May 10, 2012 at 09:19 AM EDT
A Scary Chart Says A Global Bear Market Is Underway!
Thursday, May 10, 9:20 a.m. We haven’t seen this analysis anywhere else, but it’s looking increasingly like global markets outside of the U.S. rolled over into a bear market last April, and that their rally off the October low was only a bear market rally within an ongoing bear market. We’ve been saying we expect [...]

Thursday, May 10, 9:20 a.m.

We haven’t seen this analysis anywhere else, but it’s looking increasingly like global markets outside of the U.S. rolled over into a bear market last April, and that their rally off the October low was only a bear market rally within an ongoing bear market.

We’ve been saying we expect only another correction sometime this summer, but not the next global bear market until 2013 and 2014. And the U.S. market recovered from last summer’s correction and has gone on to nominal new highs. 

But the FT World Index Ex-USA plunged 22% last summer, exceeding the official 20% decline that defines a bear market. And the rally off the October low only partially retraced that decline before rolling over to the downside again in what could be the beginning of a typical 2nd leg down.

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Global markets outside the U.S. have been correctly fearing for over a year now that the eurozone debt crisis, austerity programs, slowing economies, and actual recessions in Europe, were a threat to global economies.

Will U.S. Follow Europe’s Lead in Solving Its Debt Problem?

Luka Katseli, former economy minister of Greece, says, “The euro-zone’s debt program is suicidal, not only for Greece, but for Spain, Portugal, Italy, everywhere. The mistake is being made.”

She is referring to the EU’s German-led year-long insistence that governments tackle their debt and deficits problems by immediately cutting government spending in the midst of slowing economies and even recessions.

Demands for similar cuts and austerity actions to curb its record government debt are being made in the U.S.

Fed Chairman Bernanke has warned Congress several times in the last two years that it needs to have a plan for tackling the debt problems, but the plan shouldn’t be implemented while the economic recovery is still anemic.

In making his points a year ago he said he thought Europe was making a mistake by tackling its debt problems too soon with austerity programs, that it could potentially drop their economies back into recessions, requiring more spending and exacerbating their problems. Seems like he was right.

To read my weekend newspaper column ‘Europe Is a Bigger Problem Than the Slowing U.S. Economy’ Click here.

Subscribers to Street Smart Report: There is a very important hotline and in-depth ‘U.S. Market Signals and Recommendations’ update from last evening in the subscribers’ area of the Street Smart Report website. That is in addition to the important ‘Global Markets’ update from Monday, and the ‘Gold, Bonds, Dollar, Inflation’ report from Tuesday.

Yesterday in the U.S. Market.

Another negative day, but another day that saw weakness in the morning but some recovery in the afternoon. The Dow was down 185 points at its low, but recovered to close down ‘only’ 97 points. Volume picked up some again, with 0.94 billion shares traded on the NYSE.

The Dow closed down 97 points, or 0.8%. The S&P 500 closed down 0.7%. The NYSE Composite closed down 0.9%. The Nasdaq closed down 0.4%. The Nasdaq 100 closed down 0.3%. The Russell 2000 closed down 0.5%. The DJ Transportation Avg. closed down 1.4%. The DJ Utilities Avg closed down 0.1%.

Gold closed down another $9 an ounce at $1,589 an ounce.

Oil closed down $.52 a barrel at $96.49 a barrel.

The U.S. dollar etf UUP closed up 0.4%.

The U.S. Treasury bond etf TLT closed up 0.1%.

Yesterday in European Markets.

European markets came well off their earlier lows to close mixed yesterday. London closed down 0.4%. Germany recovered from being down more than 1% to being up 0.5%. France recovered to close down only 0.2%.

Asian Markets Were Mixed Last Night.

The Asia Dow closed down 0.1%.

Among individual markets last night:

Australia closed up 0.5%. China closed up 0.1%. Hong Kong closed down 0.5%. India closed down 0.4%. Indonesia closed up 0.1%. Japan closed down 0.4%. Malaysia closed up 0.2%. New Zealand closed up 0.3%. South Korea closed down 0.3%. Singapore closed up 0.1%. Taiwan closed up 0.1%. Thailand closed down 1.4%.

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Markets This Morning:

European markets are bouncing back some this morning. The London FTSE is up 0.4%. The German DAX is up 1.0%. France’s CAC is up 0.6%.

Oil is up $.58 a barrel at $97.39.

Gold is up $6 an ounce at $1,594.

This Morning in the U.S. Market:

This week is a very light week for potential market-moving economic reports, almost none. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

Monday it was reported that U.S. consumers, who had begun to cut back on debt in the aftermath of the 2008-2009 financial crisis, continued to load up on debt in recent months. Consumer debt rose by $21.3 billion in March, the 7th straight month of increases. It was double the consensus forecast for an increase of $10 billion.

Tuesday it was reported that the NFIB Small Business Optimism Index rose to 94.5 in March from 92.5 in February, which returns it to the same level as February of last year.

Yesterday it was reported that U.S. wholesale inventories rose 0.3% in March, while sales rose 0.5%.

This morning it was reported that new weekly unemployment claims fell a fractional 1,000 last week. The more important four-week moving average dropped by 5,250 to 379,000. And the Commerce Department reported the U.S. Trade deficit widened sharply, by 14.1%, in March.

Concerns over the situations (plural) in Europe are receding a bit this morning in Europe and the U.S.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 80 points or so in the early going.

Subscribers to Street Smart Report: There is a very important hotline and in-depth ‘U.S. Market Signals and Recommendations’ update from last evening in the subscribers’ area of the Street Smart Report website. That is in addition to the important ‘Global Markets’ update from Monday, and the ‘Gold, Bonds, Dollar, Inflation’ report from Tuesday.

I’ll be back with the next regular blog post on Saturday morning, as usual later than the week-day posts, probably around 11 a.m.

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