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rpt-MTA-2012-06-dd-Peek

rpt-MTA-2012-06-dd-Peek

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1
 June 2012 EditionRestricted & Confidential
Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com
 
Monthly Market Analytics & Technical Analysis
 
June 2012 Edition
Gordon T Long6/9/2012
 
 
2
 June 2012 EditionRestricted & Confidential
Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com
 
Monthly Market Analytics & Technical Analysis
 
JUNE 2012
SUBSCRIPTION SERVICE: PLAN IV
BIG
 
PICTURE
 
-
 
EEPING 
OUR 
ERSPECTIVES 
..................................................................................................................................... 7
 
HIGHLIGHTS
 
-
 
HAT 
OU 
EED TO 
NOW 
..........................................................................................................................................10
 
SUMMARY ANALYSIS ......................................................................................................................................................... 10
 
"BERNANKE'S BOX": Political Pressures greater than Escalating Economic Pressures ....................................................... 14
 
Defining Chart #1 ............................................................................................................................................................. 14
 
Defining Chart #2 ............................................................................................................................................................. 15
 
Defining Chart #3 ............................................................................................................................................................. 16
 
Defining Chart #4 ............................................................................................................................................................. 17
 
OUR
 
APPROACH
 
-
 
ACRO 
A
NALYTICS 
...............................................................................................................................................18
 
............................................................................................................................................................... 19
 
MAY 2012: Global Macro Drivers .......................................................................................................................................... 20
 
DRIVER: Real Wealth, Commodities & Dr Cooper ........................................................................................................... 21
 
DRIVER: Carry Trade & the € : ¥ Cross
.......................................................................................................................... 23
 
DRIVER: Currency & Forex Markets ................................................................................................................................ 25
 
DRIVER: Yield, Spread & Credit ...................................................................................................................................... 30
 
RECIPIENT: Global Equities ............................................................................................................................................ 32
 
RISK: Risk-On versus Risk-Off .............................................................................................................................................. 33
 
Transitioning: Risk-Free Returns to Return-Free Risk ...................................................................................................... 33
 
TECHNO-FUNDAMENTALS ................................................................................................................................................. 35
 
PATTERN: Slowing Global Growth Points to Continued Deceleration in S&P 500 Earnings............................................. 35
 
PATTERN: Political Pressures Will Force Bernanke's Hand with a third "Queen" ............................................................. 38
 
PATTERN: 2008 Comparisons to All Time Worst Bear Markets ....................................................................................... 39
 
PATTERN: If Japan was About De-Leveraging, then US & the EU are De-Leveraging .................................................... 40
 
PATTERN: Nikkei & Disinflation ....................................................................................................................................... 41
 
PATTERN: Central Banks & Liquidity Injections ............................................................................................................... 42
 
OUTLOOK
 
-
 
A
NALYTICAL
A
NALYSIS 
.....................................................................................................................................................44
 
STUDY: Any QE III Rally Will be Short Lived ......................................................................................................................... 44
 
Macro news is falling short of expectations almost everywhere ........................................................................................ 45
 
Fed balance sheet expansion and US equities were, for a while, correlated .................................................................... 46
 
Growth concerns, not systemic risk, are now unsettling markets. ..................................................................................... 49
 
STUDY: Driver$: Unusual Opportunities ................................................................................................................................ 50
 
Financial Repression ....................................................................................................................................................... 53
 
Credit Markets ................................................................................................................................................................. 55
 
STUDY: Driver$: Markets Moving Markets ............................................................................................................................ 56
 
Multiple Methods .............................................................................................................................................................. 57
 
Multiple Markets ............................................................................................................................................................... 58
 
Bond Market .................................................................................................................................................................... 60
 
STUDY: Market Being Distorted - Unprecedented Historical Debasement Occurring ............................................................ 62
 
Nominal versus Real - (Don't Fight the Fed)
x
................................................................................................................... 62
 
STUDY: Marginal Propensity of Liquidity Injections ............................................................................................................... 68
 
If $2Trillion a Quarter is Still Insufficient to Move Markets, How Much is Enough? .......................................................... 68
 
Example of a Recipient: Apple (AAPL) ............................................................................................................................ 70
 
Example of an Exposure: Apple (AAPL) .......................................................................................................................... 75
 
STUDY: The Potential "DELUSIONAL DISTORTION" ........................................................................................................... 76
 
A Near Term "Scare" ....................................................................................................................................................... 76
 
Then More Pumping, More Distortion ............................................................................................................................... 77
 
 
 
