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Quote of the Day

Tuesday, January 31, 2012

January 31, 2012 -- The final days of January saw the Dow down four out of the last five trading sessions. The sheer size of this still-forming top is scary. I think this top will be followed by a phenomenon known as the Kondratief bear cycle, a cycle that can endure for as long as 20 years. The other name for it is the nuclear winter, a rare and dangerous phenomenon that can last for a generation.

 

As we end the month it is notable that Lowry's Selling Pressure Index (supply) is still substantially above their Buying Power Index (demand). Joe Granville's on-balace-volume statistics remain bearish, and Joe warns of years or bearish markets ahead.

 

In fact, Joe's OBV figures are so negative that I called Joe on the phone today to ask him if his figures were for real. He told me that he expects the Dow to fall 4,000 points from here when this top breaks down. And no, Joe was not kidding.

 

Because the Dow was down on four days out of five sessions last week a corrective rally may be expected this week, but watch the volume. Whether volume increases on a rally tells us a lot about the strength or weakness of the market.

 

From the fundamental side, the yield on the Dow is down to a mini 2.52%, meaning that the Dow is way overpriced and way overvalued. Remember, the essence of Dow Theory is VALUES.

 

TODAY'S MARKET ACTION:

 

My PTI was up 2 at 6363. The moving average at 6328, so my PTI is bullish by 35.

 

The Dow was down 20.81 to 12632.91.

 Transports were down 2.83 to 5319.14.

 

Utilities were up 2.28 to 448.84.

 

NASDAQ was up 1.90 to 2813.84.

 

S&P 500 was down 0.61 to 1312.40.

 

March crude was down 0.39 to 98.39.

 

Total Volume on the NYSE and associated exchanges was 4.1 bn.

 

There were 1758 advances and 1249 declines on the NYSE.

 

There were 206 new highs and 12 new lows.

Bonds: Yield on the 10 year T-note was 1.79. Yield on the long T-bond was 2.93 Yield of the 91 day T-bill was 0.061%.

 

Dollar Index was up 0.14 at 79.30. Euro was down 0.40 at 130.86. Yen was up 0.20 at 131.34. Currency Prices as of 1 PM Pacific Time.

February gold was up 6.00 to 1740.40. February silver was down 0.25 to 33.26.

 

My Most Active Stocks Index was up 1 at 275.

 

The Big Money Breadth Index was down 2 at 972.

 

GDX was unchanged at 56.46.

 

HUI was down 1.55 to 541.23.

 

CRB Commodity Index was down 1.60 at 312.31.

 

The VIX was up 0.04 to 19.44.

Permanent Portfolio Fund (PRPFX) was down 0.12 at 48.66 (previous day closing). YTD Return: 5.58%.

 

Late Notes -- The Dow closed down today, a fantastic six down days out of the last seven sessions. Is the market telling us something? I think it is, and it's not pretty. Gold closed up again, $6 higher today.

 

As Admiral Yamamoto said prior to the attack on Pearl Harbor, "I feel we have awakened a sleeping giant."

 

Have a hilarious 2012,

 

Russell