bronson comment on longwaves:
We expect the capitalization-weighted index (CWI) of some 6,800
publicly-traded US common stocks will at least reach the area of
its 1998 lows before this first CWI bear market, in the deflationary
Supercycle bear market period, is complete. Although only the equally
-weighted total market index did that when this outrider indicator
made lower lows in 1987 vs 1990. I've attached out latest graphic
presentation of these two indices, with trendlines added for those
who have asked about some of our technical failsafe thresholds.
As for the shorter term, we believe the bullish divergence that was
set up before the market decline from the February highs, and fooled
most technicians, has now been worked off. We expect the next decline,
reflecting a MCHVIE and selling climax #5 in a 12345 pattern, will make
significant new lows, and will upset recent bottom-fishing technicians.
It's all about the manufacturing and profits recession spreading to
the service sector of the US economy, and the anticipating bear market
spreading to all the non-tech sectors of the US stock market. Our
forecasting models indicate that there can be very little doubt about
this emerging fundamental and technical contagion.
Forget the Fed lowering rates in a deflationary environment, except
very short term moves. But don't fight the downtrend trend when the
composite of sentiment indicators solidly indicate trend continuation.
To wit, insiders steadfastly refusing to net buy to any significant
degree after a $5T, 33% decline in the total market:
insidertrader.com
bullish percentage of AAII Investor Sentiment is at a new high of 64%,
Investor's Intelligence newsletter advisory sentiment never became net
bearish, put-call ratios are back in contrarian bearish territory,
(especially look at the put-call volume indicator in IBD), and consumer
sentiment (University of Michigan especially since it leads) is declining
sharply, but nowhere near its historical bottom territory:
207.8.47.37
I will post what we believe are other bearish technical indicators as
we get closer to the FOMC cutting interest rates, probably 50 bps, for
the fifth time in just seven more trading days.
I more than welcome rebuttals from anyone else, also.
Bob Bronson
Bronson Capital Markets Research |
