Peter Dag & Friends: September 2009

9/30/09

Bad news

News. The Institute for Supply Management’s gauge of business activity in the Chicago area slipped to 46.1 in September, lower than the reading of 52 estimated by economists.

U.S. private employers cut a larger than expected 254,000 jobs in September, though this was less than a revised 277,000 jobs lost in August, a report by ADP Employer Services said today.

The weakness in the manufacturing sector was a surprise and Wall Street did not like it. Employment, meanwhile, remains dismal.

I am also paying attention to the weakness of the dollar and commodities. Are we in the process of a double dip? It would be bad news for earnings.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

The bulls are still in control. But for how long?

The bulls are still in control. The market remains above the important red trendline (click on the chart to enlarge it).

The time to worry is when the S&P 500 index drops below the trendline. It might trigger an important pause in this relentless move.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/29/09

Two opposing views

Sept. 29 (Bloomberg) -- The steepest rally in the Standard & Poor’s 500 Index since the 1930s is restoring Byron Wien’s reputation as a stock picker.

Wien, hired by Blackstone Group LP last month, said he’s keeping his January forecast for a 33 percent annual gain in the benchmark index for U.S. equities, implying a 13 percent advance from yesterday’s close.

NEW YORK (Reuters) - The U.S. economy faces an increasing risk of stalled growth in 2010, the chief executive of top bond fund Pimco said on Friday, adding that rallies in the equity and bond markets have outpaced economic trends.

The summer rally in equity markets and lower-quality bonds has outpaced what is warranted on the basis of forward-looking indicators for demand, revenue, profits and credit flows, El-Erian said.

My point. Two of the smartest people see the world in very different ways. I look at the trend in commodities and it does not seem commodities are soaring. Gold is back down below $1000. Crude is sharply lower at $67. The CRB index is below the June peak. Historically earnings and commodities are closely related.

Of course, I hope Mr. Wien is right. He usually is.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/28/09

The business cycle works

In a slow economy, with the Fed easing and the yield curve unusually steep, you should see financials outperforming commodity-driven stocks and technology.

This is exacly what has happened today (click on the chart to enlarge it). Insurance (KIE), financial (XLF, IXG) stocks have outperformed commodity-driven (XLB) and tecnology (XLK) stocks.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/27/09

My gut feeling?

My gut feeling? The country is confused. The press is confused. What are the priorities? We seem to chase all sorts of issues instead of handling growth and employment and creating wealth. It looks like we want to redistribute the wealth created in the past. Too many goals all at once. Is the country rudderless?

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

Is this just the beginning?

News. China announced that it would look into alleged dumping of U.S. auto and chicken products on Sept. 13, two days after President Barack Obama imposed tariffs on imports of tires from the Asian nation. The U.S.’ move was in response to a so-called safeguard petition filed to protect U.S. producers.

Is this the beginning of a trade war? Are we protecting (supposedly) jobs by getting into this kind of policies? It is just ludicrous. We are all going to pay if we start a protectionist war. The tire makers, the chicken producers, and all of us. This is a dangerous path that we are following to show that we are doing something about it. What?

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/25/09

A warning sign?

The trendline on this graph goes from the July bottom of the S&P 500 to the recent position (click on the graph to enlarge it). This trendline spans about 3 months and is becoming an important one.

What does it mean? It means that we might experience a painful correction if the market drops below this trendline. My rule of thumb is that the length of the trendline is related to the severity of the correction.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/24/09

Double dip?

Today copper, crude oil, gold, and all commodity averages are tumbling.

It looks like commodities want to go down. We need to watch this trend very closely because commodities, all of them, are very sensitive to business growth. And business growth drives profits -- the lifeblood of the stock market.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/23/09

I hope to be wrong!

I sincerely hope to be wrong.

The decline of the dollar (click on the graph to enlarge it) is simply vicious. It is trying to tell us something --something unpleasant is ahead of us.

The dollar peaked in 2004 anticipating slower growth in corporate profits, a sharp recession, and the financial debacle of 2007-200?. What is it trying to anticipate this time? Be careful. Hedge some of your long positions -- just in case the market corrects sharply.

The real problem is that our leaders are ignoring it because they do not know what to do.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

Faber is right

Faber is right. What he said on Bloomberg (click here) repeats what I have been -- repeatedly -- writing in this blog.

The decline of the dollar is a symptom of our loss of competitiveness and possibly higher inflation in the future. It is wrong to think that a declining dollar will cause inflation. It is the other way around! The prospect of higher inflation, reflected by lower productivity, is causing the dollar to decline.

The origin of inflation is credit growing faster than GDP. This is what has happened in the past two years. Inflation will come. But it is too early to worry right now. Stay tuned.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/22/09

Concerned about the future of our country and of the dollar?

Read this impressive and thought provoking report. This is what our friends think about what is happening in the US. Just click here.

