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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 461231  
Subject: Control Panel: Trend time scales Date: 3/3/2013 1:49 PM
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Every investor has an individual risk tolerance and a different time scale. Many investors try to ride the trend, but on a short, medium or long time-scale?

The Macroeconomic outlook on the long time scale (decades) is very challenging due to demographic trends and unfunded government liabilities.

John Hussman, an investment adviser whose time scale is the entire business cycle, thinks that the current time is one of the worst times in market history to invest since several key indicator have been flashing red together for months.

Mungofitch has carefully back-tested the medium term and created the "99 day rule." The failure of a market to reach a new high in 99 trading days has often portended a lengthy bear market. Using 99 days as the trigger point avoids selling during very short-term market drops, helping to quiet noise.

This week's Control Panel shows a moderation which is potentially a topping or sideways-moving formation.

The Fear and Greed index is now in "Greed" at 60 -- it was "Extreme Greed" at 92 a month ago.

The "mungofitch MA" is still very high and well above the "red line," but it did not make a new high.

Many international markets have been in trading ranges for a while.

Stock sentiment indicators are still bullish. The ratio of the SPX:gold is the highest it has been since early 2011.

Treasury yields, which had been rising, are subsiding now. This is good for business, consumers and the housing market. The USD is strong and rising toward the top of its channel. Commodity prices in dollars (energy, copper, gold) are falling. So far, the rise in the USD has not reversed rising trend in the U.S. stock market.

The real economy is growing slowly but surely.


February 2013 Manufacturing ISM Report On Business®
PMI™ at 54.2%

New Orders, Production and Employment Growing
Inventories Growing
Supplier Deliveries Slowing

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in February for the third consecutive month, and the overall economy grew for the 45th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®....

"The PMI™ registered 54.2 percent, an increase of 1.1 percentage points from January's reading of 53.1 percent, indicating expansion in manufacturing for the third consecutive month. This month's reading reflects the highest PMI™ since June 2011, when the index registered 55.8 percent. The New Orders Index registered 57.8 percent, an increase of 4.5 percent over January's reading of 53.3 percent, indicating growth in new orders for the second consecutive month. As was the case in January, all five of the PMI™'s component indexes — new orders, production, employment, supplier deliveries and inventories — registered in positive territory in February. In addition, the Backlog of Orders, Exports and Imports Indexes all grew in February relative to January."...[end quote]


Payroll employment (non-farm) is growing. Real personal income excluding current transfer receipts is growing. The 4-Week Moving Average of Initial Unemployment Claims is falling. Real Personal Consumption Expenditures are rising. Growing demand from real (inflation-adjusted) earned income growth will pull the economy into growth.

ECRI says coyly that the U.S. "may have dodged a recession" though their data is in a pay-only report that I couldn't see.

The trend in money supply is steadily upward, though this week there was a slight pause. Federal Reserve Chairman Ben Bernanke strongly supported his easy-money policy in front of Congress this week.

The Chicago Fed National Financial Conditions Index, which measures risk, liquidity and leverage in money markets and debt and equity markets as well as in the traditional and “shadow” banking systems, showed loose financial conditions. This metric is dropping into the level of the mid-2000s.

Yields and spreads on BBB Corporate bonds (which is the lowest level of investment-grade bonds) as well as junk bonds show the craving of investors for yield and their confidence that the economy will support weaker companies.

Trend-followers will see a lot to like in this market. Contrarians will see a slight easing in the most wildly bullish indicators, which is reassuring...in the short term.

John Maynard Keynes said, "In the long run, we'll all be dead."

This week's Control Panel says that in the short-to-medium run, we should be OK. Even if the market is topping, the only news story of Macro impact is the U.S. government budget battle (the sequester and the budget at the end of March) which the market is ignoring in favor of real economic news....at least for the time being.

Wendy








http://stockcharts.com/freecharts/candleglance.html?$INDU,$S...

http://stockcharts.com/freecharts/candleglance.html?$IRX,$US...

http://money.cnn.com/data/fear-and-greed/

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&m...


http://stockcharts.com/freecharts/candleglance.html?$STOX5E,...

http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942

http://research.stlouisfed.org/fred2/series/PAYEMS
http://research.stlouisfed.org/fred2/series/PIECTR
http://research.stlouisfed.org/fred2/series/USSLIND
http://www.businesscycle.com/
http://research.stlouisfed.org/fred2/series/IC4WSA

http://www.nowandfutures.com/articles/20060426M3b,_repos_&am...

http://research.stlouisfed.org/fred2/series/MZM
http://research.stlouisfed.org/fred2/series/M2

http://research.stlouisfed.org/fred2/series/PCECC96

http://research.stlouisfed.org/fred2/series/BAMLC0A4CBBBEY

http://research.stlouisfed.org/fred2/series/BAMLC0A4CBBB

http://research.stlouisfed.org/fred2/series/BAMLH0A3HYCEY
http://research.stlouisfed.org/fred2/series/BAMLH0A3HYC
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