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Monday Market Expectations 2/28/2011 - Jeremy Frommer vs Jeremy Klein, The Debate Begins


HedgeFundLive.com

My old friend, partner, renowned economist, and all around great guy, Jeremy Klein, provided a counter point to my most recent blog “Stock Market Commentary 2/25/2011 – My Advice”

In all fairness and in the interest of thoughtful debate, it is only appropriate to publish it as its own blog.

Three other important points about the distinguished Jeremy Klein

  1. He is a wine connoisseur
  2. He is known at Goldman Sachs as “The one that got away”
  3. He is the winner of HFL pick the year end close on the S&P 2010

His response follows:

Hedge Fund Live - The Battle of The Jeremy's

 

 

 

 

 

“To my old friend Jeremy Frommer,

As you know I hold your opinion in the highest regard, you are by far one of the wisest and talented individuals I know, that said, I am not sure I agree with your view. First, crude traded at $85 just prior to Libya. It sold off there, after Egypt calmed down and may do the same when Libya reaches a resolution assuming another major oil producing nation doesn’t fall. Ironically, you argue that consumer is worse off than people think which would imply demand for oil would decrease which would also bring crude back down below $90.

A revised reading on Q4 GDP is not all too relevant as it looks back at chunks of data 5 months old. New Home Sales was disappointing, but much of that was the snap back from the CA tax credit expiring last month. More importantly, the housing sector remains depressed which most everyone agrees with and is priced into market.

Jobless Claims has resumed its downtrend and Thursday’s print was without any seasonal adjustments, so it’s clean. Most

Hedge Fund Live - Frommer Vs Klein

 

 

 

 

 

importantly, you ignore the University Michigan number, which now sits on 3-year highs and clearly shows that consumer sentiment is important.

I am also not sure how stocks in general have underperformed the S&P 500 when the latter is an index average.

I am not sure the market is overbought let alone leveraged overbought. The TICK information and open interest in the futures actually imply managers are very nervous and looking to hedge aggressively and quickly at the first sign of trouble. Therefore, we will continue to get sharp 1-3 day sell off such as the one on Jan 28 and this week before grinding back higher as the managers scramble to cover. The increase we have seen in open interest on these sharp down days contradicts greatly what one would expect when coming off 2 1/2 year highs such that we saw panic selling through Thursday afternoon.

Hedge Fund Live - Economist vs Entrepreneur

 

 

 

 

 

Finally, what percentage would you put on Saudi Arabia falling into same malaise as Egypt, Libya, and Tunisia? I am no expert on Middle East, but given monarchy is liked much more than Gadaffi, proactively trying to reform, and the U.S. will do anything in its power to aid the nation in keeping pumps flowing, I would put it at 10%. Earnings on the SPX for 2012 are $110. I think that’s a bit of stretch and will use $105. If oil prices continue to rise, I will use $85 as an estimate as energy names (12% of index and rising) will see solid increases. I will use a 14x forward multiple for the former and a 13x for the latter given additional risk premium for geopolitical uncertainty. Using my aforementioned, yet understandably arbitrary, probabilities yield a year-end level of 1435.

Been tuning in a great deal lately, as Hedge Fund Live has become the top ten go to destinations for a real time look at the markets. I really enjoy the content.

I look forward to hearing your response.

All the Best

Jeremy Klein”

Well J. Klein, you will hear from me soon as I have quite a bit to say. For now I hope our members, readers and listeners enjoy our debate

 

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10 Crazy Fidel Castro Moments (Nuclear Missles, Mini Cows and Abolish Money)


HedgeFundLive- As he is an expiring “Player” on the world scene and Hedge Fund Live is committed to keeping you informed of “Players” comings and goings, here is a quick Fidel Castro update. The Wall Street Journal says that he has had a number of epiphanies. He has recently commented that Nuclear Missiles are a bad thing. He apparently would like to see the use of money obsolete on the island of Cuba. Rumor also has it that he hopes to sell coffee machines with an added bonus of genetically bred miniature cows so you can squeeze a mini utter in your kitchen for milk. Yes it may seem that he has lost his mind. But in truth these are just recent examples of his usual antics. He has had a number of embarrassing moments over the years, which were clear signs of a dictator gone mad. Here are candid photos of him in 10 of compromising positions.  Match the photos to the correct text description.  Responses posted at the bottom of this blog.

a.

