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How Watching Market Psychology Can Help You Time the Market

Elliott wave patterns in price charts reflect the struggle between the bulls and bears
By Elliott Wave International

 

Two economic reports hit the newswires Thursday morning (March 6). Both were important, yet each one had the opposite implication for the trend. The market chose one report over the other, and the question is, why — and what can we learn from that? Read more.

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Investment Markets Overview — W/E 2nd December 2016

“The Donald”….commenced a “victory tour” this week, no doubt as a welcome break from the constraints of the New York “Trump Tower” and his nearby golf resort, where he’s been busy assembling his inner circle for cabinet. Contrary to the pre-election perception that he was all about the “blue collar” society and to “draining the swamp,” of DC, he has made key financial appointments of Wall St cronies, in particular from Goldman Sachs, who for far too long have held undue and damaging influence in Washington, and for most of the globe come to that. Furthermore, for his Defence Secretary he has gone for a career warrior, “Mad Dog General James Mattis,” a 66-year old who retired in 2013 after a 41-year career in the US Marines, that took him from a rifleman to a General and who has had extensive combat experience in the Middle-East and Afghanistan along the way. Like Trump, a hawk on Iran, it will be interesting to see how Mattis shapes up versus say the British Defence Secretary, Sir Michael Fallon, a career politician who has never held down a proper job let alone a weapon. Perhaps, and this may be wishful thinking, an ex warrior may actually think twice before putting lives on the line. Returning to “the Donald’s tour,” his first stop was at a manufacturing plant in Indiana, reverting to blue-collar, where he added a “stick” to the “carrot” of a potential reduction in corporate tax from 35% to 15%. The “stick” took the form of a warning that, “companies are not going to leave the United States anymore without consequences,” whilst not specifically stating what the penalties will be.

For the markets, it was all about Oil and OPEC this week, with the Oil price range widening to 6% during the two days ahead of OPEC’s Vienna meeting, followed by a near 16% spike over the two days that followed it. There is a lot more on this below plus interesting comment and charts on the other main asset classes for the week:

25-nov-16

 

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

 Quite how a higher oil price and higher interest rates are perceived to be “bullish” for stocks is beyond this commentator ……

Charts:
1.  Indices Weekly
2. US Consumer Confidence V US GDP V US HPI
3. E-Z  Confidence Readings X 3
4. Japan Sm Business Confidence V Japan Retail Sales
5. Commodities Weekly

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

                                             “Change can be a Shock but it can be a Positive also”

Click Here to view Details of the full version of this Newsletter which includes full text and detailed

 

BT Blues

 

    A large part of the UK’s “infrastructure spend” announced in the recent autumn statement involved the “digital economy,” which Chancellor Philip Hammond said would place the UK as a, “World Leader.”

This would be nice to see, but throwing another part of the £1BN of tax-payer money at BT Group Plc, the former state-owned monopoly, is unlikely to achieve his goal.

In 2009, BT announced it would connect 2.5 million British homes to ultra-fast Fibre-to-the-Home by 2012 and 25% of the UK, following an eye-watering payment, courtesy of the UK tax-payer, yet by the end of September 2015 it had only connected 250,000 homes and BT stopped taking orders for its fibre-to-the-home product, preferring to offer the “last mile” by copper wire to both its clients and to other communications providers  via Openreach, its fenced-off wholesale division, tasked with ensuring that rival operators have equality of access to BT’s local network.

Hence, contrary to its stated objective to achieve super-fast broadband speeds for both urban and rural Britain, including the final mile to its competitors, the company has been dogged by controversy and charges that it has abused its dominant position. Whilst a relative lucky few are obtaining of decent upload speeds, many, particularly in the more remote areas are lucky to get sub-10mps, hardly world beating when you consider that I am composing this from a Mediterranean island, whose supplier’s “entry level” is at 50mps rising to 250mps and certain Countries in Asia which provide speeds of 1000mps +. This perhaps helps to explain why its share price has fallen over the past year, effectively wiping out the 2014/15 gains:

1-dec-2016-2

Fortunately, our colour-coded indicator signaled a change to sell, the pink panel, before the slide commenced.

