Comments on: Stocks Shout “Recovery!”; What Do Other Markets Say? http://www.ritholtz.com/blog/2009/08/stocks-shout-recovery-what-do-other-markets-say/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 23:28:32 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Cohen http://www.ritholtz.com/blog/2009/08/stocks-shout-recovery-what-do-other-markets-say/comment-page-1/#comment-209126 Cohen Wed, 26 Aug 2009 20:58:56 +0000 http://www.ritholtz.com/blog/?p=36702#comment-209126 There is definitely some divergence occuring. Treasury yields have been mentioned as one. I'd point to the USD actually firming up as a potential headwind for equities. The BDI, as well, as mentioned in your report. Other items: 1. If you overlay the Chineese stock market, the CSI 300 should do, over the Naz or SP5, it seems like that market has been leading the US by a few weeks. If the down move in China continues, it does not portend well for stocks. Also, the BDI decoupled from Chineese markets before the swoon. Defintely negatives. 2. BKX has been managing marginal gains recently, propped up primarily by the loser companies like C and BAC, but overall, there doesn't seem to be much strength there. 3. The XRT did not make a new high along with the SP5. There are others but that's kind of what I'm watching mostly. While I think all those are red flags, I think it's important to pay some respect to the bull case as the trend is still their friend. Equities could be prepping for a down move but they could just be taking a breather for another run up, which would have room to 1120 on the S&P. http://image.minyanville.com/assets/FCK_May2009/File/JarrodNEW/spxdowntrend.gif There is definitely some divergence occuring. Treasury yields have been mentioned as one. I’d point to the USD actually firming up as a potential headwind for equities. The BDI, as well, as mentioned in your report. Other items:

1. If you overlay the Chineese stock market, the CSI 300 should do, over the Naz or SP5, it seems like that market has been leading the US by a few weeks. If the down move in China continues, it does not portend well for stocks. Also, the BDI decoupled from Chineese markets before the swoon. Defintely negatives.

2. BKX has been managing marginal gains recently, propped up primarily by the loser companies like C and BAC, but overall, there doesn’t seem to be much strength there.

3. The XRT did not make a new high along with the SP5.

There are others but that’s kind of what I’m watching mostly.

While I think all those are red flags, I think it’s important to pay some respect to the bull case as the trend is still their friend. Equities could be prepping for a down move but they could just be taking a breather for another run up, which would have room to 1120 on the S&P.

http://image.minyanville.com/assets/FCK_May2009/File/JarrodNEW/spxdowntrend.gif

]]> By: leftback http://www.ritholtz.com/blog/2009/08/stocks-shout-recovery-what-do-other-markets-say/comment-page-1/#comment-208897 leftback Wed, 26 Aug 2009 13:58:44 +0000 http://www.ritholtz.com/blog/?p=36702#comment-208897 Nice review, Jack. The credit markets are always wiser than equities. We have been having this out at Macro Man's blog lately (e.g. read the last few comments): http://macro-man.blogspot.com/2009/08/why-arent-bond-yields-higher.html The Leftback Index of Economic Indicators is less healthy: as you point out, spreads are wider (JNK has rolled over), the Baltic Dry is down again, and $gaso has rolled over as well, which tends to lead crude oil down. The DUCT TAPE* may be coming off the economy now. *Dollar Undermining Carry Trade, Toxic Asset Protection Exercise. Nice review, Jack. The credit markets are always wiser than equities.
We have been having this out at Macro Man’s blog lately (e.g. read the last few comments):
http://macro-man.blogspot.com/2009/08/why-arent-bond-yields-higher.html

The Leftback Index of Economic Indicators is less healthy: as you point out, spreads are wider (JNK has rolled over), the Baltic Dry is down again, and $gaso has rolled over as well, which tends to lead crude oil down.

The DUCT TAPE* may be coming off the economy now.
*Dollar Undermining Carry Trade, Toxic Asset Protection Exercise.

]]> By: davossherman@gmail.com http://www.ritholtz.com/blog/2009/08/stocks-shout-recovery-what-do-other-markets-say/comment-page-1/#comment-208845 davossherman@gmail.com Wed, 26 Aug 2009 11:30:19 +0000 http://www.ritholtz.com/blog/?p=36702#comment-208845 "The bullish retort, of course, would likely be one of welcome — “just some more bricks in the ‘wall of worry’ stocks love to climb!”. A wall constructed of inventory re-stocking, ersatz demand (”cash for clunkers”), and funny money (quantitative easing) will remain high and sturdy-looking only as long as the mortar holding it together (sentiment) remains strong (btw, the State Street Investor Confidence hit its highest level since May 2004 just today — see below). Let’s see how this edifice withstands the changing weather come autumn. How it fares will in part determine Chairman Bernanke’s legacy, just as will any outbreak of inflation should he forget to take away the punchbowl equities have been dipping into these last few months." +1 !! Thanks for a good read! Your fine art makes Barry's site a pleasure to wake to. Take care “The bullish retort, of course, would likely be one of welcome — “just some more bricks in the ‘wall of worry’ stocks love to climb!”. A wall constructed of inventory re-stocking, ersatz demand (”cash for clunkers”), and funny money (quantitative easing) will remain high and sturdy-looking only as long as the mortar holding it together (sentiment) remains strong (btw, the State Street Investor Confidence hit its highest level since May 2004 just today — see below). Let’s see how this edifice withstands the changing weather come autumn. How it fares will in part determine Chairman Bernanke’s legacy, just as will any outbreak of inflation should he forget to take away the punchbowl equities have been dipping into these last few months.”

+1 !!

Thanks for a good read! Your fine art makes Barry’s site a pleasure to wake to. Take care

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