Macro Signals in a Manipulated Market

Before we talk about Macro Signals, first we probably should mention The Mad Money CNBC Man, Cramer.  Markets like this bring out the worst in him.  If you watched him in late 1999 and early 2000, read his book “Getting back to Even”, watched him in 2008 you know the pattern.  You know that his motto is “there is a bull market somewhere, our job is to find it”.  This motto has worked well in the manipulated markets supported by the FED’s QE2 and QE3.  And you know the motto is disastrous during the periods listed at the beginning of this paragraph.  Now, he has a problem with the markets these days.  His approach to a defensive posture in the current market is erratic and telling.  Yesterday he said that things were bad in China, Europe, and Greek markets, but then suggested that you never know these days, the U.S. markets could even close higher.  Then in the afternoon after the markets had closed he chastised all the traders that had bought the market early yesterday when the Dow was down 100 points and then declined another 200 points.  Now this morning he says, don’t buy a higher opening, maybe you should lighten up a bit, actually probably a good comment for the moment.  But more importantly,  which is it Cramer, is this market creating a buying opportunity or a situation where you should move to a defensive posture.  You probably will not know until he writes his next book “Getting Back to Even 2.0”.

Cramer is in many ways a victim of the market environment created and perpetuated by Greenspan, Bernanke and Yellen.  In essence free markets are not allowed to work, FED manipulation is taught as a base in economic education.  What this leads to is a market where economic indicators have little value and anyone who tries to read the market is squashed by artificial intervention.  This will end someday but one has to admit that Global Central Bankers constitute a big dog in the fight.

Now that we have set the stage that reading the market is difficult at best we should point out, Macro signals are very different from short term 45-60 day signals like the ones that called the October 2014 selloff.  Macro signals have the weight of the data arc upon which they are based. Moving forward, here is what the Macro technical indicators say about the stock market at this point.  

The Macro indicator in which I have a high degree of confidence is one based on the S&P 500 from a macro sense using monthly data.  Today it a appears it will turn negative for the first time since November 2009. Other signals in the past 20 years are:   Buy May 1995, Sell February 2000, Buy July 2003, Sell January 2008, Buy November 2009.  In some cases the signal was close to the extremes, in some cases in the manipulated 1995 and 2009 buy signals, it lagged the extremes by a good bit.  In general the sell signals seem to be more a function of market forces, and the buy signals a function of manipulation.