We have been hearing a lot of good news over the airwaves lately about the state of our economy. Wall Street pundits are calling this the first stage of a rally. Barrons just posted its latest issue with the cover: DOW 15,000. Individual companies like Apple closed over $500 a share this past week. The housing industry had increased starts for January. GM is once again the number one car maker. Unemployment is down to 8.5%, and confidence is rising. So, is this the time for you to enter the market?
My Perspective
When I look at my indicators, I don't see it. What I do see is a feel good campaign by the Obama administration to get reelected. These are some of the reasons why I would advise you to wait on the sidelines. If this is another leg up on a bull market, the only thing you will miss is early money. Markets always correct and you can enter with a correction. What I have stated before and again here, study the volume on the correction as well as the upside. At the moment there is no volume or conviction in the market. The serious volume days have come on the downside which leads me to one of my indicators.
CEO Selling
Argus Research shows that CEOs are dumping their shares. If anyone should know about future sales, problems, etc., it is them. They are selling to the tune of 5.77 for everyone that buys. This is a omen.
Oil and Food
They have both risen in double digit percentages. You cannot trust the government because they place their people in the agancies to give reports that spin things to a positive tone. CPI in the 2% range. Really? I say BS! I say corruption! Consider this: Gasoline sales have been down since they peaked in 2007 and electicity usage is down fours years in arow while our population continues to grow. Is that a conundrum or what?
Government Manipulation
Bush did it with his tax cuts. It got him reelected and President Obama had Congress pass an accelerated tax plan in 2010 that went into effect last year. This bill allows corporations(why Republicans signed on)to write off any purchases with total 100% depreciation in the same year. This spurred the economy in the forth quarter, however this is a one time event. Every industry got a shot in the arm, but the junk is back to full price. Hope you didn't get addicted?
I could list a few other indicators, but food and oil are my mainstays, however one cannot forget the problems of the world. Greece and ECM may push their problems of debt down the road, but every road leads to a destination. The biggest problem that I see is when you get there, the price of oil could be prohibitive, especially with the Iran nuclear question or Pakistan or Afghanistan or Iraq or Chinese trade problems or some unforeseen situation. The litany will numb the mind. Remember this: the last six recessions have been caused by the spike in oil.
LIARS and CROOKS:I will look at the funny side this week as it relates to the economy and politics. The economy is so bad that Motel 6 won't leave the light on for you. Prices are so high in New York that a picture now is only worth 200 words. Mitt Romney learned a lesson: money cannot buy...Missouri, Colorado or Minnesota. President-elect Obama said that by his third year in office, he would cut the deficit in half to $563 billion and it was over $1.3 trillion which is only off by $800 billion give or take, but that's government calculations.
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