The S&P 500 and Dow Jones eeked out a new all-time high this morning, the S&P MidCap 400 recorded a new all-time high last Thursday. The Russell 2000 came within 0.08% of a new all-time high. The Nasdaq Composite recorded a new recovery high on Thursday while the Nasdaq-100 remains below last years recovery high.

On the surface the string of new highs/recovery highs is bullish and shows that the major indexes are firing on all cylinders. A humming engine is less likely to stall. However, there are some early issues that may soon illuminate the “check (stock market) engine light”.

While broad indexes remain strong (with the exception of the Nasdaq-100), individual stocks are showing signs of fatigue. In fact, prior tech giant leaders are turning into laggards.

Google (GOOG)

The February 12 article “Will Google Continue to Climb?” highlighted the dashed green support line and support at 760 and stated that the rally will continue as long as prices remain above 760 or dashed green trend line support.

Google broke below support in mid-March and now trades nearly 5% below its all-time high. The 50-day SMA is at 788 and should offer some support.

Apple (AAPL)

We all know about AAPL’s historic ascent and decline, but last week it appeared as if AAPL could stage a small comeback. The log chart shows a brief break out above the down hill parallel channel followed by a bearish relapse. A close below the 20-day SMA at 442 could unlock much lower prices (a shockingly low possible target was just revealed in last night’s Profit Radar Report).

Amazon (AMZN)

Amazon’s chart doesn’t offer any particular insight from a technical analysis perspective, but we take note that AMZN is more than 6% below its all-time high already.

Microsoft (MSFT)

Microsoft has been stuck in a 13-year trading range. MSFT just hit a year-to-date high, but is well below its 2012 high, which incidentally occurred in April.

Summary

It’s said that a fractured market is an unhealthy market. Aside from the lagging Nasdaq (primarily caused by Apple), there are no obvious fractures on the broad market index level.

The waning leadership within the large cap sector though is an early warning sign. The S&P 500 is not far away from key resistance (price target) and key support. A move to hit resistance or below support will be a sell (as in go short) signal.

Last night’s Profit Radar Report featured a specific rally target and the must hold support.

I have never seen a Long-Term or Medium-Term top (even a Short-Term top) to form on a negative news. That’s why I expect today’s weakness to be short-lived. As you know I am looking for the end of the move up from Mar 2009 low, but I suspect we have not seen it yet.

Where are we today?

The U.S. stock market held nicely on the scary news and has then advanced to new highs. All market indices are now trading at new highs. This once again prove my observations: a top cannot be formed on a bad news. What the bad news does during a primary uptrend is to scary enough people, to shake them out of their positions, so that there are many doubters in the uptrend. And as long as there are many doubters, a top cannot be formed. Learn this lesson and do not attempt a short position if a bad news comes during a strong uptrend.

Gold has not moved a lot as well and is basically trading sideways between 1560 and 1620. A break on either side should be important. Based on the larger-degree structure, I expect to see a breakout.

The only market that has moved a bit more after the negative news from Cyprus was EUR/USD. EUR lost but not as much as one could have expect based on the negative news. Still, it declined much further than I thought as it moved firmly below 1.2870. So, this is the only market that was affected somewhat byt he Cyprus news. But look at the daily chart of EUR: it has been in downtrend since early February. So obviously, the bad news here has not come right at the top.

In conclusion, this time was not anything different as the news had once again very limited impact (if it all) on the price action. Thus, this was another good lesson for us that we should only rely on the price pattern and trend recognition.

Until next time:

Trade with the Trend!

Alexander
Trendrecognition.com

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading.

When asked about so many people betting against BlackBerry on the market, the CEO replied that the proof is in the performance of the company, which is returning to profitability and turning things around with the new product offerings here now and to come later this year.  The commentator asked if with the attractive new unique platform  BlackBerry is being courted by other companies.   Thorsten said that this is not what he was on interview to discuss, and that such decisions would be made with the board, in light of the latest results.

When asked  if he regrets his comment on the iPhone platform starting to look old, he replied that the comment related to the user interface, which on BlackBerry is completely new with peek, hub, and flow.  When people get to play with the device they like the unique and newest/re-invented OS and re-engineered hardware.

When asked about the number of in-channel devices selling, he stated that 2/3 to 3/4 selling is good as one needs to have inventory in-store.

As for BES 10, it is on target to roll out soon.  Already 4000 corporate clients have adopted it of the 8000 in testing.

As to why the Z10 is out before the physical QWERT Y Q10 and reviews stating that it does not take rocket science to see that the Q10 should have gone in store first, Thorsten jokingly replied that he has a Ph.D. in Physics, so he knows a thing or two about rocket science.  The reasons the Z10 came out first are 1)to stop the bleeding in the touch cellphone market before the BlackBerry brand lost all of its consumer recognition in this area and 2)to technologically develop a touch keyboard that matched the physical keyboard that people associate with BlackBerry.

The moderators seemed to feel that the growth story was missing with the loss of 3 million consumers.  If this continued it did not look good.  It seems no one cared when BlackBerry gained up to 80 million consumers, but now the number of consumers lost as the company turns over from legacy to new BB10 devices is being made an issue by some in the the US media, in spite of the earnings beat!

It is notable that the stock was up near 2%, after the earnings call, before the Good Friday break from trading, but now appears to be ending down near 1.5% by close (3:30 pm) of the trading day on both NASDAQ and TSE.  Nokia is down near 1.4% and Apple is down 2.21%.  By close:

by Lauren Templeton, principal and portfolio manager of Lauren Templeton Capital Management, LLC, and Scott Phillips, portfolio manager and contributor to The Templeton Touch

The re-release of The Templeton Touch provided us with an obvious occasion to reflect upon another of the great blessings in our lives which was having the privilege to work for a number of years with our mentor, Sir John Templeton. Perhaps what is lesser known about his influence among investors (including ourselves), was that it extended far beyond any passion for investment or security analysis and instead into the realm of one’s set of values and perspective on life. Within the special section that Scott added to this revision, this was a constant theme that naturally took hold—if not dominated—these interview discussions with investment luminaries.