Despite being privatised over three decades ago in 1984 and now operating in over 180 countries, BT is still run very much like a nationalised business, at least in this commentator’s experience. Furthermore, it’s been a “dog” of an investment over the longer term, weighed down by debt of £14BN on a market cap of £35BN and a stated NAV of just £10BN. Furthermore, the company has probably the worst pension deficit within corporate UK.

One glance at the past 16-years share price history tells a thousand words:

1-dec-2016

 

The BT share price remains 67% below its late 1999 high and, following its post 2009 rally it is now rolling-over once more and is back below the 200-day moving average, a bearish sign.

The dashed red-line by the way is our proprietary guide as to where the BT share price should be if the debt-effect is stripped out. In this case some 70% lower than where it currently resides.

So there we have it, more tax-payer money committed to the toilet, as BT gives no indication that it’s planning to change its copper strategy, leaving its customers’, competitors’ and share-holders alike feeling decidedly blue.

 

 

 

 

 

 

 

 

 

Investment Markets Overview — W/E 25th November 2016

Cost–benefit analysis….is a systematic approach to estimating the strengths and weaknesses of alternatives with a view to determine options that provide the best approach to achieve benefits. The term was used this week by none other than Tony Blair, perhaps the worst UK Prime Minister in history, as he, along with other former leaders, Conservative John Major and Lib-Dem Nick Clegg, continue with their undermining of the democratic process to seek a second brexit referendum due to not liking the result of the first one. Blair certainly knows all about the aforementioned term, the country’s cost and his benefit that is, whilst the other pair, together with fellow establishment insiders still cannot resist the spreading of “doom and gloom” in respect of the British economy. Appalling timing as the latest economic statistics announced this week and expanded on below, have defied the doomsters. That said, we have provided our own warnings, based on factual analysis rather than political spin, which has nothing to do with brexit but all to do with unprecedented debt levels, which have grown exponentially under the stewardship of the said three “leaders.” Meanwhile, the current incumbents’ of No 10 and 11 Downing Street put their respective hands up this week as the Autumn Statement revealed that the fiscal deficit and the debt to GDP objectives hadn’t a proverbial dogs chance of being met. Their solution…..borrow even more money to fund infrastructure spending, aka Japan mid 1990s with predictable results, on which further comment is available via, “Garbage In – Garbage Out.” 

It’s been a calmer week for the debt markets, excepting for Japan that is where the JGB 10-year spiked higher. Stocks ground higher, but on pitifully low volumes compounded by the US thanksgiving holiday. Meanwhile, $Gold triggered a “death cross.” There is a lot more comment and charts on these asset classes below:

25-nov-16

 

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . . 

The global “tax grab” by greedy but grossly indebted governments’, took a new twist of late, with India being the trial “template.” ……

Charts:
1.  Indices Weekly
2. US PMIs V  $US Index
3. Italy Constitutional Referendum Voting Intentions
4. Singapore CPI V Singapore GDP
5. Commodities Weekly

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

                                        “Be careful what you wish for comes to mind”

Click Here to view Details of the full version of this Newsletter which includes full text and detailed

 

Garbage In — Garbage Out

Garbage In – Garbage Out is a term used to state that in computing and other fields that incorrect or poor-quality input will produce faulty output:

24-nov-2016

Obvious really and this column has spent more than a few thousand words exposing the dire results of “official” modelling results, be it from just about any public sector department within any country and from the growing band of so called “independent” organs of state, such as Central Banks, with the last exposure being, “Let the Carn-age Begin,” in respect of the Bank of England’s dire record on interest rates and CPI inflation guidance.

The UK’s Office for Budget Responsibility (OBR) was created in 2010 to provide independent and authoritative analysis of the UK’s public finances, following the atrocious record of accuracy from the treasury itself. It is one of a growing number of official independent fiscal watchdogs around the world and quite whether this growth rate is a genuine effort by lawmakers to actually improve analytical forecasting OR as a way to “muddy the waters” when the inevitable “blame-game” resulting from “shock events,” such as the 2007 financial crisis, transpire?

