Monthly Archives: March 2009

Signposts of a Recovery – Continued

I wanted to follow-up on my previous post on what technical indicators we utilize in our macro analysis. This edition will provide more fundamental data points we focus on to help provide insights into the overall health of the economy. At this point we would say these insights are pointing to a stabilization of the economic data at best and a slower deterioration of second derivatives as the most likely signal. Here goes in no particular order:

AAII Bullish/Bearish Weekly Index, Insider Transactions, Put/Call Ratio, Bullish Advisers, Investor Intelligence, Rydex Ratio, Mutual Fund Flows, TED Spread/LIBOR vs T-Bills, Investment Grade Spread, …

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Signposts of a Recovery

I wanted to take a few moments to provide some insights as to what I look for in regards to the overall health of the market. I watch several indicators (both technical and fundamental in nature) with some that occur daily and others monthly. Also, there are several themes that develop throughout the business cycle that demand my attention. While on whole I feel stronger about this rally than I did the December rally, I still believe that we will test the lows of early March (and I believe they will hold this time). Today I will focus on technical analysis. So …

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Government Credit Bubble Pricked!

I wanted to provide you with what appears to be one of the first fissures to surface on how it may be increasingly difficult to finance the massive budget deficits necessary to emerge from this credit crisis. Today the UK attempted to auction off 40 year Gilts (their equivalent of a Treasury bond) and the auction failed. This was the first failed auction in over 17 years in the UK as investors demanded a higher interest rate and walked away from the deal. This event comes even with the UK government announcing they would be buyers of long-term Gilts in the open …

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Dueling Bears

I wanted to continue to put this current bear market into some historical context. The most recent bear market was from 2000 to 2002 and last 30 1/2 months and fell 49.1% from peak to trough and bottomed when the index closed at 777 on 10/09/2002, according to BTN Research. If you were invested in only the NASDAQ during this bear market you suffered a great deal more with a loss of over 68%. The current bear market of 2007 to 2009 has last 17 months (so far) and has fallen 56.8% from peak to trough and bottomed (for now) …

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Why The 7% Rally?

At first blush it seems that Treasury Secretary Tim Geithner’s long awaited Public Private Investment Program (PPIP), that may invest up to $1 trillion in order to remove toxic assets from banks’ balance sheets, spurred this fantastic market rally.  This continues the ‘shock and awe’ coordinated approach to flooding the system in liquidity. We do not believe that the PPIP is a silver bullet as there are plenty of buyers willing to work with the Treasury, the Fed and the FDIC in buying distressed assets. However, will there be any sellers in this auction process by the banks that hold …

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