It was only a few days ago when everyone was commenting on the head and shoulder topping pattern and expecting a decline in the S&P 500 to the low 800s. CNBC anchors who know nothing of technical analysis were even commenting on it as the financial media were all abuzz with the pattern, with Google Trends key word search showing a dramatic increase in Internet search and news reference volume highlighting the frenzy behind the pattern.
Today’s article is a follow up to last week’s piece entitled, “Commodity Bubble Revisited.” The premise of last week’s article was to make the case that commodities were not in a bubble in the last bull market that ended in 2008 with a climatic top.
Over the last few months, markets have enjoyed a strong recovery on the hope that an economic recovery would take shape. For much of this time period, markets have been content to observe economic data which has improved moderately, or in some cases, simply failed to get much worse.
Green, Yellow, and Red. Those are the colors of an American traffic light. Green means go. Yellow means caution because the red light is about to appear. Stop if you can do so safely. Red means Stop. Currently, the markets are signaling a yellow light which again, means caution. It means take a step back and review your homework. Are your hypotheses proving correct in this market environment?
Today’s article will be the first part of a two part series addressing whether commodities represented a bubble this decade with the benefit of hindsight to look at the correction in commodities over the past year.
Today’s announcement from the Conference Board was especially telling as not only did the numbers come in below analyst expectations, but among the key numbers each component declined. In the case of the overall confidence survey, the June figure came in at 49.30, down from 54.80 in May, while the Present Situation component came in at 24.80, down from 29.70.
Understanding, absorbing, and processing the lessons of “markets past” is often one of the key ingredients in putting together a winning investment program and forging a successful investor. While no two economic climates are ever the same, and no two stock markets are ever the same, successful investors tend to have an established historical knowledge that can be employed to help assess complex situations.
While the Dow Jones Industrial Average reached a new rally high in June the Dow Jones Transportation Average did not, with many technicians pointing out the non-confirmation (shown below). Today’s article looks at why the transports have been lagging and whether or not their recent weakness relative to the industrials will continue.
Over the last 10 weeks there can be no question that the capital market ‘herd’ has come storming back into the arena for speculation, on the prowl for signs of global recovery and reflation. The idea underpinning the advance has been to surf the coattails of the market gods, -- the global central banks -- which have been creating liquidity as never before.
Back in April a piece was penned that looked at how oversold the market was on a statistical basis (“Possible vs. Probable”). The basis for the article was to look at the percent deviation of the S&P 500 from its 200 day moving average (200d MA) and how many standard deviations it was below the mean, comparing the current experience to prior bear market sell offs.