Yesterday’s UK Autumn Statement, which is effectively a second budget within the year and sets out the fiscal situation, proposed changes to it and forecasts expected to result from it, has caused a particular divisiveness between the quoted “experts.” At the heart of the division were the OBR forecast of an extra £118BN borrowing requirement over the next 5-years, and used by the Chancellor, which suggested that the bulk of it, £60BN, will be the UK’s cost of brexit, with most of the residue being down to the planned £23BN “infrastructure investment.”

So here we go again, “Blame it on Brexit,” even though there are no details of the brexit plan, let alone costings available yet!

What we lesser mortals can state factually is that UK public debt has trebled since 2005, from £0.5 trillion to £1.6 trillion. Furthermore, we can factually observe from a chart on Japan, post its 1989 financial crisis, when various debt induced infrastructure spending was central to the “forecasts” of higher growth to come:

24-nov-2016-2

Bearing in mind (please excuse the pun) that the bulk of the infrastructure spend, including miles of new roads to nowhere, new airports with no passengers etc, transpired between 1994 through 1998, with the result that economic growth, GDP, actually contracted.

Note also the exponential rise in Debt to GDP, an IMF figure, which has co-incided with lacklustre and contracting GDP, observed and forecast by this column on a frequent basis and for a variety of countries, including the UK.

The other variable dividing the “experts” has been the £GBP exchange rate and its impact on economic growth, which again have been woefully inaccurate, including the OBR and the Bank of England.

Our recent addition to this column, a currency exchange-rate forecasting service, can be accessed here, where you will note that the £Sterling’s woes were predicted a full six-months before brexit.

A suitable conclusion to “Garbage IN—Garbage Out” is a response against the criticism of the OBR forecasts, aired on BBC radio this morning, which said “there is no right or wrong in forecasting,” so good luck with that guidance.

 

 

 

 

 

 

 

 

 

 

 

 

Investment Markets Overview — W/E 18th November 2016

63% and 170% over the past 3-months…….. Were the increase in 10-year US and UK interest rates, or so we stated last week. One week later the US 10-year Treasury Yield has jumped by a further 9.5% and is now 73% higher than its early July low. Meanwhile, its UK equivalent added 6.7% this week and is now a staggering 180% higher than at early August this year. Is there really anyone out there who believes that Central Banks control interest rates, or at least the ones that matter within the real world? It turns out that there are, in fact the majority of financial analysts, economists and fund managers out there, not to mention just about every financial journalist in the world, hang-off every word uttered by the policy-makers, looking for guidance on the timing of interest rate cuts or rises. Furthermore, they also seek guidance on other important variables such as CPI inflation and GDP economic growth despite the abysmal track record provided. The 10-year interest rate has trended lower for 35-years since the 1981 highs, with central banks following every twist and turn lower, so aside of stating the obvious that a turn to a trend higher was overdue, it was always going to be a somewhat violent change as the same policy-makers have manipulated and intervened into so called free-markets at every opportunity post financial crisis. The whys and the wherefores of these trend-changes are discussed further below.

It’s been a calmer week for the markets as practitioners try to evaluate “Trumpernomics,” although judged by sentiment indicators for certain asset classes, volatility and trend changes look to be afoot.

18-nov-16

 

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

  Returning to the 10-year Sovereign interest rate, better known as 10-year government bond yield ……

Charts:
1.  Indices Weekly
2. US Housing Starts V US Home-Builder Sentiment
3. UK Retail Sales V UK CPI
4. Japan GDP V Japan Housing Loans
5. Commodities Weekly

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

                                                                “Interest Rates are a changing”

Click Here to view Details of the full version of this Newsletter which includes full text and detailed

 

Let the Carn-age Begin

A Bloomberg report of earlier today observes that Central Banks are under fire. In an article entitled, “Carney Is Growing Tired of the Global Central Bank Blame Game,” it says that Bank of England Governor Mark Carney isn’t willing to take the blame for the state of the global economy any longer, rebuking the growing criticism levelled at him and his global central banking colleagues for low interest rates and the sluggish pace of growth via their “asset purchase policies” and other barmy schemes such as negative-interest rates.

