Mohtashami 

Click to view Today "Miss Housing is in Nirvana 2013" and "Housing Nirvana is around the corner 2014" finally threw in the towel with existing home sales, revising them not only for this year but out to 2016. Recently, I wrote an article stating that if mortgage purchase applications don’t make an epic rise in the month of March, then revisions lower will have to be made for total sales.
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Start of Mean Reversion in Earnings?
Apr 11, 2014 Mike Shedlock 

Click to view JPMorgan Earnings Drop 18.5%; Slowdown in Housing the Real Killer

Stocks have been soaring mostly on investor sentiment. That sentiment was partially based on the belief earnings would continue to rise quarter after quarter, year after year. Investors also believe the Fed has their back. But what if the earnings thesis is not true?
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ECRI Recession Watch: Weekly Update
Apr 11, 2014 Doug Short 

Click to view The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 134.9, up from last week’s 133.6 (revised from 133.5). The WLI annualized growth indicator (WLIg) rose to 3.3 from last week’s 3.0.

Here are some notable developments since ECRI’s public recession call on September 30, 2011: 1) The S&P 500 is up 57.1% at yesterday’s close, although off its record close on April 2nd. 2) the unemployment rate has dropped to 6.7%, and 3) Q4 GDP was revised upward to 2.6%.
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Joe Friday: Global Markets Look Vulnerable
Apr 11, 2014 Chris Kimble 

Click to view Three years ago I did a post titled "Look Alikes, Dominoes and Slipper Slides", which illustrated that key stock markets around the world were all creating bearish rising wedge patterns.

Check out how much today’s patterns look similar to the patterns of three years ago.
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Michigan Consumer Sentiment: April Preliminary of 82.6 Beats Expectations
Apr 11, 2014 Doug Short 

Click to view The University of Michigan Consumer Sentiment preliminary number for April came in at 82.6, a jump from the 80.0 March final. This is the highest reading since the 85.1 interim high set in July of last year.

Both Investing.com and Briefing.com had forecast of 81.0.
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Producer Price Index: Final Demand Hotter than Forecast
Apr 11, 2014 Doug Short 

Click to view Today’s release of the March Producer Price Index (PPI) for Final Demand rose 0.5% month-over-month seasonally adjusted for Headline inflation. Today’s data point was higher than the 0.1% Investing.com forecast. Core Final Demand rose 0.6% from last month, topping the Investing.com forecast of 0.2%.

The BLS shifted its focus to its new "Final Demand" series earlier this year. I fully endorse this shift. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core.
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Auto Sales: Example of How U.S. Growth Is a Mirage
Apr 11, 2014 Michael Lombardi 

Click to view Growth in the U.S. economy, as it stands, can be explained with one word. That word is "mirage." The Merriam-Webster dictionary explains the word mirage as "something that is seen and appears to be real but that is not actually there." (Source: Merriam-Webster online, last accessed April 3, 2014.)
It’s a story that is getting old. On the surface, economic data looks rosy, but when you look closer, you find a picture that is completely distorted. In fact, the fundamentals suggest the U.S. economy is deteriorating.
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Treasury Snapshot: 10-Year Yield Closes Near Its 2014 Low
Apr 10, 2014 Doug Short 

Click to view The daily close yield on the 10-year note has been relatively range-bound since early February, with low of 2.60% on March 3rd and a high of 2.82% on April 2nd, which was the record closing high for the S&P 500. Today’s official close is 5 bps above that March low, which was also the lowest close of 1014.

The latest Freddie Mac Weekly Primary Mortgage Market Survey, released today, puts the 30-year fixed at 4.34%, 103 bps above its all-time low of 3.31% in late November of 2012 year and 24 bps below its 4.58% interim high reported in August of last year.
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Movie Tickets and New Homes: Why They Are Both in Trouble
Apr 10, 2014 Michael Lombardi 

Click to view In 2013, consumer spending accounted for 67% of U.S. gross domestic product. (Source: Federal Reserve Bank of St. Louis web site, last accessed April 2, 2014.) It’s plain and simple: economic growth cannot be achieved unless consumers are spending.

And unfortunately, higher prices and lower discretionary spending are putting the brakes on consumer spending here in 2014.
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’’Fixed Income Only Positive Return Asset Class in 2014’’ Say Steen Jakobsen
Apr 09, 2014 Mike Shedlock 

Click to view I don’t believe the growth estimates of the IMF and neither does Steen Jakobsen, Chief Economist of Saxo Bank.

Steen goes one further and calls for the yield on the 30-year long bond to drop a minimum of 150 basis points to 2.5%.
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Current Outlook for Stocks
Apr 09, 2014 Dominic Cimino 

Click to view Technology is currently experiencing a setback that is garnering media attention. At one point on Monday, the Nasdaq 100 Index was nearly 7% lower than its high from only one month ago. Since tech stocks have become market leaders, perhaps a broader general market correction is underway. If you remember, I believe a 10%-15% correction is possible. But let me explain why I believe even if a correction is unfolding, I do not believe the current risk is high for a new bear market.
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S&P 500 Fair Value: ’Have it Your Way’ Q4 2013 Update
Apr 09, 2014 Chris Turner 

Click to view With 100% of all S&P 500 companies reporting earnings for Q4-13, this post updates my previous work regarding S&P 500 Fair Value calculations with a couple additions.

There are many great methods for valuing the S&P 500 and Doug expertly calculates many metrics on this site. The following table summarizes a Fair Market Value using a method popularized by Yale Professor Robert Shiller, but with some additions and modifications.
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Squeezing Momentum
Apr 09, 2014 Jason B. Leach 

Click to view Here are a couple charts and notes to show you what I am looking at and why we are positioned conservatively right now (cash, long treasuries, long gold miners, several high premium plays in small allocations).

The first chart shows the January S&P 500 weakness and the informative indicator that presaged the move (John Carter’s "Squeeze" indicator).
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Shiller Drinks the Kool-Aid
Apr 09, 2014 Mike Shedlock 

Click to view One by one the bears and the rational thinkers throw in the towel. Economist Robert Shiller is the latest to drink the Kool-Aid.