 

 

2. Fidel has a passion for cross dressing and makeup

 

b.

 

 

9. Fidel trys to get Steve Jobs’s attention, wants to do Apple commercials

 

 

c.

 

 

4. Fidel is too stoned and hung over to face the crowd

 

 

d.

 

 

10. Castro caught flipping the bird at Condoleezza

 

 

e.

 

 

3. Fidel reveals he wears tighty whities, says boxers dont hold it together for him

 

 

f.

 

 

1. Fidel breaks wind and pisses off Hugo Chavez

 

 

g.

 

 

7. Fidel shows off his new pecs

 

 

h.

 

 

5. Fidel failing to strike fear in the hearts of his fellow Cubans, hopes a Batman stuntman might help his image

 

 

i.

 

 

8. Fidel Caught at Scores, he was told, “no touching”, the manager said

 

j.


 

6. Fidel loves the Austin Powers movies- he has photoshop posters in his villa

 

 

 

Responses: a-10 (Castro caught flipping the bird at Condoleezza); b-8 (Fidel caught at Scores, he was told, no touching the manager said); c-7 (Fidel shows off his new pecs); d-9 (Fidel trys to get Steve Jobs’s attention, wants to do Apple commercials); e-5 (Fidel failing to strike fear in the hearts of his fellow Cubans, hopes a Batman stuntman might help his image); f-4 (Fidel is too stoned and hung over to face the crowd); g-3 (Fidel reveals he wears tighty whities, says boxers dont hold it together for him); h-6 (Fidel loves the Austin Powers movies- he has photoshop posters in his villa); i- 2 (Fidel has a passion for cross dressing and makeup); j-1 (Fidel breaks wind and pisses off Hugo Chavez)

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The Way We Were: One Year Ago on Feb. 24, 2010


HedgeFundLIVE.com — Let’s rewind back to exactly one year ago on Feb. 24, 2010 and see what our Chief Market Strategist Jeremy Klein had to say on that day:

Mr. Bernanke Goes To Washington

While my daughters look forward to February for Groundhog and Valentine’s Day, I, on the other hand, instead get all giddy for the Chairman of the Federal Reserve marching up Capitol Hill to deliver his semi-annual Humphrey Hawkins testimony. Ok, not really, but certainly I enjoy it on some level as traders have always had a high level of anticipation which can often lead to increased volatility. Given a record balance sheet weighing in at over $2 trillion and a hike in the Discount Rate less than a week ago, this installment should be no different.

For those keeping score, Bernanke will not be delivering a Humphrey Hawkins address, for the Congressional Act that mandated it expired in 2000. However, the tradition of a February and July report to Congress by the most powerful person in the financial universe has rightfully continued. History aside, the Chairman must answer many open ended questions about the current state of monetary policy, the direct subject of his speech. Namely, how in the world will the Fed work down its massive balance sheet (it measured only $300B going into 2008), and what more does the economy need to accomplish before the central bank can start removing accommodation to thereby avoid the next great bubble – that being one of excess liquidity?

In my effort to provide as much actionable trading acumen as possible, I will attempt to make my best guess on what the Chairman will say as well as the subsequent reaction from stocks. I have always subscribed to the notion that Bernanke is the type of person who wants to be popular and liked. Whether or not the reason for that comes from his being socially inept in his younger years – he does own a P.H.D. in Economics from MIT and scored a 1590 on his SAT, his past speeches and his loose inebriated-affected lips while flirting with Maria Bartiromo at a White House formal dinner in 2006 suggest that he would rather please those he is rubbing elbows with than disappoint. Consequently, I researched all the commentaries I recorded for each Humphrey-Hawkins testimony he has given. Surprise, surprise, the stock market received all but one quite positively. That outlier came in July, 2008 when everything was melting down anyway, and the Chairman inexplicably gave a speech that reeked of stagflation.

