Archive for January, 2016

Bottom up Earning Per Share estimates for the aggregate of SP 500 companies is -4.7%.

This is quite a serious drop relative to the average  10 years (-2.2%) and also in other timeframes.

So there is a quite serious slowdown in the US economy. Not recession level, but considerable and in line with the current market falls.

As per market…unless it goes over 2043 we still are in a bear market rally.

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Japan added to the list of “negative interest countries” and the markets are cheering.

Probably it will not save the market pattern…but it also means that at the moments of panic in this year the Gang of the Reserve Banks will come and save us.

No Fed for Old Rally

Posted: January 28, 2016 in Uncategorized

As the brutal Neo Western movie “No Country for Old Man” from the Cohen’s brother – the Fed did not came in to save the markets.

If you saw that movie – you know things will get quite ugly soon.

I examined long term the relationship between oil and stock market.

The correlation is there, but sometime it is “in range” instead of directional.

Let me explain

The markets really likes oil being between $75 and $112.

It has a positive bias until $40.

Under $40 or over $112 is incrementally negative.

The current status of the market so is negative and if oil goes to $20 or even $10….a bloodbath would ensue.

What is the consesus on oil from the oil traders and commodities futures?

A bottom in late February/March around $25/$20 and then a recovery around $50/$47 by October and December around $40.

So we can extrapolate for the market an overall weakness for the whole of 2016.

A crash would occur late February/ early March taking out the current low, which would be a perfect moment to buy.

Addition:

All this reflects a Chinese market bottom around 2,500/2,400

Libya finally elected a Pro Western government. Soon they will call in for Western help and a coalition will support/invade Libya to get rid of IS Libya.

Syria the Americans are expanding and modernizing an airfield able to host CH 130 Hercules. It is not clear why,but it is an airport.

As predicted, we saw the intervention of the ECB and this week we will probably see the Fed and Bank of Japan.

The short squeeze, depending on strength, has targets area 1,920, 1,970 and then 2,050. (it would be ASX200: 5,350/5,400 approximately).

On a technical analysis point of view the graphs says “it’s a trap!!”.

Unless it clears the all time highs 2,130 – the targets between here and October at 1,785, 1650 and, on panic, a spike on the 1,550 (ASx200: 4,000 or lower!)

Yes the Reserve Banks could negate this pattern. And that is why I say “a game too dangerous”.

But it definitely looks scary

Quantitative Easing 4

Posted: January 22, 2016 in Uncategorized

All the Reserve Banks are intervening…something I spoke about…the 18 September 2015!

Well, quite ahead of time. Battle SPX 1870 has started!