Let’s
look at a longer term weekly chart of 10 year note yields, CRB Index, Dollar
index, and Gold.
Inflation
is exploding – notice the price of the CRB Index (Red).However 1/3 of the CRB index is weighted
towards energy prices.Gold (Green Line)
an often considered inflation hedge and barometer of impending inflation
expectations peaked in March.The
obvious question on Gold is this merely a correction or the start of a bigger
down move.The dollar index (blue line)
which is heavily weighted against the Euro has been in a consolidation or
trading range since April.Perhaps it’s
accumulation but it could be distribution as well before the next down move; as
yet unknown.
The big
question in my mind however is the action in the bond markets.On the 10 year yields topped out at about
5.2% in July of ’07 and June of ’06 a double top if you will.Yields
then plunged to under 4% before recently rallying somewhat.The bothersome point of the bond market is simply
yields relative to inflation are negative when you would think bond investors
would demand a premium to inflation expectations.The question IMHO to ponder is who’s
wrong?Bonds appear to be looking ahead
towards deflation (once commodities top out) and not inflation.
Something for everyone to ponder over this long weekend!
Happy Birthday America!
Enjoy your extended weekend!
ETF Range Projections for July 3
Written by Bill Zimmer
Thursday, 03 July 2008
The ECB
(European Central Bank) as expected raised rates by a ¼ point to 4.25% versus U.S. rates at
2%.
This
morning at 8:30 we received the June Jobs Report and the results are: Nonfarm
payrolls -62,000,expectations were: -50,000; Unemployment 5.5%,rate expectations were: 5.5 %; Average
workweek 33.7 hours ,expectations were: 33.7 hours;
Average hourly earnings +0.3% ,expectations
were: +0.3 %; and Jobless Claims 404K ,expectations
were: 385K
ISM
Non-Mfg Survey comes out at 10 AM and expectations are for a reading of 51
versus 51.7 for May.
As of
about 8:15 AM overseas markets were mostly lower partly in response to Wall
Street yesterday: Nikkei 225-0.16%,
Hang Seng-2.13%, Shanghai Composite+1.95%, DAX-0.59%, and the FTSE 100 -0.03%.
Due to
the July 4 holiday weekend: today Stock Markets close at 1 PM, Bond Market at 2
PM today.
Just after the Jobs report the futures look: Dow +41, S&P +3,
Naz -1, Oil +$1.25, and Gold -$2.7.
PrudentTrader.com
ETF RANGE PROJECTIONS for July 3
Tkr
Name
Prev
Close
Proj
High
Proj
Low
DIA
DIAMONDS
112.2
113.32
111.08
DUG
UltraShort Oil & Gas
27.79
28.97
26.61
EEM
Emerging Markets I
129.5
132.07
126.93
EFA
MSCI EAFEETF
66.85
67.7
66
EWZ
Brazil ETF
83.96
86.53
81.39
FXI
FTSE/Xinhua China 25ETF
125.47
128.32
122.63
GLD
SPDR Gold
93.17
93.77
92.57
IWM
Russell 2000ETF
66.91
68.08
65.75
IYR
Dow Jones US Real Estate
59.9
60.65
59.15
MDY
SPDRsMidcap
144.49
147.21
141.77
OIH
Oil Service ETF
215.27
222.18
208.35
QID
UltraShort QQQ ETF
45.83
47.24
44.43
QLD
Ultra QQQ ETF
71.64
74.1
69.18
QQQQ
Nasdaq 100 Trust
44.71
45.46
43.97
SDS
UltraShort S&P500 ETF
68.8
70.45
67.16
SKF
UltraShort Financials ETF
159.29
164.43
154.15
SPY
SPDRs S&P 500 ETF
126.14
127.75
124.54
USO
United
States Oil Fund
116.69
118.26
115.12
XLB
SPDRs Select Sector Materials
39.22
40.41
38.03
XLE
SPDRs Select Sector Energy
86.22
88.54
83.9
XLF
SPDRs Select Sector Financial
20.03
20.4
19.67
Rules: If the open
is above the Projected High or below the Projected Low then price is likely
to break out that day in the direction of the gap.If the breakout is to the upside the
Projected High becomes the Projected Low for the day and vice versa for a
downside break.
Have a Great Day!
What Everyone Knows (VIX)
Written by Bill Zimmer
Wednesday, 02 July 2008
I believe
it was Joe Granville who coined the term “What
everyone knows; isn’t worth knowing”.Seems to me just about everyone on CNBC, commentators and guests alike,
are patiently waiting for the CBOE VIX index to spike higher indicating significant
investor fear which often accompanies major market bottoms. A hopefully good contrarian might look at
that and say; the market can rally without a spike in the VIX or if the VIX
does indeed spike higher it might not mark a bottom at all but be a
continuation signal instead.What
everyone knows, what everyone expects – how often does it really happen?
Three
high spikes on the VIX, at or barely above 30 have recently marked tradeable
bottoms; that is probably what everyone is looking at, recent history.Recent history is often not a very good
indicator of future activity.For
instance, The Shanghai market collapse in March of 07; the bottom was marked by
a VIX reading of only 19, The May/June of 2006 decline’s bottom had a VIX
reading of only 25, April 2005 bottom VIX was only 19.
If we go
back to the bear market lows of 2002 and 2003 you can see it was much higher
VIX readings that coincided with the markets bottom.Then on the third trip down in March of ’03
(at the time very recent history) everyone was looking for the VIX to once
again spike up towards 50.It never
happened and the bull left the vast majority behind; waiting.It’s just not that simple.What
everyone knows or thinks they know is not worth knowing – Joe Granville was
right about that.