Therefore, if we assume that he speaks dovishly in his text, which the press will release at the stroke of 10:00 AM, then look for headlines that indicate accommodation will remain until necessary as well as a reiteration for the umpteenth time that last week’s hike of the Discount Rate did not signal a shift in current easy monetary policy. In addition, he may talk of slack in the job market and even mention yesterday’s caught-with-your-pants down Consumer Confidence number as evidence that the economy, while improving, still has a long way to go. He will also likely rehash his February 10th speech, released but not given thanks to two feet of snow on the Mall, which indicated that the Fed will work down the balance sheet quite passively. I would not be surprised if when speaking of the low levels of inflation, he uses a phrase such as “can afford to be patient, yet vigilant at the same time.” In other words, the Fed will let America keep their bar tab on liquidity running for quite some time and probably too long such that we will paying for it with higher prices down the road.

Complicating matters, the U.S. Census Bureau will release the New Home Sales report, one of the biggies of the month, at exactly at the same time as the Bernanke text. I think traders will largely ignore the number unless it prints a huge outlier either way. Still, I think despite yesterday’s abysmal confidence numbers, optimism should reign for the day as the S&P futures bounced 7 handles from its lows late yesterday to settle 4 points rich to fair value and our old pal Ben will arrive to the rescue regardless of whether he did Jello shots with Ms. Bartiromo last night.

S&P 500 E-Minis Key Technical Levels
Support: 1090.25, 1086.50, 1079.50, 1065.00, 1060.00, 1057.50
Resistance: 1107.50, 1111.00/11.75, 1120.00, 1125.00, 1130.00, 1138.50

___________________________________________________

Where we were then:

S&P Futures
Open: 1096.75
High: 1105.50
Low: 1092.50
Close: 1103.50

Where we are now:

S&P Futures
Last: 1303.50



Thursday Market Expectations from Jeremy Frommer - 10 reasons it is time to buy the market.


HedgeFundLIVE.com — I feel vindicated. The markets behavior is exactly what I have been blogging about for 2 weeks. But what now? Last night I went home long stocks short futures dollar neutral. Today will be a cathartic day. Then the shorts will cover, Middle East issues will stabilize over weekend, oil will start to drop lower as this morning’s gap is short covering from trader who shorted against the 100 level yesterday. Gaddafi will be dead inside of a week. I am still concerned about Bahrain. But as my plan was to see the market test 1300 a couple of times, I expect the bull market to resume by Monday. Keep in mind that In 3 days we have given back the entire month of February and then some. This gives me 2 signals, time to cover shorts, and find the beaten up names that have less impact from the overseas issues. Worst case I see 1287 as a massive support level. I am buying TGT, IMAX, homebuilders and beaten up tech, including AAPL and NFLX. I look for a serious reversal off these lows either today or tomorrow. As Saudi Arabia floods the population with money and Bahrain offers the same thing, I am reminded of our own government’s strategy for fixing problems. Clearly the economic numbers coming out this morning will help stabilize the market. Apple launches Ipad 2 next week. The federal government will figure out how to extend the budget deficit, as Obama has now shown his hand. He will move to the center when left with no alternative. He has to if he wants to be reelected.

So lets review.

  1. Today will be the highs in oil for some time.
  2. While I am worried about Bahrain, I have yet to see something that would force me to change my trading strategy
  3. Qaddafi will be dead soon
  4. All of Februarys gains have been wiped out
  5. Individual stock are down as much as 10%
  6. Economic numbers today will be inline to better
  7. We are through earning season
  8. We are testing 1300
  9. Tech is cheap

10. And the number one reason to buy the market – I have covered all my shorts.

 

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Stock Market Analysis: choppy action


Is trouble lurking?

HedgeFundLIVE.com — My last three days trading has been horrible and it culminated yesterday with getting stopped out of stocks an hour before the big move up, but that is ok I can live with it after getting a good nights sleep. So how do I think the next few days play out in the market?

 

I was quite bullish yesterday afternoon as stocks really felt like they bottomed but then I get up early this morning and see that the S&P futures made a lower low from yesterday and this certainly has me concerned. I will be looking to trade from both sides today but only buying stocks on the extreme moves and then trading them from the short side on rallies up near R3.

I think we can trade lower today and get within striking distance of the 50 day SMA on the S&P futures which we can test on Friday. If that level does not hold, then we could be in for a real bottoming of this market and may get into the 10% correction mode taking the markets down towards 1200.



