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We begin with the necessary disclaimer. These are one set of possible subjective analyses and do not constitute professional investment advice. No investment decisions should be made on the basis of this information. Financial investment is an inherently risky activity and must be undertaken with a competent investment advisor.
Having said that, as a matter of my personal opinion, it looks as if the equity markets are signaling an important change in tone to the upside. Has the bond theme reached its natural conclusion?
First consider the CRB index, which is weighted towards industrial raw materials. Here we see a definite surge in activity suggesting that there might be an actual demand for them. It appears that it might be snapping out of a five month long holding pattern…
CRB index
Next we see the broker dealers rebounding. These are the guys who directly profit from increased market activity. Somebody is getting rapidly interested in them.
If we look back to Wednesday’s trading, we see the composite market (this chart is a hybrid of the SPX and NASDAQ and seems to give a very nice picture of the meaningful market activity) we see the close above a critical resistance line.
Also, high tech, which was supposed to be a trouble spot, has sharply rebounded. This may be in anticipation of a new round of financing.
On the other end of the economic balance, the retail sector has powered out of a slump as well.
Even the aerospace and defense sector, which is probably suffering from a military wind-down syndrome, has shown signs of life.
And if we look overseas at Thailand, we see a market in simply explosive growth. This in no way is a picture of global slowing.
Overall, it looks as if the equity market is regaining its vigor and a slow but potentially powerful deep rooted recovery may be underway.
September 29, 2010 at 12:47 pm
Dear Petra,
Let me doubt about this analysis, co’s I don’t believe in chartist snafu (and I never did). In the other way, the fundamental analysis shows to be a most believable predictive tool.
Did you ever thought about the Harrod and Domar theorems? By those ones I mean a consubstantial blockage of W and K factors propping this analysis to real representation of that’s going to happen.
In other words, the capital productivity factors (which had grown and furnish the basis of world economy growth numbers) are blocked by energy supplies of after peak situation. The economy couldn’t restart if the energy lacks, that’s a bare fact.
I can’t see the price as the driving factor of economy development. Let me point up your observation about the retail sector: There you’re right in short term view, only the prices and not volumes, are powering this curve . Honestly, do you mean that an “out of work” and “foodstamped “ population can maintain his previous levels ( 2007 ) consumption? Even though the military production increases, I see nothing sustainable in it.
From now to the future I’m predicting the fall of demand an fall of offerings, including all the productivity factors ratios blocked and a stationary macroeconomic state. You can notice, that it has nothing to do with ” collapsniks “ and “ eternalgrowthniks” media discourses.
Productivity factor K/L blocked, signifies wage drop blocked, no multiplicator and no accelerator on sight. The unavoidable result : A long term stagnation of investment and demand.
That’s a matter of fact, the stationary economic state is a bad news for finance and even more bad one for real economy businesses : Until the innovation come to reboost productivity ratios. Nowadays, we’re far enough from this innovation step.
I’m not Nostradamus, I’m sharing my point of wiew.
And I like your blog … by the way.
Courtier-or