As noted by Business Insider Shiller tweeted the following about a post from White House Council of Economic Advisers Chair Jason Furman on various economic indicators:

"Furman’s blog chart 4 of hours worked in manuf suggests, with new record high of 42, no recession for years to come."
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A Technical Look at the Nasdaq Composite
Apr 08, 2014 Floyd Flannigan 

Click to view Since most of the hysteria of the last few days seems focused on the Nasdaq Composite, I would expect the other indexes to follow the Comp if the overall situation continues to deteriorate. If one were to view the stock market as predictable, one might say, based on a daily chart, that this is a textbook head-and-shoulders in the making, with a picture-perfect up-trending neckline plus a very nice horizontal neckline (~4000). So, now a retracement up to the mid-Fibonacci zones is in order, and then a retest of the neckline(s).
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No One Will Ring The Bell At The Top
Apr 08, 2014 Lance Roberts 

Click to view The market has had a rough start of the year flipping between positive and negative year-to-date returns. However, despite all of the recent turmoil from an emerging markets scare, concerns over how soon the Fed will start to hike interest rates and signs of deterioration in the underlying technical foundations of the market, investors remain extremely optimistic about their investments. It is, of course, at these times that investors should start to become more cautious about the risk they undertake. Unfortunately...
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New Updates at Crestmont Research
Apr 08, 2014 Ed Easterling 

Click to view Note from dshort: My friend Ed Easterling, whose Crestmont Research P/E valuation is a regular feature on this website, has published collection of periodic updates to his ongoing analysis. The commentary below is reprinted from his latest distribution email to subscribers.
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Building Financial Danger
Apr 08, 2014 Ted Kavadas 

Click to view My overall analysis indicates a continuing elevated and growing level of danger which contains many worldwide and U.S.-specific "stresses" of a very complex nature. I have written numerous posts in this blog of some of what I consider both ongoing and recent "negative developments." These developments, as well as other exceedingly problematic conditions, have presented a highly perilous economic environment that endangers the overall financial system.
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Small Business Sentiment Improved in March
Apr 08, 2014 Doug Short 

Click to view The latest issue of the NFIB Small Business Economic Trends is out today. The April update for March came in at 93.4, up 2 points from the previous month’s 91.4. Today’s headline number is at the 19.7 percentile in this series. Since its initial recovery following its Great Recession trough, this index has been stuck in an extremely volatile range for the past three years. Since January of 2011, it has repeatedly bumped a ceiling around the 94.5 level and then retreated.
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Get More Insights Each Week with Advisor Perspectives
Apr 07, 2014 Doug Short 

Click to view If you enjoy the timely economic and market research you get each day on dshort.com, I invite you to join the 400,000 other financial advisors who receive a wealth of investment insights each week on Advisor Perspectives.

Delivered every Tuesday morning, Advisor Perspectives offers actionable investment strategies, market insights and practice management advice.
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Demographic Trends in the 50-and-Older Work Force: Monthly Update
Apr 07, 2014 Doug Short 

Click to view Note from dshort: I’ve updated this commentary with the latest numbers from Friday’s Employment Report.

This is not the scenario that would have been envisioned a generation ago for the "Golden Years" of retirement. Consider: Today nearly one in three of the 65-69 cohort and almost one in five of the 70-74 cohort are in the labor force.
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Structural Demographic Trends in Employment: Monthly Update
Apr 07, 2014 Doug Short 

Click to view Note from dshort: I’ve updated this commentary with the latest numbers from Friday’s Employment Report.

The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution). The result is the participation rate expressed as a percent.
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The Civilian Labor Force, Unemployment Claims and Recession Risk
Apr 07, 2014 Doug Short 

Click to view Note from dshort: I’ve updated this commentary to include the latest labor force data in Friday’s employment report.

A long-term chart of the seasonally-adjusted 4-week moving average of Initial Claims gives a rather distorted view of the economy. Why? Because it doesn’t take into account the 104% growth in the Civilian Labor Force since January 1967. For a better understanding of the weekly Initial Claims data, let’s view the numbers as a percent ratio of the Civilian Labor Force.
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The Part-Time Employment Ratio: Up Slightly in March
Apr 07, 2014 Doug Short 

Click to view Buried near the bottom of Table A-9 of the government’s Employment Situation Summary are the numbers for Full- and Part-Time Workers, with 35-or-more hours as the arbitrary divide between the two categories.

The Labor Department has been collecting this since 1968, a time when only 13.5% of US employees were part-timers. That number peaked at 20.1% in January 2010. The latest data point, over four years later, is only modestly lower at 18.9%, up from 18.8% last month, which was the interim low.
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Its ’’Escape’’ Time, But Which Direction?
Apr 07, 2014 Chris Kimble 

Click to view This 5-pack of chart focuses on key U.S. stock indexes and how all of them are facing key long-term lines at the exact same time, and a couple of them are facing Fibonacci extension levels too. If one breaks out will all breakout? If one breaks down will others break down too?

In time, investors "will escape" from these line. The key question is ... in which direction!
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Real Earnings of Private Employees Improved in March
Apr 07, 2014 Doug Short 

Click to view Here is a look at two key numbers in Friday’s monthly employment report for March:

  • Average Hourly Earnings
  • Average Weekly Hours
The government has been tracking the data for Production and Nonsupervisory Employees for decades. But coverage of Total Private Employees only dates from March 2006.
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The Truth Behind Friday’s Jobs Market Report
Apr 07, 2014 Michael Lombardi 

Click to view Boy ... did investors ever get excited about Friday’s jobs market report. In case you haven’t heard, in March, 192,000 jobs were added to the U.S. economy.

