Correction, pullback, or Bear Market? Part 1

Part 1 [ China } of this ongoing Correction saga
  We are post Thanksgiving.
 The Fed December rate decision is ahead.
 The indexes could make up for a lack luster year by rallying into and thru the end of January … but, fundamentals first and foremost, we need to see improving corporate quarterly Financial Reports and Financial Calls advising increasing revenues, earnings, margins, Return on Assets (ROA), Return on Equity (ROE), Return on Investments (ROI), … and GROWTH.
 I.  Performance of the Indexes from Friday, 11/27/2015
Index chart 20151127
  • Dow Jones    17,798.49  -14.90  (-0.08%)  (chart: blue)
  • Nasdaq        5,127.52  +11.38  (+0.22%)  (chart: gold)
  • S&P 500       2,090.11   +1.24  (+0.06%)   (chart: red)
  • Rus 1k (RUI)  1,160.15   +0.87  (+0.07%)
  • Rus 2k (RUT)  1,202.38   +4.36  (+0.36%)
  • Rus 3k (RUA)  1,239.30   +1.20  (+0.10%)
  • CBOE (TNX)       22.25   -0.07  (-0.31%)
  • S&P500 Volatility (VIX)   15.12   -0.07  (-0.46%)
The Indexes below were all victims of a Mr. & Ms. Fickle Markets “Smackdown” on Monday, August 24th, 2015.  At the time the talking heads, busy little bees that they are with every bit of bad news,  were buzzing around multiple guests, rendering their opinion about the Fed, the USA and global economies, currencies, interest rates, and stock markets’ direction, as to whether we were looking at indications of a “correction”, or the beginnings of a “Bear” market.  Clear as mud it was.
II. Truly, IMHO, there was much conflicting information upsetting Mr. & Ms. Fickle Markets.
 First, China’s growth was showing indications it was, and is slowing,  …   Lest we forget, while China appears to be dabbling in some aspects of a democracy, or a republican form of government, China is a country where a minority employing a Communist political system of government, censors, badgers, bullies, and controls the majority of its citizens.  Until the global markets meltdown, China had an “assemble it and export it” based economy and realized, in a lengthy global economic slowdown,  China needed to shift its growth focus to a combination economy of both exports and a “new” internally based consumer driven economy.
As an economy built on “assemble it and export it”, China knows it is way behind on the Intellectual Property curve, as well as the “how to” curve.  China embarked on a strategy to acquire intellectual properties and secrets.  China embarked on hacking, but failed to grasp that it lacks the “how to” which, isn’t written down, and China can’t steal (hack) “how to” …  means … if you hack, but do not understand “A’, and you hack, but do not understand “B”, the “how to” of putting hacked A together with hacked B and making it work is next to impossible and reduced to a lengthy trial and error process.  China now gets that, trying to get USA companies to build partnerships with the USA partner transferring IP and “how to” to the Chinese partner, as a REQUIREMENT.  As that doesn’t seem to be drawing takers, China, thru a privately owned, non-public, Chinese company, is trying to BUY, hasn’t given up on buying Micron Technologies (MU).  Micron, thanks to its Intel (INTC) partnership, as well as Micron’s and Elpida’s R&D, is the BEST of IP and ‘HOW TO” breed … not just for the IP, but for the “HOW TO”! 

Note to Mr. & Ms. Fickle Markets:  China has the money.  China gets it needs both Intellectual Properties, and the “HOW TO”, something Mr. & Ms. Fickle Markets currently, MISTAKENLY, places so little FUNDAMENTAL value on in USA companies …  like what the USA lost when Japan bought the USA created VCR IP.

  • How many VCRs did the USA manufacture?
  • How many VCRs did the USA buy … from Japan?
  • Mr. & Ms. Fickle Markets are you PAYING attention to the VALUE China is placing on acquiring IP and “HOW TO” ??

Also, China didn’t, and doesn’t have, a retirement, and/or social security system … so China motivated its citizens to BUY gold, telling them not to worry about the price over time, even guaranteeing gold would go up in price … China even began selling gold in grams through its local post offices.

Problems, Strategy Resolution, Failures … and Blunders?

 China wanted it citizens, for their future, for their retirement,  to keep the gold they already acquired, buy more gold, and yet still spend money to acquire things.  China hit on a strategy to make its citizens feel wealthy enough to spend money thru buying and selling stocks.  Well, many of China’s citizens started dabbling in stocks, then neglecting gold, buying stocks hand over fist … and the China’s stock market rally was on … bringing in more of China’s citizens from the sidelines, late to the party, buying on margin, “investors” that didn’t want to miss out.
Apparently, to convince global investors, like its 1.4 billion citizens to BUY stocks of Chinese companies, China’s stock market regulators discussed, debated, and felt they needed to add hedging and short selling to China’s stock market toolbox.  China’s stock markets regulators (my vote for “the” worst idea for 2015) authorized short selling of a list, not all, of Chinese stock markets listed companies, and China’s stock markets stopped rallying, trended sideways, and then crashed.  Short selling in China, though short lived, is getting people arrested, and Financial organizations, their managements, and China’s citizens are nervous.   Now, the Chinese government is looking for culprits and scapegoats.  Not an investor friendly environment.
  •  So, China’s citizens, to participate in China’s stock markets rally … stopped buying gold … and how has that worked out for gold?
  • Too many Chinese citizens, that entered the stock market late to the party, buying on margin, got wiped out by the short selling authorization, … and how has that worked out for China’s internal consumption?