Although Sir John will always be recalled for the specific illustrations he provided for successful investing, such as pioneering global investing, his contrarian-minded purchases, etc., it was his character and example as a human being that left the strongest impressions among the acquaintances that contributed to the book.

Likewise, through the explorative dialogue of these interviews a consensus was reached that Sir John often took an interest in individuals who possessed a certain passion for learning, the joy of life, and upholding a standard of high integrity above all else.

When William Proctor first sat down with Sir John in the early 1980s to write the original version of The Templeton Touch, there was clearly a great effort put forth to reveal the underlying factors to Sir John’s success as an investor. It seems likely that many readers, except perhaps for those that knew Sir John, would have been surprised to see only occasional mention of financial analysis, models, investment rules, or so on, but instead a list of well-defined and reasoned character traits. Admittedly, some of these traits people are born with to some degree, and some others need to be cultivated from the ground up. No matter what the starting position however, the below excerpt from Chapter 1 of The Templeton Touch represents to us a basic template for success, and in this case success can be defined in the field of investment, but also more broadly in “the game of life” so to speak.

For that matter, these are the same ideals that we practice, strive for, and measure ourselves against for progress. In sum, we believe that the standards we maintain in these areas will ultimately define our level of success as investors, which is most appropriately measured by us, you, and other observers as an ability to safely compound returns in the market above what is commonly available through the market indices. Hopefully, you too will find the excerpt below helpful in your own self-examinations as an investor, or otherwise.

We now refer you to the central determinants of the “Templeton Touch” which are listed below from Chapter 1 of the book.

Self-reliance.

From his earliest youth, Templeton was taught to think and act for himself. He developed a belief in himself, a self-assurance and self-confidence. Invariably, this is a crucial quality in the successful investor, who must ultimately stand alone to make the final decision about where his or her money will be placed.

Reasonable risk-taking.

Most successful investors—and John Templeton is no exception—seem to have a bit of the entrepreneur in them. But even though Templeton is willing to take adventurous risks with big money, he is, above all, a rational and responsible risk-taker. He carefully analyzes all the factors before he puts even a penny on the line.

A sense of stewardship.

This may seem a strange quality to include among those associated with successful investing. But actually it’s one of the most important.

Many outstanding investors, including Templeton, have a feeling that the money they are accumulating represents something of value beyond mere worldly riches, and perhaps even something sacred. This is not to say that they worship money. Rather, it’s a matter of showing great respect for the potential power of wealth and also gratitude for their ability to earn fortunes. In Templeton’s case, this attitude really does approach a sense of stewardship, or an assumption that he has merely been given the privilege of managing assets that have been entrusted to him.

 

In some ways, Templeton’s attitude is true in a purely worldly sense, in that he does manage great sums for others through his mutual funds and the investment accounts that wealthy individual clients have entrusted to him. But there is also a spiritual dimension to his approach because he believes that even his personal assets were given to him by God.

 

This sense of stewardship encourages great care in making decisions that involve the disposition of money. And it also engenders a deep commitment to thrift—one of John Templeton’s most apparent personal characteristics.

 

A drive toward diversity.

The principle of diversity has always been one of the foundations of successful investing: In other words, it’s important to spread your risk by putting your funds into a variety of investment vehicles, so that if one investment has a bad year or goes under, you won’t lose all your capital.

 

But Templeton goes beyond this traditional interpretation of the diversity principle to search worldwide for good investments. Many pundits who have tried to explain his success have stressed the fact that his diversity is not merely national, but is international as well.

 

A bargain-hunting mentality.

Searching for bargains is part of John Templeton’s basic approach to life: This orientation affects the way he buys furniture, cars—and stocks. Part of his bargain-basement style with stocks involves looking at low price-earnings ratios and other traditional investment techniques. But, as we’ll see, his approach is much broader than that taken by most of his fellow investors.

 

A broad social and political awareness.

The present and future value of stocks and other investments is always dependent to some degree on the nature of local social movements, laws, and government regulations. Even the basic nature of the political system may have a dramatic effect on how well a given investment will do in future years. For example, Templeton steers clear of investments in countries that are characterized by what he calls “socialization”—or various forms of socialism and other concerted governmental influence in business.

 

Flexibility.

There’s no ironclad formula or doctrinaire, rigid rules that guide the top investors. These experts are always willing to “roll with the punches,” always flexible when new situations and challenges confront them.

A willingness to devote large quantities of time to studying potential investments and developing sound moneymaking strategies.

This key quality of the best investors may not be particularly glamorous. On the contrary, it is a rather ordinary characteristic. But at the same time, it’s an absolutely essential ingredient for investment success. A willingness to work hard for relatively long hours and to do in-depth analyses of specific stocks and investment situations is a sine qua non for making profits in this field.

 

John Templeton doesn’t waste many of his free minutes when he travels in airplanes, waits for business appointments, or finds himself in situations that most people would consider “dead” or wasted time: Instead of sitting for minutes or hours staring out into space, he reads articles and studies by security analysts on various companies that interest him. As a result, he is one of the best-prepared investors in the world when it comes to knowing the facts about a variety of potentially profitable opportunities.

 

An ability to “retreat” periodically from daily pressures.

