Meantime, I decided that this is worth posting here today. So even though it was done a couple of days ago, it remains valuable as an overview of these markets:
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from DoctorK:
Here's a compilation of all of the bearish indicators in the market. As we've already discussed, payroll is tomorrow, and what's most important is how the market reacts to the numbers. There is distinct possibility for the markets to rally tomorrow [Friday, 12/5] (I don't know why it would, but it could).
Having said that, here are the bearish indicators.
Let's start with Vix, Yen and TLT. Vix is high, but actually giving a neutral signal. It potentially has found support at 60 and is about to move higher. Or, it might fail to break its 20 day moving average and come down.. Yen and TLT however are screaming higher (especially TLT). Normally Vix is correlated to these two indicators, but the correlation has broken down with the Fed's indication that it will push down long-term rates. But, the Fed hasn't actually started pushing down long-term rates, which means that much of the rise in TLT and Yen comes from money going into bonds or Yen. Eventually this will cause equities to sell off (and Vix to rise).
From another perspective, it is hard to imagine that a rally in equities or commodities will take hold as long as TLT and 30-year bond prices continue to rise. I'm looking for a reversal in TLT for a bottom to occur.
Another indicator is 10 year Treasury yields, which are incredibly low. In the chart below, the green line is the low from 2003. The yields we're presently seeing are modern day lows. Again, no rally till we see these yields rise.
After that, look what's happening to commodities. Let's start with BDI. It's falling again. Already down 95% from the highs, and it is still falling.
And then there's the commodities. Gold is hanging on as its value as a store of wealth has value. All other commodities are at their lows or setting new lows. Silver, which is both a precious metal and an industrial metal is just above its lows, possibly forming a bottom.
Gold's hanging tough near the middle of its BB and might be putting in a higher low.
Silver might be putting in a bottom as well.
Charts from http://bespokeinvest.typepad.com/bespoke/2008/12/bespokes-commodity-snapshot.html
Platinum's chart looks a little more bearish than silver, but a bottom might be forming.
Copper, on the other hand, which is much more an industrial metal, is setting new lows.
Oil as we know, sliced through $45 and is making new lows, and natural gas is on the verge of doing the same.
Meanwhile, the Ag's are getting hammered. Corn continues to fall, while wheat failed to establish a bottom and is making new lows.
And both coffee and orange juice, after successfully testing support once, have broken lower:
Then there are Credit Default Swap spreads on commercial bonds. The US markets are holding just below all time highs:
Investment grade on (top), high yield on (bottom)But in Europe, spreads are blowing out:
Investment grade on the (top), Crossover (High Yield) on the (bottom)
(Charts from http://www.creditresearch.com/cdrweb/index.jsp)
I have no idea why Europe is blowing out, especially with the rate cuts today. But perhaps the US is ahead of the game in recapitalizing their financial system with all the Fed and Treasury interventions, including the trillion or so the Fed dumped into the system last week.
The economic numbers are absolutely putrid, check out this Weldon Report for a rundown http://weldononline.com/data/wmm120408xMoney1228437893.pdf
I particularly like this chart they provide of US domestic auto sales:
Now comes payroll. This could be the start of another leg down. The indices could also find support tomorrow, and start their leg up. But, we won't know until the market reacts to the payroll numbers.
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(Folks, as I mentioned, DoctorK has started his own blogsite, you can locate by going to his profile under "Contributors" at the bottom right - to see what he updates there from time to time.)
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