STOCKS WORLDWIDE FELL FOR SECOND DAY IN A ROW

SEE THE LONE BEAR LETTER 1,2,3,4,5 ABOVE

Stocks fell for a second day in a row, with the NASDAQ falling below the 5000 level and the S&P 500 below 2100. Investors appear to be pulling back slightly after the major averages made new highs and the NASDAQ crossed above 5000 the first time in 15 years. Wall Street appears weary, particularly because winter stormy weather throughout the country has been hampering economic activity and in the West Coast the ports strike could also hamper economic activity. Wall Street is expecting a damping in new jobs growth to around 240,000, down from 257,000 in January. The unemployment rate is expected to trickle down to 5.6% from 5.7% European stocks closed higher as the 19 country euro zone economy appears to be inspired by  falling oil prices and the lower euro. Europe is also is expecting a surge in economic activity when the central banks begin a quantitative easing program in May. However, recovery is still far short of that experienced in the United States. In China, Hong Kong Hang Seng index dropped 1% and the Shanghai composite gained a percent. China’s Premier lowered this year’s official growth target to 7% from last year’s 7.5% India’s central bank today unexpectedly cut a key interest rate by a quarter of a percentage point. This was the second such reduction this year as the bank lends support to government efforts to boost economic growth. So, all seems quiet on the Western and Eastern front.

Warnings of a slowdown in Europe, China and South America and ongoing conflicts between Russia and the Ukraine and problems in parts of the Middle East are being ignored. There are still plenty of warning signs that the stock market can’t keep this pace going. Nobel prize-winning economist Robert Shiller has noted that his metric to measure how expensive US stocks are, the Shiller P/E10   index, is back to levels not seen since the financial crisis. The P/E ratio for the Dow Industrial s is at about 17, whereas the P/E ratio for the NASDAQ is at about 30. All of these P/E ratios are high, but are not necessarily excessive. HOWEVER THE PERCENTAGE OF THE MARKET ABOVE REGRESSION IS 91% ( that is very high) AND 39% ABOVE REGRESSION OF THE SHILLER P/E 10 ( well within the 5th Quintile)!  So bulls, enjoy your glory while it lasts.

Current	Dow	NASDAQ	S&P 500
	18,096	4,967	2,098
Short Term	UP	UP	UP
Int. Term	UP	UP	UP
Long Term	UP	UP	UP
ForecastedTrendd	DJIA	NASDAQ	S&P 500
Short Term	Down	Down	Down
Int. Term	?	?	?
Long Term	Sideways?	Sideways?	Sideways?
Breakout Points	DJIA	NASDAQ	S&P 500
Short Term Up (Resistance)	18,288	5,008	2,119
Short Term Down (Support)	17,147/17,0000	4605/4,5455	1,991/1,9733
Int. Term Up (Resistance)	18,974 See Fibonacci Projections above	5,002 See Fibonacci Projections above	2,486 See Fibonacci Projections above
Int. Term Down (Support)	15,855         /15,356 /14,688	4,166 3,986/3294	1,820 /1,560
Long Term Up (Resistance)	18,974	5,132	3,044
Long Term Down Fibonacci Support	50%12,000  62% 10,750	50%2,958  62% 2,555	50%1,390 62% 1,177
10 yr Treasury 2.12	Gold 1,2131,198	Oil 51.78