The retreat concept is a religious notion that has direct application to effective investment strategy. Templeton found that when he moved from Wall Street to his present home in the Bahamas in the 1960s, his success as an investor improved markedly. The hours he spends in solitude help him to get a perspective that was impossible in the hullabaloo of the New York financial markets. These times of reflection also give him the courage to make decisions counter to prevailing market fashions—and often enable him to make money even as the majority of other investors are losing theirs.

 

An ability to develop an extensive friendship network.

One of Templeton’s most endearing qualities is his ability to make and keep friends in a wide variety of fields and geographical locations. As it happens, many of these friends are in influential positions in the business and investment community, and they are invaluable contacts when he needs advice or information about a particular investment possibility.

 

Patience.

One of the “fruits of the Spirit” listed in St. Paul’s letter to the Galatians (5:22) is patience. And this personal quality is just as important in successful investing as it is in authentic spirituality. John Templeton has learned to be patient and persistent as he selects a certain stock and then waits calmly for it to start an upward climb. The wait may be months or years, but Templeton takes the long view—and his patience has proven him right more often than not.

 

Thought control.

This quality may at first seem rather ominous, because thought control may be associated with control from the outside, as happens in some religious cults or political brainwashing situations. But Templeton’s approach to thought control is just the opposite. He advocates and practices imposing, from within, a discipline and restraint on the direction of one’s thoughts and emotions. In other words, his thought control is really a form of self-control or self-discipline. He has learned over the years to focus his mental powers only on the task at hand and to block out all extraneous influences that might distract him from his main purposes in business and life. The result has been an ability to achieve great things in the worlds of investing and philanthropy.

 

Positive thinking.

This is a form of thought control that Templeton practices, but it has a “life of its own” and therefore must be listed as a separate quality. He believes that negative thoughts are a kind of psychological poison that tends to sap a person’s energy and distracts that person from accomplishing important goals. He certainly recognizes poor or negative investments when he sees them, but he doesn’t dwell on them. Instead, he moves on quickly to those investments that offer the positive promise of greater profits.

 

Simplicity.

Although there is a great deal of intricate analysis involved in evaluating many of the companies and special investment situations that Templeton considers every week, a major feature of his investment decisions—and of his entire life for that matter—is simplicity.

 

After all the complex elements in an investment decision have been considered, he tries to boil them down to their essential components. But even though the final statement of the solution of a problem may reflect classic simplicity, it still takes a genius of sorts to get to the true essence of an investment problem—just as it took a genius like Einstein to state the simple form.

This is an excerpt from the December 27, 2012 issue of the Maximum Pessimism report issued by Lauren Templeton Capital Management, LLC.

by Fernando Commodari, Ph.D.

March 26, 2013; 13:00 EST

BlackBerry (BBRY) shares picked up more than 1% to $14.38 after two days of losses following the U.S. launch of its Z10 . In an early note, Bernstein Research predicted a strong earnings report from the company on Thursday.  The new media deal with Viacom and Univision may be prompting the rise, along with the in-store release of the BlackBerry Z10 at T-Mobile.

“We expect gross margins 7 points ahead of consensus expectations, as Blackberry 10 units enter the mix and high margin service fees persist,” analyst Pierre Ferragu wrote in his note. “On that basis, we expect the stock to respond favorably to the quarter’s reporting.”

Yesterday:

Jefferies and Nomura Go Head to Head on CNBC

(I am long on BBRY; no comments on the Stock Market or specific stocks on this site are to be taken as advice for buying/selling any stock!)

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But there’s been a lot to cheer about lately as growing retail sales, positive factory figures and an unemployment rate at the lowest level in four years has helped spur American stock exchanges higher. The market has for the most part looked through the possible negative consequences of sequestration-related impact on overall growth.

Japan has been another bright spot on the global economy lately as the country welcomed a new central bank governor to the job, Haruhiko Kuroda, this past week. Backed by the recently elected Prime Minister Shinzo Abe, the new central bank governor begins work on a feat no one has yet managed to pull off: to reverse nearly two decades of falling prices to lift wages and boost profits in the world’s third-largest economy. If Japan’s experiment works, Japan, which has deprived the world economy of growth during past recessions could one again become an engine of growth and global prosperity.

The proposed policies of Mr. Kuroda have many detractors, including Masaaki Shirakawa, his predecessor, who say that combating Japan’s deflation just can’t be done. But Mr. Kuroda and Mr. Abe beg to differ, believing that Japan suffers from deflation in part because consumers and businesses have become accustomed to hoarding cash after the 1990s asset crash and lingering recession. But so far, just the talk of quantitative easing has made a noticeable impact. The yen has weakened by 18 percent against the U.S. dollar and stocks have risen by more than 40 percent since mid-November on expectations of a change in central bank policy.

But despite the positives the big picture globally remains the same: economic growth in Europe and the United States since the 2008/2009 financial crisis is anemic, growing at the slowest post-recessionary pace since the Second World War. The recovery globally is so weak that the governor of Australia’s central bank, Glenn Stevens has dubbed this period of sluggish growth following the financial crisis as the “Great Frustration.”

The slow pace of growth has many observers wondering whether the American economy has hit an air pocket that may result in a return to soft growth and dismal stock market returns. But the financial modeling that I’ve conducted suggests that while we may experience of few more months of softer than trend economic growth, the U.S. and international activity will likely revert to its prior pace of economic recovery. This resumption of growth is likely to be driven by the substantial amounts of stimulus being provided by global central banks and the collective strength of leading business cycle data.

Despite the persistent worries over America’s loss of competitiveness, something remarkable is happening at the grassroots level. Once you look beyond the dysfunctional and broken politics inside the Washington beltway, you discover reason for hope. America still leads the world in spending on research & development and towers over emerging giants such as China in crucial matters such as the quality of its research universities and the respect for intellectual property. At the grassroots level, local officials are competing aggressively to lure migrants and investment to their communities with strategies as diverse as scrapping income tax to building more bike lanes.

