Tuesday March 8, 2016
Stocks and oil are taking a breather in pre market trading this morning. Junk makes a comeback
Junk bond Rebound Signals easing Fear
I quoted a headline from the front page of today's WSJ regarding junk bonds. This is interesting in that we peg this as a transition week with today possibly recording
the top of the seven week rally. In the chart JUNK has re traced enough to work off its over sold condition. RSI how equals its previous high where JNK topped out in June. This is
typical bear market thinking, the bounces mean the bottom is now in place. Be sure tor read page A 13 Rising Global Debt and the Deflation Threat on page A 13. The world is awash in debt
Our bets on CLF and MSB paid off. global debt is 300% of GDP which puts us right back at the 2007 levels. You will recall what happened next.
CLF has fallen so far one can hardly read the vertical numbers from three years ago. Iron ore prices soared Monday on China's promise to continue to produce more steel. But this is happening in conjunction with a copper, gold, silver, and oil rally as well.
Now, if we are right about the overall stock market topping this week, will energy prices as well as energy stock prices continue to soar if the overall market falters?
Stay tuned.
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