Market uptrend has been broken

Wall Street can no longer deny deteriorating economic fundamentals and corporate earnings as technical indicators roll over.

By Anthony Mirhaydari Apr 19, 2013 11:17AM

Arrow Down © ImageSource PictureQuestThe new downtrend accelerated Thursday as the S&P 500 ($INX) closed below its 50-day moving average for the first time since December on another batch of disappointing earnings reports (with the technology and financial sector getting hit hard) and poor economic data. The April Philly Fed manufacturing report fell to 1.3, well below consensus, on poor employment and new orders.

 

Globally, there was chatter that a French bank was in trouble, ongoing political stalemate in Italy and a focus on the upcoming G-20 finance summit in Washington to see whether the world issues a warning to Japan on its efforts to devalue the yen.

 

It's a full-spectrum assault on the bulls. And as a result, Wall Street analysts have no choice but to start issuing warnings to clients -- creating a self-feeding cycle of selling and fear.

 

On the earnings front, there's a lot of red. Technology and financial stocks are getting hit hard as first-quarter results roll out, resulting in major weakness in these sectors and pushing them down to join with already weak materials and energy stocks.

 

 

Both Bank of America (BAC) and Morgan Stanley (MS) were hit earlier this week on disappointing results. EBay (EBAY) dropped nearly 6% Thursday after it guided lower and made negative comments about its European business. Nokia (NOK) was hammered 11.5% after missing on revenue. IBM (IBM) is getting hammered Friday after posting a rare top- and bottom-line miss as services revenue is cut back.

 

 

You'll remember that IBM, as the largest component in the price-weighted Dow Jones Industrial Average, was responsible for that index's melt-up in early March. Now the bulls are experiencing IBM's outsized influence on the Dow, but in the opposite direction.

 

 

But the big story is how Wall Street analysts are slowly realizing that the deteriorating trajectory of both corporate earnings and the economic data can no longer be ignored. As the strategists at the big brokerages sound the alarm, investors are pulling the plug on stock positions. Here are some excerpts:

 

UBS: "Since mid-November the market's advance has been out of sync with weak earnings and economic trends (consensus GDP is for 2% growth in 2013). More recently, a number of market indicators that typically move with equities have begun to point south. These include economic surprises bond yields, inflation expectations, commodity prices, and investor sentiment. Now is a good time to begin dialing back on risk."

 

Bank of America Merrill Lynch: "We think markets may be under pricing three macro risks: The ability of Beijing to ease policy aggressively in the face of strong home price appreciation may be limited; the positive wealth effect of US housing recovery may not be enough to offset the contractionary impact of fiscal tightening; Japanese money may stay at home longer than expected."

 

Barclays Capital: "The S&P 500 sits 120 bps off its all-time high close, but simmering under the surface are global growth concerns, propped up by monetary policy forces. The questions remain if the market can hold up in the face of a soft growth outlook. [E]xpect a challenging environment for US equities over the coming months."

 

Morgan Stanley: "The expected 2Q growth soft patch is now arriving…"

 

I maintain my bearish bias as the rest of the world slowly starts to realize that maybe, just maybe, they had become overconfident and complacent. In response, I am adding another short position to my Edge Letter Sample Portfolio: Blackberry (BBRY).


Disclosure: Anthony has recommended BBRY short to his clients.


Check out Anthony's new investment newsletter, the Edge, and his money management service, Mirhaydari Capital Management. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at anthony@edgeletter.c​​​​​​om and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.

108Comments
Apr 19, 2013 12:45PM
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The only reason it took Anthony so long to be right is the crazy **** inflation causing easy money fed policy. The only reason we have not yet seen the inflation is because the economy is far worse then most people realize.
Apr 19, 2013 12:15PM
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The market has figured out you cannot PRINT and TAX your way to Prosperity?    Or Borrow and Spend your way out of Debt?    

After all these years they have finally figured it out....  Obamanomics is a complete and utter failure?
Apr 19, 2013 12:08PM
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Everything you say sir is 100% FACTUAL except this nerd, Bernanke, is creating the disconnect of all disconnects. He is a complete and utter Wall Street patsy.  And of course America is now considered, by the scam artists in the hedge fund world, the least ugly pig. So the US stock market (ruse) is getting all of this fast money. Simple as that. 


Apr 19, 2013 11:58AM
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Be honest folks, Anthony being bearish all the time is no different then folks being bullish all the time. Just because a person cries Wolf all the times doesn't mean you ignore the fact that this time, he might just be right. Being a perma bull and ignorant of the current facts on the ground can only have one ending.
Apr 19, 2013 11:43AM
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So the usual summer slump is actually going to happen again. Anthony, you are a genius.
Apr 19, 2013 1:13PM
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Look at the bottom of the article - Anthony is clearly picking Blackberry to go lower.  So, we can all follow along and see if he's right or not.  At least he's putting his money where his mouth is.

Now, for those of you who like to troll and criticize, put your money where your mouths are and give us your picks, so we can see how fantastic you really are.

As for me, for now, I'm bullish on the Euro against the USD.  Next week, if we can get any kind of a bounce in US stocks, I see the Euro pushing 1.315.