America is working well in spite of the shenanigans in Washington. And if the politicians in Congress ever decided to set aside their differences and punch at or above their weight, the U.S. recovery well so far unremarkable could quickly accelerate to the benefit of all Americans.

A likely uptick in the U.S. economy and stock market is the most likely endgame in my investment outlook, suggesting a strong preference for stocks over bonds and for U.S. stocks over foreign stocks for the balance of this year. The preferred style biases that I favor are for value stocks, with high betas in sectors that have already experienced a negative re-rating that will position them for future outperformance. One sector that looks particularly attractive right now is U.S. Financials. The recent housing crisis and subsequent financial crisis has seen valuations hobbled, making them the ideal play offering value, beta and strong outperformance possibilities if the U.S. economy continues on its upward trajectory.

by Fernando Commodari, Ph.D.

On March 16, 2013, in an interview with the Francophone:”LE GRAND JOURNAL DE NEW YORK” published on March 18, 2013, CMO of BlackBerry, Frank Boulben stated that “BlackBerry aims to be the leading provider of machine to machine (M2M) embedded systems”, using QNX and BlackBerry 10 devices.  The company has as a goal to be the leading innovator in mobile computing, not necessarily the biggest seller of cell phones like Samsung and Apple. With QNX in everything from slot machines, cars, home appliances, medical and other devices, BlackBerry can offer novel solutions and applications with these embedded systems.

In speaking about the new Z10, Boulben stated that the marketing effort, which will kick into high-gear on USA TV the week of March Madness, will emphasize the 4 differentiators of the new BlackBerry OS 10 devices: 1)the communications HUB, 2)the virtual and upcoming Q10 physical keyboards which offer the fastest and best typing experiences of any platform, 3)BBM with video chat, voice calling, and file share and 4)BlackBerry “Balance” which allows separating “work” and “personal”  aspects of one’s life on one device. Boulben refused to provide a number for the unprecedented cost of the BlackBerry marketing campaign.  He said he took the job because it offered him the opportunity to contribute to the greatest comeback story in tech.

For those of you who are fluent in French, the interview is available here:

“LE GRAND JOURNAL DE NEW YORK”  interview with Frank Boulben, CMO, BlackBerry

The next few weeks and months will be interesting  even if the BBRY stock, thanks to the short holds (that in my opinion are going to be left holding their shorts!), will continue on its roller coaster ride.  BlackBerry is well positioned with the new OS 10 devices, with its active NFC/VISA partnership(s) to lead the way with paperless payments.  These are the beginning devices; watch for more powerful BB10 devices such as the “Aristo” to launch near the Fall. Clearly, BlackBerry is focused on moving forward towards achieving its re-invention aspirations. After just a few days of the US in-store availability of the Z10, this product is already at number 8 of the top unlocked cell phones on Amazon:

Top Unlocked Cell Phones on Amazon

Users have given the Z10 4.5/5 stars:

Z10 Reviews on Amazon

With the upcoming “real time” ad campaigns BlackBerry 10 is set to “invade” iPhone and Android screens with full takeover ads :

BlackBerry Real-Time Ad Campaign

Stay tuned to this site to keep moving forward as BlackBerry is about to have some of the most exciting times since it invented the mobile communications platform, as it redefines mobile computing.

We’ll be reviewing the upcoming “BlackBerry Keyboard Challenges”  pitting the new virtual keyboard against Android and iPhone users.

This week, here in NYC, our home base for 20 plus years, we’ll be watching the T-Mobile (March 26, 2013) and Verizon (March 28, 2013) in-store arrivals.  No one knows the NYC area better than us; we understand the cultural nuances, and multi-lingual aspects, and have the in-store links to bring you timely, accurate, unbiased data/information, without the hype.  We’ll be watching the markets on Thursday, March 28, 2013, as BlackBerry reports its Quarter earnings.  You can count on us to tell it like it is!

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BlackBerry stock has gone up near $10 in about six-seven months or on average @$1.45/month, since September 2012:

This forward trajectory continues, and with the in-store placement of the Z10  in the USA by this Friday, March 22, 2013, I would expect the stock to continue to do well. Contrast this with Nokia’s stock which has remained flat over the last 6.5-7 months and to Apple stock which is clearly on the decline over the same period.  With the newly re-designed OS, BlackBerry 10, based on QNX, BBRY is uniquely positioned to move forward with the new embedded machine to machine (m2m) systems and to bring out more sophisticated hardware.

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Copyright 2013 (logo/sm, since 1993), all rights reserved, all content on this site!

I am long on BBRY.  The opinions on this site are my own and are not to be interpreted as suggesting guidance for the purchase or selling of any stock.

According to the Stock market tips experts sensex may touch 21000 by the mid of 2013 and may touch 22000 by the end of 2013. Recently RBI has also decrease the repo rate by 25 points that is also effecting the share market.

According to the analyst of S&P(standard and poor) The indian sensex will defiantly get its height by the end of 2013. But as per latest condition it may minimize foreign investment.According to the said Paras Adenwala, Managing Director & Principal Portfolio Manager, Capital Portfolio Advisors “Right now politics crises cause lot of down in share market”.

The nifty got down by 52 points to 5690 and the Bse Sensex fell by 124 points or you can say by 0.66 percent to 18884.19 its lowest in the march.Big share like ICICI bank, ZEE and the axis bank also getting low as well as some effect on SBI share seen by today.