Meanwhile, the very new “Trump Team,” have been quick off the mark to criticise the Federal Reserve and it’s boss, Yellen, advising it to shrink its bloated balance sheet, arguing that the Fed’s debt portfolio has damaged the economy by channelling credit to corporations and the federal government instead of to new, more dynamic small businesses, whilst harming savers and retirees along the way.

This column has long advocated the folly of Central Bank policies, in fact central banks in general, stating that it is the market that sets interest rates, not the CBs, they only re-act.

And after years on central bank attempts to “rig the markets,” a crime to lesser mortals, the markets are striking back, as observed via last week’s “Investment Markets Overview:”

As US and UK Central Bankers delude themselves this week, and those who care to listen to them, that interest rates will only be increased once over the next two to three years, the 10-year bond yields of both countries have soared by a respective 21% and 20% this week and by 63% and 170% over the past 3-months.

16-november-2016-blog-1

The chart above shows the US Treasury 10-Year Yield, inverted to better show its close correlation to stocks, in this case the S&P 500 Index. Well over a $Trillion in world bond values were vaporised last week, with the JP Morgan Global Aggregate Bond Index value falling from $38.4TR to $36.8TR month to date, the largest slide in decades.

Once the S&P finishes its “kiss” of the underside of the dashed-red support line, a few bob may be about to disappear from stock portfolios also.

Last week’s “Investment Markets Overview,” also showed the link between stock-markets and credit, or should we say debt-levels to anyone other than the banking community, which also observed that both are “rolling over:”

16-november-2016-blog-2

So as Carney “cries into his corn-flakes,” and the blame-game intensifies between the CBs and the politicians, you may be well advised to follow true independent market analysis before the events unfold.

The levels of global debt and asset values stoked-up by it suggests that the carnage is about to begin.

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Markets Overview — W/E 11th November 2016

Rout…to defeat an enemy completely and force them to run away, according to one dictionary’s definition, was certainly a fitting word for “The Donald’s” showing at the US Presidential election. As with the UK’s Brexit referendum, the turn out was huge, plus a silent majority voted for him but didn’t want to admit it, which is where the surprise was sprung and fooled both the pollsters’ and the media. Not only did the Republicans win the White House but they now control both the House of Representatives and the Senate. With Trump now set to be the 45th President of the United States, the first since Eisenhower’s 1952 election of someone with zero political experience, it would appear that the Clinton’s days in front-line politics have ended, particularly if even 10% of the alleged wrong doing swirling around the internet is correct. It is too early yet to formulate Trump’s main objectives, suffice to say that he appears to surround himself with talented people so that offers hope for the future, assuming of course that they are not all “yes men.” In a way perhaps we are going full circle in politics, where self-made individuals wish to put something back into the system rather than the past few decades’ trend of the many entering politics to become wealthy. Trump obviously recognises that the army of bureaucrats within the public sector, including the myriad of quangos’ that are part of it, need to be culled, as aside of acting as a major “drag anchor” on the economy, they have been standing on the shoulders of the productive part of the economy, extracting the latter’s diminishing wealth to finance their increasingly unaffordable remuneration packages and in particular their final salary pension schemes. The question is, will recognition turn into action?

It’s been another very volatile week for the financial markets, with the winners being mainly within certain stock-markets, despite the initial swoon as the election result became clear, whilst the losers have been within the perceived safe areas of Sovereign debt and the precious metals space. Aside of finance, another notable event of the week was the sad passing of singer-songwriter, Leonard Cohen, to whom I pay homage for his remarkable timing, Socionomically, to markets, which you may wish to read here.

11-nov-16

 

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

  So, there we have it, a further blow against the liberal elite by the silent majority, who feel worried, angry, concerned and ignored……

Charts:
1.  Indices Weekly
2. US Consumer Credit V US S&P 500 Index
3. UK BRC Sales V UK BRC Sales Food Only
4. China Exports V China Imports
5. Commodities Weekly

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

                                                “The times they are a changing…and quickly”

Click Here to view Details of the full version of this Newsletter which includes full text and detailed