Another solid report from the team in Switzerland covering the major sectors and indicators and price patterns once again.
Amongst the items a wave five top for end q1 looks increasingly likely but its possible that a new higher high can be formed as the distribution is not providing a classic signal yet. This is correct as regards my own price work, so far. We do have plenty of non confirmations coming through on the inter market side with the HGX continuing to fail to make a new high, as i’ve pointed out on the forum pages in the last week. (Also why i’m short some home builders as the smart money has not been chasing them higher in spite of the popular headlines. Always a contra sign of trouble ahead). The Em indexes and world index non confirmation of the higher high. And a technical sell signal break of price trend occurring on many of these em indexes. The break of price trend on the usdjpy also a kicking off a sell indicator on the usd vs jpy and therefore bearish on the nik225 as i picked up last Friday myself illustrating the inverse correlation between the two was at extremes and triggering my own sell on my own book of the j-reit asset class together with going long the jpy.
On the market breadth side of things we have yet another non confirmation and narrowing of the leaders. Despite last week’s new reaction high in the SP500, the breakout has not been confirmed by an expanding number of new 52-week highs. The market sentiment is once again at extremes as provided by the AAII and other sentiment surveys. They don’t pick up on the recent fund flow data but this does indicate PI entry into the market but no wash out from bond funds as yet. The positive recent shift into tracker index etfs a good indication of late speculation according to some market theorists.
As an aside the ‘fit’ to my own methodology continues to be excellent. The inter or intra market work i admire and am taking a stage further than the team themselves i believe. Its also worth mentioning, in my view, that the technical inter market price work of Stan Weinstein would also compliment perfectly the Swiss team’s approach adding to the mix specific stock instrument selection in the liquid US markets. Unfortunately his report is big money item retailing at circa $60,000 p.a. Occasionally i do get a copy through. I’ll keep you posted when i do. His methodology can easily be copied subject to having the time to copy it, note.
Without more delay here the excellent Swiss report. We remain waiting for a pattern on the US indexes. The technical weakness grows louder every week but i’ve observed over the years that thin narrow trading indexes can display a habit of ‘drifting’ higher for extended periods against all your judgement. Patience is required picking off the weak inter market laggards as they fail tests along the way.
Macro wise, the events in Cyprus we have picked up in the forum pages. They are meaningful in my view and part of the continued debasement of fiat money. All the major fiat currencies can no longer be used as an effective store of value this is clear. Following Hayek’s methodology we have increasing confirmation signals of the systemic breakdown. Law is becoming increasingly arbitrary, a key indicator according to Hayek of systemic failure. Confiscations and expropriations are increasing. There is no debt repudiation here yet, indeed the opposite has occurred in recent years so we can suppose the k-wave winter is still in her early stages. Nominal bubbles and subsequent bursting should increase in frequency as we step forward. Overall capital should continued to be destroyed through this process and living standards should therefore continue to fall. Against this negative overall back drop a great wealth will be transferred during this process creating winners and losers along the way.
As capital holders we must do as Senholtz recommends.
‘When speculators anticipate more inflation and monetary
depreciation they endeavor to sell the depreciating currency
and buy goods or foreign exchange that do not depreciate. They are
preserving their working capital. Thus they are promoting their
own interests but also those of society, which benefits from the preservation of productive capital’.
Onwards and luck to all
Rich
(27 votes, average: 5.00 out of 5)
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