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Categories:General Market Commentary
''Projecting that yields will stay low, J.P. Morgan analysts also recommended selling cyclical stocks, as their prices are affected by ups and downs in the economy. As the following chart shows, stubbornly low Treasury yields suggest sluggish economic growth which in turn hurts cyclicals.''
The essential take away from this is that low Treasury yields are the result of high demand for the 'safe haven' parking of money.
This is due to the belief, and not an unsubstantiated one, that the general economy is NOT doing as well as the central government and financial media are portraying.
This reflects the general mindset that people are seeing a much more dangerous economic environment and are trying to 'protect' their capital, even if it means diminished returns, vs. risking it in equities and the like
Abstract from a article in 2009: watch the BLUE Line
remember this is from 2009
CRB Index (blue line) falling to new lows. Bond yields are now at the lowest levels in sixty years. Over the past few years, a positive correlation has existed between commodity prices, bond yields, and stock prices. Falling commodity prices imply global economic weakness. Falling bond yields imply the same. A collapsing Euro (along with foreign stocks) is pushing money into the relative safety of Treasuries and the U.S. Dollar. Rising bond prices equate to lower yields. A rising dollar equates to falling commodity prices. Falling bond yields and commodities leading to falling stock prices. The rising dollar is also taking a more serious toll on foreign stocks. Their technical condition looks a lot weaker than the U.S. Problem is weakness there causes weakness here as well.
Dow invisible against Utilities, Transportation,
3-2016 The Coppock Curve tells us the market is at a significant juncture point
CHOPPOCK CURVE features a long-term smoothed momentum indicator called the ?Coppock Curve?. It was designed by the late Mr. E.S. Coppock of Texas, to identify major lows. The signal he developed was to wait for the indicator to fall below zero and then turn up. Other than that, he concluded that the indicator was of little use. On the other hand, the Coppock Curve has in the last 100 years or so, been quite successful and very consistent in calling major turns. This is not only for US equities but for other markets as well. In this respect, Flags its track record since the 1960?s with the green vertical lines. No technical indicator is perfect of course, and the red line in 2002 shows a premature buy signal. What is intriguing right now is that the curve has gone flat, thereby pointing up the very fine balance that currently exists. If it turns up we get a buy signal and if it turns down, look for lower prices.
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