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Friday, June 12, 2015

Daily update 6/12 ECRI admits there was no recession in 2012

Oops, sorry.  Greece is not solved after all.  Who could have imagined that?

That looks like a kiss good bye of the trend line.  The breadth was -62% which is about right with the size of the move.  New highs dropped way down to 50.  New lows were about the same as yesterday at 87.  TRIN was 1.87.  That is showing a hint of selling pressure without being real panicky.  Over two would have been a better chance to bring out buyers on Monday.  Is it just me or does this chart look a little bearish?

We have white price bars already.  That greatly lowers the odds the move up is anything to be taken serious.  We have seen price bars stay green for weeks after a low when the market was truly in a bull move.  This pattern just looks like all the other rally attempts over the last few months.  We have a confirmed break of the 100 SMA and both indicators have negative crossovers.  The only positive I can see in this chart is that we are still above the 18 SMA.  The bulls still could come to the rescue here.  Most Monday's have been up this year.  I think they would have to really show up in force to get this market out of trouble though.

Greece is solved rumors come out every now and then, but they seem to be having less and less affect on price.  Are people starting to think there will be no kicking the can this time.  I saw this interesting article.  EU holds first talks on Greek default as Athens holds out hope

EU officials have held their first formal talks on the possibility of a Greek default, officials said on Friday, but the darkening outlook failed to fluster Prime Minister Alexis Tsipras, who holed up with his negotiators after proclaiming optimism at an open air concert.

It is clear to most people with a functioning brain that Greece cannot possibly pay back their debt.  It is about time they get down to it.  I have no idea how this is going to work out and it certainly could have real and material impacts on stocks and bonds.  All I know for sure is that the market is in a weakened condition.  The kind of condition that can have a mini waterfall decline if sellers get impatient.  Complacency seems very high to me.  The VIX imploded on the rally the other day.  There is a prevailing feeling that everything will be all right and we are going to break out on the upside.  If that does not happen look out below.

The ECRI predicted the U.S. was going to have an unavoidable recession in Sept. 2011.  Later they said the epicenter of the recession happened in the middle of 2012.  They finally had to admit there was no recession when the data revisions were all in for that time period.  This is a pretty interesting read on what happened.  The Greater Moderation  While they missed the call the economy did slow down considerably.  I would not dismiss their future calls because of this event.  They will likely be right next time and make the call before nearly everybody else.

The market and sector status pages have been updated.  Have a great weekend.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.