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Why I Watch CNBC

By Jeff Clark
Thursday, December 31, 2009

Mark Haines made me do it. I wanted to wait, but the Uncle Buck-ish CNBC anchorman forced my hand.
 
Let me explain...
 
Last week, I shared with you some of my favorite technical indicators and how to interpret them. All of them suggested the stock market would likely trend lower in January and the odds favored a bet on the downside.
 
The Bollinger Bands are tightening, indicating a big move is on the way. The charts of the major indexes are displaying bearish rising-wedge patterns. Volatility Index (VIX) option prices are skewed to the upside, suggesting the VIX is going to move higher, which usually happens as the stock market moves lower. And the Bullish Percent Indexes for most market sectors are overbought and beginning to turn lower.
 
Despite the bearishness of the indicators, I was going to wait until next week – when we escape the traditional bullishness of the holiday season – before recommending a bearish trade to my Short Report subscribers. But I changed my mind. I changed it Tuesday morning after watching Mark Haines of CNBC interview a trader on the floor of the New York Stock Exchange.
 
Now, I like Mark Haines. He's one of the few talking heads who actually seems to understand how markets work. His extreme bullish bias during the interview, however, was almost distasteful.
 
"This market will not go down," Haines repeated each time the trader he was interviewing made a cautious comment. "It just will not go down."
 
Perhaps Mr. Haines was playing devil's advocate and merely highlighting the market's resiliency and consistent climb over the previous six trading sessions. But there was something taunting about the manner in which he said it. It was as though he was plugging his thumbs in his ears, wiggling his fingers, sticking his tongue out, and giving the trader a Bronx cheer.
 
And it was enough to make me want to place an immediate bet on the downside of the market.
 
There isn't a technical term for it, and there isn't any mathematically valid way to measure it... but when the emotions of CNBC reporters reach giddiness or despair, then it's as good a market timing indicator as any of the subjects I wrote about last week.
 
Indeed, it is an outstanding contrary indicator.
 
We can look back at March 2000, when Maria Bartiromo, CNBC's "Money Honey," giggled with delight as she and Jim Cramer discussed the Nasdaq's remarkable 100% gain in only five months. We can also point to a moment in early March of this year, when Joe Kernen actually drooped his head on camera while reporting General Electric, CNBC's parent company, was trading below $7 per share.
 
Each of those moments occurred within days of a major reversal in the market.
 
Mark Haines' interview on Tuesday morning was a far less extreme example. But he was still enough of an overconfident bull to convince me the time was right to bet the other way.
 
You might want to consider doing the same.
 
Best regards and good trading,
 
Jeff Clark




In The Daily Crux
Market Notes
New York Times races higher... legendary newspaper surges over 50% since October, reaches new high.
 
Sugar hits 20-year high... the sweet stuff trades at $705 per metric tonne on ongoing supply concerns.
 
Dollar rally continues... U.S. dollar hits three-month high against yen as traders bet on recovery.
 
Brazilian stocks have best annual run in six years... fund EWZ more than doubles in 2009.
New York Times races higher... legendary newspaper surges over 50% since October, reaches new high.
 
Sugar hits 20-year high... the sweet stuff trades at $705 per metric tonne on ongoing supply concerns.
 
Dollar rally continues... U.S. dollar hits three-month high against yen as traders bet on recovery.
 
Brazilian stocks have best annual run in six years... fund EWZ more than doubles in 2009.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%

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