March 21, 2013 at 09:32 AM EDT
Expected summer problems showing up early?
Thursday, March 21, 9:25 a.m. At the time of our buy signal last fall we said we expected an impressive favorable season rally that would carry the market to new highs, and the S&P 500 back to the level of its previous ‘secular bear market’ peaks again, but for economic and market problems to return [...]

Thursday, March 21, 9:25 a.m.

At the time of our buy signal last fall we said we expected an impressive favorable season rally that would carry the market to new highs, and the S&P 500 back to the level of its previous ‘secular bear market’ peaks again, but for economic and market problems to return just about as the market’s favorable season ends in April or May.

The first half of those expectations have already taken place, with the Dow at new all-time highs, and the S&P 500 back to its previous secular bear market peaks.

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But already some of the situations we didn’t expect to see until closer to the summer months have begun showing up.

We’ve been telling you since last fall that "The catalysts for another summer correction could be any or several of the following: the economic recovery showing signs of stumbling again; concerns that Washington is cutting government spending too quickly for the recovery to handle, that the Fed might begin removing the punch bowl of QE bond purchases and easy money too quickly for the economy to handle; the return of the euro-zone crisis; or spiraling inflation finally beginning to show up."

Potential early signs of problems for the economy are already beginning to show up. Consumer confidence unexpectedly dropped sharply in February as the first impact of the 2% employment tax kicked in.

The transportation industry is often a bellwether for the economy, since it gets an early look at whether economic activity is picking up or slowing down before those conditions show up in economic data and reports. And this week, Fed Ex, the global shipping giant, considered a bellwether for the transportation industry, reported a 31% decline in quarterly earnings, and warned that global trade has slowed to levels not seen since the last two significant economic downturns.

And Caterpillar, the giant global provider of construction and mining equipment, considered to also be a bellwether for global economic growth, reported an unexpected 13% plunge in orders in the three-month period from December through February. The company said Asia Pacific sales fell 26%, and North American sales fell 12%.

Meanwhile, global economic problems are hitting the headlines again. This morning’s reports included that the euro-zone PMI Index declined again in March, falling to 46.5 from 47.9 in February, remaining under the 50 level that indicates a recession, with no sign of even bottoming let alone beginning to recover.

Washington is not making much progress so far on coming up with a compromise on the automatic spending cuts. And yesterday, the Fed gave its first hint at changing its QE policy. Rather than repeating its previous promise of continuing its $80 billion a month purchases of bonds and mortgage backed securities into mid-2014, Chairman Bernanke the Fed will adopt a flexible plan of varying the purchases on a month to month basis based on how the economy is doing.

And the euro-zone crisis is already in the headlines again, thanks to the Cyprus fiasco.

But so far the markets don’t seem all that concerned about the early signs of conditions changing.

An important question for the long-term is whether the secular bear market has ended, or if the pattern of the last one will continue to be followed.

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We’ll just continue to follow our indicators.

To read my weekend newspaper column click here: Remain Invested But Alert!

Subscribers to Street Smart Report: There is an in-depth U.S. market, gold, bonds, update from yesterday in your secure area of the Street Smart Report website

Yesterday in the U.S. Market.

A positive day to another new high for the Dow, on average volume of 0.7 billion shares traded on the NYSE, 1.5 billion on the Nasdaq.

The Dow closed up 55 points, or 0.4%. The S&P 500 closed up 0.4%. The NYSE Composite closed up 0.7%. The Nasdaq closed up 0.8%. The Nasdaq 100 closed up 0.7%. The Russell 2000 closed up 1.0%. The DJ Transportation Avg. closed down 0.4%. The DJ Utilities Avg closed up 0.8%.

Gold closed down $4 an ounce at $1,607.

Oil closed up $.80 a barrel at $93.50.

The U.S. dollar etf UUP closed down 0.2%.

The U.S. Treasury bond etf TLT closed down 1.1%.

Yesterday in European Markets.

European markets closed up quite strongly yesterday as concerns over the bank crisis in Cypress eased. The overall Europe Dow closed up 1.0%. Among individual countries, the London FTSE closed down 0.1%. The German DAX closed up 0.7%. France’s CAC closed up 1.4%. Italy closed up 2.2%. Spain closed up 1.2%. Russia closed up 1.0%.

Asian Markets were mixed Tuesday night and again last night.

The Asia Dow closed down 0.2% Sunday night and up 0.2% last night.

Among individual markets last night:

Australia closed down 0.1%. China closed up 0.3%. Hong Kong closed down 0.1%. India closed down 0.5%. Indonesia closed down 0.6%. Japan closed up 1.3%. Malaysia closed up 0.1%. New Zealand closed down 0.2%. S. Korea closed down 0.4%. Singapore closed up 0.6%. Taiwan closed up 0.2%. Thailand closed down 0.9%.

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Markets This Morning:

European markets are down this morning. The Europe Dow is down 0.8%. Among individual countries the London FTSE is down 0.7%. The German DAX is down 0.8%. France’s CAC is down 1.0%. Norway is down 0.1%. Portugal is down 0.2%. Spain is down 0.5%. Switzerland is down 0.7%. Italy is down 0.1%. Russia is up 0.8%.

Oil is down $.67 a barrel at $92.83.

Gold is up $7 an ounce at $1,614 an ounce.

This Morning in the U.S. Market:

This week will be an average week for potential market-moving economic reports, and will include the first new info on the housing industry in a while; New Housing Starts, Existing Home Sales, FHFA Home Prices, plus the Fed’s FOMC meeting announcement, Chairman Bernanke’s press conference, etc. To see the full list click here, and look at the left side of the page it takes you to.

Monday’s report was that the NAHB Housing Market Index, which measures the confidence of home-builders, declined to 44 in March from 46 in February, its second straight monthly decline, and to its lowest level since October.

Tuesday’s report was that Housing Starts ticked up a bit, 0.8%, in February. Permits for future starts were up 4.6%. Starts for single-family homes were up 0.5% to an annualized rate of 618,000, the highest level since 2008, but still well below the peak in 2006.

There were no economic reports yesterday, but the Fed’s announcement after its FOMC meeting and Chairman Bernanke’s press conference in the afternoon provided some temporary upside volatility that subsided by the close.

This morning’s reports are that new weekly unemployment claims ticked up by 2,000 to 336,000 last week. The four-week m.a. of claims fell by 7,500 to 339,750. And the U.S. PMI Mfg Index ticked up from 54.3 in February to 54.9 in March. And the FHFA Housing Price Index showed home prices were up 0.6% in January, and up 6.5% over the last 12 months.

Still to come are Existing Home Sales, the Phila Fed Index, and Leading Economic Indicators, all to be released at 10 a.m.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 70 points or so in the early going this morning.

To read my weekend newspaper column click here: Remain Invested But Alert!

Subscribers to Street Smart Report: There is an in-depth U.S. market, gold, bonds, update from yesterday in your secure area of the Street Smart Report website

I’ll be back with the next regular blog post on Saturday morning, as usual later than on the week-days, probably around 11 a.m.

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