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Hello Fellow Chart Watchers! The equities markets are continuing to decline and there's very little bullishness on the current charts. Retests of last September's lows have already started with some of the industry indices and will start happening with the major averages soon. Here are a couple of performance charts that should keep you from going long anytime soon:  Here we see how the major averages have done since last August. On 1-August-2001, the market began a sharp downturn that culminated with the consequences of September 11th. Since then, the markets rebounded starting on 21-Sept. The rebound ended in early January. A minor uptrend developed in March, but since then, most of the averages have declined steadily. The two exceptions are the Russell 200 Small Cap index which held onto its gains until early May and the Amex Composite which has been helped (as we'll see) by strength in the oil and precious metal sectors. Notice that the other averages (especially the the S&P 500 and Nasdaq composite) are closing in on their September lows. Finally, everything has been heading south in June.  Here we see that the Large Caps started diverging from everything else in December. The relative strength of the mid-caps is not widely mentioned. Still, all three indices are now below their 1-August levels.  Commodity groups present a mixed picture - Most have moved sideways however two stick out. Energy has been all over the place as war worries combined with supply/demand cycles to create lots of uncertainty. More interesting is the continued strength in the Precious Metals group which may reflect a low-level "flight-to-safety" by investors. We may get another bounce when the major averages reach the lows set last September. That could happen as early as next week. True ChartWatchers will be watching closely until then. Take care,
Investor's Intelligence Sentiment Fairly amazing that this number has remained fairly constant throughout much of the current bear market. What will it take for more people to become bearish?  Charts courtesy of DecisionPoint.com --Carl Swenlin Don't forget to visit DecisionPoint's "Top Advisors Corner" for free, periodic updated from some of the best in known names in the stock market advisor business. Click here for the latest postings. The inverse relationship between stocks (the Dow) and bonds continues. Over the last few months, rates and stocks have moved in unison. The Dow advanced in late February and early March while rates declined. Both rates and the Dow peaked in March and declined until late April. Both rose for a couple weeks in early May. Most recently, the 10-year note yield declined from 5.32% to 4.81% in the last 4-5 weeks, while the Dow moved from 10353 to below 9500.  As long as rates decline, the prospects for further fed tightening are diminished. This should be bullish for stocks, but has not been the case in recent months. Perhaps higher risks are associated with stocks and money is seeking a safe haven. Until bonds start to fall (rates rise), stocks could be in for further weakness. At the very least, money moving into bonds is not money moving into stocks.  The 10-year note yield recently broke trendline support and declined below its April low. There is potential support around 4.8%, but the current trend remains down. A move back above the support break at 4.96% would be positive, but it would take a move above 5.1% to start thinking bullish on rates, and perhaps stocks. For more of Arthur's intuitive commentary, check out his website: TDTrader.com Take your TA to the next level! Friday's market action is characterized as nothing but volatile - but as a result, the banking index caught a bid a investors and traders moved towards yield - dividend yield. This means that investors are becoming even more risk adverse, and are comforted by the simple fact that they have some type of floor accorded to the stock, and a decent income stream - many of these stocks yield somewhere between 3.0% and 4.0%. That aside and we believe in the same vein, is the fact that Microsoft (MSFT) closed higher on the day - in fact, it would appear to be bottoming as investors appear willing to buy the bluest of the blue chips in technology, and we think this increases the chances substantially for a summer rally to material given we believe MSFT is a "leader", and the indices are in dire need of LEADERSHIP.  Good luck and good trading, If you want more of Richard's award winning advise, check out his website: TheRhodesReport.com - Highly recommended! CONSUMER SENTIMENT WORSENS... The latest Michigan Sentiment numbers fell to 90.8 from May's 96.9. This follows on the heels of yesterday's sharp drop in retail spending -- and another decline in Producer Prices. It's disconcerting to keep reading about "surprisingly" weak economic numbers. Exactly who is being surprised? A well-known economist was quoted in IBD this morning saying: "My belief is that the recent market weakness is not an economic signal that the recovery is at risk." We've pointed out before that the market leads the economy -- not the other way around. The collapse in stock prices over the past couple of months has been warning of a slowing economy. Maybe it's time the media starts interviewing people who aren't so "surprised" all the time. The intermarket picture today continues to reflect a weakening picture. Economic weakness is pushing bond prices up (and yields down), stock prices down, the dollar down, and gold up. That's been going on throughout the entire second quarter. Global stock markets have also been rolling over. Asia fell 2% today, while Europe lost 3%. Yesterday, we showed the Dow and the yield on the 10-year T-note threatening their February lows. Those lows have been broken in both markets. The Dow and the T-note yield are now trading at the lowest levels since last fall. What does surprise us is that economists and the media keep referring to the drop in the PPI as "good" news. Historically, a drop in prices (spelled deflation) is bearish for stocks -- not bullish   CONSUMER STOCKS DROPPING... Consumer-oriented stocks -- like retailers -- are getting hit pretty hard today. The Morgan Stanley Consumer Index has broken its 200-day moving average. Consumer spending accounts for two-thirds of the American economy. If the chart below reflects loss of consumer confidence (and we think it does), that can't be good for the economy.  John Murphy posts charts like this every day on his website, MurphyMorris.com.
Here are some links that should help you get started:
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