Is the Market Showing Signs of Topping Out?

Let’s have a look at the market, over the past month.

Currencies:

Sterling was down 4% and the Euro was off by 2.5%. The Canadian dollar was off by 2% and the US dollar was up by 2.5%.

This is a sign of market deterioration.

Treasuries, represented by TLT, was up about 1%, while a variety of muni funds were down anywhere between 2-3.5%. High yield, however, was not badly damaged–with JNK and HYG off by less than 1%.

This is a sign of moderate deterioration.

Commodities have been weaker across the board, led by Wheat (-10%), Coal (-8%), Tin (-7.5%), Uranium (-7.3%) and Silver (-7%). The only notable strength was in natural gas, +5.5% for the month.

This is a sign of market deterioration.

Market leadership is often found is larger cap stocks. I searched through the top 25 companies, ranked by market cap– per sector–for month to date performance data and this is what I found.

Basic Materials
24 out of 25 stocks were down

Consumer Goods
11 out of 25 stocks were down

Financial
16 out of 25 stocks were down

Healthcare
14 out of 25 stocks were down

Industrial Goods
15 out of 25 stocks were down

Services
12 out of 25 stocks were down

Technology
13 out of 25 stocks were down

Utilities
12 out of 25 stocks were down

After viewing the large cap world, coupled with the data compiled from the raw commodity performance, I think it’s fair to declare there is severe dismantling of the commodity sector, which in many cases, is a barometer for global growth and reflation.

On the other hand, if you are looking at this from the Federal Reserve’s point of view, there is nothing in the market that is suggesting “inflation.” Therefore, the QE to infinity and beyond mantra should persist–putting a bid in any downtrending market.

Out of the top 25 stocks, ranked by market cap, only 11 were down over the past month. Most of the down stocks were off marginally. Moreover, it’s important to remember how much the market went up in January (+4.5%). All things considered, the market is still UP 1.4% in February and you jackasses are calling this 2007 all over again.

Look, I am open to the idea that western finance as we know is on the verge of collapse. Believe it or not, I welcome it. I did very well shorting the market in 2008-2009 and generally hate human beings and look forward to his extinction from this planet. Nevertheless, one step at a time BOZO. You cannot jump to conclusions like this, at least publicly. You make yourself look bad, providing your enemies with a never-ending supply of custard pies to throw at your clowned face.

Here are some empirical points to consider, when gauging the overall strength of this market.

Out of the 3,742 stocks tracked inside The PPT, 2,164 are above their 50 day moving averages, 2,592 above their 200 day moving averages and 1,243 are above their 20 day moving averages. The weakest sector is basic materials, with just 109 out of 520 stocks above their 20 day moving averages.

I will concede the presence of weakness in the commodity sector. At the same time it’s important to remember that 311 of 508 stocks are UP in the basic material sector–over the past 3 months.

You people need to chill out and enjoy the ride. We’re going to snap back soon and trend higher in March.

NOTE: Just under 30% of stocks are within 5% of their 52 week highs, while just 226 are within range of their 52 week lows. Also, the diabolical Italian 10 yr yields are at 4.5%, a good 1.5% away from the danger zone.

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