Market is weaker than it looks
As the Dow inches to new highs, a majority of stocks have tipped into a new downtrend.
Uptrends have a life cycle. First, the smallest, riskiest stocks push higher amid fear and skepticism as the economy quietly shows signs of improvement. Then, ancillary assets like copper, industrial commodities, and emerging market stocks move. The final phase sees mega-cap, defensive stocks levitate amid great fanfare as everyone focuses on the Dow 30 but ignores signs of economic stalling.
Right now, we're at the very end of the final phase. And as a result, despite the Dow's new closing high on Tuesday, the situation is weaker and more dangerous than it seems.
People aren't ready for this. Sentiment is off the charts. According to the Hulbert Financial Digest, newsletter writers are recommending a net long position that's tied for the second-largest since the survey's inception in 2000. The top spot was April 3, 2000 at the height of the dot-com bubble. The other second-place reading was in early February.
People are also aggressively positioned. Mutual fund cash levels are plumbing historic depths. Assets in equity mutual funds and ETFs are carrying three-times more assets than money market funds -- a level seen at the bull market tops in 2000 and 2007.
But the evidence doesn't support the fever dream.
Economic data in Asia, Europe, and here at home has been disappointing. Manufacturing output is slowing. Unemployment is rising. Recessions are deepening. Negative corporate earnings preannouncements are rising ahead of the Q1 earnings season.
And technically, the picture is weakening. The Russell 2000 Small Cap Index is on track to close below its 50-day moving average for the first time since November as it disconnects from the stocks driving the Dow higher, defensive stocks like toilet paper maker Kimberly-Clark (KMB) and consumer staples maker Procter & Gamble (PG).
And market breadth has disconnected from the Dow's rise as well. Just 62% of the stocks in the NYSE Composite are above their 50-day moving average -- lows that were last seen in December.
The weakest started in materials and energy stocks, such as steelmakers, but has now spread like a cancer to semiconductors and banks. Just look at the way the Market Vectors Semiconductors (SMH) is rolling over. Or Morgan Stanley (MS).
Disclosure: Anthony has recommended MS short to his clients.
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Oh really?? Market 'weaker than it looks'??? Well....DUH!!!! Everybody with an eye on REALITY and doesn't have his head up his asking price knows the 'market' is so discconected, so uncoupled from that reality it may as well be in a pretend world, which of course....it is. Ben "Benny Bucks" Bernanke has been shoveling 85 billion a month in toilet paper dollars into the hands of his TBTF rich banker buddies who can win or lose without consequence. If they make a fortune...they keep it! If they lose a fortune....we pay for it!!!! What a sweet deal!!!
'Market weaker than it looks' is like comparing the tip of the ice berg to that which lies below.
See, this is what happens when you let computers trade for you. The Wall Street Life Cycle is reduced to two weeks, the long term becomes 90 days, and a year becomes infinity when the value of everything is expected to fall to zero (credit Zero Hedge).
weak jobs report?? the fcuk us say???, gee what gave it away?? the fact that you can walk down the street in any city and "SEE" there is no prosperity and no kind of "REAL" jobs being created, except of course more IRS agents to implement bullshiiiiiit obama regime regulations to destroy more of the private sector if there's anything left to destroy that is,
OOPS!! WHAT'S THIS? WHAT'S THIS!!!! STOCKTON CALIFORNA BANKRUPT??? ANOTHER CITY IN CALIFORNIA BANKRUPT???? NO!!! EVERYTHINGS' SO GREAT NOW! ISN'T IT????? OH RIGHT, LOOK WHOSE RUNNING THE STATE, DEMOCRAPS! NUFF SAID!
meanwhile the MESSiha golfer in chief is blowing a $100million dollars on 'brain mapping' ???? if you mapped obama's brain, now what you'd find? well you know the empty space in a hand ball? there you go.....(see also the liberal mind mapped segment below) anyway, hmmm is this some veiled attempt to take a stab at Dr. BEn Carson (who called the little chain smokin' golfer out on his healthcare nightmare), a man that Obama couldn't even begin to come close to even if he lived 10,000 years, although don't bother 'brain mapping' an idiot libs brain, I can save the hundred million for you by telling you what a lib mind looks like, much like the surface of the moon, blown out chunks of brain matter therefore their brain is unable to think logically and uniformly, they are hell bent on hate, rancid racist rhetoric and Marxist ideologies and claim to be 'for the people' funny, STalin said the same thing anyway,
all those blown out chunks of brain make it impossible for the neuro transmitters to fire correctly, therefore they vote for , and vehemently support, make excuses for and idolize the communist American dream haters, the very same people that will destroy the liberal morons in the end as well, there you go, one hundred million dollars saved.
Take away Wall street's security blanket and pacifier and then we will see the real truth.
Obama is still talking about green energy and gay marriage and now more cheap loans for people who can't afford houses but he's done
nothing about the 40 million on unemployment welfare foodstamps and the high energy gas food prices! he's pushing a socialist agenda!
The Dow has had a nice run up, even if the last few months have been staged, and it is very close to a down turn. The Bands are no longer diverging, the Bottom Band has turned upward, the top Band slowly declining. When the top Band breaks downward, we will have a change in the Trend; the Dow is due.
What type of correction is anyone's guess. Will they allow it a nautral flow, or will it be manipulated? More than likely the latter, only time will tell. By all rights, it should be fairly deep, possibly a 50% retracement, which would take it down to the 11,000 area, but at this point only speculation.
Point is, brace for the change and the reactions that follow.
If you become a Long Term Investor instead of a "Market Timer" you wouldn't have to worry so much there Anthony ! And neither would your naive clients for that matter.
Quit buying into Anthony's game - Become a Long Term Investor of Large Iconic Dividend Stocks then you will always be a winner. Quit making investing hard - it's so simple any of you can do it !
Market to drop 50% tomorrow ?? I really don't care because my little money soilders are right where I want them - Then the Dividends will just buy more shares for me until it does bounce back. And it will, it always does ! Only the fools that try to "Market Time" lose !
Same article as last week, and the week before, and the month before and the year before...
Same comments as last week, and the week before, and the month before, and the year before...
Sooner or later it's going to take a downturn, they you'll all be right! That'll show 'em!
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