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I encourage you to read again one of my articles that I wrote back in 2010. I wrote this article for a totally different situation but it shows what is the most likely scneario after a negative news come out:

http://www.trendrecognition.com/education/articles/140-how-the-markets-react-if-bad-news-comes-at-the-top

In this article I discuss a similar technical situation: when a bad news come right or near the top of the stock market. Is the trend going to reverse? – you will see that the answer is “NO”. That’s why I warned my subscribers in today’s update to be careful with shorts and not to panic.

You can also see this video from 2010 on the same topic:

http://www.trendrecognition.com/education/video/141-the-stock-market-and-the-news-impact

Bottomline, I have never seen a Long-Term or Medium-Term top (even a Short-Term top) to form on a negative news. That’s why I expect today’s weakness to be short-lived. As you know I am looking for the end of the move up from Mar 2009 low, but I suspect we have not seen it yet.

Until next time:

Trade with the Trend!

Alexander
Trendrecognition.com

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading.

Next stop, 15,000? As the Dow Jones Industrial Average settled at a new all-time high of 14,253.77 on March 5, the psychological lift on Wall Street was undeniable – the market was finally back to where it was in 2007. Or was it?1

For many Americans, the Dow equals the stock market, and the stock market is a direct product of the economy. It doesn’t quite work that way, of course. Right now, it is worth examining some of the factors that have driven the Dow to its series of record closes. Does the Dow’s impressive winter rally signal anything more than unbridled bullish enthusiasm?

The small picture. Investors should remember that the Dow Jones Industrial Average includes just 30 stocks – 30 closely watched stocks, to be sure, but still just 30 of roughly 2,800 companies listed on the New York Stock Exchange. The S&P 500, with its 500 components, is considered a better measure of the market. When you hear or read that “stocks advanced today” or “stocks retreated this afternoon”, the reference is to the S&P. As the Dow kept settling at all-time peaks in early March, the S&P was consistently wrapping up trading days at 5-year highs but still remained about 2% off its 2007 record close.2,3

You could argue that the Dow is even less representative of the broad stock market than it once was. The 2007 blue chip stocks are different compared to those today as the index has gotten a little more tech-heavy.1

If you add up all the share prices of the 30 stocks in the Dow, you will not get a number over $14,000. The value of the Dow = 7.68 x the total share prices of all 30 Dow components. How did Dow Jones arrive at the magic multiplier of 7.68? It is a direct reflection of the Dow Divisor, which is a numerical value computed and periodically adjusted by Dow Jones Indexes. For every $1 that shares of a DJIA component rise in price, the value of the Dow rises 7.68 (the Dow Divisor, you see, is well beneath 1 – on March 7 it was 0.130216081).4,5,6

The DJIA isn’t indexed to inflation, so hitting 14,167 in 2013 isn’t quite like hitting 14,167 in 2007. It is a price-weighted index as well (i.e., each Dow component represents a fraction of the index proportional to its price), which also makes a comparison between 2007 and 2013 a bit hazy.1

The big picture. The Dow surpassed its old record thanks to many factors – the resurgent housing market, the Institute for Supply Management’s February purchasing managers indices showing stronger expansion in the manufacturing and service sectors, an encouraging ADP employment report, and of course earnings. Perhaps the most influential factor, however, is central bank policy. The Federal Reserve’s ongoing bond-buying has stimulated the real estate industry, the market and the overall economy, and fueled the DJIA’s ascent. The parallel, open-ended effort of the European Central Bank has diminished some of the anxiety over the future of the euro. In early March, the ECB and the Bank of England again refrained from adjusting interest rates and ECB president Mario Draghi mentioned the need for the bank to retain an “accommodative” policy mode until the eurozone economy sufficiently improves.3

In the big picture, two perceptions are moving the market higher. One is the conclusive belief that the recession is over. The other is the assumption that the Fed will keep easing for a year or more. Pair those thoughts together, and you have grounds for sustained bullish sentiment.

How high could the Dow go? Any time the Dow flirts with or reaches a new record high, bears caution that a pullback is next. Though many analysts feel stocks are fairly valued at the moment, a combination of headlines could inspire a retreat – but not necessarily a correction, or a replay of the last bear market.

While the market has soared in the first quarter, the economy grew just 0.1% in the fourth quarter by the federal government’s most recent estimate. That may have given some investors pause: the Investment Company Institute said that $1.13 billion left U.S. stock funds in the week of February 25-March 1, which either amounts to bad timing, an aberration (as it was the first outflow ICI recorded this year), profit-taking or skittishness.7

If the Dow hits 14,500 or 15,000, that won’t confirm that the economy has fully healed or that the current bull market will last X number of years longer. It will be good for Wall Street’s morale, however, and Main Street certainly takes note of that. Lazard Capital Markets managing director Art Hogan seemed to speak for the status quo in a recent CNBC.com article: “We’re certainly in an environment where good news is great and bad news is just okay. The market has just found the path of least resistance to the upside in the near term and it’s hard to find something to knock it off there.”7

Citations.
1 – business.time.com/2013/03/06/dow-jones-closes-at-record-high-so-what/ [3/6/13]
2 – http://www.nyse.com/content/faqs/1050241764950.html [3/7/13]
3 – money.cnn.com/2013/03/07/investing/stocks-markets [3/7/13]
4 – http://www.dailyfinance.com/2013/02/28/dow-14000-economy-meaning-djia-explainer/ [2/28/13]
5 – http://www.investopedia.com/terms/d/dowdivisor.asp#axzz2MtpUOJVi [3/7/13]
6 – online.wsj.com/mdc/public/page/2_3022-djiahourly.html [3/7/13]
7 – http://www.cnbc.com/id/100533269 [3/7/13]

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. This material was prepared for Redwood Financial Network’s use.

http://www.cnbc.com/id/100511878

Now, the important question – why are they wrong?

