Quote of the Day
Tuesday, March 20, 2012
March 20, 2012 -- The greatest credit bubble in history has burst. The world markets are now under long-term pressure from deleveraging and contraction, all as a result of the correction of the boom (bubble) since World War II. The bear market that started in May 2007 was temporarily held back by a frightened Fed, which fed multi-trillions of dollars into the system. As a result, stocks have pushed up as they respond temporarily to the actions of the Fed. All of which gives us the confused picture that we have been dealing with ever since January.
I want to bring my PTI up to date, via a point & figure chart. Each box on the chart below is equal to 3 PTI points. It takes three boxes for a reversal. Thus what we see is a large base at the bottom of the chart, then a rising column which ends in a consolidation, then a very long rising column and a three-box reversal. The very latest action is a rising column of eight boxes to a new high.
Conclusion -- My PTI remains bullish. To turn bearish, a new declining column would have to be a length of eleven boxes, taking it below the little three-box reversal. The arrow points to the box that would have to be filled in order to turn my PTI bearish. That would require eleven declining boxes from the current high.
Silver is now outpacing gold on a relative strength basis. Central Fund of Canada (CEF) is made up of roughly half silver and half gold. The fund actually owns the physical metals. I believe CEF is an item worth holding if you have it -- with silver looking increasingly attractive. If the P&F chart below hits 27, that would be impressively bullish.
The P&F chart below shows the ratio of silver to gold. The ratio is bullish which means that silver is stronger than gold on a relative strength basis. If the ratio hits 24, it will be very bullish for silver vs. gold.
TODAY'S MARKET ACTION:
My PTI was down 4 at 6398. The moving average at 6358, so my PTI is bullish by 40.
The Dow was down 69.94 to 13170.19.
Transports were down 71.56 to 5288.48.
Utilities were up 1.69 to 453.36.
NASDAQ was down 4.17 to 3074.15.
S&P 500 was down 4.23 to 1405.52.
There were 1000 advances and 2030 declines on the NYSE.
There were 49 new highs and 21 new lows.
May light crude was down 2.49 to 106.07.
Total Volume on the NYSE and associated exchanges was 3.6 bn.
Bonds: Yield on the 10 year T-note was 2.36. Yield on the long T-bond was 3.44. Yield of the 91 day T-bill was 0.101%.
Dollar Index was up 0.16 at 79.61. Euro was down 0.09 at 132.36. Yen was down 0.42 at 119.58. Currency Prices as of 1 PM Pacific Time.
April gold was down 20.30 to 1647.00. May silver was down 1.12 to 31.83.
My Most Active Stocks Index was down 1 at 328.
The Big Money Breadth Index was down 5 at 1045.
GDX was up 0.26 at 49.86.
HUI was up 2.57 to 476.33.
CRB Commodity Index was down 3.89 at 315.53.
The VIX up 0.54 to 15.58.
Permanent Portfolio Fund (PRPFX) was up 0.17 at 48.98 (previous day closing). YTD Return: 6.27%.
Late Notes -- Reacting to the current forces of contraction and deflation, gold turns temporarily soft, as it awaits the next actions of the central banks, all of which are starting to pump and create more fiat money.
Note, Lowry's Selling Pressure Index is now only 110 points above its Buying Power Index. A crossing over of the two with Buying Power above Selling Pressure would be very positive for the market.