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About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Friday, March 22, 2013

Stock Market -- Weekly

Fundamentals
The Fed continues to expand its balance sheet rapidly and despite the rapid upward
trajectory of credit extended, it looks like it will still be another 3-4 months before Mr.
Bernanke starts to get more avid pushback from the hawks on the board and some of the
economics staffers as well. The near-death experience of the economic recovery last
year has the inflation hawks off-balance and quiet for now. Aggressive QE creates a
strong tail wind for the market.

My weekly cyclical fundamental indicator has experienced a moderation of its uptrend
in recent weeks but is still heading higher primmarily reflecting stronger employment
indicators.

About Cyprus
Cyprus is a tax haven with banks that form a payments / deposits flow hub. Banks that
specialize in payments / deposit flows must be exceptionally discrete, maintain excess
equity capital and keep low risk loan portfolios. The money is made via hefty fees that
are charged for maintaining high discretion and for allowing funds transfers that require
bankers naturally disinclined to ask probing questions. Risky lending is to be avoided
because funds transfers can and do involve occasional, troubling overdrafts for which
a large capital base is needed to smooth out those little bumps in the road. Leverage up
and make risky loans and you can be dead in a hurry, figuratively if not literally. Little
Cyprus has a bit of leverage here -- to leave what lies beneath staying beneath, so to
speak. Outsiders will need to be discrete in settling the Cyprus fracas.

Technical
Back on Mar. 10, I opined that the stock market would be moving into an intermediate top
over the subsequent two weeks ended Mar. 22. The market has turned flat in the short run,
but remains in a clear uptrend nonetheless. The SPX is overbought on price momentum as
well as on the weekly MACD and RSI indicators. SPX Weekly

Overbought markets reserve the right to get even more overbought, but this baby seems
well along.

It is interesting that as the SPX has approached its historic highs we have seen an outbreak
of coughing and foot shuffling before the bulls finally square up and take out  the old highs.
Since the market can inflict pain for all at critical junctures, a fitting alternative scenario
would be for players to squeeze the shorts into the land of the new high, shout "hooray",
high five each other in the halls, enjoy a few joyous days and then get clobbered by a sell off....

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