Think about it this way. Let’s say that you have $1,000,000 sitting in cash because you are scared of which way the market may go. But then, for whatever reason, you decide you have changed your mind, and you are ready to invest that $1,000,000.
To keep this example simple, let’s say that you decide to buy$1,000,000 of General Electric stock. So off you go and you buy the stock. Your $1,000,000 is no longer on the sidelines. You are invested in the market. Isn’t this a bull market signal? Not so fast!
What did this transaction look like from the other side?

Someone had that $1,000,000 of GE stock. When they sold it to you, they gave up the stock and they now have what was your $1,000,000 sitting in their cash account. In other words, you just participated in a zero-sum game. You traded your cash position with another person who had a stock position. Before the transaction, there was one person with $1,000,000 of cash (you) and another person with$1,000,000 of stock (them). After the transaction, there was one person with$1,000,000 of cash (them) and one person with $1,000,000 of stock (you).

The net outcome – overall, nothing changed…unless the person who sold you the stock turns around and buys different stocks immediately. But who knows?

The moral of the story – ignore anyone telling you that “cash on the sidelines” is an indicator of which direction the market may go. Who knows?

Your Retirement Quarterback
Peter R. Wechsler
President
Franklin Retirement Solutions

If you like superlatives, 2013 is your year. After edging out another gain on Wednesday, the Dow Jones closed higher for the 9^th consecutive trading day. This is the longest such streak since November 1996.

Now, stocks are overbought, volume is waning and RSI is lagging. How Bearish is this for the stock market? How have stocks done after previous 9-day winning streaks?

The sample size for 9 consecutive up closes is extremely small. There’s only one since 1996.

To get a larger sample size and better read, we’ll look at recent times the Dow closed higher for 7 or 8 days in a row.

The chart below highlights all 7-and 8 consecutive day up closes since the 2009 low.

There are two 7-day streaks (July 2009, March 2007) and three 8-day streaks (August 2009, March 2010, February 2011) and of course this year’s 9-day streak (March 2013).

Every 7-or 8-day run was followed by at least one more short-term high within the next two trading days (twice the very next day, followed by marginally lower prices).

In July 2009 and February 2011 the Dow just kept trucking higher. In August 2009 and March 2012 the Dow corrected approximately 4% within days after the streak ended.

Somewhat bigger corrections (up to 10%) were seen about a month after the February 2011 and March 2012 streak highs. All losses were eventually recovered.

It is interesting to note that 3 of the 6 runs occurred in March and (one more happened in February), so March momentum runs are nothing unusual.

The gray/black trend lines in the above chart show important resistance levels, that once broken led the extended rallies (resistance levels were outlined in the Profit Radar Report).

To sum up, the Dow is ripe for a correction, but any correction is likely to draw in enough buyers to bid up prices to new all-time highs.

Since history doesn’t always repeat itself, it’s important to watch key support levels and become defensive if they are broken.

What goes up must come down. We’re all aware of this fact of life. The question is, when will stocks come down and how fast and far will they come down?

There’s been some talk about another Flash Crash event, so I wanted to check out how likely another Flash Crash-like event is right now.

The price action leading up to the May 6, 2010 Flash Crash is illustrated in the first chart below.

Note that the ominous May 6 sell off happened eight trading days after the April 26 high. By the time May 6 rolled around, the S&P 500 had broken below two support levels (green lines). It also broke out of a triangle formation.

The basic recipe of events (time lag between top and waterfall decline, break below support levels) also led up to Black Monday, the fateful day that saw stocks crash in 1987.

Another clue leading up to the 2010 high was an extremely low equity put/call ratio. In a note to subscribers on April 16, I warned of the following:

“The message conveyed by the composite bullishness is unmistakably bearish. The put/call ratio in particular can have far reaching consequences. Protective put-buying provides a safety net for investors. If prices fall, the value of put options increases balancing any losses occurred by the portfolio. Put-protected positions do not have to be sold to curb losses. At current levels however, it seems that only a minority of equity positions are equipped with a put safety net. Once prices do fall and investors do get afraid of incurring losses, the only option is to sell. Selling results in more selling. This negative feedback loop usually results in rapidly falling prices.”

The equity put/call ratio is currently in neutral territory and the S&P 500 just posted a new top tick yesterday. The S&P would have to drop below initial support at 1,540 first. This would have to be followed by a break below key support.

The time lag between a new high and break below support should give investors enough time to turn defensive.

Seasonality suggests that the time for a Black Swan sell off is not (yet?) ripe. ‘Sell in May and go away’ has been a good strategy in most recent years, especially in 2010. March/April seasonality is not nearly as bearish as May.

In summary, the risk of an immediate Flash Crash type event is negligible, but that doesn’t mean that prices will only go up.

The potential for a Black Swan event and larger decline becomes greater if we zoom out of the very near-term into the mid-and longer-term timeframe.

High corporate profits coupled with the U.S. Federal Reserve’s policy of easy money were the key factors helping to drive the Dow to a record close last week. Money managers all over the world are in a bullish mood as they contemplate the potential for future gains. What was particularly stunning about the Dow’s ascent was that it followed February’s lacklustre market performance.

The once giddy investment climate turned sour in February and investors removed their bets as the Italian elections and worries over inflationary pressures building in China caused investors to rethink their unbridled optimism. Broad market measures, such as the Morgan Stanley Capital International (MSCI) World index slipped 0.2% last month, as weakness in Europe overwhelmed strength in the U.S. In February, markets in the United Kingdom fell 3.1% while Italy tumbled a staggering 12% and Germany the engine of Europe conked-out falling by 4.1%.

