Equity markets are in the throes of the "dog days" of summer and had a sleepy week with an upside bias. Thursday was the pivotal day as a number of indexes penetrated significant resistance which signals a short to intermediate term bull market.
Hi, I had a few minutes this morning to throw together some charts and make a few comments on what was a momentous week in global financial markets.
This will be extremely abbreviated but I thought it important to give my readers a perspective on these developments because I believe they set in motion a course of events that will lead this market higher into the election.
The next couple of days in the stock market could be on the quiet side. You see, the Federal Reserve is holding a two day FOMC meeting on Tuesday, and Wednesday. Many institutional traders are going to be on hold until they hear what the Federal Reserve Chairman Ben Bernanke says. As you know, most institutional traders and investors are just dying to hear the words quantitative easing three (QE-3). The likelihood of this happening this time around is very slim.
I am starting to see a couple of interesting short term patterns emerge in the markets. US equities are starting to slowly trend back upwards:and risk in the market (as measured by the VIX) seems to be subsiding:
This morning, the 10 and 30 year U.S. Treasuries are declining lower. The fall in the bond market comes as stocks soar higher and fear in the marketplace fades. Traders can easily watch a chart of the iShares Barclays 20+ Yr Treasury Bond (ETF) (NYSEARCA:TLT), and the iShares Barclays 7-10 Year Treasury Bond Fund (NYSEARCA:IEF) and see that both equities are coming under selling pressure.
Nearly every trading day the U.S. Dollar Index futures (DX-M2) will pullback or decline when the index trades higher before the opening bell. As you may know, when the U.S. Dollar Index declines the major stock indexes will usually rally and trade higher. The opposite is true when the dollar rallies as the major stock will usually decline and trade lower. This afternoon, the U.S.
Once again, bond yields on the 10 and 30 year U.S. Treasury Note are rising. Last week, the yields jumped sharply higher by more than 25 basis points on both the 10, and 30 year note. Higher rates will affect the important mortgage market and this could be problematic to the recent inflation rally.
Apple Inc (NASDAQ:AAPL) is by far the largest stock by market capitalization in the world. The company is now valued at more than $500 billion and climbing. AAPL stock is now more valuable than the entire retail sector combined and that includes WalMart Stores Inc (NYSE:WMT). This company has taken over the world and they only have a handful of products.
Has anyone looked at the U.S. debt lately? Well, the debt clock is now reading $15.5 trillion and climbing. By the end of 2012 U.S. debt should be over $16 trillion. Nobody in the media is talking about the national debt anymore. Perhaps these numbers do not really matter?
