Is It, "It's Europe, Stupid!" or Is It, "It's Stupid, Europe!"?

Mike Turner |

I should be getting hazardous duty pay this week as I attempted to get the upcoming week's forecast from the Elves. Boy! These guys are hopping mad. Seriously hopping mad. I've never seen so much hoping and throwing anything and everything they can find. Broken glass is everywhere. Trust me... this is not a pretty sight.

In the midst of the chaos and tumult and my attempting to dodge flying projectiles, I asked why all the anger? This question was totally ignored. So, I grabbed the nearest hopping ELF and asked (yelled, actually, since it was difficult to hear one's own voice) what was going on? He looked at me and in his 'you can't be this stupid' voice (actually this is the voice I hear all the time from Elves) he said, "Oklahoma State wasn't picked to play LSU for the BCS National Championship!"

Oh... Ok... I keep forgetting Elves are such rabid OSU fans.

I said I appreciate the outrage, but I have thousands subscribers anxiously waiting to hear the Elf-based market projections and as such, I needed the report. About that moment, another projectile hit me in the face. It was a giant spit wad, which was actually this week's report.

So... I unwadded the slobbery mess and here it is...

"The Bull-to-Bear ratio for this week is 3.5-to-1 in favor of the Bulls. The red line (Short Sell) appears to be rolling over and moving back from an oversold condition. The black line (Composite of Short Sell and Long Buy indicators) also appears to be bottoming. This is often a pattern that precedes a move higher in the near-term of the broader market. The S&P 500 (green shaded area) is now trending a bit higher as previously forecast. Short positions could be in jeopardy. Long plays could be considered for this week."

The Bull-to-Bear ratio for this week is 3.5-to-1 in favor of the Bulls. The red line (Short Sell) appears to be rolling over and moving back from an oversold condition. The black line (Composite of Short Sell and Long Buy indicators) also appears to be bottoming. This is often a pattern that precedes a move higher in the near-term of the broader market. The S&P 500 (green shaded area) is now trending a bit higher as previously forecast. Short positions could be in jeopardy. Long plays could be considered for this week.

Turner Bull/Bear Forecast
For the Upcoming Week

Investor Sentiment Weekly Forecast

The Turner Bull/Bear Forecast™ provides a one-week directional forecast on the market, with [-5] being the most Bearish and a [+5] being the most Bullish. This is predicated on the ratio of number of new Buy Signals to the number of new Short Sell Signals for the previous week. The assumption is investors are becoming more Bullish the more lopsided the ratio becomes in favor of new Buy Signals; and, the converse is true; the more lopsided the ratio becomes in favor of new Short Sell Signals, the more Bearish investor sentiment.

Turner CrossOver Oscillator

The Turner CrossOver Oscillator™ provides an indication of the over-bought or over-sold condition of the market. The red line (New Short Sell Signals) shows a technical direction and strength (or lack thereof) of investors to push stock prices lower, triggering new Short Sell Signals. The higher the Short Sell Signals line, the more Bearish the market. The black line (Composite of both Short Sell and Long Buy Signals) is the combined impact of both the new Short Sell Signals and the new Buy Signals and is an indication of the degree of oversold or overbought condition of the market. Buying opportunities exist when the Composite of Signals line is moving higher. The higher this line moves, the more Bullish the market. Market bottoms are represented by a change in direction of the Composite of Signals line from moving lower to moving higher. Market corrections become much more likely when the Composite of Signals line crosses the Short Sell Signals line from below the Short Sell Signals line to above the Short Sell Signals line. The market is represented by the green shaded area.

Scrawled across the bottom of the paper was the phrase, "See, I told you so!!", along with a smiley face. I had to admit, the Elf report for last week was far more bullish than bearish. This was one reason why I was willing to change my trading strategy from bearish to bullish last Tuesday. I hate to admit it when the Elves are so doggedly correct, but facts are facts and the fact is they recommended short covering last week and that further shorting was not recommended.
As a side note... I agree with the Elves about Oklahoma State...
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My Trading Strategy for the Week...

Europe notwithstanding (and that is something I am NOT doing), the forecast charts are predominantly bearish for the next couple of weeks. I find it odd (more on this in tomorrow's video commentary) that virtually everyone of bear biased forecast charts (see example, below) are in significant inversions.


This coming Friday, the Europeans (once again) are supposed to come up with another grand plan to save themselves from economic chaos. I guess I shouldn't assume that the US is going to bail them out (more on this below), so maybe they are actually going to come up with a credible plan. The US (and most global) markets would skyrocket higher if there is even the hint of a credible plan. What probably needs to happen is a unification of Europe into the "United States of Europe", but no country wants to give up their sovereign rights. But, to keep the fiscally irresponsible countries from having to be bailed out by the fiscally not-so-irresponsible countries, some kind of loss of sovereign control of fiscal issues is going to have to be defined.

Then, there is good ol' Ben and Timmy... What a great team they are... and thank goodness they are there to think for us and to protect our financial futures. After all, we (the great unwashed) are not smart enough to understand these kinds of complexities on our own. It makes perfect sense (sarcasm meter pegged) to print money out of thin air and assume that such actions will never come back to haunt us in the form of massive inflation. I like the Fed's attitude... "If it's not a problem now, it will never be a problem in the future!" Great policy.

We should be on the lookout for some kind of expanded, but nefariously secretive, plan to move US dollars from the US to the IMF to the ECB to the European banks to the sovereign debt of bankrupt European countries. When and if it happens, it is likely we will not know about it until someone makes the Fed confess through a response to a "Freedom of Information" request.

Is it "It's Europe, Stupid!" or is it, "It's Stupid, Europe!"??

Last week I posited that Ben and Timmy, as surrogates for President Obama, just might underwrite the European financial crisis. Now, it appears, I am not the only one who thinks the Fed/Treasury might just try to use taxpayer guaranteed US debt to bail out the too-big-to-fail Europeans. Some in Congress are wondering, as well. It's about time someone in Congress said enough is enough!

So... Between the concern over the Fed sneaking (oops... sorry... I meant to say, "swapping") a few trillion US Dollars over to Europe and the Europeans meeting on Friday to announce yet another plan to come up with a plan that will be used to establish a plan for planning how to plan for a plan to solve the European financial crisis, the market this week could move higher. A Santa Claus rally is still more likely than not. As such, I am looking to pick up some bull-biased trades.

The Unvarnished Truth About Friday's Job's Numbers...

According to government labor statistics, the civilian labor force dropped by 315,000; virtually unprecedented in last 30 years (the only worse October/November reporting period was in 2008 when 332,000 departed the labor force). Put another way... According to government-speak... the more people that give up and quit looking for work, the lower the unemployment rate. Lauding the 8.6% unemployment rate as proof that the "economy is responding to Obama's fiscal policies" epitomizes the phrase, "lies, damn lies and statistics." 140,000 new jobs in Friday's report is a good thing, but keep in mind it takes more than 200,000 jobs per month just to keep up with population growth. So, in reality 80,000 more jobs were lost.

And just to cut the liberal side of the aisle off at the knees... Yes, I know, both Republicans AND Democrats have been using these phony numbering/statistics schemes for decades to make bad news look like good news and vice versa. Like a lot of people in this country, I am fed up with Washington's politics and would like to see wholesale changes across the board along with term limitations... significant term limitations.

Have a great week in the market! The futures, at this writing look very positive for Monday's open. The Santa Claus rally could be underway!!

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