The chart below shows stock market investor reaction after March’s jobs market report was released Friday morning; and investors bought more stocks!
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Gauging Investor Sentiment with Twitter: Weekly Update
Apr 06, 2014 Blair Jensen 

Click to view The Downside Hedge Twitter sentiment indicator for the S&P 500 Index (SPX) moved dramatically on a daily basis, but the smoothed indicator is being compressed as the market moves sideways to up. When the market moved to all time highs the daily indicator confirmed the move with prints in the +25 area, but that was quickly reversed as price consolidated on Thursday then fell on Friday. This suggests that traders are being whipped around by price and are a bit jittery.
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Momentum Stocks Take a Nosedive
Apr 06, 2014 John Nyaradi 

Click to view Bottom line: The next days and weeks will be pivotal for the market’s future direction as the various indexes work to re-synchronize. A mixed bag of fundamental and technical factors set the stage for more volatility ahead.
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Dissecting the S&P for General Market Direction: Large, Mid and Small Cap
Apr 06, 2014 Steven Bauer 

Click to view Of the 1,500 component Companies in the Large Cap / Mid Cap and Small Cap, currently the ratios of Bullish and Bearish Companies are (on balance) growing ever more negative (Bearish) while the market ascends often to new highs. As you know, my past postings of this Quantitative Matrix Count of the S&P’s has been descending and clearly forecasted (fore-told) the results of past weeks and this past week’s performance. It is simply a matter of the "numbers" and they tell ALL!
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Weekly Market Summary
Apr 06, 2014 Urban Carmel 

Click to view This is the market you are trading right now:

First, since March 20 (the day after the FOMC meeting), SPY has gapped up 10 out of 11 days. The index is actually down during this time but the stunning fact is that the sum of the overnight gaps account for a gain of $6.80. In comparison, the cash hours of the market account for a loss of $7.40. The overnight gaps have given sellers room to unload their shares during cash hours when liquidity is superior without tanking the market.
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Weighing the Week Ahead: Fluff or Fundamentals?
Apr 06, 2014 Jeff Miller 

Click to view Sometimes markets emphasize simple themes, rejecting even modest efforts at nuance. The current big stories are the record highs in stocks, the length of time since the last significant correction, and the "market is rigged" meme. These themes are all easily grasped and interesting media fodder. It has set the agenda.

Meanwhile, the economy seems to be providing a positive answer to early 2014 skepticism Weather (!) or Not?
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5 Things To Ponder: ’’The Market Is Rigged’’ Edition
Apr 05, 2014 Lance Roberts 

Click to view The "big story" this week was obviously Michael Lewis’ new book "The Flash Boys" which brought to light the potentially negative impact of high frequency trading (HFT). This is not new news. I first started writing about this very important issue in June, 2011:

"Program trading accounts for as much as 70 percent of the market volume on a daily basis."
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Tech Breaks Support as Momentum Hits Highest Levels since 2000
Apr 05, 2014 Chris Kimble 

Click to view Two weeks ago the Power of the Pattern shared that the NASDAQ 100 (NDX) had recorded the highest overbought momentum readings since the 2000 highs. At the same time it was forming a bearish rising wedge at resistance as key Bio Tech names were already breaking support
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Flows Into Emerging Markets Surge While Cracks in the U.S. Widen
Apr 05, 2014 Chris Puplava 

Click to view The markets had a positive week with the S&P 500 up 0.40%, the Dow 0.55%, and the Russell 2000 0.14%. In terms of sectors the telecommunication service sector was the star performer as it was up 1.40% with materials matching the telecom sector with a 1.40% gain, while the technology sector took a beating on Friday (down 2.23%) and was the only sector down for the week by sliding 0.64%.
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The Unemployment Rate Is Not Signaling a Recession: Update
Apr 04, 2014 Georg Vrba 

Click to view A reliable source for recession forecasting is the unemployment rate, which can provide signals for the beginnings and ends of recessions. The unemployment rate model, updated with the March figure of 6.7%, does not signal a recession now.

The model relies on four indicators to signal recessions:
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Joe Friday: Bullish on Gold Miners
Apr 04, 2014 Chris Kimble 

Click to view The Junior Gold mining ETF (GDXJ) finds itself at key price point right now. The ETF broke above falling resistance and it is now testing it as support, for the first time. At the same time this support test is taking place, GDXJ could be forming a bullish Reverse Head & Shoulders pattern.
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192K New Jobs in March, Unemployment Rate Unchanged at 6.7%
Apr 04, 2014 Doug Short 

Click to view Today’s report of 192K new nonfarm jobs was lower than the Investing.com forecast of 200K. And the unemployment rate, unchanged at 6.7% is a tick above the Investing.com expectation of 6.6%....

The latest employment-population ratio of 58.9% is at the top of a narrow range since the end of the last recession and the highest reading since August 2009.
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Market Valuation, Inflation and Treasury Yields: Clues from the Past
Apr 03, 2014 Doug Short 

Click to view My monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with normal business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.

But these are different times.
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Market Valuation Overview: Yet More Expensive
Apr 03, 2014 Doug Short 

Click to view Here is a summary of the four market valuation indicators I updated at the beginning of the month.

  • The Crestmont Research P/E Ratio
  • The cyclical P/E ratio using the trailing 10-year earnings as the divisor
  • The Q Ratio, which is the total price of the market divided by its replacement cost
  • The relationship of the S&P Composite price to a regression trendline

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Why Surging Profits Aren’t Leading To CapEx And Jobs
Apr 03, 2014 Lance Roberts 

Click to view ...There is one last point to be made. Currently, there is a majority of analysts, and economists, "hoping" that businesses will suddenly step to the fore and begin a "spending rampage" to boost economic growth. While anecdotal evidence suggests this will not be the case, even if it comes to pass, there is likely to be disappointment. Never in history has a segment that comprises 17% of GDP been able to pick up the slack for a segment that comprises 68%. It is function of math that will likely lead to eventual disappointment.
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How Long to the Next Recession? iM’s Weekly Update
Apr 03, 2014 Anton Vrba and Georg Vrba 

Click to view The BCI stands at 168.5 and is slightly down from last week’s upward revised 168.6. BCIg, the smoothed annualized growth of BCI, also grew to 17.0 from last week’s upward revised 16.9. This week’s BCI shows no recessionary trends.

Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.
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Dissecting the Dow for General Market Direction: MCD, MMM, MRK, MSFT and NKE
Apr 03, 2014 Steven Bauer 

Click to view After review (Dissecting) of the Dow 30 component Companies, these five Companies are among those that contribute to the suggestion that the very old Bull General Market is continuing to deteriorate. Yes, there are rallies and pull-backs, but this stalwart Indicator, along with my S&P 1,500 Composite Index continues, to show deterioration. The topping process for a multi-year bull market is always a slow one. It therefore requires much patience and discipline.
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ISM Non-Manufacturing: March Shows Improvement, But Slightly Below Expectations
Apr 03, 2014 Doug Short 

Click to view Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 53.1 percent, up from last month’s 51.6 percent. Today’s number came in slightly below the Investing.com forecast of 53.5, which was also the consensus at Briefing.com.

Here is the report summary:
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Recession Probability Models
Apr 03, 2014 Ted Kavadas 

Click to view There are a variety of economic models that are supposed to predict the probabilities of recession.

While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.
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The Q Ratio and Market Valuation: Monthly Update
Apr 02, 2014 Doug Short 

Click to view Quick take: I’ve updated this valuation metric based on data extrapolations through the end of March, the Q Ratio is 63% above its arithmetic mean and 76% above its geometric mean. If we use the calculation method of Nobel Laureate James Tobin, the ratio is 80% above its arithmetic mean and 96% above its geometric mean.
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Crestmont Market Valuation Update
Apr 02, 2014 Doug Short 

Click to view The 2011 article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling provided an overview of Ed’s method for determining where the market is headed. His analysis was quite compelling. Accordingly I include the Crestmont data to my monthly market valuation updates.
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Anticipating Friday’s Employment Report
Apr 02, 2014 Doug Short 

Click to view The most important economic news this week is Friday’s employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, probably the most significant in the near term being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository).

Today we have the estimate for March nonfarm private employment from ADP at 191K new jobs and a TrimTabs estimated range of 195K to 225K total new jobs.
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Is the Stock Market Cheap?
Apr 02, 2014 Doug Short 

Click to view Here is a new update of a popular market valuation method using the most recent Standard & Poor’s "as reported" earnings and earnings estimates and the index monthly averages of daily closes for the past month, which is 1863.52. The ratios in parentheses use the monthly close of 1859.45. For the earnings, see the table below created from Standard & Poor’s latest earnings spreadsheet.
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Regression to Trend: A Perspective on Long-Term Market Performance
Apr 02, 2014 Doug Short 

Click to view

Quick take: At the end of March the inflation-adjusted S&P 500 index price was 80% above its long-term trend, up from 76% above trend the previous month.


About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let’s apply some simple regression analysis to the question.
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Secular Bull and Bear Markets
Apr 01, 2014 Doug Short 

Click to view Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Without crystal ball, we simply don’t know. One thing we can do is examine the past to broaden our understanding of the range of possibilities. An obvious feature of this inflation-adjusted is the pattern of long-term alternations between up-and down-trends.
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Moving Averages: Month-End Update
Apr 01, 2014 Doug Short 

Click to view Valid until the market close on April 30, 2014

The S&P 500 closed March with a monthly gain of 0.69%. All three S&P 500 MAs and all five the Ivy Portfolio ETF MAs are signaling "Invested" based on the classic 10-month moving average implementation of the strategy.
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The S&P 500, Dow and Nasdaq Since Their 2000 Highs
Apr 01, 2014 Doug Short 

Click to view Here is a update in response to a standing request from David England, a retired professor now actively educating investors through his Trader’s Eye website. In his presentations, he likes to disprove the standard message of Wall Street, "Don’t worry! The market will always come back." I furnished David with some charts, and I now share them with regular visitors to my Advisor Perspectives pages.
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Aerospace: Flying High - But Running Out of Fuel
Mar 31, 2014 Steven Bauer 

Click to view At this time I reiterate my Favorable Opinion for holding many / most of the component securities of the within the Aerospace Industry Group. Buying may be prudent only after a notable pull-back -- but even then you will want to pass or definitely be highly Selective with you choices of investment securities.
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Real Median Household Income Rises 1.2% in February
Mar 31, 2014 Doug Short 

Click to view Summary: The Sentier Research monthly median household income data series is now available for February. Nominal median household incomes were up $668 month-over-month and up $1,787 year-over-year. Adjusted for inflation, they were up 1.2% MoM and 2.4% YoY.

The latest monthly gain was the second largest of the 170 data points in this series since the turn of the century. However, in real dollar terms, the median annual income is 6.8% lower (about $3,892) than its interim high in January 2008.
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NYSE Margin Debt Hits Another Record High
Mar 31, 2014 Doug Short 

Click to view Note from dshort: The NYSE has released new data for margin debt, now available through February. I’ve updated the charts in this commentary to include the latest numbers.

The New York Stock Exchange publishes end-of-month data for margin debt on the NYXdata website, where we can also find historical data back to 1959.

The latest data puts margin debt as at an all-time high, not only in nominal terms but also in real (inflation-adjusted) dollars.
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These Emerging Markets Are Working on an Upside Breakout
Mar 31, 2014 Chris Kimble 

Click to view Over the past month the S&P 500 is flat. No big deal. Over that same time period Brazil ETF EWZ is up 7.5%! Is a long-term trend change at hand in Brazil? Unless you live under a rock, you are well aware that BRIC countries have had a rough time for the past few years. Is this drastic under-performance by the BRIC countries finally about to change?
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Moving Averages: Month-End Preview
Mar 31, 2014 Doug Short 

Click to view Here is a preview of the monthly moving averages I track after the close of the last business day of the month. All three S&P 500 strategies are now signaling "invested" -- unchanged from last month. All five of the standard Ivy Portfolio ETFs are also signaling "invested". However, one ETF in the 12-month moving average variant is on a tightrope between "invested" and "cash".

