Category: Commentary
Stock Market Intermediate-term High Likely in Place
The S&P 500 index ended the week near support at the lower boundary of the uptrend from October 2011. However, the March employment data was much worse than consensus expectations, causing a 15-point decline in S&P 500 futures on Friday. For several weeks, we have noted that the rally from October is extremely overbought and [...]
US Dollar Confirms Formation of Short-term Low
The US dollar index closed moderately higher today, continuing the reaction from yesterday and confirming the formation of the latest short-term cycle low (STCL) as predicted by the cycle low signal that was generated yesterday. The rally from August 2011 continues to hold above uptrend support and technical indicators on the weekly chart are being [...]
The Gold Currency Index Negatively Diverges from Gold
Gold closed sharply lower today, returning to recent short-term lows of the downtrend from late February. A close well below $1,644 would reconfirm the downtrend and forecast a relatively quick move down to strong congestion support in the $1,600 area. Technical indicators are now moderately bearish overall on the daily chart, favoring a continuation of [...]
Stock Market Rally Reconfirms Bullish Translation
The S&P 500 index closed moderately higher today, moving up to marginal new highs for the uptrend from October 2011 and the cyclical bull market from early 2009. Technical indicators are moderately bullish overall on the daily chart, favoring additional short-term strength. However, the advance from October remains extremely overextended on an intermediate-term basis and [...]
Stocks Begin Another Test of Rally Support
The S&P 500 index rebounded from early losses to close slightly lower today, holding below recent highs of the rally from October 2011 and beginning another test of uptrend support. Technical indicators are slightly bullish overall on the daily chart, tentatively favoring a continuation of the advance. However, the rally from October is extremely overextended [...]
Case-Shiller Home Price Indices Decline to New Secular Bear Market Lows in January
The Case-Shiller home price data for January were released today, showing another broad decline in the 10-city and 20-city composite indices to new lows for the secular downtrend from the bubble peak last decade. Data through January 2012 … showed annual declines of 3.9% and 3.8% for the 10- and 20-City Composites, respectively. Both composites [...]
Corporate Profits Approach Cyclical High
In his latest weekly commentary, fund manager John Hussman analyzes several mainstream arguments that suggest the stock market is inexpensive at current valuations, including the most common “methodology” that focuses on corporate earnings forecasts. As he correctly observes, the forward earnings model has a very poor performance history, and it is especially dangerous near highs [...]
Stock Market Secular Trend Review
During periods of great market turmoil, it is useful to revisit the big picture often. Short-term price behavior only has meaning when analyzed in the proper context afforded by the long-term view, so all investing and long-term trading strategies should begin with a thorough understanding of the current secular environment. There have been five secular [...]
Stock Market Short-term Cycle Approaches Potential Inflection Point
The S&P 500 index closed slightly lower today, holding near recent highs of the rally from October 2011. Although technical indicators favor a continuation of the advance, the uptrend is extremely overextended on a short-term basis and it will almost certainly be followed by a violent overbought correction. Speculative overextended rallies of this type tend [...]
Stock Market Overbought Correction Develops as Expected
The S&P 500 index closed sharply lower again today, confirming the break below support at the lower boundary of the uptrend from October 2011. For several weeks, we noted that the rally from October was extremely overbought and that the resulting retracement would almost certainly be violent in character. The correction has developed as expected [...]
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