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look at the chart of money
supply
it took a BIG dive
Ben
this does not bode well for the market after we
bounce a little higher
----- Original Message -----
Sent: Monday, November 19, 2007 9:54 PM
Subject: Gordon Harms report
11/16/07 MARKET
CLOSE
TIMING IS EVERYTHING -- THE TREND IS YOUR FRIEND
ECONOMIC OUTLOOK: Favorable for growth.
Personal income(3 month sma of yearly rate)is up 6.8. Was up
6.4.
Unemployment rate is low at 4.7%. Was 4.7%.
Gross Domestic Product is 3.9 last qtr. Was 3.8 Prior Quarter.
Purchasing Manager Index is 50.9(favorable > 50). Was 52.0.
Capacity Utilization is 81.7%; Was 82.2%.
CPI, Oct. 2.75% (3 Mo. Avg. Inflation), up from 2.36% in Sep.
PPI, Oct. 4.39% (3 Mo. Avg. Inflation), up from 3.44% in Sep.
JOC-ECRI(Industrial Price Index), Nov. is 1.15%, up from
1.13%..
10 yr TN rate/FF rate is 0.958, recession IS expected. Ratio <
1.0.
Expect recession when ratio is < 1.0. Ref: 1989-1990 and
2000-2001.
Yield ratio normal: 10 Yr TN/13 wk T-Bill rate is 1.21.
MONETARY LIQUIDITY: Money supply is mixed.
Eight week ROC of M2 money supply is 0.09%.
Money Market yield is 4.27%. Was 4.41%.
Money Market funds are 3025 billion, was 3001 billion. Up 24
billion.
Dollar index at 76.05 is DOWN 8.52% from 6/14/07 high at
83.13.
PSYCHOLOGY: 2 bull, 1 Neutral
CBOE Equity Total Vol. Put/Call Ratio: .76, last week was .73.
Market: Bullish
> 0.60 and Bearish < 0.30
Market Vane(Commodity/Futures): 58% Bullish, last week was 3
AAII 33.0% bull and 49.5% bear. 3 wk SMA Ratio = 1.25. Was
1.26.
3 wk SMA Ratio > 1.10 = Bullish, >> Bullish = > 1.50, <
0.35 = Bearish
BOND PRICE TRENDS: Up from 6/12/07, interest rates are moving
down.
Prime rate 7.50%. Was 7.75%.
Fed discount rate 5.00%, down from 6.25% high on 8/17/07.
Fed funds rate: 4.33% was 4.78%
13 Week T-Bill rate: 3.43% Was 3.55%.
STBI Bonds are up 12.51% from 6/12/07. Was 10.19%.
Zero bonds are up 10.66% from 6/12/07. Was 9.05%.
High Yield bonds down 3.38% from 10/15/07. Was down 2.60%.
STOCK and BOND YIELDS: Bonds are Favored for Yield.
The 30 year U.S. Govt. bond real yield is 1.77%. Was 2.21%.
The historical
average real yield is near 3.00%.
The avg. 30 yr. U.S.Govt. historical real bond yield expected is 5.75%.
10 Year T-Bond is 4.15%. Was 4.23%.
30 Year T-Bond is 4.52%. Was 4.96%.
S&P500 earnings: 5.82%. Was 5.84%.
S&P500 yield is 1.95%. Was 1.951%.
S&P500 Inflation adjusted real dividend yield is -0.78%.
Prior week was -0.782%. BUY at greater than approx.-1.50%.
Stock Value Index is 1.42, was 1.37. Buy >1.03 and Sell
<0.97.
S&P500 value is 16.38% below an estimated 1744 fair value,
based on
historical S&P 500 earnings, P/E and US30 bond yield.
STOCK MARKET LONG TERM VALUATION: Unfavorable overvalued.
The S&P 500 P/E ratio is 17.18(4 to 20 is range: 1870 to
1997)
based on
trailing earnings. Trailing P/E was 45 in April 2002.
The long term average of S&P 500 P/E is near 14.5, median is
11.
DOMINANT STOCK MARKET INDICATOR(Beasley): UNFavorable from
11/12/07.
NYC-N DOMINANT Neg Env,
Score 4/13(IN > 3/13), IN 7/5/07.
OTC-C Neg
Env, Score 3/15(IN > 4/15), OUT 11/15/07.
Total score is 7 of 28, last weeks score was 19.
STOCK MARKET PRICE TRENDS: Moving down.
S&P500 est. earnings next year over last year: 12.47%. Was
9.09%
Quarterly est. changes: second 5.08%, third -20.4%, fourth 16.4%.
SP-CP 11/16/077 closed at 1458.74.
SP-CP is 1.71% BELOW 1484 the 200sma which is rising.
SP-CP is 3.66% BELOW 1514 the 50sma which is falling.
Nov through Apr is seasonally favorable on average.
STOCK MARKET BREADTH TRENDS: Sum Indexs and prices move
together.
NYSE Volume and AD Sum Indexes turned DOWN 10/15/07.
NASDAQ Volume and AD Sum Indexes turned DOWN 10/15/07.
Long cycles: 14 of 16 cycles are moving down.
CYCLE TRENDS- 5 WEEK 10 WEEK
20 WEEK 9 Month(40 wk)
WIL-5 OS-Dn,11/15/07 OS-Dn,10/15/07 N-Dn,11/06/07 OS-Dn,11/09/07
DJ-30 OS-Up,11/13/07 OS-Dn,10/11/07 N-Dn,10/29/07 OS-Dn,11/01/07
RUT-I OS-Up,11/13/07 OS-Dn,10/15/07 N-Dn,11/02/07 OS-Dn,11/09/07
NDX-X OS-Dn,11/05/07 OS-Dn,10/19/07 N-Dn,11/09/07 OS-Dn,11/14/07
N = Stoch >20 <80, OS = Stoch <20 Out/Buy, OB = Stoch >80 Hold/Sell
SECTOR Family Averages: Gains from market HIGH 10/31/07 mostly
losses.
Bd-Zero
2.5 Finance -7.7
BD-USGov
0.9 NASDAQ -7.8
VMFXX
0.0 Cap-Micro
-7.8
Bd-HighYield -2.6 Realty -8.6
Utility
-2.9 New
Asia -10.6
Trade RUT-I Russell 2000 small cap index against money market fund
VMFXX.
Signals Source Status Date CAR/MDD One
Yr. Two Years
2of4
FTOOLS Buy 9/11/07 19.2/9.3
19.5/9.3
BBLong
Trade Sell 11/13/07 22.6/4.3
24.0/5.4
NSOSIG Trade Sell 11/14/07 14.9/2.2
12.7/3.6
SPHSEL
FTOOLS Buy 9/17/07 7.3/9.3
12.2/9.3
BTTTUS30 FTOOLS Buy 8/16/07 2.9/9.3
11.9/9.3
Buy/Hold Broker Hold Hold
-2.7/12.2
8.4/14.1
Percent compound annual rate of return(CAR)
and maximum draw down(MDD) while holding.
Since these signals were invented more than two years ago and their
method of signal generation has not changed, their back test performance is
equivalent to real time performance.
No virus found in this incoming message.
Checked by AVG Free Edition.
Version: 7.5.503 / Virus Database: 269.16.1/1140 - Release Date: 11/19/2007
7:05 PM
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