The Way We Were: One Year Ago on Feb. 23, 2010


Let’s rewind back to exactly one year ago on Feb. 23, 2010 and see what our Chief Market Strategist Jeremy Klein had to say on that day:

Today’s Trivia Question

Here is today’s semi-gratuitous trivia question:
- Which of the following activities is the most painful?

A. Watching curling in the Winter Olympics
B. Anything Jonas Brothers
C. Sitting in traffic on the NJ Turnpike
D. Trading this equity market

Before you answer, consider the following: First, the answer is clearly not Choice A, for deep down, we all secretly believe that with maybe a week’s worth of practice, we can be marching in the Opening Ceremonies for the next Winter Olympics. Choice B is a good 2nd selection, but fails because if you have daughters like I do, there is some enjoyment out of seeing them get all in a tizzy to this “music.” Besides, Joe, Kevin, and Nick are good old Jersey boys, so we can’t dump on them. Bruce, Bon Jovi, Jonus Brothers? Ok, maybe that’s a stretch, but that’s still not the right answer either. Choice C is the sucker’s pick because who wants to wait in traffic; however, it is meant to be a trick as the answer references the New Jersey Turnpike, so it affords you the chance to hum a few bars of Simon and Garfunkel’s “America” and spend time “counting the cars on the New Jersey Turnpike.”

So clearly choice D wins it. The average range in the S&P 500 futures market the past week has dropped to nearly 10 handles with the middle portion of the day flat-lining. The easy thing to remark here would be to trade conservatively and not get chopped around. However, I will be more ambitious and speak of opportunity that may be available even with this tape. In the past few days, I have mentioned in this forum that I believe that the fundamentals and internals of the broader market are solid. If you believe as I do that we did make an intermediate bottom on February 5 on the way to a yearly high above 1150.45 in the SPX cash, how does one trade that and take an advantage of a dry market?

Quite simply, trade early. For each of the past 9 days, the low of the day has been put in during the morning. In fact, in 7 out of the last 8 trading sessions, the bottom was hit prior to 10:30 AM. This is not surprising, for large institutional investors will typically start buying soon after 10:00 AM when all the “morning news” and any lingering economic data has filtered through the market to avoid negative selection in their purchases. Their buying has also shown up late in the day as evidenced by my 22 day Rolling Tick Indicator which has climbed from 55 to 246 in just over a week. Will this pattern hold forever let alone today? Of course not and who knows although with only Consumer Confidence and a large 2YR Treasury auction on the docket, I would put the odds on it to be likely for today. Therefore, whether you too are putting money to work or are looking to catch a nice day trade, in a quiet market, you have a much more favorable chance of success being aggressive early than waiting until later in the day. This is especially true with the next several days being some of the strongest of the monthly calendar. To be sure, one can sit on the sidelines and play it safe, but doing so may mean missing some legitimate winning opportunities and instead coming up with silly trivia questions obfuscated as a trading commentary to send to all your friends.

S&P 500 E-Minis Key Technical Levels
Support: 1103.50, 1098.75, 1095.75, 1092.75, 1086.50, 1079.50, 1065.00
Resistance: 1111/11.75/12.75, 1120.00, 1125, 1130, 1138.50

___________________________________________________

Where we were then:

S&P Futures
Open: 1107.00
High: 1112.75
Low: 1190.25
Close: 1197.25

Where we are now:

S&P Futures
Last: 1306.75



Wednesday Market Expectations From Jeremy Frommer - Short into Friday, Flat for the Weekend


"My dear Sarkozy, is it true? Are you deserting me as well, my sweet desert?"

