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I last looked at the Shanghai Composite Index in May, 2010. (Click here and here.) My interest in the Chinese market is the possibility that it is a leading indicator for the US indices. Back in May with the Shanghai Composite off its highs by 17%, I stated "that US equity bulls should be concerned that the Chinese market has been diverging from the US indices. After all, the Shanghai Composite led the US markets off the bottom back in late 2008 and early 2009." So once again let's look at the technicals for this important market.
Thursday, August 26, 2010
Morning News Notes: 8.26.10
The morning news notes as prepared by TL....initial jobless claims, Japan buys foreign bonds, money supply is growing, the bond bubble, sales of new homes declined in July, and economists cut their GDP forecast.
Tuesday, August 24, 2010
A Bond Bubble? Not Likely!
My thoughts on the bond bubble can be summarized in two words: "not likely". When commentators have to tell you it is a bubble, it isn't a bubble. Or to put this in another context, name me one market top in the last 10 years where the commentators on CNBC where not imploring their audience to buy at the top. If anything, the commentators have this aura of incredulousness. "How dare bonds head higher and stocks head lower. Doesn't everyone know how undervalued equities are?" When CNBC throws in the towel and when they utter those famous words - "is it to late to buy now?" - then we can consider the possibility of a bond bubble.
Morning News Notes: 8.24.10
The "Morning News Notes" as prepared by TL...the egg recall, AIG, mortgages + White House = government guarantees, the YEN, consumer debt, US Equity technicals, Zandi on the housing market, California struggles to pay its bills, and drilling.
Monday, August 23, 2010
Morning News Notes: 8.23.10
The "Morning News Notes" as prepared by TL...why CEO's aren't hiring, excess cash at companies, Gallup poll on automotive companies, former chief economist at IMF on low interest rates, Wall St. job cuts, small investors flee stocks, US housing, Doug Kass is bullish, Obama to give speech on Iraq, and the political outlook for November.
Sunday, August 22, 2010
Investor Sentiment: Heading In The Right Direction
Insiders are buying, and the "dumb money" indicator is neutral but nearly becoming more bearish (i.e., bull signal). Another week of downside pressure will likely set up another buying opportunity in the near future as lower prices will bring out the bears. How sustainable will this buying opportunity be is the only question. In recent months, bearish extremes in investor sentiment have led to quick rallies (1-2 weeks) on lackluster volume that have been prone to fail. In other words, the markets aren't going anywhere fast, and the risk of failure is mounting.
Friday, August 20, 2010
Utility Sector: Divergence Between Smart and Dumb Money
The Utility Sector is thought to be a safe haven in the time of market duress. There is no question that the market is under pressure, but I would be very careful about betting on the assumption (dogma?) that safety will be found in the Utility Sector. Currently, it should be noted that utility company insiders are net sellers of their shares to an extreme degree. This is the "smart money". On the other hand, utilizing the Rydex asset data, these market timers (who we might call the "dumb money" because of their propensity to get it wrong) are betting to an extreme degree on higher prices in the Utility Sector. I ask: in such a weak market, why would I bet against the "smart money" and on the "dumb money"?
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