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Technical Security Analyst Association of San Francisco Saturday January 15, 2011

Financial Market Update. The Secular and Cyclical Outlook for Stocks, Bonds, and Commodities. Technical Security Analyst Association of San Francisco Saturday January 15, 2011 Presented by: Tom Kopas , Martin Pring, and Joe Turner www.pringturner.com. 4. 3. 2. 1. Secular Trend Stocks.

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Technical Security Analyst Association of San Francisco Saturday January 15, 2011

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  1. Financial Market Update The Secular and Cyclical Outlook for Stocks, Bonds, and Commodities Technical Security Analyst Association of San Francisco Saturday January 15, 2011 Presented by: Tom Kopas, Martin Pring, and Joe Turner www.pringturner.com

  2. 4 3 2 1

  3. Secular Trend Stocks 16-years/ 62% decline/ 4 recessions 19-years/ 67% decline/ 4 recessions 19-years/ 69% decline/ 6 recessions ? 10-years/ 34% decline/ 2 recessions ?

  4. Halfway Through Secular Bear Completed Secular Bear Target Area 2016-2020

  5. 4 U.S. Stock Prices (Inflation Adjusted) 3 2 1 U.S. Commodity Prices Commodity Oscillator (72/240)

  6. 2000 1966 1929 1901 2 2 6 4 2 4 4 2 4 6 3 1 1 7 3 5 3 1 5 1 3 5 7

  7. Key Points: Secular Trend for Stocks • Long Periods of Alternating Good and Bad Performance • Secular Trends Change at Extreme Valuation Levels • Currently Halfway through our 4th Secular Bear Market • Be Aware of Commodity Secular Bull Market • Capitalize on Cyclical Stock Market Opportunities • Understanding Secular Environment is Key to Success

  8. Setting the Scene for the Very Long-term Trend of Commodities and Bond Yields Presented by Martin J. Pring www.pringturnercapital.com

  9. US Commodity Prices 1840-2010 8 US Commodity Prices 22 Average bear=21-years 12 Average bull=19-years 18 22 33 19 Current bull is 8-years old. 13 23 www.pringturnercapital.com

  10. US Commodity Prices 1840-2010 US Commodity Prices Danger level in 330-360 zone. Price Oscillator (60/360) www.pringturnercapital.com

  11. CRB Spot Raw Industrials versus the Commodity Barometer CRB Spot Raw Industrials 100% reading in December Pring Turner Commodity Barometer www.pringturnercapital.com

  12. CRB Spot Raw Industrials versus the Global Economy Largest decline when bullish. CRB Spot Raw Industrials Global Economy A long way from a zero crossover. www.pringturnercapital.com

  13. CRB Spot Raw Industrials Still rising but fully stretched. Commodity Diffusion Indicator (24/9)

  14. US Government Bond Yields 1860-2010 US Govt Bond Yields 30-years Average=30-years Average=25-years 40-years 29-years 21-years 21-years

  15. US Government Bond Yields 1865-2010 96-month MA US Govt Bond Yields (20-30-year) Line is around 4.6%. 240-month (20-year) ROC www.pringturnercapital.com

  16. US Government Bond Yields 1865-2010 US Govt Bond Yields (20-30-year) Trendline and MA at 4.6%. Green plot when yield is above 96-month MA. 240-month (20-year) ROC www.pringturnercapital.com

  17. US Government Bond Prices versus the Bond Barometer US Government Bond Prices 35% reading in December. Pring Turner Bond Barometer www.pringturnercapital.com

  18. Master Yield versus Long-term Momentum 1958-2010 Master Yield Another buy signal? Long-term Momentum www.pringturnercapital.com

  19. 3-Month Commercial Paper Yield Green highlight shows when Growth Indicator is above +20%. Indicator ticking up again. Growth Indicator

  20. 3-month Commercial Paper Yield Loans All Banks/Governments Turning? KST (Ratio)

  21. Commodity versus Bond Prices 1855-2010 US Commodity Prices Government Bond Yields 6-years 4-years 6-years 8-years

  22. Inflation/Deflation Ratio 1961-2010 Inflation/Deflation Ratio KST Bullish

  23. Breakout Commodity/Bond ratio 1860-2010 Commodity/Bond Ratio Early stage of the secular bull market. Price Oscillator (60/360) www.pringturnercapital.com

  24. Leading the way Commodity/Bond ratio versus Government Bond Yields Commodity/Bond Ratio A double break would be highly significant. Government 20-30-year Yield www.pringturnercapital.com

  25. The Stock Market is Fear and Greed Superimposed Over the Business Cycle Joe D. Turner Pring Turner Capital Group www.pringturner.com

  26. The Random Noise of Economic News!

  27. Money Supply ? Bond Prices Stock Prices Economy Commodities

  28. Pring Turner Investment Approach Shortest: 6 Months Longest: 65 Months Shortest: 10 Months Longest: 120 Months Secular Bull Market 15.5% In a Recession Secular Bear Market 31.7% In a Recession We are Here

  29. The Rest of the World is Growing Faster… … Creating Global Inflation

  30. 4 to 5 YEARS Bonds Stocks InflationSensitive

  31. Utilities Banks Technology Food Producers Technology Transports U.S. Treasuries Consumer Discretionary Oil Drillers Oil Drillers Diversified Metals U.S. Treasuries Diversified Metals Healthcare Energy

  32. Tactics to Protect and Grow Your Wealth Secular Trend at Critical Juncture Pring Turner Capital Group

  33. Key Points: Investing Around the Business Cycle • Markets are Linked in a Logical, Rational, Sequential Relationship • For over 150 Years, Markets have Tracked Business Cycle Sequences • During Secular Bear Markets Economy in Recession More Often • Pring Turner Organizes the Business Cycle into 6 stages • Currently in Stage 4 • Good for Stocks and Inflation Sensitive Securities • Bad for Bonds • Business Cycle Drives Profitable Asset Allocation Decisions

  34. Seasonal and Cyclic Outlook for 2011 Presented by Martin J. Pring www.pringturnercapital.com

  35. Decennial versus Third Year of Presidential Cycle

  36. Decennial Cycle Secular bears Secular bulls All decades Weakness into mid-”2”-year.

  37. Current US Secular Bear Market vs The Average of Three Previous Bears Average of three previous secular bear markets. Bear trend since 2000 Mid-twelfth year

  38. +17% +10% Mid-August-Oct Mid-August-Oct +7% July-November

  39. Year 11 of Secular Bear Sept-Oct Early-April-Dec Mid-April-Dec -7% Mid-April-Dec Years Ending in “1” 1900-2010 -5% Years Ending in “1” 1900-2010 Secular Bears -13% Years Ending in “1” Secular Bears Prez 3 -18%

  40. Cyclical Equity Indicators

  41. S&P Composite /Commodity Prices 8 10 3 10 120-month (10-year) ROC

  42. S&P Composite Shiller P/E 18-ROC Topping?

  43. S&P Composite & KST Dividend Yield 1890-1960 S&P Composite KST Dividend Yield (Inverted)

  44. S&P Composite & KST Dividend Yield 1960-2010 Stalling from a high risk area. S&P Composite KST Dividend Yield (Inverted)

  45. S&P Composite versus the Stock Barometer S&P Composite Barometer is bullish. Pring Turner Stock Barometer www.pringturnercapital.com

  46. S&P Composite Int KST S&P. Int KST Con Staple RS line.

  47. Thanks for Listening… Please Visit our website www.pringturner.com to sign up and receive our latest research. Pring Turner Capital Group www.pringturner.com

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