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Quote of the Day

Monday, April 16, 2012

April 16, 2012 -- "Fools and fanatics are always so certain of themselves, but wiser people are so full of doubts." -- Bertrand Russell

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Every once in a while I like to take a very broad view of all the markets -- the US and the rest of the world. So here goes. The first chart below includes the Dow Jones World Stock Index. Here we see the World Index forming a top below a preceding top and then sinking below its (blue) 50 day MA. Not very good.

 

 

 

 

 

This second chart below shows Morgan Stanley's world stock average, minus the US stocks. This Index is a bit weaker than the one above, showing that US stocks are stronger than stocks in the rest of the world. Here again we see declining tops, which are usually bearish, and the Index has now fallen below both its 50-day MA and its 200-day MA. Conclusion -- weakness.

 

 

 

 

This third chart shows the Wilshire Index and its three upward surges over the last three years. Of course, the Wilshire deals with almost all US stocks (over 5,000 of them) on our three US stock exchanges: the NYSE, the AMEX and the NASDAQ. At the end of the third surge, a little head-and-shoulder pattern has formed. These tiny H&S patterns can be powerful; a Dow close below 12500 would be bearish, but the big picture of the Wilshire is clearly bullish. And it shows that US stocks are stronger than overseas stocks. So if you must buy stocks, stay with the best sector of US stocks (obviously the blue chips with the best ratings and a long history of raising their dividends: PG, ABT, JNJ, KO, PEPSI, etc.)

 

 

 

Notes: Monaco real estate is the most expensive on earth. According to Citi Private Bank, the average cost of real estate in Monaco is $5,408 per square foot.

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What are the very rich doing? Here's what. A Cezanne painting, "The Card Player," was sold in 2011, when the royal family of Qatar bought the painting in a private sale for $250 million (the highest price ever paid for a painting). This surpassed a Jackson Pollock painting that sold in 2006 for a record $140 million. The $250 Cezanne is one of a series of five paintings. The other four are housed in museums around the world. Qatar, the oil-rich kingdom, is trying to establish itself as an intellectual center.

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With US fast food outfits "invading" China by the thousands of units, you have to wonder whether China's demise won't come from mass severe obesity. In watching TV for hours, I'm amazed at the number of ads claiming to "lose weight for you." One of the most interesting is the company that promises the "Brazilian butt lift." Their ads verge on soft porn. I also consider Dancing with the Stars a subtle version of soft porn.

 

The last WWI vet died at the age of 110 just two weeks before her 111 birthday. Florence Green was born in London on Feb. 19, 1901. She enlisted in the Women's Royal Air Force in 1918 at the age of 17, working as a waitress in the officer's mess hall at RAF Marham in eastern England.

 

A group is attempting to form a diamond ETF. They will buy gem quality certified diamonds up to six 6 carats in size. Russell Comment: Gem quality diamonds are scarcer than gold, but if the fund is established, it should push up the price of gem-quality diamonds, which are growing more expensive by the month. The fund, if it is successful, will also increase the liquidity of diamonds, as well as educating the public as to the intricacies and science of diamonds.

 

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I had a visit with a friend who is a very bright nuclear physicist. In the course of our long conversation, we brought up the "problem” of age groups in the US. I understand that the fastest growing age group in the nation is those who are over 80 years of age. We both asked, "If this is true, then who's going to do the needed manual work such as garbage collecting or erecting telegraph poles and other heavy duty labor?" I'll be 88 years of age in July, and I can tell you firsthand that once you are 80 or more, the heavy physical work is OVER. Furthermore, when you are over 80 everything that can go wrong with your body starts to happen. I know very few people in their 80s who are not suffering from some disease of the body or the mind. What's the answer? More doctors, more psychiatrists, more hospitals, more rehabs, more medical instruments, and more young people to take care of the oldsters. I haven't figured out the answer to this one yet, but I can tell you that it's going to be one HUGE problem. Remember Soylent Green where very old people were "reprocessed" and eaten by the younger generation? Nah, I'm sure that's not going to happen -- at least not under Obama or Romney. They're both too interested in senior votes.

 

Back to the market. Looks as though my PTI has been telling the truth. My PTI remains bullish, (I'll show the P&F chart tomorrow) and the market is acting accordingly.

 

TODAY'S MARKET ACTION:

 

My PTI was up 6 at 6387. The moving average at 6368, so my PTI is bullish by 19.

 

The Dow was up 71.82 to 12921.41.

 

Transports were up 37.61 to 5234.65.

 

Utilities were up 4.14 to 456.24.

 

NASDAQ was down 22.93 to 2988.40.

 

S&P 500 was down 0.69 to 1369.57.

 

There were 1727 advances and 1303 declines on the NYSE.

 

There were 58 new highs and 52 new lows.

 

Total Volume on the NYSE and associated exchanges was 3.4 billion.

 

Bonds: Yield on the 10 year T-note was 1.983. Yield on the long T-bond was 3.131. Yield of the 91 day T-bill was 0.081%.

 

Dollar Index was down 0.36 at 79.52. Euro was up 0.56 at 131.39. Yen was up 0.94 at 124.30. Currency Prices as of 1 PM Pacific Time.

June gold was down 10.50 to 1649.70. May silver was down 0.02 to 31.37.

 

May light crude was up 0.10 to 102.93.

 

My Most Active Stocks Index was up 7 at 295.

 

The Big Money Breadth Index was up 4 at 1022.

 

CRB Commodity Index was down 2.09 at 300.76.

 

The VIX unchanged at 19.55.

 

Permanent Portfolio Fund (PRPFX) was down 0.42 to 48.10 (previous day closing). YTD Return: 4.36%.

 

Late Notes -- Today's action was erratic but OK, with the usual sell off in the Dow at or near the close. But my PTI says, due to the absence of a sell signal, the trend remains bullish.

 

As for Dec. gold, it rattled around a bit, closed down ten bucks, but closed nicely above 1600 again.

 

These are strange and disconcerting markets. Will the Dow ever close above 13,000? And will Dec. gold ever close above 1700? Only the shadow knows, and he isn't talking. They took a big bite out of the Apple today, down almost 25 bucks. That's what happens when a stock gets too popular and the experts compete for forecasts 50% above where a stock is. In this business, unlike your date at the senior prom, it never pays to be too popular. And oh yes, Google was down 18 to a lowly 606. The Apple Google action made me a bit nervous.

 

Personally I don't feel lucky, and in this erratic I prefer to watch from the sidelines.