On Thursday (April1) the Dow Industrials continued to flirt with the 11,000 level, and held tight to its much-exalted 18-month highs. And according to the mainstream experts, the "Green Shoots" of recovery have popped up on the US economic soil like pink flamingo yard ornaments signifying the start of a new bull market. Here, this April 1 news item reads: "Bulls Sipping April Fuel." (MarketWatch)
This has to be some kind of April fool's joke. Because in reality, the regenerative "fuel" in the US economy's engine couldn't run a lawn mower. Ipso Facto(s) -- these recent stats:
In January, employers slashed 23,000 private sector jobs as opposed to the widely expected creation of 40,000 jobs.
On March 31, Moody's Investors Service downgraded five major banks in Greece to confirm the deterioration -- not improvement -- of the country's debt crisis.
From December 2009 to January 2010, the S&P/Case-Shiller Home Price Index rose a paltry .3%. The increase did nothing to erase the fact that home values are still 30% below their July 2006 peak.
February 2010 saw the fourth consecutive drop in new home sales to the lowest level since such records started in 1963.
US Treasuries in March suffered their first monthly loss for the year, while the 10-year yield stands at its highest level in TEN months.
Despite a modest drop, US unemployment still stands at a dreadful 9.7%
The much-celebrated rise in fourth-quarter Gross Domestic Product was largely driven by the temporary fixes of Federal bailouts and inventory declines, NOT sustainable trends in consumer spending, business investment or employment growth.
So far in 2010, the Federal Deposit Insurance Corporation has dissolved 41 US banks. US lenders are collapsing at the fastest pace in 17 years while the number of banks on the FDIC's "Problem" list has climbed to its highest level since 1992.
The list goes on -- suffice it to say: The mainstream experts will explain away the upbeat performance in stocks via a feather of good news, EVEN IF it means "shrugging off" a two-ton elephant of negative data. And in the end, their analysis becomes a matter of convenience and crowd appeal -- NOT accuracy.
For that, the March 31 Short Term Update (STU, for short)steps in with an eye-opening account of the real health of the US stock market. In this publication, our analysts present a series of charts that reveal how the market's stack up against sure-fire measures of momentum, strength, and wave structure.
Here is a partially reprinted version of one of those charts: the DJIA, Daily versus NYSE Daily Volume since March 15.
As you can see in the top panel, the Dow registered four consecutive up closes in the final week of March. And, in the original STU chart, our analysts show whether the rally in prices was matched by an increasing volume; a bullish signal.
Also, Short Term Update presents a compelling snapshot of the S&P 500 versus the Percentage of S&P 500 stocks above their 10-day moving average since August 2009.
Eduard Hamamjian Managing Director
GeaSphere LLC
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