Stocks continued their gains throughout the middle of last week as a private report from ADP Research Institute showed employers added 198,000 jobs last month, topping the median economist forecast for 170,000 and bolstering optimism ahead of the government’s March 8 th labor report. The Fed also indicated that the U.S. economy grew at a moderate pace across most of the country, citing rising consumer demand for homes and cars as the catalyst for February’s growth.

For investors the good news keeps on coming, as markets appear nowhere near the kind of cyclical turning point we were on the cusp of in October 2007, suggesting that markets have a ways to run yet. Since the bear market lows, some $10 trillion has been restored to U.S. equities, fueled by the fastest profit growth since the 1990s and monetary stimulus from the Federal Reserve. Retailers, banks and manufacturers led the recovery from the worst bear market since the 1930s as the Dow took less than 65 months to rise above its previous high—more than a year faster than the recovery from the internet bubble.

It may seem strange that companies are posting such big profits at a time when U.S. unemployment rates are 7.9 %, but joblessness is actually working to the benefit of corporations which are able to drive their existing employees even harder. In the process, companies are adding to earnings rather than expanding their payrolls, making it a virtuous circle for investors.

Investors have been flocking to cash-rich companies for the juicy dividend income they can produce, which in many cases is significantly higher than the yield available on fixed-income securities. The dividend yield on the Dow is 2.48 percent, while 10-year U.S. government bonds are yielding about 1.9 percent.

The bull market in stocks will likely continue as investors who’ve watched patiently from the sidelines as markets have move higher will join the party and forcing the market multiple higher. As yields on the 10-year U.S. government bonds start moving toward three percent, the 35-year bull market in bonds will finally be drawing to a close forcing yield-hungry investors back into the stock market.

My game plan for the months ahead is to continue overweighting stocks over bonds, and the U.S. over other developing markets. “Risk on” is clearly the order of the day and I have reduced slightly my exposure to Base Metals companies and Industrials while boosting my exposure to the Financials and Asset Managers in the expectation of more good times to come.

First, EUR/USD is still in primary uptrend from July 2012 low. For the past couple of weeks it has tried to built a base near 1.2995 level. In my opinion we need a break abv 1.3195 Fibonacci level to have a signal that the next big move up is under way. Here’s the chart from my latest Short-Term update :

http://www.trendrecognition.com/images/stories/2013/forex2013/eurusd_st_20130310.gif

GBP/USD market broke below 1.5260 key Fibonacci and chart support a few weeks ago and since then it has been under strong pressure. With that break down we have a confirmation that the larger degree downtrend from the year 2008 top has likely resumed. If correct, ultimately we should go below 1.35!

And finally, USD/JPY… This market remains in strong uptrend on its daily chart. Last week it broke out above a small chart consolidation below 94.50 and reached new high for the bull market from September 2012 low. The next Fibonacci level to watch here is 96.70 ahead of 98.90. See the latest Short-Term (daily) chart:

http://www.trendrecognition.com/images/stories/2013/forex2013/usdjpy_st_20130310.gif

Last week I turned bullish at 93.40 here and this position has moved nicely since then. Everyone takes their own decisions according to their approach to the market, but I think you can’t allow to miss the weekly analysis that I make (they combine a wave analysis using the Neely method as well as an objective trend definition apporach). If you want to read these updates every week, choose a subscription plan from the ones below:

http://www.trendrecognition.com/subscription

Until next time:

Trade with the Trend!

Alexander
Trendrecognition.com

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading.

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Drop us a line via the coordinates below.  We would need your ok to distribute your app, and an image file that you would like us to use for your Blog site.  This can be a great way to drive traffic to your blog. Drop us a line by March 14, 2013, and we’ll discount the cost at 15%.  There are near 80 million BlackBerry devices (OS 5, 6, 7, 10, PlayBook) out there!

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Do you know the latest Bangladesh butter production numbers? They might be worth more than Wall Street’s latest price targets.

According to Forbes columnist David Leinweber, there’s a 99% correlation between a composite indicator of Bangladesh annual butter production, U.S. cheese production, and the total population of sheep in both Bangladesh and the U.S. and the S&P 500.

Obviously, the predictive properties of the ‘butter production index’ are purely accidental and if you’re trying to get the latest butter production stats, you deserve to be creamed.

‘Sports Illustrated Swimsuit Issue Indicator’

This indicator, first coined by Bespoke Investment Group, suggests that the S&P 500 will generate above average returns when the cover model is American.

The average S&P return from 1978 – 2008 when the cover model was American is 13.9%. The average annual return for non-American model years is 7.2%.

The 2013 model is American.

Men’s Underwear Indicator

Apparently men have a tendency to hang on to their underwear, but a good economy often triggers an (much needed?) underwear makeover.

Men’s underwear sales have shrunk from 3% of overall menswear in 2008 to 2.2%.

Coupon Indicator

A penny saved is a penny earned, and when things are tight people like to save. Coupon usage has been declining since 2010.

Napa Valley Wine Auction Indicator

Wine auction attendees don’t fly economy to Napa. They fly in style, bid in style and live in style. Juicy auction proceeds reflect a good economy. The 2012 auction took in $700,000 more than in 2011 (up from $7.3 – $8 million).

Diaper Indicator

The Great Recession affected even the youngest generation as diaper sales fell during the financial crisis. The current diaper sales of $5.4 billion are still below the 2008 figure of $5.7 billion.

Simon’s Headline Indicator

My headline indicator is a non-scientific assessment of media sentiment. It’s not ‘tangible’ and doesn’t have a written track record, but it’s nonetheless helpful. Media sentiment, as investor sentiment is used as a contrarian indicator.