My market expectations depend on a number of events. I understand that I have been unequivocal about my short-term bearish stance, but I also have been specific about the levels I have been looking for on the S&P. I have felt we needed to get down to the 1308 level on the S&P futures. I expected us to pause there and perhaps over a number of weeks test the reality of 1300, as a confirmed psychological barrier that we broke through that should now become support. That would signal to me that my long-term bullish stance is still in place. Given the uncertainty over inflation, the federal budget and our domestic municipality financial crisis, I think we have seen the highs for at least a month, perhaps into May. Though, I am not a believer in sell in May and go away. This has been a year of opposites; perhaps we buy in May, and stay. I expect Gaddafi to be dead or gone by the end of the weekend, problem is we have now learned you cannot be long going into a weekend. My greatest fear for the weekend is Bahrain. People do not realize that this is the one to closely watch, as it is a precursor to potential issues in Saudi Arabia. I am relatively dollar neutral this morning having covered a significant portion of our shorts on yesterdays gap down. I will look for early morning strength, or at least stability. At noon I will begin building back into a larger short position, which I will continue to add to though Friday morning. I look for significant weakness by Friday afternoon, barring an exogenous event such as a bullet in Gaddafi’s head. Names I am long, continue to be potential take out names, I am short stock near their 52-week highs. This is an exogenously driven market; there are significant concerns out there. While I will be making big bets, I will be taking them off rapidly. Holding periods will be no longer than a few days and I expect to be close to flat over the weekend. Our domestic issues take second place to problems abroad, but should not be forgotten.  I will provide an afternoon expectation blog at around 1pm



The Way We Were: One Year Ago on Feb. 22, 2010


Let’s rewind back to exactly one year ago on Feb. 22, 2010 and see what our Chief Market Strategist Jeremy Klein had to say on that day:

“The Alexander Haig Rally?”

With the Winter Olympics in full gear, fresh powder still sitting on most Northeast slopes, and The Bachelor down to its final two bachelorettes, it may have gone unnoticed to most of you that former Secretary of State Alexander Haig passed away this weekend at the age of 86. Serving under President Ronald Reagan, Secretary Haig was famously, or rather infamously, known for declaring to the world that he “was in charge” during the hours following the assassination attempt of Mr. Reagan as then Vice President George H.W. Bush was in transit and unavailable to lead the country. Mr. Haig erroneously believed that the Secretary of State was 3rd in succession to the Presidency which had been the way for many years. Instead, unbeknownst to him, he had been moved down the food chain behind Speaker of the House Tip O’Neill and president pro tem of the Senate Strom Thurmond thanks to a change in the federal statutes in 1947. One could envision an arm twisting conversation from then President Elect Reagan to the then CEO of United Technologies when the former finally got the latter to commit to signing on board for the cabinet by saying, “well you know Al, if George and I go at the same time, you immediately ascend to the throne.”

So why do I bring this up, for most of you could care less as I already mentioned that Jake The Bachelor is down to choosing between Tenley and Vienna (what normal set of parents give their daughter either of these names?) for his heart. Traders can be a quirky folk. With the S&P 500 barely trading in 10 point ranges after moving around with double that volatility the prior month and no real news on the horizon today, they will look to latch onto something – anything – to break it out of their midday malaise. Many recall the 21 gun salute we gave to Ronald Reagan with a near 2% rally on the day after his passing and celebrated with an even bigger move higher on the announcement of Yasser Arafat’s death. Stocks even moved upward when even Gerald Ford, who is known mostly for keeping the Oval Office seat warm after pardoning Nixon, passed at the end of 2006. Could we then today possibly see another tribute from equity traders for a fallen political leader? Uh… no.

However, while it is difficult to predict market movement for any single day, I imagine stocks will continue to grind higher as the Q4 earnings picture has been mostly completed and overall, it has been good enough to keep the 12 month forward P/E at a quite reasonable 14x. Technically, things are also quite favorable as my one month Rolling Tick Indicator, which projected this snapback rally on February 8 with an deeply oversold level of 67, sits at 200 which is still fairly neutral. In addition, the 5 day average day session range on the S&P futures has dropped off precipitously to 12.6 from a peak of 19.6 on February 10. If there is anything the last decade should have reaffirmed, is that stocks rise quietly, but fall violently.
The best tell recently on what the market will do for the rest of a particular day has been coming from early morning volume levels in the S&P 500 E-Minis. Again, heavier volume has almost always suggested a sharp sell off while lighter amounts have foreshadowed flat to upwardly grinding days. Take note of what the E-Mini volume is at approximately 9:55 AM. If it is close to or under 455K, expect a constructive day for equities. If it is instead over 675K, I would tread quite lightly and think about possible hedging or exit strategies. Other benchmarks would include 845K at 10:55 AM for a light day and 1,085K at the same time for a heavier, more volatile one.
Finally, one piece of housekeeping business… If you have questions pertaining to this note or anything market related that may arise during the day, please e-mail them to [email protected] I will respond post-haste with what will hopefully be lucid commentary on our webinar broadcast. To get access to our webinar, we will provide you with an invitation upon your request to this e-mail address. I encourage you all at least to try listening in during some point for a day or two. Beyond continuous and dynamic updates on market direction from yours truly, we have color coming from top shelf fundamental portfolio managers and technical day traders as well as a daily lunchtime trading educational series.

