Friday, August 6, 2010

8/6 Morningline Update

  • Stocks: S&P 500, Nasdaq 100 move to bear phase on Person's Proprietary Signal (pps) (SPY, QQQQ)
  • High-yield corporate bonds move to bear phase on the pps (JNK)
  • Crude oil shows pps bear signal (USO)
  • Emerging markets turn bearish on the pps (EEM)

If the markets were a mystery novel, this would be the moment of recognition: Happy days are not here again. The recession is not over. Recovery is not just around the corner.

So, no recovery means lower corporate profits (bear signs for SPY, QQQQ), greater likelihood that corporations will default on their debt (bear sign for JNK), less demand for crude oil amid industrial stagnation (bear sign for USO), and fewer chances for export-dependent emerging markets to prosper (bear sign for EEM).

All of this from a disappointing jobs report. How dismal is that!

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.

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.

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