Positions that are less than 2% from a signal are highlighted in yellow.
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Gauging Investor Sentiment with Twitter: Weekly Update
Mar 30, 2014 Blair Jensen 

Click to view The Downside Hedge Twitter sentiment indicator for the S&P 500 Index (SPX) continues to paint lower highs on a daily basis. Up days in the market aren’t generating high readings and are often associated with negative prints. Friday’s strong morning rally wasn’t enough to encourage traders on the Twitter stream. Tweets were littered with mentions of a topping process, short covering, an oversold bounce, or looking for a place to get short. Many traders are simply playing the range which results in our indicator printing tepid readings on a daily basis.
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Dissecting the S&P for General Market Direction: Large, Mid and Small Cap
Mar 30, 2014 Steven Bauer 

Click to view Of the 1,500 component Companies in the Large Cap / Mid Cap and Small Cap, currently the ratios of Bullish and Bearish Companies are (on balance) growing ever more negative while the market ascends often to new highs. The below table is offered for reference, as to the winners, the losers and the "Also Rans."
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Weekly Market Summary
Mar 29, 2014 Urban Carmel 

Click to view Expectations were for weakness post-Opex and during the last week of the month (post). In the event, RUT dropped more than 3%, NDX more than 2% and SPX more than 0.5% this week.

Equities made no progress in March. SPX was flat while RUT and NDX lost 3% or more. In comparison, treasuries, despite contrary comments by the Fed Chair, rose 1%. Given the torrid rise of equities in February, to say that March’s lackluster performance was out of the consensus is a substantial understatement.
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5 Things To Ponder: Words Of Caution
Mar 29, 2014 Lance Roberts 

Click to view The financial markets have not done much since the beginning of the year but that is not necessarily bad news. Despite Russia’s annexation of Crimea which sparked threats of military conflict, the Federal Reserve tapering asset purchases, massive "polar vortexes" and less than impressive economic data - the markets have remained mostly resilient. I discussed yesterday that there are signs of deterioration in the market internals which are typical of market tops.
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Waterfall Pattern Starting in the White Hot Bio Tech Sector?
Mar 29, 2014 Chris Kimble 

Click to view One month ago the Power or the Pattern suggested that white hot Bio Tech (IBB) looked to be facing stiff resistance at a very important Fibonacci extension level. At the time members shorted this ETF, and since then IBB is off 14% in the past 30 days.
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The Evolution of Optimal Lookback Horizon
Mar 28, 2014 Adam Butler, Mike Philbrick and Rodrigo Gordillo 

Click to view We’ve previously written about the potential for even "simple" investment systems to be deceptively complex. Here is one example.

Many asset class rotational systems are optimized on lookback horizon (to our observation, most use 120 days), so we thought it would be interesting to investigate the evolution of optimal lookback horizon through time. This allows us to put ourselves in the position of an analyst at different points in history and try to speculate on the choices he might have made given the information at his disposal then.
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Joe Friday: Google, Tesla & Bio-Tech Fall Hard!
Mar 28, 2014 Chris Kimble 

Click to view If I had told you a month ago that Google, Tesla and Bio-Tech would fall -7% to -15%, would you have thought the S&P 500 would be "FLAT" if that happened? Well it did and I suspect the outcome surprised more than me.

These three stocks that have been hit so hard are associated with the NASDAQ index. The chart below shows that the NDX 100 is testing rising support and its 50MA at the same time.
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The Latest on Real Disposable Income Per Capita
Mar 28, 2014 Doug Short 

Click to view With this morning’s release of the February Personal Incomes and Outlays we can now take a closer look at "Real" Disposable Personal Income Per Capita.

The February nominal 0.29% month-over-month increase is encouraging, but after we adjust for inflation, the real MoM change is a smaller 0.21%. The year-over-year metrics are 2.27% nominal and 1.39% real.
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PCE Price Index Update: Core Inflation Remains Far Below the Fed Target
Mar 28, 2014 Doug Short 

Click to view The latest Headline PCE price index year-over-year (YoY) rate of 0.87% is a decline the previous month’s 1.19% (a slight adjustment from 1.18%). The Core PCE index of 1.10% is unchanged from the previous month’s upward adjustment from 1.09%.

As I’ve routinely observed, the general disinflationary trend in core PCE (the blue line in the charts below) must be quite troubling to the Fed. After years of ZIRP and waves of QE, this closely watched indicator consistently moved in the wrong direction.
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Are You Minding the Curves? Sweet Spot is Likely Not Where You Think
Mar 28, 2014 Mike Shedlock 

Click to view Curve Watcher’s Anonymous has its eye on the yield curve again.

Over the course of the last year, and except for the close front-end, US treasury yields have risen across the board, and in some cases dramatically. This is what one would expect from a tapering Fed that is also discussing rate hikes.
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36% of American Workers Have Savings of Less Than $1,000
Mar 28, 2014 Michael Lombardi 

Click to view I have said it many times in these pages: economic growth in the U.S. economy can only occur when the general standard of living for the average American improves. Sadly, each day, we see more and more evidence suggesting the opposite.

Consider the results from the 2014 Retirement Confidence Survey by the Employee Benefit Research Institute.
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BEA Revises 4th Quarter 2013 GDP Growth Up Slightly To A 2.64% Annual Rate
Mar 27, 2014 Rick Davis 

Click to view ...The improvement in the headline growth came almost entirely from the BEA’s reassessment of consumer spending on services (adding .57% to the headline number, mostly from increased spending on health care). Offsetting that increase were downward adjustments to consumer spending on goods (-.06%), the growth rate for inventories (which lost -.16% and is now reported to be in slight contraction) and fixed investment (-.15%). Only minor adjustments were made to exports and imports.
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Revisualizing the Second U.S. Housing Bubble
Mar 27, 2014 Craig Eyermann 

Click to view ollowing our most recent post looking at the current trends in U.S. median new home sale prices, we were forwarded the following question:

"Can you quickly and easily ’real dollar’ this chart?"

By "this chart", our inquisitor is likely referring to the following chart, showing the overall trend for median new home sale prices with respect to median household income since 1967:
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Real GDP Per Capita: Another Perspective on the Economy
Mar 27, 2014 Doug Short 

Click to view Earlier today we learned that the Third Estimate for Q4 2013 real GDP came in at 2.6 percent, up from 2.4 percent in the Second Estimate and generally in line with most forecasts. Let’s now review the latest numbers on a per-capita basis.