3
 June 2012 EditionRestricted & Confidential
Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com
 
STUDY: Near Perfect Rounded Top Is In - But It Needs Revisiting! ...................................................................................... 78
 
Golden Cross & New Closing High................................................................................................................................... 79
 
Longer Term Timing Indicators ........................................................................................................................................ 80
 
Monthly Moving Average - Non Confirmation ................................................................................................................... 81
 
We Have Seen this Pattern Before - 2000 and 2007 ........................................................................................................ 82
 
STUDY: Wolf Wave / Megaphone Tops ................................................................................................................................ 83
 
SHORT
 
TERM
 
 –
 
ECHNICAL
A
NALYSIS 
................................................................................................................................................87
 
SUPPORT & RESISTANCE .................................................................................................................................................. 87
 
Gann Analysis.................................................................................................................................................................. 87
 
Boundary Conditions ........................................................................................................................................................ 89
 
Channels & Regressions.................................................................................................................................................. 91
 
Fibonacci - Controlling Time Extensions .......................................................................................................................... 93
 
Elliott Wave ...................................................................................................................................................................... 96
 
SENTIMENT - Consumer, Investor & Trader ......................................................................................................................... 99
 
CONSUMERConsumer Confidence - Conference Board ...................................................................................................................... 99
 
Consumer Sentiment - Michigan .................................................................................................................................... 102
 
Consumer Comfort......................................................................................................................................................... 103
 
INVESTORInvestors Intelligence ..................................................................................................................................................... 105
 
American Association of Independent Investors ............................................................................................................. 105
 
National Association of Active Investment Managers (NAAIM) ....................................................................................... 106
 
Small Business Optimism .............................................................................................................................................. 107
 
Smart Money / Dumb Money Confidence ....................................................................................................................... 108
 
TRADERSPercentage Stocks Above 50 & 200 DMA ...................................................................................................................... 109
 
Margin Levels ................................................................................................................................................................ 110
 
Mutual Fund Cash Levels v S&P 500 ............................................................................................................................. 114
 
OSCILLATORS & BREADTH: Indicators of Importance ..................................................................................................... 116
 
NYSE Overbought / Oversold ........................................................................................................................................ 116
 
OEX Open Interest (Puts/Calls) ..................................................................................................................................... 117
 
TRIN .............................................................................................................................................................................. 118
 
McClellan Oscillator ....................................................................................................................................................... 119
 
INTERMEDIATE
 
TERM
 
 –
 
ISK 
A
NALYSIS 
.......................................................................................................................................... 120
 
RISK SUMMARY- Aggregated Global Financial Risk Index................................................................................................. 120
 
Banking Risk - LIBOR-OIS Spread (Updated) ................................................................................................................ 121
 
Banking Risk - TED Spread (Updated) ........................................................................................................................... 121
 
Credit Risk - Global Credit Default Swaps (Updated) ..................................................................................................... 121
 
Credit Risk- EU Credit Default Swaps (Updated) ........................................................................................................... 122
 
Consumer Risk - Housing- Rate of Change (Reference) ................................................................................................ 123
 
Economic Risk- ECRI Leading Index (Updated) ............................................................................................................. 125
 
Inflation Risk- Money Supply Growth - M3 (Updated) ..................................................................................................... 126
 
Inflation Risk - Money Velocity (Updated) ....................................................................................................................... 126
 
Monetary Risk - Bank Liabilities (Updated) ..................................................................................................................... 127
 
Cost of Money Risk - Interest Rates (Updated) ............................................................................................................. 128
 
AGGREGATED RISK LEVEL ........................................................................................................................................ 129
 
EARLY MAY - Everyone Is Suddenly Nervous .................................................................................................................... 130
 
Nervousness: GREECE: Investors Flock to Safety as Euro-Exit Fears Rise .................................................................. 130
 
Nervousness: FRANCE: Showdown in Europe: Hollande Takes on Merkel and Draghi, Insists on Renegotiation ofMerkozy Treaty .............................................................................................................................................................. 131
 
APRIL- Complacency the Biggest Risk................................................................................................................................ 132
 
Complacency: US Equities Ignoring US Sovereign Risk Warning .................................................................................. 132
 
Complacency: US Equities and Treasuries Decouple - Déjà Vu .................................................................................... 134
 
Complacency: Five Reasons For Caution in US Equities ............................................................................................... 135
 
Complacency: Five Reasons For Caution in US Equities ............................................................................................... 138
 
Complacency: It's Time to Dial Back on Risk ................................................................................................................. 141
 
Complacency: Complacency Measures are High ........................................................................................................... 143
 
Complacency: Exhibit A, January Volume ...................................................................................................................... 145
 

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