Today's Markets

With the SPYs, notice the following:-- The market was in an upward sloping channel until a bit after lunch.-- The market broke the upward trend in the early afternoon.-- The market tried to rally twice through the 200 SMA but was rebuffed.-- There is upward resistance in the 132.50 - 132.60 rangeNotice the following:-- There are interlocking trends/patterns....

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Are Commodities Heading Lower?

One of the main reasons I have been concerned about inflation is the incredible price spike across a variety of commodities. However, according to this week's Barron's cover story (subscription required) this may be the result of a speculative bubble. Here are some pertinent excerpts:Here's the problem [with all of the bullish bets on commodities]: The speculators' bullishness may be way overdone, in the process lifting prices far above fair value. If the speculators were to follow the commercial players -- the farmers, the food processors, the...

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What Inflation?

From Bloomberg:European inflation accelerated to the fastest in almost 16 years in March, heightening the European Central Bank's quandary at a time when the economy is cooling and confidence is falling.Consumer-price inflation in the euro area accelerated to 3.5 percent this month, the highest rate since June 1992, the European Union's statistics...

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New Bank Code

Today the new voluntary bank code comes into effect, which will "in theory" require banks and building societies to do more to help customers in financial difficulties.The new code states that banks must contact customers that they think may be heading toward debt problems, until now the onus has been on the individual to contact the bank. Consumer group Which? said the new code should have gone further, such as raising minimum credit card repayments. Banks must now assess whether people will be able to repay their debt, before they are given new...

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An In-Depth Look At the SPYs

I'm going to spend this week taking an in-depth look at the three major indexes. Let's start with the SPYsThis is a fifteen year chart in weekly increments. Notice the following.-- We're clearly in the middle of a multi-year double top. The first top occurred in 2000 and the second top occurred in 2007.-- Notice that prices are at roughly at the...

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The FSA

Were the FSA to be regulating itself, given its recent report about its failings, it would have failed itse...

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Weekend Weimar and Beagle

It's that time of the week again. The markets are closed. That means it's time to think about anything except the markets. I'll be back bright and early Monday morni...

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Personal Spending Flat

From marketwatch:U.S. consumer spending was flat in February after adjusting for inflation, the third consecutive month of weak consumer demand, the Commerce Department reported Friday.Real consumer spending has risen less than 0.1% seasonally adjusted since November, a clear sign that the main engine of U.S. economic growth is stalling as job growth...

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Are More Banking Problems Coming?

From CNBC:"I would say that while to date the problem banks have been quite low, there clearly has been some deterioration since the beginning of this year, and should the economy continue to slow down, as many expect, it is likely that we will continue to see some growth in the problem institutions," he told a seminar at the Bank of Korea......Rosengren...

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House Prices Fall

Figures from the Nationwide show that the price of the average house has fallen in March by 0.6% to £179,100. The annual rate of house price inflation is now 1.1%, the lowest since March 1996. Fionnuala Earley, group economist for Nationwide, is quoted in The Times:"The outlook for UK house prices is clearly more downbeat. Some of the downside risks we identified in November have become a reality — most notably the continued turmoil in the financial markets." Howard Archer, chief economist for Global Insight, is predicting a 5% fall in house prices...

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Is the Fed Rethinking Its Policy Toward Asset Bubbles?

From Bloomberg:Federal Reserve officials may be rethinking their aversion to acting against asset-price bubbles, an article of faith during former Chairman Alan Greenspan's 18 years at the helm.After this month's near-collapse of Bear Stearns Cos., Minneapolis Fed Bank President Gary Stern -- the longest-serving policy maker -- said in a speech yesterday that it's possible ``to build support'' for practices ``designed to prevent excesses.'' New York Fed President Timothy Geithner, whose district bank took on almost $30 billion of Bear Stearns assets...

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Today's Markets

Yesterday the market's broke through an uptrend that started on Monday, March 17. Yesterday the markets traded in a range from 133.5 to 134.5. Today the market consolidated lower in a triangle pattern. Also note the market sold-off hard at the end. End of the day sales are never a good thing. It means traders are taking money off the table at...

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Behind The Curve

I am not the only person who believes that the Bank of England and Mervyn King have been slow to realise the dangers of the ongoing credit crunch.Former Bank of England policy maker DeAnne Julius has weighed in. She is quoted on Bloomberg as saying:"They're behind the curve.If I were still on the committee I'd be voting for a half-a-point cut."She went on to say that King had not communicated enough with financial markets as well as banking regulators and the Treasury, as the crisis developed last August.She blamed the Bank of England for the run...

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Has the Fed Removed Downside Risk?

I've been thinking about this portion of the latest Fed statement:First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of...

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It's a Very Difficult Market to Read

Sometimes the charts are incredibly clear and give very clear signals. Sometimes they're about as clear as mud. The current market is definitely a case of the latter. Consider the following:Above is the chart using simple moving averages. These SMAs give equal weight to all the numbers in the calculation, assuming that every number is equally important....

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A Quick Oil Update

Oil is rallying again.Notice the following:-- Prices retreated roughly 8% after the last Fed rate cut.-- Prices retreated to the previously established support around 100-- This price is also very close to the 38% Fibonacci retracement level for the early February/mid-March rally.-- Yesterday the price moved through the 10 and 20 day SMA-- The shorter...

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Today's Markets

The SPYs are currently in a consolidation pattern. Note that today they broke through the trend line established a week ago Monday. But the average has been trading in the 133 - 135 range for the last three days. While there could still be a double top formation on Monday and Tuesday of this week, there is usually a stronger, sharper sell-off from...

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FSA Admits To Being Unacceptable

Hector Sants the CEO of the beleaguered Financial Services Authority (FSA) has finally admitted what everyone else has known for many months, namely that its handling of Northern Rock was unacceptable. The FSA's internal review of the fiasco stated that the "quality, intensity and rigour" of oversight by its management had been inadequate. It said that its supervisory teams had failed to follow up with Northern Rock on the vulnerability of its business model, as the credit crisis took hold last summer. Resources were inadequate, and managers failed...

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Commodities/Dollar Update

One of the big stories for the last 3-6 months is the commodities boom. Just to refresh your memory, the commodity market has been on fire for two inter-related reasons. As the Fed started to cut interest rates it became clear to traders that the Fed was going to let inflation run. As a result, traders bid up commodities as an inflation hedge. ...

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Are We In For Long-Term Stagnation in Stock Prices?

From today's WSJ:The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.The Standard & Poor's 500-stock index, the basis for about half of the $1 trillion invested in U.S....

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Yesterday's Markets

Here's an interesting question for Bonddad readers: Is it better to have the market wrap after the market closes or in the morning before the market opens?Anyway -- let's look at the long-term chartsThe SPYs have the most interesting 10-day chart. On the left, notice we have two triangle consolidations. The first is more level and the second is a...

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Today's Markets, er, Tomorrow

I've got a doctor's appointment that I have to run to (I'm fine. This is routine stuff). But I'm leaving before the market closes. I'll run "today's markets" tomorrow morni...

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Case Shiller Index Drops Record Amount

From the APHome prices in many cities continued to plunge by record levels in January as sellers cut their asking bids and rising foreclosures took their toll, new data showed Tuesday.While the spring selling season usually gives the market a bounce, some analysts say any notable improvement may not come until well into the summer. U.S. home prices...

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Housing Nowhere Near a Bottom

From today's WSJ:A glut of foreclosed homes of historic proportions is starting to drive down U.S. home prices faster as lenders put more properties on the market and buyers show signs of interest.The ability of America's lenders to manage this fire sale will be crucial to determining how long the housing market stays in the dumps -- and how quickly...

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