HAS THE BEAR MARKET RETURNED?

I know I had many loyal readers, and I am sorry I have not been able to keep up with this blog, I enjoyed writing regularly for many years. But my business I started 4 years ago is thriving and needs most of my attention.

There are many troubling technical reasons to be concerned with the current state of the stock market.
I won't bore you with exact details, but there is so much underlying weakness in stocks BEHIND the large cap leaders to be alarming. More and more stocks are falling into their own bear markets as the major indexes were reaching new highs, that pattern has only gotten much more pervasive and worse.

They like to say you have just a few generals leading, but your army has run off leaving you to fend for yourself. Sector after sector has fallen into their own bear market....and its reaching a point on no return for the major indexes.

There is no way stock valuations make any sense with the profit expectations going forward. QE and all the tricks like ZIRP has helped only the stock market, but not the real economy maybe limping along at a 1.5- 2.0 GDP

The Transport index made its highs last November, that was 8 months ago!

Commodities are in a bear market, what's with OIL at $40???? When economies are HUMMING, so are commodities...if indeed we are consuming them to make things, build things....we need energy...something is wrong.

China.....as reported this AM on the financial channel a respected analyst Chanos stated " it's much worse than you think".....its major FUBB over their....major....and its just beginning as the govt attempts to buy stocks , whatever it takes has hastened the loss of faith.....there is NO such thing as free markets, the more THEY manipulate, the worse the repercussions

APPLE  has fallen down...actually began 2 weeks ago.

Oil in a free fall  USO

VIX, fear index has spiked, worth watching to see if it has broken out of long downtrend. Higher VIX means LOWER stocks.

ZIRP policy has to end sometime, now with stock weakness will the FED even raise .25% this year?
The current policy is already 5 years into CRISIS LEVELS......did we never leave the crisis?

Markets in BULL mode DO correct, so we don't have to jump to conclusions.....that said, the majority of stocks already in downtrends is not what you see in a healthy bull market.

D 

Transports continue to Diverge

This action continues to be monitored, the longer it continues the more meaning it may have. In a market controlled by FED action since 2009, it is hard to envision anything but a sideways to up market. Memories are short lived.

The REAL question we WILL get an answer to EVENTUALLY is, whether the FED'S manipulation helped us DODGE a bullet, or eventually puts one right into investors' head.

Nothing is for FREE, nothing lasts forever.

D

FED MEETING

Everyone is fixated on the statement being issued today by the Federal Reserve. It isn't a matter of if, but when will interest rates begin to " normalize"?

The Financial crisis was back in 2008/2009, but FRD funds rate is still at zero %, crisis levels.
This fixed rate , has screwed savers and gifted investors. Hey, it was a plan, and maybe it worked to stay a worse outcome. But for every yang , there is a YANG. And we don't know yet, what the cost will be, for bailing out the worlds economies, but more so the stock markets.

I believe the market is in the progress of putting in a top, doesn't happen overnight . Underneathe the soaring Netflix and Aaple stocks, are weakness that is broadening.

D

Perfect Storm

I've been gone for awhile hopefully not forgotten.

These are interesting times, IMHO the ship,has sailed on making the easy money. Many stocks have already fallen off the wagon into their own downward bear trends , but these mostly go unseen by the avg investor.

Who cares that hourly wages are falling, and have made a miserable recovery 5 plus years into the zero interest rate manipulated stock market mania. At the same time, in today's report, labor costs are rising which is a bad combo for profits.

A rising US $ is bad for many US company profits , especially the multi nationals.

Unemployment rate is now down to 5.5%, and the feckless FED still has rates pegged at 0%, a CRISIS level. Are we still in a crisis?

Here lies the problem. The world's central bankers are racing each other to lower their rates and weaken their currency, in hopes of stimulating their economy. It should be that easy.

Zirp has made the big players discard any caution and many have levered up large multiples to their cash holding, remember this is what the FED wants...throw caution to the wind and buy buy buy.
And this has caused an historic divergence between the 1% at the top and everyone else! nice going.

Is the weakness in gold, and the plunge in oil prices stemming from overproduction? Weak demand? Or hints of deflation.

Few months ago the Transports did not confirm the new highs in the Dow,  minor in size, but diverge nonetheless.

Now the FED has signaled, it will begin raising rates in 2015, many think this summer. There seem to be a lot more headwinds for US stock prices than there have been in awhile.

The level on the SPX of 1750 I deem important support, and needs to hold.

My own personal indicator has been on a BEAR warning for months. But one additional indicator has yet to confirm.

But I think the easy money has been made ....and one at a time, they must be eyeing the exits....

D

FED SUPPORT. FOR MARKET EVAPORATES

http://www.safehaven.com/article/36258/fed-abandons-stock-markets

Adam. Hamilton does a nice job of outlining what headwinds in esters could face in 2015.

D

CONSEQUENCES DELAYED BUT INEVITABLE

I'm all for a bull market like the next guy. But can we just have one that is born, and lives on its own 2 feet? Or is the stock market just doomed to rinse and repeat.....

Organic natural growth would be a lasting one, where there is a natural balance to things and resources.

Instead we get an abomination of reality and manipulation. EACH END (2000, 2007) to the back room guys behind the curtain economy boom mania is an equally or more so bust and panic.

The most recent addition (2009- current) of a false dawn, carries with it historic measures to keep the man behind the curtain hidden, and so will follow with even greater consequences.

D

DO whatever it takes

http://www.prudentbear.com/2014/10/kuroda-bubbles-and-king-dollar.html#.VFYsamK9KSM

"Importantly, the risks were deeply systemic. Policy responses were systemic. Draghi moved forward with “Do Whatever it Takes,” followed soon by open-ended QE from Bernanke and Kuroda. I never bought into the notion that Fed “money” printing was about U.S. jobs. I don’t believe Kuroda’s move Friday was about Japanese inflation. Policy responses have been akin to Benjamin Strong’s 1927 “coup de Whiskey,” but on a multi-shot global basis (with chaser). And over the past two years we’ve witnessed a 1927 to 1929-like market response, again on a globalized basis. 

Predictably, throwing Trillions of “money” at a global Bubble has only exacerbated instability. Throwing Trillions of “money” at dangerously maladjusted global financial and economic “systems” will surely only worsen the addiction. I see Kuroda’s move as further evidence of global central bank desperation. Global risks have inflated profoundly since 2012."

There are no sound money policies being followed by any world Central Bank, just print away so to speak and all our troubles will go away. Since 1980 with Greenspan, then Bernanke, now  Yellen LOW interest rates and the new QE gambit have given us 35 years of falling interest rates, rising bond prices, worlds longest running bull market , the bond bull. Nothing lasts forever.

What eventually follows EVERY bull market is a bear market. A bear market in bonds would mean rising interest rates. For 5 years now, savers have been punished with near 0 returns on savings. Savings are discouraged, speculating is encouraged. Asset appreciation, looks and feels good has been the aim of the FED since they began easing, then injecting trillions with QE into the speculating pool.

Looks good, feels good, but a false high.

You don't get prosperity  by printing money or every corner of the globe would be rocking. It would be that easy. These policies have made the inequalities around the globe even more pronounced between the upper crust and the stale bread.

Nothing comes for free and no cost, many do not care when or if the piper gets paid. But paid he will get, with more than a pound of flesh when the spring gets uncoiled. It is reaching that zenith in the law of diminishing returns. Just mention QE, throw money out of thin air, and watch the markets soar.

Nope, what me worry?

D