Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Ominous Stock Market Warning Signs - Sell in May and Go Away

Stock-Markets / Seasonal Trends Apr 20, 2013 - 07:57 PM GMT

By: Sy_Harding

Stock-Markets

As the potential Sell in May and Go Away influence approaches, problems for the stock market are stacking up from both the fundamental and technical sides.

On the fundamental side;


  • New home sales fell 4.6% in February, the biggest decline in two years.
  • Durable Goods Orders ex-aircraft orders fell 2.7% in February.
  • The Conference Board’s Consumer Confidence Index unexpectedly plunged from 68.0 in February to 59.7 in March.
  • The Thomson Reuters/University of Michigan Consumer Sentiment Index plunged to a nine-month low in April.
  • The ISM Mfg Index unexpectedly dropped from 54.2 in February to 51.3 in March, its third straight monthly decline. The ISM Non-Mfg Index, covering the services sector, also declined in March.
  • Retail Sales fell 0.4% in March, the biggest decline in 9 months.
  • Only 88,000 new jobs were created in March, much worse than the forecast for 200,000 jobs.

This week we learned that the Conference Board’s Leading Economic Indicators fell 0.1% in March versus the consensus forecast for an increase of 0.2%.

And while overall housing starts were up in March, single-family home starts fell 5.0%, and permits for futures starts fell 3.9%.

Meanwhile, the economic problems are being confirmed by commodity prices, including the price of oil. Declining commodity prices usually indicate demand for goods is dropping and the economy is in trouble.

For instance, the CRB Index of Commodity Prices fell 15% in the summer of 2010 and the S&P 500 fell 15% in that summer’s correction. In 2011, the CRB Index fell 15% and the S&P declined 19.5% in that summer correction. Last year the CRB Index fell again, and the S&P 500 fell 11% in its correction to the early June low.

So it’s not comforting that even as the Dow and S&P 500 have been making new highs this spring, the CRB Index is already down 11.5% from its last peak and making lower highs on its rally attempts and lower lows on the pullbacks, no bottom in sight yet.

On the technical side there is a negative divergence shaping up between the Dow and the DJ Transportation Average, and between the blue chips of the S&P 500 and the small stock Russell 2000 Index. The Dow and S&P 500 remain near recent highs and comfortably above their 50-day moving averages, while the Transportation Index and Russell 2000 Index have both come down from their March highs and broken beneath the previous support at their 50-day moving averages.

Meanwhile global markets tend to move pretty much in tandem with each other, and an even more ominous divergence has been in place for a while between the resilient U.S. market and numerous important global markets, on which technical indicators triggered sell signals a month or more ago. They include Brazil, China, Hong Kong, India and Russia, which are already down an average of 12% from their recent peaks.

Even the largest and strongest stock market of Europe, Germany, which had been making new highs right along with the Dow, has been in a correction over the last few weeks, now down 7%, with short-term support levels broken and looking like more downside ahead.

As the old saying goes, the market does like to climb a wall of worry.

But with the economy stumbling again as it has in each of the last three summers, commodity prices tumbling, and important global markets giving up, it’s no time to be made complacent about the U.S. market by its continuing resilience, which seems to now be on shaky underpinnings.

In fact, investors should be preparing for the potential that downside positioning may become the way to go before long.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2013 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Sy Harding Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in