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05032010 May 25, 2010

Posted by easterntiger in economic history, economy, financial, gold, markets, stocks.
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Weather Report Interim 05032010

Current Positions  (No Changes)

I(Intl) – exit; S(Small Cap) – exit; C(S&P) – exit ; F(bonds) up to 30%;  G(money market) – remainder

Weekly Momentum Indicator (WMI***) – last 4 weeks, thru 04/30   +15.58, +8.94, +13.86, +4.51

(4wks ago/3wks ago/2 wks ago/last week)

Market bulls continue to point to rises from monthly lows, and continuations of the mini-bull from last March as symptoms of strength.  On the other hand, this is the fourth rise similar to three others in the past 2 years.  Each of the first three resulted in substantial (double digit percentages) declines in a short period of time.  Also, last week’s high of 11,258 on the Dow Industrials coincides with the nearly 2/3 return (61.8%) from the March 2009 bottom back toward the 14,198 October 11, 2007 all-time top.  These very precise ‘retracements’ are watched closely as decision points for either signs of trend continuation or trend reversal.  This line is, essentially, a ceiling that will mark a boundary for the next trend or direction.

Interest rates continue down a slow crawl, which could signal bond buying, i.e., bond prices rising to test demand.  Safety could win out over risk in the near term.  The recent multi-month high in interest rates (the 6th high in the same rate range over the past year) could likely represent a ceiling of a different sort, where it’s realized that levels above are too threatening to outstanding debt levels, as threats to continued slow growth and a drag on credit demand.

These markets have                         These markets DO NOT have
New Highs Over January                 New Highs Over January Highs

FTSE – London                                 ISEQ – Ireland
SMI – Switzerland                             CAC – France
Nasdaq – U.S.                                    SMSI – Spain
S&P 500 – U.S.                                  MICEX – Russia

Dow – U. S                                         BSE – India Bombay Stock Exchange
AEX – Netherlands                            Hang Seng – Hong Kong
DAX – Germany                                Shanghai – China                        .
SMI – Switzerland
Nikkei – Japan
Merval – Argentina
Nifty 50 – India
Bovespa – Brazil
All Ordinaries – Australia

***The Weekly Momentum Indicator is a strength measure of the S&P100, the largest 100 stocks in the U. S., in terms of market capitalization (share price of each of the 100 stocks times the number of shares available to the public).  The WMI is the difference in the S&P100 average opening price for each of the past three Monday mornings and the average closing price for each of the past three Friday afternoons.  This detects upward, sideways or downward movement of the overall market, since the markets generally move in synch from one index to another, and correlates very well with identifying opportunities for reward/gain and for situations for risk/loss in all equity indexes.  Rising numbers from the prior week are positive opportunities, while falling numbers from the prior week are avoidance opportunities.  I have a weekly, thirteen-year history for this indicator at the time of update in this report (05/03/2010).***

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