070210: On the heals of further bond market strength and a growing belief that deflation is back in the mix; all but one (Germany being the lone holdout) of the equity index's have broken their respective up-trends, have registered new bearish chart patterns and/or have broken down in earnest. Fundamentally, the recovery wasn't all that great to begin with and now politicians are calling for tighter fiscal policy, the imposition of various new corporate and consumption tax regimes and a growing belief that various industries need to be more strictly regulated. Look out all you capitalists, its going to be a bumpy ride for a little while. Else ware, commodity prices look vulnerable too. While they haven't broken the way stocks have we may need to go through a period of consolidation before any new moves higher can be seen.
Stocks: Listed above are the four most significant stock index's in North America. The Dow Industrials, The S&P 500, The Nasdaq and The TSX 60 (important for us Canadian's....irrelevant to the rest of the world....lol). Notice the almost straight line up move we experienced over the past year. It is hard to believe the Dow was trading in the 6000's just last year! The important thing here (I believe) is that it would be perfectly normal and healthy for all of these markets to take six months and clean themselves up. Give us a 50% retracement, let's hear some real bearish sentiment out there, and if we could too please.....could we get a nice bullish momentum divergence while you are at it......maybe that is asking a little much....
For those OnlyDoubles subscribers out there, after some careful analysis, it appears an option trade just isn't profitable enough (from a risk/reward perspective) to consider. Should we get a rally up to test the respective stops, options positions may become attractive at that point...
That's all for this issue of the CTS Spotlight,
Brian Beamish FCSI
the_rational_investor@yahoo.com
http://www.the-rational-investor.com
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