We, the USA and the EU, need China as much as China needs us.

(a) China’s stock markets are fixable.  Honesty and transparency, should be the best China government stock market policy.  Chinese financial advisors should be able to analyze a Chinese company fundamentals, technicals, and sentiment, and express an honest RISK versus REWARD assessment, including an individual’s humble opinion, on buying, or selling.  China needs fully functional stock markets, with controlled margin, with call/put options, including LEAPS, with covered call options selling, but, until China allows the truth to be told, without censorship, without fear of arrest …  NOT short selling.
(b) China’s internal consumption is fixable … although now, it has a much longer road to travel … perhaps 5 to 7 years before prudent planning, as opposed to piecemeal schemes, bears fruits.
(c) China needs a comprehensive environmental protection plan that guides businesses, and manufacturing, to produce, and grow, while NOT polluting the land, air, and water.  Here, the Chinese would, should, setup a commitee to study the USA’s Code of Federal Regulations  Title 40 Protection of the Environment regarding Air, Land, and Water Environmental Protections as well as the process as to how the USA, through discussion, debate, and input, seeks to protect our environment while arriving at less burdensome, satisfactory, pro-environment, pro-business protections.  USA environmental sector and industry businesses are sorely needed, and should be welcomed, in China.

(d)   More to follow  ….


 Select USA Indexes by the numbers  
III.  Correction, pullback, or Bear Market? … vs. 52 week lows
 (a) Dow Jones Industrial Average (INDEX DJIA: .DJI)

(a.1) The DJIA, from its low of 15370.33 on 8/24/2015, is up +2428.16  points, or +15.798%

  • Friday’s 1 PM ET early close brought the DJIA down 14.9 points.
  •    a negative 52 week performance of -0.16%,
  •    a negative -0.14% year to date performance,
  •    -552.87 points down from the DJIA’s 52 week high of 18351.36, or -3.016 percent.
  •    The DJIA is +5.77 points above its Pivot Point for Monday, 11/30/2015
(a.2) The Nasdaq Comp, outperforming the other indexes.   The Nasdaq from its 52 week Low of 4292.14, is up +835.38 points, or +19.463%.
  •    Friday’s 1 PM ET early close brought the Nasdaq up 11.38 points.
  •    a positive 52 week performance of +7.01%,
  •    a positive +8.27% year to date performance,
  •    -104.42 points down from the Nasdaq’s 52 week high of 5231.94, or -1.996 percent.
  •    The Nasdaq is +4.06 points above its Pivot Point for Monday, 11/30/2015
(a.3) The S&P500, from its 52 week Low of 1867.01, is up +223.1 points, or +11.95%.
  • Friday’s 1 PM ET early close brought the S&P500 up 1.24 points, or +0.059%.
  •    a positive 52 week performance of +1.09%,
  •    a positive +1.52% year to date performance,
  •    -44.61 points down from the S&P500’s 52 week high of 2134.72, or -2.09 percent.
  •    The S&P500 is +0.93 points above its Pivot Point for Monday, 11/30/2015
 (a.4) The Russell 1000 (RUI) is up +118.01 points from its low of 1042.14, or +11.324%.
 (a.5) The Russell 2000 (RUT) is up +123.75 points from its low of 1078.63, or +11.473%.
 (a.6) The Russell 3000 (RUA) is up +126.17 points from its low of 1113.13, or +11.335%.
(b)  Correction, pullback, or Bear Market? … vs. 52 week highs
  • Index, Close, 52Week Hi, Change,  %Change, Friday, 11/27/2015 
  • DJIA ..     17,798.49,  18,351.36,   (-562.87),   (-3.013%)
  • NASDAQ ..    5,127.52,   5,231.94,   (-104.42),   (-1.996%)
  • S&P 500 ..   2,090.11,   2,134.72,    (-44.61),   (-2.09%)
  • Russell 1k   1,160.15,   1,191.59,    (-31.44),   (-2.638%)
  • Russell 2K   1,202.38,   1,296.00,    (-93.62),   (-7.224%)
  • Russell 3k   1,239.30,   1,275.89,    (-36.59),   (-2.868%)
  • CBOE TNX        22.25,      24.89,     (-2.64),  (-10.607%)
  There’s more to add … and more to follow, which will be added [ here ] as well as in the Parts to be published … and in the comments below.   Note:  You do not have to join to read the blogs, or the comments, but, you do have to join to comment below.  All opinions, within the Site Terms of Use,  are welcome.  Feel free to participate in the discussion.
—————————- Monday, 11/30/2015
 Please read:
  Have a great day investing, or trading …


(Tags-1) Indexes, Index ETFs, and Sector ETFs: 
(Tags-2) Stocks



288 thoughts on “Correction, pullback, or Bear Market? Part 1

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