For an alternate historical view of the economy, here is a chart of real GDP per-capita growth since 1960.
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Visualizing GDP: Dissecting the Third Estimate Upward Revision
Mar 27, 2014 Doug Short 

Click to view The chart below is my way to visualize real GDP change since 2007. I’ve used a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself....

Here is the latest overview from the Bureau of Labor Statistics:
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Philly Fed Leading Economic Index Suggests Expansion Across 100% of the Nation
Mar 27, 2014 Chris Puplava 

Click to view On Monday, the January release of the Philadelphia Fed’s State Leading Economic Index came out for all 50 states of the nation. The leading index is a six-month forecast for the state coincident indexes and the January data showed that all 50 states are expected to see their coincident indexes rise over the next six months.

This would be an improvement in the coincident data for January which showed that the coincident indexes increased in 48 states and remained stable in two.
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How Long to the Next Recession? iM’s Weekly Update
Mar 27, 2014 Anton Vrba and Georg Vrba 

Click to view The BCI is unchanged from last week’s upward revised 167.9. However BCIg , the smoothed annualized growth of BCI, increased to 16.4 up from last week’s 15.8. This week’s BCI shows no recessionary trends.

Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.
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GDP Q4 Third Estimate at 2.6%, Up from the 2.4% Second Estimate
Mar 27, 2014 Doug Short 

Click to view The Third Estimate for Q4 GDP, to one decimal, came in at 2.6 percent, up from 2.4 percent in the Second Estimate. The GDP deflator used to calculate real (inflation-adjusted) GDP remained unchanged at 1.6 percent. Investing.com had forecast 2.7 percent for today’s GDP estimate and the deflator to remain unchanged.

Here is an excerpt from the Bureau of Economic Analysis news release:
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Why the Sudden U.S. Dollar Collapse?
Mar 27, 2014 Michael Lombardi 

Click to view When news first broke from the Federal Reserve that it would slow down the pace of its quantitative easing program, the consensus was that the U.S. dollar would start to rise in value as the Fed would be printing less new dollars and actually eliminating all new paper money printing by the end of 2014.

But the opposite has happened.
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Dow 30: Nine DOWN, Twenty-One to Go!
Mar 26, 2014 Steven Bauer 

Click to view At this writing these nine Companies are now Bearish and “Un-Favorable” and are suggesting that the very old Bull General Market is deteriorating. It is always a slow process of topping that requires much patience and discipline. Doing your homework each day helps more than you might think.
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The ’Real’ Goods on the Latest Durable Goods Data
Mar 26, 2014 Doug Short 

Click to view Earlier today I posted an update on the March Advance Report on February Durable Goods New Orders. This Census Bureau series dates from 1992 and is not adjusted for either population growth or inflation.

Let’s now examine the same data adjusted for both population growth and producer price inflation, which gives us the "real" durable goods orders per capita. The snapshots below offer an alternate historical context in which to evaluate the standard reports on the nominal monthly data.
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Durable Goods Report: February Was a Mixed Bag
Mar 26, 2014 Doug Short 

Click to view The headline number beat expectations, but Core Capital Goods New Orders (Nondefense Ex Aircraft) dropped 1.3%.

The March Advance Report on February Durable Goods was released this morning by the Census Bureau. Here is the Bureau’s summary on new orders:
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S&P 500 Approaching Inflection Point
Mar 26, 2014 Sasha Cekerevac 

Click to view The winds are changing, my friends. For most of the past year, each time the S&P 500 sold off, it was a buying opportunity. I think we are at an inflection point this year, as we all know nothing lasts forever.

I believe it all began to emerge last week with the Federal Reserve meeting. As long-time readers know, over the past couple of months, I’ve been warning that once the Federal Reserve begins to adjust monetary policy, this will have a negative impact on the S&P 500.
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What the Breakout in the Gold-to-Copper Ratio Is Telling Us
Mar 26, 2014 Michael Lombardi 

Click to view Copper is considered an industrial metal, used in industries across the board. When copper prices fall, it’s usually an indicator of a slowdown in the global economy. On the contrary, gold bullion isn’t much of an industrial metal; rather, it is used as a hedge against uncertainty in the global economy.

When you look at these two metals together, often referred to as the gold-to-copper ratio, they tell us something very important....
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The Deflationary Threat To The 1990’s Replay Story
Mar 25, 2014 Lance Roberts 

Click to view Yesterday, I wrote a piece discussing why "It Is Impossible To Replay The 90’s", making the point that we are likely replaying the 1970’s instead. My friend and colleague, Doug Short, emailed me with a valid point suggesting that the inflation of the 70’s, due to the Arab Oil Embargo, was not likely. The real concern, in his opinion, is that we are in an era of stagnation, with the ongoing risk of deflation being the real "wolf at the door." To these points, I very much agree.
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U.S. New Home Sale Prices at the Mercy of Mortgage Rates
Mar 25, 2014 Craig Eyermann 

Click to view Now that the U.S. Census Bureau has finally posted the income data that it collected in January 2014 through the Current Population Survey (over a month late, the Bureau posted its data for February 2014 at the same time), we can now check in on the status of the second U.S. housing bubble. The chart below reveals what we find:
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Consumer Confidence Bounces Back in March
Mar 25, 2014 Doug Short 

Click to view The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through March 14. The 82.3 reading was above the 78.6 forecast of Investing.com and 4.0 above the February 78.3 (previously reported at 78.1). This measure of confidence has risen from its interim low of 72.0 in November and it now at a new post-Financial Crisis high.

Here is an excerpt from the Conference Board report.
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Richmond Fed: Manufacturing Remained Soft in March
Mar 25, 2014 Doug Short 

Click to view The March update shows the manufacturing composite at -7, a slight decline from last month’s -6. Not surprisingly, the full report continues to mention bad weather as a factor. Today’s composite number was below the Investing.com forecast of -1.

Because of the highly volatile nature of this index, I like to include a 3-month moving average, now at -0.3, to facilitate the identification of trends.

Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.
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Jeremy Grantham’s Seven-Year Forecast
Mar 25, 2014 Mike Shedlock 

Click to view Jeremy Grantham 1999, Jeremy Grantham Today: "Over Next Seven Years, Market Will have Negative Returns"

It is extremely difficult to sit out a party. Do so and you lose both clients and assets. Invest in unloved and undervalued assets and you do even worse.

But what is the alternative? Get drunk like everyone else?
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Gasoline Volume Sales, Demographics and our Changing Culture
Mar 25, 2014 Doug Short 

Click to view The Department of Energy’s Energy Information Administration (EIA) data on volume sales is over two months old when it released. The latest numbers, through mid-January, were published yesterday. However, despite the lag, this report offers an interesting perspective on fascinating aspects of the US economy. Gasoline prices and increases in fuel efficiency are important factors, but there are also some significant demographic and cultural dynamics in this data series.
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Are We Really Headed for Deflation?
Mar 25, 2014 Michael Lombardi 

Click to view The Bureau of Labor Statistics (BLS) reports inflation in the U.S. economy increased by 0.1% in February from the previous month. (Source: Bureau of Labor Statistics, March 18, 2014.) As usual, these numbers have again brought up the theory of deflation -- a period when general prices decline.
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It’s Impossible To Replay The 90’s
Mar 24, 2014 Lance Roberts 

Click to view In my opinion it is likely quite impossible, from an economic perspective, to replay the secular bull market of the 80-90’s. While I would certainly welcome such an environment, the more likely scenario is a repeat of the 1970’s. The trick will be remaining solvent for when the next secular bull market does indeed eventually arrive.
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Will Prices Rise Significantly When Velocity of Money Picks Up?
Mar 24, 2014 Mike Shedlock 

Click to view Several people have written recently telling me that price inflation is under control only because the velocity of money (the alleged rate at which money circulates) is falling.

Reader Mark pinged me with this statement "Falling velocity is deflationary. It indicates people are saving their cash." Others have expressed similar opinions, typically in reference to this chart by the Fed.
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Natural Gas: Stinky Stuff to Deal with Right Now
Mar 24, 2014 Steven Bauer 

Click to view At this time I reiterate my Un-Favorable to Neutral Opinion for holding many / most of the component securities of the within the Natural Gas Industry / Commodity Group. Buying may be prudent only after another notable pull-back -- but even then you will want to pass or definitely be highly Selective with you choices of investment securities.
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Understanding the CFNAI Components
Mar 24, 2014 Doug Short 

Click to view The Chicago Fed’s National Activity Index, which I reported on earlier today, is based on 85 economic indicators drawn from four broad categories of data:

  • Production & Income
  • Employment, Unemployment & Hours
  • Personal Consumption & Housing
  • Sales, Orders, & Inventories

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Watching and Waiting
Mar 24, 2014 Jason Leach 

Click to view As discussed in my February "Red House" commentary, most stocks/ETFs on both my conservative and speculative watch lists have gone parabolic - moving straight up without correction. Ostensibly, the parabolic move has occurred on the back of U.S./Japanese "money printing" contributing to a health care/biotech bubble, Internet 2.0 bubble, semiconductor bubble, solar bubble, etc.

Thus, potential significant near term capital depreciation is overriding the two other components of total return in JBL Wealth portfolio strategies....
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Why the U.S. Housing Market Is Headed for Trouble in 2014
Mar 24, 2014 Michael Lombardi 

Click to view Compared to the past two years, the U.S. housing market will not have a great year in 2014.

In fact, key indicators are now pointing to a top in the housing market recovery:

The National Association of Home Builders/Wells Fargo Housing Market Index fell to 47 in March, coming down more than 16% from 56 in January....
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Home Builders Need to Breakout Now, Or...
Mar 24, 2014 Chris Kimble 

Click to view The Dow Jones Home Construction index created a "Bearish Head & Shoulders" top from 2003 to 2007. The index ended up losing 90% of its value during the housing crisis with half of the decline taking place once the neckline broke. Over the past five years the index has had a strong rally, taking it to the "underside of the neckline" of that monster bearish pattern.
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Chicago Fed: Economic Growth Increased in February
Mar 24, 2014 Doug Short 

Click to view "Index shows economic growth increased in February": This is the headline for today’s release of the Chicago Fed’s National Activity Index, and here are the opening paragraphs from the report:

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.14 in February from 0.45 in January. Three of the four broad categories of indicators that make up the index increased from January, and two of the four categories made positive contributions to the index in February.
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Monetary Perspective on QE and Tapering
Mar 24, 2014 Mike Shedlock 

Click to view In Reflections on the Yellen Taper-Hike Announcement; What Does the Fed Know? I quoted the opinion of Saxo Bank Chief economist Steen Jakobsen.

Steen commented "Please, do not think for one minute that FOMC have any clue about the economy six months from and even less so looking into 2015."
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Gauging Investor Sentiment with Twitter: Weekly Update
Mar 23, 2014 Blair Jensen 

Click to view The Downside Hedge Twitter sentiment indicator for the S&P 500 Index (SPX) is painting a negative divergence from price on a daily basis. Traders on Twitter aren’t enthusiastic about the market being near all time highs which is highlighted by decreasing volume and intensity of tweets as the market moves higher.
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Dissecting the S&P for General Market Direction: Large, Mid and Small Cap
Mar 22, 2014 Steven Bauer 

Click to view Of the 1,500 component Companies in the Large Cap / Mid Cap and Small Cap, currently the ratios of Bullish and Bearish Companies are growing ever more negative while the market ascends often to new highs. The below table is offered for reference, as to the winners, the losers and the "Also Rans."
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Weekly Market Summary
Mar 22, 2014 Urban Carmel 

Click to view The recent story is this: two weeks ago, the US indices pushed to new highs, but the vicious bounce over the prior month had reached the point of exhaustion and a retrace was therefore due.

