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Quote of the Day

Monday, January 09, 2012

January 9, 2012 -- There is so much news coming at us via TV, radio and the newspapers that I find it almost impossible to discuss our economy intelligently. That is, of course, even if a real understanding of the news could possibly help us in the difficult business of investing.

 

Despite the tidbits of happy employment news that hit the market last Friday, the internals of the stock market continued to look dreary. My PTI advances slowly and very sluggishly and the trend of upside volume on the NYSE is not encouraging. Friday the Dow was down just 55 points but downside volume exceeded upside volume by an impressive amount. Worse Lowry's, upside Selling Pressure and Buying Power spread apart negatively to a new separation amount of negative 191. This is the poorest looking Lowry's picture of the year.

 

Subscribers who are buying or holding stocks on the basis of the better employment news should remember that deteriorating internals in the face of improving newspaper headlines give us the worst of all markets. I cannot warn subscribers strongly enough that they face hard times in both the market and the economy during the months ahead. The operative words now are "extreme caution." Please be out of all common stocks with the exception of the mining shares. According to my studies this year it's going to be a long, cold fall and winter.

 

If the market and economy turns down during the months ahead, President Obama's chances for a second term will drop to zero. This increases the importance of a final choice for any Republican candidate. I think that Obama and the Democrats will be double crossed by both the stock market and the economy in the months ahead.

 

Gold closed on Friday above 1600, and gold bulls are hoping that 1600 will be the new base for gold.

 

One thing that worries me is that American consumers are not prepared for a declining stock market or for hard times. As I said before, nobody under the age of 80 has ever seen hard times, nor have their parents experienced hard times. Sadly, instead of building savings, Americans are still deeply in debt, and they are in no shape, psychologically or financially, to face a deepening recession. The big money in the stock market this year will be made by the shorts, but remember, those that have profits will have those profits treated as earnings from a tax standpoint, rather than long-term capital gains.

 

Clearly, our government does not want us to profit from short sales.

 

I know that some of the big firms (i.e. Goldman) are cutting salaries. The "insider" word is that these firms are preparing for tougher times -- they are looking out as far as 2013.

 

TODAY'S MARKET ACTION:

 

My PTI was up 6 at 6343. The moving average at 6315, so my PTI is bullish by 28.

 

The Dow was up 32.77 to 12392.69.

 Transports were up 30.98 to 5100.01.

 

Utilities were up 1.38 to 452.58.

 

NASDAQ was up 2.34 to 2676.56.

 

S&P 500 was up 2.89 to 1280.70.

 

February crude was down 0.22 to 101.34.

 

Total Volume on the NYSE and associated exchanges was 3.2 bn.

 

There were 1923 advances and 1109 declines on the NYSE.

 

There were 115 new highs and 19 new lows.

The Big Money Breadth Index was unchanged at 969.

 

Bonds: Yield on the 10 year T-note was 1.95. Yield on the long T-bond was 3.01. Yield of the 91 day T-bill was 0.015%.

 

Dollar Index was down 0.31 at 80.94. Euro was up 0.32 at 127.61. Yen was up 0.24 at 130.20. Currency Prices as of 1 PM Pacific Time.

February gold was down 8.70 to 1608.10. February silver was up 0.09 to 28.78.

 

My Most Active Stocks Index was up 9 at 236.

 

GDX was up 0.30 at 53.65.

 

HUI was down 2.87 to 519.76.

 

CRB Commodity Index was up 2.04 at 311.52.

 

The VIX was up 0.44 to 21.07.

Permanent Portfolio Fund (PRPFX) was down 0.13 at 46.64 (previous day closing). YTD Return: 1.19%.

 

 

Late Notes -- The market (the Dow) keeps stumbling along, giving the impression that it is systematically generating big profits. The fact is, based on upside and downside volume, that we are seeing a lot of churning going on. Gone are the "hot" 90% up-days of last year. Today the market may chug-chug all day long to produce a final 25-point gain in the Dow.

 

Gold still holding above 1600, although it is doing it's best to scare us our of our positions.

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Again let me remind my subscribers that I am now writing via the Dragon program. This means that I talk, and my talking is electronically typed through the services of the Dragon software.

 

Everything we do is controlled by our brain. And I am afraid that the shock of breaking my hip has caused me to lose some of my typing ability. Thus, my use of the talk-and-type Dragon program.