Founded in 1741 in St. Gallen, Wegelin & Co. is Switzerland's oldest bank. As a limited partnership, it is one of the few remaining Swiss private banks whose partners have unlimited liability. This legal status - based on the principles of autonomy and personal responsibility - characterizes the business of Wegelin & Co. to a considerable degree.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

Observations

I cannot fail but think that what is happening in the world seems nonsense and the outcome of random events. People act like bees in a beehive. Just trying to survive and randomly producing what we call history.

We want to believe we are guided. Like the idea of “intelligent design”. It makes us feel comfortable. There is overwhelming evidence, however, that history is the outcome of the unplanned fight of power groups seeking power and wealth. It was the theme of the last observation.

All this has important investment implications in choosing our time frame for investing. One thing is sure -- the concept of long-term is a dangerous one. Think of the 1930s, the 1970s, and 2000s. These periods add to 50% of stock market history. In other words, you have a 50% chance of forecasting the long term.

Just track the forecasts of the Fed. They missed this recession in an embarrassing way! Thinking near term reduces the randomness of the outcome because there is more certainty about the trend. This is the reason why momentum investing is the most successful strategy.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/20/09

I do not understand why they do it

News. Markets are generally unhappy about the news that President Obama recently approved higher tariffs for Chinese-made tires. Such protectionist moves reduce trade, and ultimately, prosperity for both nations involved.

It's likely intended to save or create U.S. jobs. In reality, it will just drive up costs for consumers and anger the Chinese. They have reportedly already filed a complaint with the World Trade Organization.

My point. Am I wrong or are we moving towards a government managing our lives (health, cars, banking, housing, insurance, ....) and favoring protectionism? Is this the recipe for strong growth for our country?

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

Watch commodities

The reasons I follow closely commodities is because they give information about the strength of the economy.

They bounced from March to June (click on chart to enlarge it). But they have been flat since then. Are they telling us the economy is not as strong as some believe?

They are also correlated with profits. Are commodities saying profits had a bounce in the spring, but they are under pressure again? Is this bearish news for stocks? Time will tell, of course.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/19/09

More of the same

News. Sept. 18 (Bloomberg) -- BlackRock Inc. Chairman Laurence Fink said Obama administration programs to help homeowners stave off foreclosure may hinder the recovery of the mortgage market while benefiting banks that own second loans on the properties.

Fink said policies introduced this year to reduce foreclosures are flawed because they don’t require home-equity loans to be wiped out before the mortgage is modified.

My point. More of the same. Probably worse. The "too big to fail" financial companies became even bigger by acquiring competitors. Borrowers are even more in debt helped by the government. Is this the way to run a ship?

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

9/18/09

Down and then up?

News. The S&P 500 is now 20% above its 200-day moving average for the first time since 1983, says host Melissa Lee. That last time that happened we had a nasty sell-off. According to Gary Kaminsky, former Neuberger big wig and future cable news star, the market has not been this much above its 200-day moving average since May of 1983. "It's just another indication that the fear to "not own" stocks is sometimes as great as the fear to own names for many portfolio managers, especially this time of year," said Kaminsky. "The market is way overbought short-term." (Source: CNBC)

News. The S&P 500 has climbed from 20 percent below the 200-day moving average to 20 percent above it only three times since 1928, according to a note from Bespoke Investment Group. Using this comparison, the index dropped one, three and six months later. After a year, it was up twice, Bespoke said in a note.

“If the S&P 500 follows the historical script, the typical fourth quarter rally could face some stiff headwinds,” the research firm wrote. (Source: Bloomberg)

It looks like the gurus believe the market is going to pause and then will keep going up. Time will tell.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977
Ranked No. 1 market timer by Timer Digest

A worrisome trend

The markets always win. The politicians can say and do what they want, but the markets always win.

Look at the tragic decline of the dollar (click on the chart to enlarge it). What you hear on the TV business channels is plain nonsense, as I wrote several times in this blog.

The trend of the dollar measures our competitiveness. It reflects productivity differentials between us and other countries. It reflects opportunities created by the way the government treats business.

If foreign buyers feel our products do not have value, they sell dollars to buy products denominated in other currencies.

If foreign investors do not see a profit opportunity in the USA, they sell dollars and buy the currencies needed to invest in other countries.

It is very difficult to have a strong currency. You have to earn it. The countries with a strong currency are the "rich" countries with a rising standard of living. The countries with a weak currency indicate a decline in the standard of living relative to other more competitive countries.

The decline of the dollar is ominous for us from an economic and standard of living viewpoints. It means our manufacturing sector is fleeing the USA to start operations in countries with less regulations, more competitive, and with greater profit opportunities.

And we seem to worry about health care, the pay of executives, and create "czars" for just about anything we do. Our leaders need to wake up and try to understand the real meaning and implications of the sickening decline of the dollar which started in 2004.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

9/11/09

Interesting trends

The dollar is an important leading indicator of what is going to happen in the USA.

It peaked in 2004 and it anticipated the credit debacle in 2007.