The following week, the indices declined, most ending last Friday right on their January pivot highs. There was an attractive set-up for a bounce into the current week. In the event, indices rose over 1%.
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Tech Momentum the Most Overbought in 14 Years
Mar 22, 2014 Chris Kimble 

Click to view Since the 2009 lows, tech has done very well, up over 190% in the past five years. This rally has pushed momentum to levels not seen in 14 years! We have to go back to the dot.com peak to find momentum this high. At the same time momentum is lofty, the NDX 100 is hitting a line in the sand that has been important for the past 24 years.
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Vehicle Miles Driven: Another Population-Adjusted Low
Mar 22, 2014 Doug Short 

Click to view The Department of Transportation’s Federal Highway Commission has released the latest report on Traffic Volume Trends, data through December.

Travel on all roads and streets changed by -1.3% (-2.9 billion vehicle miles) for January 2014 as compared with January 2013. However, if we factor in population growth, the civilian population-adjusted data (age 16-and-over) is at a new post-Financial Crisis low and total population-adjusted data are only fractionally above its low set in June of last year.
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Market Momentum Beginning to Fade: Are Stocks Losing Steam?
Mar 22, 2014 Chris Puplava 

Click to view I am seeing divergences in the market’s monthly and weekly MACD numbers, which have been declining for months. I am also seeing divergences in the percent of stocks making new 52-week highs, which is failing to confirm the market’s new high. We’ve also yet to see a weekly MACD buy signal on the S&P 500 since the sell signal given in January to suggest the corrective phase of the market is over. The neutral readings seen in my intermediate-term indicators do not shed any clue on the market’s direction, with price serving as the best key.
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Baked in the Cake
Mar 21, 2014 Alan Hartley 

Click to view Equity markets continue to rise as confidence in a sustained recovery becomes more prevalent. Despite softer than expected economic data reported recently, it seems investors -- like us -- have shrugged off the weakness as being due primarily to the unusually frigid winter.
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Gold Reserves: Top 20 Countries
Mar 21, 2014 Mike Shedlock 

Click to view My friend Nick at Sharelynx Gold has an interesting chart on world gold reserves that I would like to share.

For those how think the US is going to enter hyperinflation with the US dollar becoming completely worthless, I reply that it will not and cannot happen because the US has the world\’s largest gold reserves.
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5 Things To Ponder: Yellin’ About Yellen
Mar 21, 2014 Lance Roberts 

Click to view The biggest news this past week was Janet Yellen’s first post-FOMC meeting speech and press conference as the Federal Reserve Chairwoman. While I have the utmost respect for her accomplishments, every time I hear her speak all I can think of is my white haired, 75-year old grandmother baking cookies in her kitchen. This week’s "Things To Ponder" covers several disparate takes on what she said, didn’t say and the direction of the Federal Reserve from here.
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Japan’s Amazing Market Drama: New Update
Mar 21, 2014 Doug Short 

Click to view It’s been quite a while since my last close look at key Japanese market and bond data. The amazing rally in the Nikkei 225 hit its interim high at the end of December, up 99.6% from its interim low in November of 2011. The steroid effect of massive monetary intervention subsequently evolved into an ongoing drama of high volatility.
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Just How Stupid Do Public Companies Think Investors Are?
Mar 21, 2014 Michael Lombardi 

Click to view According to FactSet, between January 1 and mid-March of this year, 195 of the S&P 500 companies have used the word "weather" in some manner in their conference calls. This is 81% higher than the same period a year ago, when 108 of the S&P 500 companies used the term "weather" in their conference calls. (Source: FactSet, March 14, 2014.)
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Chinese Rally?
Mar 21, 2014 Dominic Cimino 

Click to view Do I dare step out on a limb and suggest bullish possibilities for China? Nearly everyone is bearish and waiting for a hard drop in China’s stock market. I’m well aware of copper’s sell-off and its implications about China. I’m also aware of the public’s slower economic growth consensus, and recent credit crunch concerns. Then why am I suggesting bullish possibilities for China?
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Joe Friday: 2014 Commodity Rally No Proof of a New Bull Market
Mar 21, 2014 Chris Kimble 

Click to view No doubt several commodities have shot up like rocket ships in the first 90 days of 2014. Below are the top 10 performing commodities YTD. On the flip side, when looking back over the past three years, commodities performance has been anything but impressive.... Actually they’ve been a place to avoid!
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What History Says About Fed Rate Hikes
Mar 20, 2014 Lance Roberts 

Click to view Yesterday, Janet Yellen gave her first post-FOMC meeting press conference. In her prepared statement, she stated exactly what was already expected....

The problem for the markets came during her press conference when she was asked what a "considerable amount of time" between the end of the current QE program and the first rate hike would be. She replied: "About six months."
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Existing Home Sales Look Soft
Mar 20, 2014 Logan Mohtashami 

Click to view Today the NAR came out with the February Existing Home Sales numbers, and the year-over-year action looks soft.

Five points on the numbers that came out today:

    - It’s looking more like zero growth in total sales for 2014. While new home sales still have room to edge higher, existing home sales, which are more indicative of what is happening on main street America, continue to be soft.
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Conference Board Leading Economic Index Increased in February
Mar 20, 2014 Doug Short 

Click to view The Latest Conference Board Leading Economic Index (LEI) for February was released this morning. The index rose 0.5 percent to 99.5 percent from the January’s 99.3, an upward revision from 92.2 (2004 = 100). The latest number was above the 0.2 percent forecast by Investing.com.

Here is an overview from the LEI technical notes:
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Market Cap to GDP: The Buffett Valuation Indicator
Mar 07, 2014 Doug Short 

Click to view From time to time I’m asked why I don’t include Market Cap to GDP among the long-term valuation indicators I routinely follow. The metric gained popularity in recent years thanks to Warren Buffett’s remark in a 2001 Fortune Magazine interview that "it is probably the best single measure of where valuations stand at any given moment."
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The Fed Balance Sheet: What Is Uncle Sam’s Largest Asset?
Mar 07, 2014 Doug Short 

Click to view Note from dshort: I’ve updated the quiz based on yesterday’s Q4 Financial Accounts of the United States (previously referred to as the Flow of Funds Accounts). Hint: The correct answer is the same as it was for the last quiz, just more incredible.


Pop Quiz! Without recourse to your text, your notes or a Google search, what line item is the largest asset on Uncle Sam’s balance sheet?
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