August 30 2014
As always Of Two Minds is worth reading.
Will sports cartels survive the next recession?
Stocks registered what is likely to be a final short term low and are recovering. New highs shoudl come this October.
The number of stocks over their MAs quickly snapped back.
Stock are on track for new highs this fall. I expect that to be more of a final high.
Bonds
I read some analysts are calling this a partial retracement, but it looks like bonds are going back to their old highs. John Murphy has traced this to extreme weakness in Europe as the ECB lowers rates in a desperate attempt to re start a moribund economy. Still it seems odd to have stocks and bonds both advancing at the same time.
Crude Oil
I suggested last week that the fall from 103 looked more like a third wave. I drew the two blue lines to show the similarity. We had a sharp move up in July as well but it did not last. I would bet on further weakness this fall. Real suport lies at the old lows at 85.
US Dollar
The strength of the US Dollar may make it difficult for oil prices to climb very far, even from their oversold condition.
Bottom Line
We are nearing the 40 year anniversary of the December 1974 low in the Dow at 577. I am expecting the forty year cycle to peak this fall. That should bring an end to the five year rally from 2009. We are roughly five years from the March 2010 lows as well.
hanks for reading The Market Perspective
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