Thursday, March 29, 9:25 a.m.
A year ago I was pointing out the eerie similarities in April (2011) to conditions the previous April (2010), and sure enough the similarities continued into an almost identical 20% summer correction.
And here we are looking at a similar picture as March draws to a close this year.
Like the last two years, the S&P 500 has had an impressive rally to a potentially overbought condition above its long-term 200-day m.a., and technical indicators are in their overbought zones.
Investor sentiment reached high levels of bullishness and complacency in April of 2010 and 2011, low levels of fear, as can be seen in this chart of the VIX Index (also known as The Fear Index).
And here we are with investor sentiment at similar levels of no fear (high levels of bullishness and complacency, as indicated by the level of the VIX (and numerous other measurements of sentiment).
In April in each of the last two years, the U.S. economic recovery had been showing surprising strength during the fall and winter months, and then began showing signs of stumbling.
And this year, we’ve certainly seen surprising economic strength this winter, with continuous positive surprises in the monthly economic reports, which easily beat the consensus forecasts of economists and analysts.
And now we’re seeing a string of negative surprises almost identical to the situations in April 2010, and April, 2011, indicating the recovery is stalling again.
Then there is Europe. In each of the last two years the eurozone debt crisis had receded into the background by April, only to come back into the headlines in the spring.
And here we are with the worries about a default by Greece kicked down the road, but now concerns about Spain and a recession in Europe coming into the picture.
I could go on with the list but have run out of time to get this post on.
To be continued.
To read my weekend newspaper column ‘Here We Go Again Already?’ Click here.
Yesterday in the U.S. Market.
A down day all day, on somewhat heavier volume of 0.8 billion shares traded on the NYSE.
The Dow closed down 71 points, 0.5%. The S&P 500 closed down 0.5%. The NYSE Composite closed down 0.6%. The Nasdaq closed down 0.5%. The Nasdaq 100 closed down 0.4%. The Russell 2000 closed down 0.7%. The DJ Transportation Avg. closed down 0.3%. The DJ Utilities Avg closed down 0.9%.
Gold plunged $23 an ounce to $1,661.
Oil closed down $1.76 a barrel at $105.57 a barrel.
The U.S. dollar etf UUP closed down 0.1%.
The U.S. Treasury bond etf TLT closed down 0.1%.
Subscribers to Street Smart Report: There is a hotline from last evening, and an in-depth update on our U.S. market signals and recommendations from yesterday afternoon, and a special report on Global Markets from Monday in the subscribers’ area of the Street Smart Report website.Yesterday in European Markets.
European markets closed down fairly sharply yesterday, and have now given back all their gains of Monday’s one-day rally. The London FTSE closed down 1.0%. The German DAX closed down 1.1%. And France’s CAC closed down 1.1%.Asian Markets Were Down Again Last Night.
China’s market experienced its largest loss in 4 months Tuesday night, the Shanghai Index closing down 2.7%, and the Shenzhen Index down 4.1%, and Asian markets closed down again last night.
The DJ Asia-Pacific Index closed down 0.6%.
Among individual markets last night:
Australia closed down 0.2%. China closed down 1.5%. Hong Kong closed down 1.3%. India closed down 0.3%. Indonesia closed up 0.4%. Japan closed down 0.7%. Malaysia closed up 0.1%. New Zealand closed up 0.3%. South Korea closed down 0.9%. Singapore closed down 0.7%. Taiwan closed down 2.1%. Thailand closed unchanged.
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Markets This Morning:
European markets are negative again this morning. The London FTSE is down 1.0%. Germany’s DAX is down 1.4%. France’s CAC is down 1.2%
Oil is down $.46 a barrel at $104.94.
Gold is down $2 an ounce at $1,659.This Morning in the U.S. Market:
This week is an average week for potential market-moving economic reports, but they include Consumer Confidence, Durable Goods Orders, the final revision to 4th quarter GDP, Chicago area PMI, etc. To see the full list click here, and look at the left side of the page it takes you to.
Monday’s reports continued the string of recent disappointing reports. They were that Pending Home Sales unexpectedly fell 0.5% last month compared to the consensus forecast of an increase of 1.0%, suggesting the next monthly report on home sales will also be weak. The Fed’s Dallas area Business Activity Index was a big negative miss, declining from 17.8 in February to 10.8 in March, widely missing the consensus forecast that it would remain strong at 17.0. And perhaps most disappointing, the Chicago Fed National Activity Index, designed to gauge economic activity nationally, fell back into negative territory for the first time in four months, coming in at –0.09 in February from +0.33 in January.
Tuesday’s reports were the Case Shiller Home Price Index, which was another negative report from the housing industry, showing home prices fell 0.8% in January, and were down 3.8% over the past 12 months. And the Conference Board’s Consumer Confidence Index declined slightly, from 71.6 in February to 70.8 this month.
Yesterday, it was that Durable Goods Orders were up only 2.2% in February, not enough to recover from the 3.6% decline in January, leaving them beneath December’s level.
This morning’s reports were good news, that new weekly unemployment claims fell by 5,000 to 359,000 last week, and the 4-week moving average declined by 3,500 to 365,000. And the final take of 4th quarter GDP growth was 3.0%, no revision either way from previous estimate. But Corporate Profits fell 0.4% in the 4th quarter from the 3rd quarter, the first decline since the 4th quarter of 2010.
Our Pre-Open Indicators:
Our pre-open indicators are pointing to the Dow being down 50 points or so in the early going.
To read my weekend newspaper column ‘Here We Go Again Already?’ Click here.
Subscribers to Street Smart Report: There is a hotline from last evening, and an in-depth update on our U.S. market signals and recommendations from yesterday afternoon, and a special report on Global Markets from Monday in the subscribers’ area of the Street Smart Report website.
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. eastern time.
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