Labor Day 2010
As the President trots out the Second Stimulus, we take a longer look at the internals of this market. This is the Summation Index for the NYSE. The green red blue ribbon is the 21, 34, 55 week exponential moving average. Note that once all three turned down in 2007, they never recovered until the rally back in 2009. Note that once again all three have crossed over with the longest 55 bar green line on top now. We think this is significant and cuts thru all the talking head mumbo jumbo about the economy and what might or might not happen. The pink lines trace the downtrend channel that took place from 2006-2009. This spanned three years. If our analogy holds true here, we are in for a similar long and grinding bear market now. The three MAs confirm that down turn. And we have the start of another down trend .
We continue to believe that examining the internals of the market, what stocks are doing without the weighting of the big price indices is key to discerning what is really happening. Our conclusion is that the new down trend is underway.
Remember that we are only half way through the 18 years period of economic stagnation. The latest stimulus idea of tax credit for one sector while taxing oil and gas will achieve no overall success. Unemployment numbers continue to increase. Polls indicate massive discontent with current policy which is typical of a bear market.
We are recovering from surgery to repair a retinal detachment so our graphs will likely be fewer and comments more frequent, bear with us, we continue to monitor the markets.
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