Daily Investment Interpretations

March 28, 2012

2012-3-28: (Wednesday Night): The market indices fell again today: Stocks dig a hole; Stocks Lower on Macro Drag, Weak US Data. The NASDAQ Composite inched down 15.39 (-0.49%) to end at 3,104.96. The Dow fell 71.52 points (-0.54% to 13,126.21; the S&P 500 declined 6.98 points (-0.49%) to settle at 1,405.54. Oil deflated to 105.48:Oil falls on supply jump, talk of reserve release; gold ends at 1664: Gold down 1.6% after failing to touch $1,700. The VIX fell -0.12 to 15.47.
    "Stocks finished lower again on Wednesday in a relatively volatile session of trading. Major indices started the session in mixed trading but would sell off hard following a disappointing durable goods ... Read More »"    

    Marketwatch says: 
    Durable orders slower than forecast  
    Hugh Johnson: Too far, too fast for stocks?
    VIX to double, even triple this year 
    3 stages of a bull market  I've retained this for three days now until I could find time to comment on it. 
    What the authors are saying is that there are normally three stages to a cyclical bull market. The first rise lasted from the Great Recession low of 677 on the S&P 500 to its close at 1,217 on April 23, 2010. The second leg ran from April 23, 2010, to 1,361 on May 2, 2011. Now the third and final "blow-off" leg is underway during which the markets will become overpriced and "frothy", setting them up for a major cyclical bear market in the 2013-2015 time frame. From there, if past is prologue, the markets ought to be set for the next super(secular)-bull market, running from something like 2016 to something like 2032. 
    How far do the indices rise during these 16-year secular bull markets? From 1915, when it bottomed at $53.17 to its super-bull market peak of 381 in 1929 (see chart below), the Dow approximately 7-folded. From its bear market bottom at 41 in 1932 to its bull market peak in 1966 at 996, the Dow 24-folded. The period from 1932 to 1966 is 34 years. If we think of this 34-year time interval as two 17-year super bull markets back-to-back, then each of them would have risen by a factor of about 4.9:1. (The Great Depression skewed some of these time frames because of its severity.) Then from its super-bear market low of 777 in August, 1982 to its super-bull market high at 11,723 in 2000, the Dow rose by a factor about 15:1. Of course, these gains don't include corrections for inflation. (These influences would tend to offset each other.)

    A reasonable expectation for the rise of the Dow and the S&P 500 for the 2016-2032 time frame after correcting for inflation and dividends, might be, a 8-folding to10-folding.
    Amylin analysts advise caution amid stock rally
    Analyst price targets are for losers    
    Michael Gayed writes: Will financials lead the way higher?  
    Mark Hulbert: Stocks only slightly expensive.  
    Lawrence McMillan: Bulls are still in charge.  
    Matthew Lynn describes The next leg of gold’s bull run.  
    U.S. stocks drop as global growth fears percolate    

    State of the Markets articles include:   
    Orders For Durable Goods Below Expectations in March  "Although the data series is known to be quite volatile, orders for long-lasting goods came in below expectations in March. The Commerce Department reported that oders in March rose by... ... Read More »"
    Wall Street Bigwigs Looking To Add Landlord To Job Titles "Some Wall Street bigwigs are lining up to add landlord to their job titles as suddenly hedge funds appear to be ready to bid on pools of foreclosed properties Fannie Mae will be selling. The way the new program works is if the new owners rent out the properties rather than either occupy or flip the homes, the government is willing to sell properties to Wall Street funds at attractive prices. The hope is this approach might aid the ailing housing market by shrinking the number of available properties for sale – and then being ... Read More »"
    Investor's Intelligence: Bullish Sentiment On The Rise  
    U.S., UK, and France Consider Releasing Strategic Oil Reserves 
    Now Is The Time (To Plan)  
    Yields Continue to Fall at Italy's Latest Bill Auction  
    Market futures are flat tonight.