Saturday, August 13, 2011. 9:00 a.m.
The U.S. market has had serious enough problems, but global markets have led the way down, many topping out before the U.S. market, and experiencing larger declines.
Like the U.S. market they are also short-term oversold and potentially due for a short-term rally off the oversold condition.
A number of important global markets have given back their entire QE2 inspired rallies off of last summer’s low. Another example of what we mean when we say avoiding large losses is just as important to long-term investing success as how much you make in the rallies. It doesn’t matter how much is made on the upside if the profits are not taken and kept before they are given back.
It’s looking like whereas the 2008 crisis began in the U.S. with the housing collapse and spread out around the world, the current crisis, actually several separate ones, the government debt crisis of Europe, and inflation concerns in Asia, which threaten the next decline into a global recession, began outside of the U.S. and is now coming ashore in the U.S.
I hope you listened a few months ago when even in the free area of the blog we warned against Wall Street’s assurances that emerging markets would be safe havens due to their stronger economies. They depend on strength in developed markets for strength in their export-dominated economies, so as always have experienced the same market declines.
You probably saw the various reports of the rare ‘death cross’ having been triggered late last week.
It’s triggered when the 50-day m.a. breaks below the long-term 200-day m.a.
Some significant market declines of 40% to 50% have followed the signal being triggered. But not always.
And I misspoke. The declines, as in the 2007-2009 bear market, did not ‘follow’ the signal. The declines were usually quite well underway by the time of the signal.
So for instance, while our sell signal came on May 8, within 3% of the top, the market was already down 17% when the death cross signal was triggered last week.
And it looks to us like the odds favor another short-term rally off the short-term oversold condition before the death-cross signal would have any meaning.
Perhaps more important than the ‘death cross’ is where we stand with the current cyclical bull market within the long-term secular bear market that began with the lost decade from the 2000 peak. That is one of the subjects we are working on for next Wednesday’s new issue of the newsletter.
To read my weekend newspaper column ‘It’s Time For Some Relief!’ click here!
We have updated the sample issue of Street Smart Report, which you might find interesting. Click on the link to the sample issue in the right hand column to check it out.
A 2nd positive day in a row.
The Dow closed up 125 points, or 1.1%. The S&P 500 closed up 0.5%. The NYSE Composite closed up 0.6%. The Nasdaq closed up 0.6%. The Nasdaq 100 closed up 0.7%. The Russell 2000 closed up 0.2%. The DJ Transportation Avg. closed up 1.2%. The DJ Utilities Avg closed down 0.5%.
Gold closed down $2 an ounce, closing at $1,746 an ounce.
Oil closed down $0.43 a barrel at $85.30.
The U.S. dollar etf closed unchanged.
The U.S. Treasury bond etf TLT closed up 2.0%.
European markets finally had a positive day, and it was very positive. The London FTSE closed up 3.0%. The German DAX closed up 3.5%. France’s CAC closed up 4.9%.
A third straight down week. And on heavy volume. Not as negative in the U.S. as globally.
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Next week will be a quite heavy week for potential market-moving economic reports, among them reports from the housing industry and on inflation, which we haven’t heard from in a few weeks, including Existing Home Sales, the Consumer Price Index, etc. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.
Subscribers to Street Smart Report: There is a very important ‘U.S. Market Signals and Recommendations’ update, and an important hotline in the subscriber area of StreetSmartReport.com from Wednesday. And the new issue of the newsletter will be out on Wednesday.
I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m. Have a great weekend!
Non-subscribers: How are you doing so far in 2011? We can help, and at very reasonable cost! Market, sector, stock, gold, bond, and dollar buy and sell signals, short-sales, long-side and ‘inverse’ etf’s, mutual funds, two portfolios of recommended holdings (one modified buy and hold, and one market-timing). Street Smart Report Online provides an 8-page newsletter every 3 weeks, an in-depth 6 page interim update every Wednesday on our intermediate-term signals and recommended holdings, an in-depth 4-page ‘Gold, Bonds, Dollar’ update every 2 weeks, and special reports and hotline updates as needed. Highly regarded and in our 24th year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.
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