Currently the market is at an oversold condition similar to what we’ve seen at all of the significant bottoms over the last few years. However, we’ve yet to see clear evidence of exhaustion in selling followed by a surge in enthusiastic buying, which is the final evidence of a market bottom.
Right now, the S&P is more extended above its 200 week moving average than anything we have experienced since 1999. This is only the fourth time we have seen this type of extension in six decades. No predictions of some imminent demise, rather a “lesson” from direct historical experience.
By executive order of the President of the United States, as announced in the State of the Union address, there is now a new type of tax-advantaged retirement account.
The markets have stabilized and remain in a short trading range with the bulls and bears fighting it out. Various readings suggest we’ve likely seen a short-term bottom and may rally into next week; however, we haven’t quite seen enough fear in the markets to suggest the corrective phase is over.
Before we talk about the trees, we have to talk about the forest to put things in perspective. Over the long-term horizon, I believe we are in a new secular bull market that was confirmed when the S&P 500, the Dow Jones Industrial Average, the Dow Jones Transport Index, and the Russell 2000 all achieved all-time new highs last year...
Judging by pump prices, Canadian drivers might think oil companies were rolling in profits that only move higher. Lately, though, the big boys in the global oil industry are finding that earning a buck isn’t as easy as it used to be.
The US dollar is little changed against the major currencies, while the emerging market currencies are more mixed, ahead of the FOMC statement later today. Global equities are higher. Core bond markets are lower, while Spain and Italian bonds continue to outperform.
Emerging markets have been hemorrhaging this year and are now grabbing media attention. However, as I show below, the decline in these markets and currencies has been taking place for some time now. Question is: do they now present a real emerging threat?