S&P 500 E-Minis Key Technical Levels
Support: 1105.75, 1098.75, 1093.00, 1086.50, 1079.50, 1065.00
Resistance: 1111.75, 1120.00, 1125.00, 1130.00, 1138.50, 1147.00/1150.00

___________________________________________________

Where we were then:

S&P Futures
Open: 1106.00
High: 1112.75
Low: 1103.50
Close: 1107.50

Where we are now:

S&P Futures
Last: 1312.75



Oil Supply Threatened- Finally Middle East Protests Pull Down Markets


Morning Notes

- Unrest in Middle East has been enough to push down markets
- Libya threatens to cut off oil supply in its entirety should protests continue; hence, oil and oil stocks are up notably
- Several major oil producers have suspended ops in Libya due to the turmoil there
- Inflation concerns in China as a result of potential oil restriction
- Shanghai Comp down 2.6% while Hang Seng closed down 2.1%
- Japan’s outlook cut to negative from stable at Moody’s
- Yen has weakened, yet Nikkei closed down 1.8%
- There was an earthquake in New Zealand (6.3 magnitude)
- Dollar, gold, bonds are seeing a lift- flight to safety plays
- On economic calendar for today: Case Shiller out at 9a; CB Consumer Confidence at 10a
- S&P futures are down 16 handles from FV ahead of the open



Tuesday Market Expectations From Jeremy Frommer - 7 Reasons the Stock Market is Suffering From Narcissistic Personality Disorder


The Stock Market is Screwed Up, and So Am I

After writing a number of articles about the market being delusional and then a number of articles about me being a little delusional I finally sat down with my wife to get what always promises to be a dose of reality coupled with simple but incredibly valuable insight. Unfortunately the conversation was precipitated by 3 days of intense yoga followed by 3 days of alcoholic binging that made me wonder if it was time for me to call Betty Ford and look up my old psychiatrist, Dr. Prazin. My wife diagnosed me and in doing so helped me diagnose the entire financial community, and even more specifically the stock market.  She said she had been doing some research and has determined that I suffer from Narcissistic personality disorder. Determined to heal my self and improve my trading, I decided I would try to better understand my disorder and at the same time better understand the market.

Narcissists have an inflated sense of their own importance. Check there for both the market and me.

Behind the mask of ultra confidence lies a fragile self esteem, vulnerable to criticism. Check there for both the market and me.

But that doesn’t mean that the market and I are true Narcissists as defined by the mayo clinic. It may just be that we have healthy confidence in our opinions, high self esteem. I don’t value myself more than I value others, (a key component of narcissism) though I often dream of having zero responsibilities, packing a bag and going off grid for a while…. In truth I look around me, and am blessed to be surrounded by great people who are invaluable to me.

The market though, is another story. The market has been behaving like a certifiable narcissist. The market seems to have little concern for the value of others. It wasn’t always this way.

Lets review 7 symptoms of narcissism.

1. Is the market expecting constant praise and admiration? “The S&P 500, up 4.2 percent so far this month, has doubled in less than two years, the quickest 100 percent jump since the Great Depression.” This headline is all over the net. “I’ve never seen a market like this,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services. A market watcher for 35 years, he is taking profits in every area but commodities.” The market is thriving on these headlines.

2. Is the market exaggerating its achievements? “Slowly, but at least so far surely, bullish sentiment continues to grow. It is now perilously close to dangerously high levels.” Say Mark Hulbert of MarketWatch. In the short term this should be bad news for stocks. But the market just seems to ignore these sentiment indicators.

3. Does the market believe it is special and acting accordingly? “The rest of the world has an interest in the US recovery because of its stimulating policies, Mr. Bernanke argued in prepared remarks he plans to deliver in Paris as finance leaders from the Group of 20 nations gather.” Mr. Bernanke seems to think we are special according to newsystocks.com.

4. Is the market taking advantage of others? Reuters Feb 17th “Energy shares gained alongside

Narcissistic Personality Disorder starts at the top

crude oil prices, which climbed 1.5 percent on fresh tension between Israel and Iran. The tension added to concerns about unrest in the Middle East, which could lead to supply disruptions.” Many energy stocks are hitting multi year highs. But on the flip side “California’s average price for a gallon of regular gasoline hit $3.50 Thursday for the first time since 2008, driven higher by the impact of Middle Eastern turmoil on the oil market. California’s average gas price has jumped 8 cents in the past week and now stands at 35 cents above the national average, according to the AAA automotive service. San Francisco‘s average has reached $3.57, while drivers in San Jose are paying $3.53 per gallon. Not since October 2008 has California’s gas prices been this high. In June of that year, the state’s average set a record of $4.61 before the economic collapse pushed gas prices into a tailspin.” Says David Baker from chronicle news service. I fell taken advantage of when I fill my tank up at the station. Really think about it, do you ever come out of a gas station lately feeling good. The oil companies can poison our waters, get away with it, and the funnel clean up costs through inflated prices masked in middle east tensions.

5. A classic Narcissistic symptom is ones inability to keep healthy relationships. It is months now where individual stocks seem to dominate the indexes but broad stocks don’t seem to participate in the movement of the indexes. No one can tell me what the value of overbought or oversold indicators are, since all the market does is power forward. In fact Goldman Sachs market watcher Noah Weisberger had this to say on the phenomenon, in a recent note.

“Within the U.S. market, where we have the richest set of metrics, we find that both implied average stock correlation and implied average sector correlation have declined sharply so far this year. Mechanically, the decline in this metric is a function of a combination of falling index volatility and rising sector volatility (in the case of implied sector correlation) or rising single stock volatility (in the case of implied stock correlation). These measures reached historic highs during the depths of the 2009 sell off. But in the “post-crisis” era, both stock and sector correlations peaked in mid-2010 (at a whopping 0.9 for average implied sector correlation and 0.7 for average implied stock correlation) and both measures have been falling in fits and starts ever since.”

6.  Narcissists set unrealistic goals. Zacks investment research Steve Reitmeister says in answer to the direction of the market “I strongly believe the answer is that we are due for more gains. Not just because there is no double dip. More importantly, there are sound fundamental reasons for the market to continue its advance.” So do many of his peers. Stock markets to not continue to advance indefinitely without healthy reversals.

7. Arrogance and haughty behavior often accompany a diagnosis of narcissism.

A. Headline MSN money Feb 4th: Ignoring Egypt, markets roar on. The political crises sweeping the Middle East join the risks of unresolved economic issues at home. Yet speculators continue to run wild.

B. Reuters Feb 10th: (Reuters) - Investors are often told not to fight the Fed, but in the U.S. Treasuries market taking the opposite stance to the Fed has been a winning strategy in the past six months.

C. FTMdaily reports: Stocks Ignore Growing Inflation Concerns

Arrogance and Haughtiness are acts of ignoring other’s opinions. to hold their opinions in disdain.

I have felt there was something wrong with the stock market for at lest the last couple of weeks. But I could not put my finger on it. But it is no relief to now know that one thing I had come to rely on for my livelihood, is so very ill.

The Mayo Clinic says, “It’s not known what causes narcissistic personality disorder. As with other mental disorders, the cause is likely complex. Some evidence links the cause to a dysfunctional childhood, such as excessive pampering, extremely high expectations, abuse or neglect.” I could find evidence of all of the in the history of the stock market.

Complications of narcissistic personality disorder, if left untreated, can include depression and even suicidal thoughts. I think the flash crash was the first indication there might be something wrong with the market, but I hope my research help you better understand what is truly going on with today’s stock market. And when the market falls into a brief state of depression, and correction, don’t be surprised. We are dealing with a classic Narcissist and there is no real cure. I expect depression to set in on tuesday, and suicidal thought by friday for the Stock Market. Buyers Beware.