Well here it is Sunday morning and I am thinking about the market. That's not so unusual, as I think about the market everyday.
But what I am thinking about this particular Sunday morning is the market action last week. The negative action has to have been disappointing to the bulls.
Let's examine some of the facts of what traders are looking at and what has them worried.
Interest rates: Last week the 10 year Note inched higher yet again and interest rates closed higher for the week. The upward trend in interest rates remains positive, this is not a good sign for the stock market.
Crude Oil: Forget the Middle East that's a disaster already. If that was not enough you have Nigeria which is not exactly going along with anyones game plan. Bottom line, oil closed higher on the week. I would not be surprised to see oil trading over seventy dollars a barrel on Monday or Tuesday of the new trading week. This is not a good sign for the stock market. Higher fuel costs, translate into higher food cost, which translates into higher inflation, which means higher interest rates. These are not good signs for the stock market.
OK, let's sum this all up by looking at the market itself. As I have said before, listen to the market as it tells you what it wants to do. Last week the Blackstone Group went public. This to me was a pretty bearish sign. Here you have some of the smartest guys on the planet selling their assets to the public. Think about it for a second, would you if you are making all this money in all these private deals cut the public in for a share of the pie???
My guess is, if the principals of Blackstone are still around in a few years they will take Blackstone private again with a stock buy back.
Just a thought.
Back to the market. Three weeks ago MarketClub flashed a "Trade Triangle" exit signal on the Dow. The same exit signal held true for the S&P. The lone exception was NASDAQ which managed to inch to new highs last week.
For the record, the major trend for all the indexes remains positive according to the MarketClub formula.
The bulls argue that there's lot's of liquidity and that stocks are cheap relative to whatever metric du jour they are using to measure stock values.
I say watch the market and not the words of the talking media heads. Always remember market action trumps market talk every time.
Here's what I expect will happen. Look for and expect more volatility in the markets. The easy money has been made. Look for money to become more expensive to borrow as rates climb higher. The wild card has to be oil. Under seventy dollars is under the radar for most market mavens and media pundits. Over seventy dollars and it's a whole new ball game.
So there we have it, the Ying and Yang of the market. Are we seeing a top in the global stock markets or is this the pause that refreshes.
For me, I am going to watch the market action and MarketClub's "Trade Triangles" as I know they offer the most subjective view of what the future holds.
Anyway, that just some of the things I am thinking about this Sunday morning. Have a great week in the market and remember there is usually a bull market somewhere in the investment world and MarketClub can help you find it.