The media is reporting the Dow’s new all-time highs, but it’s doing so almost begrudgingly. There’s little uninhibited excitement about the Fed-driven new high as these headlines show:

Reuters: Dow Surges To New Closing High On Economy, Fed’s Help
CNBC: Dow Breaks Record, But Party Unlikely To Last
Washington Post: Dow Hits Record High As Markets Are Undaunted By Tepid Economic Growth, Political Gridlock
The Atlantic: This Is America, Now: The Dow Hits A Record High With Household Income At A Decade Low
CNNMoney: Dow Record? Who Cares? Economy Still Stinks

What does this mean? I venture to say that the final high has not yet been seen.

Have a look at the basics

When investing for the long term it’s crucial to remember the underlying value of an asset–how much it’s truly price, divorced from the whims of the market. This is performed through analyzing an asset’s basics: its provide us. Its demand. This is tough for a commodity like gold, as gold, in contrast to most commodities, is seldom ate up, simplest held, making it hard to decipher what is true demand and what’s mere speculation. On the other hand, there are a number of ways to take a bet at gold’s actual corporations, including indexing it in opposition to the value of the greenback and against other commodities.

Get into the Swing of things

For the ones are searching for a more quick-term strategy, swing trading gives a possible for quick profits. In line with GoldPrice.org, the amount of trading in gold greater dramatically within the overdue 2000s, resulting in an extra severe motion in companies. In swing trading, investors pay no consideration to the basics underlying the true worth of an asset, but are searching for to capitalize on brief-term companies tendencies. A trader can profit from the momentum of a worth motion via making an investment as the price is on its method up or betting towards it when the cost is on its approach down. For example, if a file on expanding inflation makes traders quickly bullish on gold, a swing trader may are seeking to get in at the rush or promote gold brief if he feels the wave of pleasure is starting to crest.

Related articles

• Gold Backwardation – The Real Story (armstrongeconomics.com)

Add in the fact that China maintains the level of volatility which is a characteristic of emerging markets, as well as something of an obscure economic system, and it’s no surprise that foreign investors have felt discouraged.

While concerns like these are certainly prevalent at times, it’s important to remember there are still a number of attractive qualities beginning to arise.

Regardless of how equities have faltered in the past, the Chinese bond market has delivered relatively well. There are clearly slim pickings to be had elsewhere within the bond markets of the developed world, whilst the Chinese market continually yields marginally higher. Furthermore, currency appreciation could improve returns across the investment board should a presently undervalued exchange rate see a turnaround.

Better still, China’s economy has doubled in size since the year 2007, yet stocks are valued at around one third of their peak price in October 2007.

China’s stock market performance however is another matter. The country is seen as the world’s fastest growing economy, and yet investment returns can only be described as underwhelming. Why so? The disconnect here is not unique to China. It’s a common denominator among the emerging markets and in general there are two reasons for it.

Unfortunately, developing economies regularly display “extractive” characteristics. In other words, due to inadequate levels of transparency and deficient governance by more congruous bodies, profits are often misappropriated by upper management and government officialdom.

On the other hand, as markets begin to entrench and deepen and countries introduce regulations in order to better safeguard investors, the “extractive” element tends to fade. Luckily for China, this transformation does appear to be well underway.

The other reason being that economies can and do diverge temporarily away from their markets, but in the longer run, it’s a commonality that emerging economies generally converge back towards economic growth and higher productivity rates. Where China is concerned, this does indeed make for an acceptable proposition.

It should be noted that the economic prospects of China are not quite as rosy red and shiny as they were only a few years ago. The country is currently facing exposure to a number of downside risks, including high local government debt, a weak housing market, and a banking system which is thoroughly under-regulated.

That said, and although the prospects of retirement investing in China may be less appealing than before, they still appear something of a preferable choice to much of the rest of the world where sluggish growth and large risks among a whole host of other ailments persist.

It is interesting to note here that during periods of global investment tension, investors habitually scurry back to more familiar markets. The underlying logic behind this behaviour is circumspect at best. Where developed nations suffer from anemic growth and have racked up unprecedented levels of debt, developing nations such as China have reduced their own vulnerabilities by establishing huge war chests of currency reserves in addition to maintaining healthy amounts of fiscal financing and current account surpluses.

A prediction by the World Bank suggests the Chinese economy will achieve “rich nation” status by the year 2030. China now boasts the second largest economy in the world having taken that accolade from Japan in 2011. It’s the world’s most bountiful exporter of capital and consumer goods, and is the largest contributor to global economics. As long as the overall potential for volatility is recognized and the longer term horizon agreed to, China makes for an increasingly inviting investment proposition, and most certainly offers a valuable opportunity for portfolio diversification.

Now, the daily charts of Nasdaq 100 and S&P500 are still mostly bullish (particularly the on in S&P500 which is in strong uptrend), but the hourly charts have become neutral. Here’s the hourly chart of Nasdaq 100 from today’s daily update that I posted for subscribers earlier today:

http://www.trendrecognition.com/images/stories/2013/indexes2013/nq100_vst_20130304.gif

As you can see, there is a clear Triangular formation on the chart. Unfortunately there is no way to know which way this Triangle is going to break out. Based on the trend on the daily chart, a breakout looks more likely in S&P500 chart, and to less extend in Nasdaq 100 chart. But at the same time, you have to remember that I expect an important Medium-Term top in these indexes somewhere in the first half of this year based on my long-term analysis (if you haven’t seen this analysis, you can access it free here:
http://www.trendrecognition.com/lt-forecast
).

Bottom line, the immediate outlook is uncertain, but a decline below last week’s lows will strengthen the idea that important tops have already been made. If however, the prices break out on the upside from the recent sideways consolidation, we may see a small uptrend for a few more weeks before the final top arrives.

Until next time:

Trade with the Trend!

Alexander
Trendrecognition.com

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading.