Goldilocks and the 3 Bears (FTSE100, DOW, S&P500

[Hoop]

Hoop, How are you feeling now? Some dangerous looking patterns forming on some of the major indicies (double tops? mainly) and the Shanghai Comp is precariously placed on a tipping level. I'm feeling more nervous than I have for quite some time.

yeah me too Belg ...I've got this terrible gut feel of deja vu. Many country's economies have hit a flat patch recently, also China's growth rate has suddenly fallen ....what has caused this and why all suddenly and unexpectedly at the same time?...if it is due to high (but not extremely high) commodity prices then all these economies must be in a terribly fragile state. CNBC interviewed Gary Shilling yesterday and he didn't make me feel any better either....in fact, he was rather negative.

A ( THE ) Biggest exporting employer of labour in China was removed from the Hang Sen today..

What does that tell you Belg ??

" The times they are a changing ".. IMHO..

Where now ??..

Janner I'm glad Foxconn has hit hard times...My point of view is it's one very very large ugly mother of a company. It treats its employees worse than cattle, its involved in all sorts of shenanigans, been caught out price-fixing recently, and its safety record is crap...Company making losses is mainly due to its feudalistic management methinks

[winner69]

http://www.nzherald.co.nz/business/n...ectid=10732010

Shame on you Belg ... believing that sort of crap

[Hoop]

Well 2.5 years ago we were looking at Shanghai Composite our leading indicator Goldilocks which lead the rest of the worlds equity markets (stock markets) out of the GFC bear market...Since then Shanghai turned first from Goldilocks back into a bear and now the rest of the world are following abeit slowly for the European and American equity markets. So once again....do we have to look to the Asian economic powerhouse to keep showing us the way.....why not...as a leading indicator Shanghai Comp has been excellent so far....

..So with reference to the Shanghai "leading indicator" ....Is the world equitity markets due to change for the better in the next couple of months??....The answer is NO

Unfortunately or fortunately the Chinese are having a week off work this week...as the Shanghai Composite is sitting exactly on a conjuncture. So where to from here????... up or down????... The bear market is 2 years old now, so the bear is very mature and one would expect that a conjuncture at this late bear stage would see the death of the bear....but there are worrying signs as there is no recession in China to signal a new Bull and there are fiscal controls in place to curb growth so to tackle inflation, a signal that a bear cycle will continue. ..For the outcome it seems we will have to wait and see and from the chart we won't have to wait long either.

[Hoop]

Colin Twiggs Site is showing the latest charts with some Major markets switching to a primary bull tide.

When watching for a global turnaround in the Equities Market one has to be aware that not all markets follow each other..they only all meet together to create a perfect storm infrequently....
however....
The shanghai composite has been in a bear market cycle longer than other global markets .....so I assumed this would be a good leading indicator for other Equity markets. It was when it turnaround in 2008 and the rest followed some months later....its seems likely though this is not going to happen this time....Some Equity markets seem to breaking out of their bear tides but Shanghai Comp remains as the party pooper....
This is strange...
With China a couple of months ago starting a monetary easing program to circumvent an economic slowdown we would have expected this easing action to have a positive upward pressure on the Equity markets..this has so far not been strong enough to turnaround the bear tide.....
so...
If Shanghai Market is still a leading indicator then many of the Worlds Equities are creating a bull trap?...
or..
is Shanghai..China (once the Goldilocks) reversing its role and with India becoming a laggard indicator?
or..
Shanghai Comp was never an influencing factor in the first place...just a coincidental happening.
Amazing considering the world is pinning its hopes on China to help them minimize the possible fallout from an European financial bomb.

[Hoop]

Tha ASX seems to be more in tune with Shanghai than the S&P500 atm......... both markets are in cyclic bear market cycles.
Both countries avoided negative GDP growth (recession) in 2008 resulting in tighter fiscal controls (theoretical down pressure on Equities) in relation to other global countries.

...

[Hoop]

Well it was said back in 2011 that the ASX (AORDS) should keep an eye on Shanghai for a lead of direction...Is that still a valid statement.??
Shanghai was an leading indicator at the time of the 2008/2009 crash....since then the oscillations have shifted towards the AORDS being the leader....up to now that is...
Both Indexes are in a cyclic Bear Market Cycle..the AORDS bear looks to be a weaker state though.

[Hoop]

The scenario
Back in October 2008 during the GFC and with the sharemarket crashing beyond belief and there were doomsayers on each corner all pronouncing the sharemarket is going to keep falling for years..

Amongst all this chaos a person from the future appears and grants you one wish....You say... "What will be the financial outcome of this GFC mess by the end of March 2013 using economic growth data of the major countries?"
A flash of light and a memory stick appears with all the economic data and two bonuses...wow...2 years of media articles from 2008 to 2010 showing what well known advisers were going to write....and..a hint 2 Countries stockmarkets will have recovered all their bear market losses by end March 2013 ..............The Countries were not named but with all this economic data it will be easy to pick which 2...eh????

WOW...I'm going to make a fortune.....Let see which Country escaped the recession and has the highest ecomonic growth ...ahh China ...wow The Shanghai went from 6200 to now at 1600 Gee 4 times....USA may be one of those hints too as well lets see 1550 now at 800 hmm only 2 times......All the future data shows Europe is an economic mess so forget those markets...I'll stick all my money on the Shanghei Market...its a non brainer...

Result: Bugger!!!!!!!
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For some perspective on the post-financial crisis rally, today's chart illustrates how much of the downturn that occurred as a result of the financial crisis has been retraced by several major international stock market indices. For example, the S&P 500 peaked at 1,565.15 back in October 9, 2007 and troughed at 676.53 back on March 9, 2009. The most recent close for the S&P 500 is 1,563.77 -- it has retraced 99.8% of its financial crisis bear market decline. As today's chart illustrates, China (Shanghai Composite), Japan (Nikkei 225), India (S&P BSE Sensex), Germany (DAX), France (CAC 40) and the UK (FTSE 100) are all above their financial crisis lows (i.e. above 0% on today's chart) while none of the aforementioned countries are currently trading above their respective pre-financial crisis peak (i.e. none are above 100% on today's chart). It is interesting to note that the US (epicenter of the financial crisis) has outperformed the other major stock market indices while China has lagged.

[Hoop]

A lot of media noise about gold and copper atm
Here's one more bit of noise to add to the collection

Not enough evidence...but my chart has picked up a recent curious copper down/equity up divergence ..when this type of divergence last appeared 5 years ago it ended up badly for us Equity investors. Maybe something to keep at the back of your mind ..eh? tick.. tick.. tick.. BOOM

[Hoop]

Tableau Public is Open source software which organises large amount of data into a simplified interactive web graphic form. Open source is free to the world and individuals around the world are using it for all sorts of things.
Below is a link from a French Journalist (Le Monde newspaper) who has made a time chart of Europe and shows the countries in recession in Europe from 2007 to now
Remember when viewing any of these charts the graphic info could be erroneous much of it are written by unknown individuals.

Its interesting to see from this Journalists Europe recession chart that some countries seem to be economically improving...this would explain the lower media noise about Europe atm

There's also a rule of thumb...Equity markets turn bull 66% through a recession...we've had the FTSE bullish breakout at the start of the New Year

http://www.tableausoftware.com/publi...rope-recession

The above URL also contains the free download of the Tableau Public software...I am learning to use it atm ....lots of fun but I need spare time to master it and spare time I'm short of atm.

Below is a screen print image (not active for Tableau Public program...but is active to all my Photoshop files)

[Hoop]

Reposted from the Daily S&P500 thread..I will post more correction type method stuff here as it probably not the preferred diet for many readers on ST.

The S&P500 Bull's demise(historically speaking) is overdue, therefore a turning (reversal) from Bull to bear cycle at any point in time from now on would not surprise me in the least....Reversals and Corrections start off indistinguishable and only manifest themselves as time goes on.. the correction happening now is inconclusive so far...

Remember it is all drama atm ...in the long term aspect atm its a blip hardly seen on the long term chart (see below)..This could change of course but will it??
As I said previously the change will occur when the ducks line up in a row....The odd duck has lined up others haven't.... so ...a cycle reversal isn't indicated yet its too early to tell...I personally have no doubt because I believe the Wall St is still in doubt but as things stand as of last friday it still seems to be a bull market correction..

Whats a Duck?...

I got asked this question yesterday as the person googled it and got nonsense out of the answer Google gave...Well organised..wow great answer...
OK ..let me explain ..I've used this ducks lined up in a row method for so long that I forgot that it was my personal methodology and I named it a duck..It seems in the real world no one has named these types of correlation indicators as ducks so until this moment Google has no reference to my duck methodology....This type of correlation methodology is commonly used but not the duck name.......Sorry about that..

Actually well organised is close..What I class as a duck is the mixing (organising) of event variables and find a correlations with what I want e.g the Equity variable (S&P,DOW,etc)....My purpose is to create these ducks to increase the power of forecasting the DOW/S&P500..the more ducks, the more power of the forecasting.

I received an email received this morning about Consumer Confidence and unemployment rate correlations .....I decided to overlay the DOW on to it to see if it could be a duck....The DOW did loosely correlate therefore I have created another duck to watch...At the moment my overlay charts are static and up dating them is time consuming..however hopefully soon thanks to Google Charts via Google developers I may soon have all my ducks self updating...I have done this already with all the listed companies on the NZX using a self updating spread sheet.

My newly created duck (below) as do all ducks make visible information which is usually caste into the shadows due to the every day by day noise..Careful.. only to look at the trends on the chart as the DOW is not to scale

First Glimpse chart observations
1....Day by day drama distracts....so far this latest drop is a hardly visible blip on the long term chart...so no worries yet?
2....When consumer confidence (inverted) is growing and unemployment rate is falling the DOW is usually in the wall of worry phase (bull market cycle)
3....When consumer confidence (CC) (inverted) is at its greatest /unemployment rate (UR) at its lowest the Dow is usually near its top (Final phase of the Bull Market Cycle)
4....Reversals often see a recession and affect DOW
5...Since the last 45 years (charted time period) A recession hasn't commenced when the CC & UR have been this high up on the chart
6...Cycles seen on the chart don't seem to be affected by the FED
7...Don't rely on one duck only..false alarms with this duck appeared in 1985 and 1995.


So what are we looking for on this duck chart at this period of time...A hint of reversal (duck moving into a line)...As we see at this moment in time there is no hint (Yet!!) of this duck lining up to threaten the life of the old DOW (& S&P500) Bull