7/30 Morningline

Now that the dust of the initial GDP response has settled, let's see how the land lies:

• Nasdaq 100's pps ghost bear sign becomes permanent (QQQQ).
• Treasury long-term bonds show intermittent pps bull sign on upward gap (TLT).
• Dollar shows pps bear phase against yen following day of cheshering (USD/JPY).

Stocks and Rates

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY
QQQQ
VIX
TLT
JNK

The QQQQ signal flipped in and out throughout the day on Thursday -- more out than in, I'd say. The signal is the third phase switch in a parabolic sar bull phase that began in mid-July, and at this point is contrarian.

The TLT signal is disappearing and appearing nervously today as the price tries to settle under the twin impacts of slow GDP growth and a fascinating report (in pdf) from the St. Louis Fed saying there is a serious risk of Japanese-style deflation. (That's what I was reading with my coffee at 4 a.m.)

A bull signal on TLT suggests an expectation of lower  interest rates ahead. Although surely not from the Fed's short-term rate-setting -- how do you go below zero?

(Now if we could manage income inflation and price deflation, I could live with that.)


Below, oil and gold, and global indicators.

Oil and Gold

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
USO
GLD

Global

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
EUR/USD
USD/JPY
EEM

USD/JPY, another ghoster from yesterday, is showing a fairly steady (so far) bear signal on the pps, after a three-day bull whipsaw. We'll see if it lasts the day, or if it evaporates like the dew from the lotus petal under the mid-morning. If it shows dandelion robustness, or the swirling fall of the ephemeral cherry blossom.

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The Great Reflation: How Investors Can Profit From the New World of Money
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we reemerge from the wreckage.

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Indicator Exchange-Traded Fund Symbols:
EEM - emerging markets
EUR/USD - euro/dollar currency pair
GLD - gold
JNK - high-yield corporate bonds
QQQQ - Nasdaq 100 index
SPY - S&P 500 index
TLT - Treasury long-term bonds
USD/JPY - dollar/yen currency pair
USO - crude oil
VIX - fear index


Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal.
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.