Wednesday Market Momentum Breadth Volume
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 |
So should we be buying bonds or shorting them? If you are a buyer, you're thinking the recession is only getting started, rates are headed lower and you need safety from falling stock prices. If you are a seller, you think the economy may muddle along, but you are quite concerned about commodity-inflation and rising rates ahead. That's my view and I took an initial short bonds position today. Although my confidence level is low... read on.
As for the stock market, I'm reading lot's of negative comments that basically state we've hit the top of this intermediate cycle and prices are headed lower. But so far my charts show the new lows haven't yet signalled a serious selloff ahead, and the selling on Tues and Wed seemed to make sense after a nice run up... and with the SPX failing just under the 200-day. I think a pull back to the 50-day or maybe the 50% retrace level is reasonalbe and isn't necessarily ringing alarm bells as long as the market internals aren't too bad.
What has me quite worried is the report from Trim Tabs that the economy has suddenly stalled again. Not that they were seeing much strength in the weeks prior, but tax receipts, withholdings, job ads, buybacks, insider buying were all pointing to a stealth economy firming up. Now this week all that has dropped off a cliff according to Trim Tabs. They were considering going 100% long last weekend, but they are now considering going 50% short this weekend. Quite the reversal for an investment strategy. More like a day trader which is not their style.
ECRI makes the excellent point that indications were that the recession would be mild but would last longer than many thought. Now with oil spiking, despite today's reversal, ECRI points out that it is a jolt to a very weak economy that could send it into a more severe recession. If that's the case, the future for commodity prices and bond rates is quite uncertain, because a severe recession is probably capable of sending oil prices lower which would mean lower bond rates as well.
