Wednesday, July 8, 2009

Wednesday Evening Market Update

EBR's recent bullishness on Treasuries has proven out, as the yield on the 10-year has collapsed from a recent peak near 4% to under 3.3%. At the same time, gold, silver and oil are all looking weak. Numerous stock charts look weak as well, with strength in low-end retailers such as Family Dollar the only excitement.

The cyclicals such as steels, Boeing, and others are weak, and GE has turned down. Citigroup and AIG have definitively broken down, and JPMorgan and Wells Fargo are being toyed with around various moving averages.

Overall, EBR is short-term more neutral on most markets than otherwise, with a bias to the downside on the markets or equities with the weakest charts. This downside bias unfortunately includes the Dow and to an only slightly lesser extent the S&P 500, the moving averages of which are reminiscent of their patterns in fall 2007.

Of course, psychology is much more attuned to the bear/recession (Depression) case now, unlike the refrain then that what happens in subprime stays in subprime. That obvious fact means that a big down-move in stocks come more from the meat than from evaporation of froth.

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