Early December is where the highest amount of tax-loss selling occurs and this year is a double whammy, selling stocks so losses can be written off against the winners for tax purposes, and, also, now selling the winners since the capital gains, dividends, and other taxes are all going up as a result of the election. In other words, cash in and take the profits at a lower tax rate. Then traders can bring on positions after the first of the year once the fiscal cliff drama is solved and more clarity exists. Both outcomes are more bear-friendly but in these markets, flip a coin. The dividend announcements where companies are pulling the divvy's into 2012 to avoid taxes are resulting in large pops for stock prices. The markets remain subservient to the politicians and central bankers.
The 20 and 200-day MA's are starting to flatten out which hints at some extended sideways action. The 50-day MA at 1421.60 is so close price would be amiss to not want to test this important moving average. The stochastics and money flow would like to see a higher high in price, this would be in concert with a test of the 50-day. Then a potential roll over with negative divergence may be in play. Markets are erratic, unstable and not to be trusted. Current projection would be topping in the 1413-1429 range right now then roll over. Watch the 50-day MA closely since it carries a lot of clout. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
The Vol quote sounds so similar to another blog I read as well as your last update on the Dollar. He spoke about both early last week. He said the market is going to new lows after this rally. He is very accurate. I think both of you are on he same page.
ReplyDeleteIt will definitely reach 1424 before roll over.
ReplyDeleteMuch is written on the Chinese recovery? Is the China recovery contingent upon a U.S. recovery, or can it occur independently?
ReplyDeleteChina has the best recovery that phoney data can print. You cannot trust anything reported from China. But, that is the only data. Chian and Europe are more connected at the hip than the U.S. MOst do not realize that Europe is China's number one customer, not the U.S.
ReplyDeleteThus, the trouble, or improvements, in Europe will impact China more than the U.S. China grew over the last decade due to all the export growth and all the infrastructure spending. There are cities built with no one living there. That will all end badly. China is trying to make the shift from a more rural economy to a more modernized, city and urban economy, for them to be more self-sufficient, and experience domestic growth for them to move forward. This is like the U.S. in the early 1900's and the industrial revolution. The jury is out if they will be able to make the transition. Most traders lean bullish so eveyone says this will happen. Keystone does not think it will be a smooth path, their timeline is likely much to optimistic, the transition from rural to city will likely take a couple decades not a few years. But watch Europe in the context of assessing China's path forward.
Gordon Chang would agree with you. So far, he's been dead on right about the Chinese economic situation.
Deletehttp://www.businessinsider.com/gordon-chang-chinese-gdp-growth-2012-10
http://www.foreignpolicy.com/articles/2011/12/29/the_coming_collapse_of_china_2012_edition
Sean
The CPC has mad a wild swing from its low of .63 now printing 1.16.
ReplyDeleteAnon, that's a smart article by Chang. When you can't trust the government numbers, look at energy consumption. Even with improving efficiency, I a society that is producing more will use more energy. I wish there was an easy way to track energy consumption in the U.S.
ReplyDelete