It's not that we're dumb, it is just human nature
I may be clutching at straws but the break in trend which we saw last week is certainly different from the persistent upward move we have experienced since last March. Commodity prices must continue lower to take pressure off the stock market and relieve the Fed from hiking rates.
It was a good call so I'm leaving it up!
On the other hand..........neither of these bottom indicators are at extreme levels yet. To me it appears that the blue volatility index must reach at least 35 to indicate a solid bottom while the red volatility index must increase to perhaps 1.35.
Neither move has happened as of 09/09/08.
Source: http://www.market-harmonics.com
It is not just oil!
Congress is set to investigate the price of oil and why it has risen so fast. But unless they broaden their investigation and look at commodities in general, their time will be wasted!
This has to happen to set a market botom
Currently, just 17% of stocks in the S&P 500 are above their 50-days, which is just about as low as breadth has been during the prior lows seen back in August, January and March.
Eleven percent of Industrials and Materials stocks, 8% of Consumer Discretionary stocks, and just 3% of Financial stocks are above their 50-days.
Just think! It is worse Elsewhere
I am suspicious when a series is dropped from publication. Notice the acceleration in M3 growth immediately after the series is dropped.
The Consumer Price Index is probably understated as well. The latest quarter GDP came in a slight positive, enabling the Administration to claim that we are not in a recession. If inflation had been reported in a manner consistent with the prior 12 months, we would have seen negative growth in the GDP.
Dollar Confidence is Improving
July 3, 2008
The value of the dollar set a new recovery high last week. Dollar confidence remains up significantly from the low set last March. The Confidence Index is derived from market trades by those acting on their belief that the US $ will go up or down. We have seen a significant improvement in speculators attitude toward the US Dollar.
The Fed remains in a "Damned if you do, damned if you don't" position. This chart plainly calls for the Fed to be raising rates to avoid increasing inflation yet the Board of Governors has been forced to loosen the money supply in order to protect the banking system. It appears that the Fed is coming around though, as Bernanke has indicated that the next move will be to take money out of the system.
It isn't just oil; other storable commodities are also rising rapidly.
