Tuesday Interest Rates & the US Dollar
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
Note to self: don't panic! The bears proved themselves today. The market is now oversold, so the burden starts to shift to the bulls to prove there is someone left out there who wants to own stocks. A while back we said that the equity market could not move higher as long as the TBill rate continued to move lower. The chart above shows the TBill rate has improved a bit showing tentative easing of the distress in the credit market. A break above 3.3% would help indicate that this isn't just a brief bounce, and offer at least the outside possibility for stocks to stabilize.
Rates are sagging in the middle with the 2 and 5-year rates below the shorter and the longer rates. When bond investors are uncertain they invest in the middle of the curve until the outlook is clear. Have all these rates hit their lows? Bonds have to be fully valued here. If rates go any lower it has to mean real trouble for stocks. If stocks can't compete at this level then there is no doubt the primary trend for stocks is now lower.
Longer-term charts carry a lot of weight predicting trends. The chart above is certainly long-term and has issued a decisive signal which means it is to be taken seriously. The message is that the scale has tipped against equities.
No doubt this weak dollar has undermined the attractiveness of US stocks. If the US Dollar is finally finding a bit of support, it may work in favor of our stock market.