Apr 19, 2013 12:28PM
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I love it! Just as this "Uptrend broken" appears on the web, The DOW jumps up 70 points from it's low of the day. Post another artical about the crashing market Anthony!  You have been driving the market higher all year with your articles about market crashes!
Apr 19, 2013 1:37PM
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Anthony, the feeding of selling and fear is coming thru the brokers and traders passing it on to the investors!  They are the one's that are blowing things way out of proportion, not the investors. Investors are nothing but sheep being led to the slaughter and being led by the neck by their brokers and traders.  If one is that stupid to believe every piece of hearsay and rumor that is being spit out by Wall Street, then shame on the investors for being so ignorant!!!!!!!!!!!!!!
Apr 19, 2013 11:54AM
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Oh my God, I've never seen a market downturn before, or profit taking, what to do, what to do?  On the other hand, didn't something like this happen last year?
Apr 19, 2013 11:42AM
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Yet this scam called the stock market goes up. Bernanke. Pure and simple. The biggest ruse in mankind. a Wall Street patsy. They don't call him "bend over Ben" for nothing on the "street."
Apr 19, 2013 6:21PM
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Another pitifully predictable Mirhaydari piece.  He's shorting like crazy and thinks he can talk people into joining him.  People, quit the pure speculation and buy only solid company stocks that don't follow all the volatility and up and down hype.  He's been calling for a market collapse for a year.  He recommended gold, silver and oil last August/September when they were at a high!  Go ahead and throw your money down his rathole recommendations.  Anthony's problem is that he is so smart and adept at analysis that he thinks he knows where things are going with some sense of confidence.  That's the problem with very smart people - they believe their own BS.
Apr 19, 2013 2:28PM
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I think that Anthony is his own worst enemy.  He's trying to convince everyone that the markets are going to drop and spread fear.  He thinks that the sooner he can spook the herd the sooner his predictions of a meltdown will come true.  The problem is, he has been saying this for months and months and the market keeps going up.  I think that there's a certain amount of people who seriously think "Anthony is out with another doomsday column.... chuck some more money into the furnace!"  It's almost become a sign of prosperity.  If he'd just put a cork in it for awhile then the small percentage of investors (and brokers, planners, etc.) who pay attention to MSN money columns would be forced to examine things for themselves.  They'd be scared by what they see (on their own) and they'd feel the honest-to-goodness fear that they should be feeling.  Anthony has become a warm and dependable  plate of comfort food for those who keep dumping money into what's becoming a bubble.

Apr 19, 2013 6:52PM
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If you didn't bother to read Tony's latest hysteria, bottom line the poor guy NEEDS your help! His pants are down, and he's DESPERATE to cover his shorts, like immediately! In the meantime, he's hoping to maintain some income by churning out one hysterical MSN article after another. You're welcome Tone, we all clicked on your latest cry for help ;) 
Apr 19, 2013 4:36PM
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I see pounding Gold the other day as kind of an Insurance policy for the market. At least for the time being the chances of the bottom falling out of this market appears slim. I do think Gold will rebound very well.  A trillion dollars worth of gold didn't just wake up Monday morning and decide to walk off.  It was a planned sell off and I believe the intended effect was achieved and I believe most of  those who sold friday were probably back in Monday afternoon.  I look for gold to continue under the radar and be quietly accumulated.  The market likely will not go down until Anthony buys in or the New World Order says it is time to take several trillion from those poor souls who don't get what "confiscation" really means.  I can't believe folks blew Cyprus off the way they did.  A fool and his money, da de da. JMHO
Apr 19, 2013 5:22PM
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This guy is absolutetly clueless , I mean you need to realize that markets tend to go up and up and eventually it will come down some before the next leg up , Economy is slowly recovering and easing is done all over the world .  Anthony you cant be guessing wrong for another 6 months or so , Read the fundementals and watch and learn .

Apr 19, 2013 6:30PM
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The caption on the picture at the beginning of this article should have been:  WHYYYYYYYYY can't I ever get it right? (by Mr. Mirhaydari....)  But some of you posters are really pretty funny (others, not) and I enjoy reading such diverse views.
Apr 19, 2013 12:54PM
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Hot Tip: When Mirhaydari says sell, that's the time to buy.
Apr 19, 2013 1:40PM
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Being a Bull or a Bear is not really a problem...

 

Being a Perma Bull or a Perma Bear, isn't usually all that bad either..

 

But being a "Chicken Little" is usually a WHOLE DIFFERENT STORY..

Wasn't that something to do with Mother Goose...??

And those kind of intentions, REALLY have NOTHING to do with INVESTING....imo.

And are not WORTH following..

 

Apr 19, 2013 2:24PM
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I think the markets are showing us that the value of companies has risen enough, at least for now, to account for the inflationary actions, which devalue the dollar and force interest rates up, by the fed.
Apr 19, 2013 5:20PM
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"Disclosure: Anthony has recommended BBRY short to his clients."

 

I'm surprised Anthony has any clients left that aren't bankrupt...considering all his "Epic" forecasts that have fallen flat.

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