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Wednesday, April 16, 2014

Review of US Stocks and Troublesome Trends

NYSE Composite's REV(E), a measure of trend energy base on total NYSE volume, has been generating higher highs and lows since early March (chart 1).  This technical setup reflects growing trend energy as price builds cause.  Investors, worried about Ukraine, comparison to panic declines, or numerous other headline worries won't 'recognize' this setup until price jumps the creek of resistance (March/April highs).

Capital flows into US stocks likely misinterpreted by both the experts and public hide troublesome global trends (chart 2).

Chart 1: NYSE Composite


Chart 2: Dow Jones Transports (DJTA) and US American Railroad Stocks Prior 1914, DJTA to Dow Industrials (DJTADJIAR) and DJTADJIAR Cycle Z Scores (DJTAC3and4)


Observations

  • The Cycle of Accumulation and Distribution is also recognized in Dow Theory
  • Capital, flowing from Transports to Industrials since 1901, pushed the Dow Transport to Dow Industrial ratio to extreme negative concentration years ahead of the 1929 crash.  Capital's extreme concentration and tendency to flow from areas of high to low concentration, forced a reversal of flows in 1938.  The invisible hand has ignited another global recovery.
  • Capital flowed from the Industrials to Transports for decades.  By 1985-1990, the ratio return to levels not seen since the early stages of the Great Depression.
  • After 1985-1990 capital flows reversed again.  The Dow Tranports to Dow Industrials ratio and global economy have been slowly contracting ever since.  This downward trend and extremely high sovereign debt burdens setup not only the Great Depression but also the global unrest of the 1930's and 1940's.  The invisible hand is warning investors and leaders around the world again.



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Retail sales jump 1.1% in March, beating estimates

Retail stocks have been lagging the broader market for months. This underperformance which can linger for months before the economy and stocks turn lower reflects declining real spending (consumption) in America. In time, investors will realize that the Era of Consumption, a trend of ever-increasing spending, likely ended 2013.

The last economic up tick within a larger up cycle, due later this year, should extend this underperformance and confuse investors that recognize these trends as warnings of trouble brewing.

Chart: SP Retail to SP 500


Headline: Retail sales jump 1.1% in March, beating estimates

WASHINGTON (MarketWatch) -- Sales at U.S. retailers increased 1.1% in March to a seasonally adjusted $433.9 billion, the Commerce Department estimated Monday. This is the largest gain since September 2012. Sales rose an upwardly revised 0.7% in February, compared with previous estimate of a 0.3% gain. Ahead of the report, economists surveyed by MarketWatch expected total sales to rise 0.8%. Excluding the 3.1% rise in motor vehicle sales, retail sales rose 0.7%. Economists had expected ex-auto sales to rise 0.4%. Gains were widespread across sectors. Sales at general merchandise stores had their biggest gain since March 2007

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As a special thanks to the loyal Insights supporters, additional, market-driven money flow, trend, and intermarket analysis will be provided to Insight donors in 2014. This analysis will be revealed by an Insights key.



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Tuesday, April 15, 2014

Review of Crude Oil

Crude oil continues to build cause for the next impulse wave.

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As a special thanks to the loyal Insights supporters, additional, market-driven money flow, trend, and intermarket analysis will be provided to Insight donors in 2014. This analysis will be revealed by an Insights key.



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Gold Shares Review





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As a special thanks to the loyal Insights supporters, additional, market-driven money flow, trend, and intermarket analysis will be provided to Insight donors in 2014. This analysis will be revealed by an Insights key.



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The Rise of Socialism and 'Fairness' within Society

The rise of socialism, increasing percentages of receipts and outlays relative to national income since late 1920's and early 30's, reflects the tax and spend and return to fairness philosophy of economic and social management.  What the 'master planners' conveniently ignore is that every action carries consequences in the real world.

These consequences, often growing geometrically after birth, also carry consequences.  This process of cause and effect continues until the social and economic systems fall so far out of equilibrium that implosion, despite the recognized brilliance of central planners, becomes the only viable solution.

When total receipts and outlays as a percentage of national income surge above previous highs during the next down cycle, the public's disdain for centralize management and forced 'fairness' within society will only rise as investment dwindles, jobs disappear, and standard of livings contract well below subsistence levels for most.

Chart 1: Total Receipts to Gross Domestic Product Ratio (TRGDPR), Annual


Chart 2: Total Outlays to Gross Domestic Product Ratio (TOGDPR), Annual


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Monday, April 14, 2014

NYSE Composite Review

NYSE Composite (US stocks) displaying normal profit-taking after REV(E) establishes new highs.

Chart: NYSE Composite


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2014 crash will be worse than 1987's: Marc Faber

In an era of high frequency trading (HF), a panic 1987-style decline is only a matter of time.  1987 style concentration displays not only an extremes in price but also valuation(s) and relative money flows - relative concentration in comparison to stocks, bonds, gold, etc.  The intensity of each crash is also a function of time and cyles.  For example, the 1987 style decline, while sharp, didn't last long.  Stocks, trading within a larger up cycle, rebounded quickly once the extreme concentrations were unwound.

Is the SP 500 (large cap stocks), currently oscillating from bearish and bullish extremes, displaying 1987 style concentration that should concern investors?

Only computer analysis of long-term trends can answer that question.

Headline: 2014 crash will be worse than 1987's: Marc Faber

Marc Faber says the stock market is setting up for a decline more painful than the sudden crash of 1987.

"I think it's very likely that we're seeing, in the next 12 months, an '87-type of crash," Faber said with a devious chuckle on Thursday's episode of "Futures Now." "And I suspect it will be even worse."

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As a special thanks to the loyal Insights supporters, additional, market-driven money flow, trend, and intermarket analysis will be provided to Insight donors in 2014. This analysis will be revealed by an Insights key.



Paypal, a leading provider of secure online money transfers, will handle donations. Thank you for your contribution.

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