The dollar is now tanking again. Is it saying the economy is going to be in trouble again?

And then, watch commodities (click on the graph to enlarge it). They are very sensitive to current economic conditions. I have been telling you several times in the past to watch them closely.

A weak dollar (a leading indicator) and declining commodities (a coincident indicator) may be telling us not to be too optimistic about the economy.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Solid advice from a chinese doctor

Q: Doctor, I've heard that cardiovascular exercise can prolong life. Is this true?
A: Heart only good for so many beats, and that's it... Don't waste on exercise. Everything wear out eventually. Speed up heart not make live longer; that like say you can extend life of car by driving faster. Want live longer? Take nap.

Q: Should I cut down on meat and eat more fruits and vegetables?
A: You must grasp logistical efficiencies. What does cow eat? Hay and corn. What are these? Vegetables. So, steak nothing more than efficient mechanism of delivering vegetables to system. Need grain? Eat chicken. Beef also good source of field grass (green leafy vegetable). And pork chop can give 100% recommended daily allowance of vegetable products.

Q: Should I reduce my alcohol intake?
A: No, not at all. Wine made from fruit. Brandy is distilled wine. That means they take water out of fruity bit; get even more of goodness that way. Beer also made out of grain. Bottoms up!

Q: How can I calculate my body/fat ratio?
A: If you have body and you have fat, ratio is one to one. If you have two bodies, ratio is two to one, etc.

Q: What are some of the advantages of participating in a regular exercise program?
A: Cannot think of single one, sorry. My philosophy: No Pain...Good!

Q: Aren't fried foods bad for you?
A: YOU NOT LISTENING!!! .... Foods fried in vegetable oil. How getting more vegetables be bad for you?

Q: Will sit-ups help prevent me from getting a little soft around the middle?
A: Definitely not! When you exercise muscle, it get bigger. You should only do sit-ups if want bigger stomach.

Q: Is chocolate bad for me?
A: You crazy? HELLO… Cocoa beans! Vegetable!!! Cocoa beans best feel-good food around!

Q: Is swimming good for your figure?
A: If swimming good for figure, explain whales to me.

Q: Is getting in-shape important for my lifestyle?
A: Hey! 'Round' is shape!

Well, I hope this has cleared up any misconceptions you may have had about food and diets.
AND.....

For those of you who watch what you eat, here's the final word on nutrition and health. It's a relief to know the truth after all those conflicting nutritional studies:

1. The Japanese eat very little fat
And suffer fewer heart attacks than Americans.

2. The Mexicans eat a lot of fat
And suffer fewer heart attacks than Americans.

3. The Chinese drink very little red wine
And suffer fewer heart attacks than Americans.

4. The Italians drink a lot of red wine
And suffer fewer heart attacks than Americans.

5. The Germans drink a lot of beers and eat lots of sausages and fats
And suffer fewer heart attacks than Americans.

CONCLUSION
Eat and drink what you like. Speaking English is apparently what kills you.

9/9/09

Junk bonds, stock prices, and trendlines

High-yield bonds have had a tremendous run as predicted by our The Peter Dag Portfolio.

As you know I like to use trendlines (see previous posts). The one I used on the gold chart has been quite right in predicting the recent move in gold.

Something has happened recently that has caught my attention. The chart of JNK (the ETF for high-yield bonds) has an interesting pattern (click on the chart to enlarge it). JNK has violated a trendline spanning 6 months. This, in my view, is an important break because of the length of the trendline.

My interpretation is that high-yield bonds may be close to a period of consolidation.

This change in trend could have important repercussions for the financial markets.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

What is the main driver of the dollar?

The main driver of the dollar is profit opportunities.

When a country loses its competitiveness and productivity advantage, profits decline.

The decline of profit opportunities forces investors to sell the currency and seek more attractive countries and currencies.

This is what is happening to the US since 2004. The dollar has been sliding not because of all the nonsense you hear on the business channels. The main reason is that our productivity and profits (click on the chart to enlarge it) have declined since then.

The dollar will strengthen when our productivity will grow faster, we become more competitive, and profits after tax will grow at a strong pace.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

9/8/09

Observations

What is the meaning of history? None! It is the reason we will never learn from history. History is about the success and destruction by the hands of the powerful. We will never learn its dynamics.

Hitler, Napoleon, Stalin & Co. pursued power to its catastrophic end. The French Revolution, the British and Roman Empires sought growth to the ultimate collapse. The Church of Rome during the Dark Ages, Greenspan, A. Burns in the 1970s, and Bernanke witnessed immense destruction of wealth. Their power was useless in avoiding disaster. They caused it.

People go to Yale, Princeton, and Harvard to study … what, why? To become powerful and amass wealth. If we knew, if we understood the meaning of history, we would not have had the problems humanity has had throughout the millennia – and now. They write learned dissertations. The outcome is disaster. Why? Because they do not have a clue on how the world works.

If they knew, we would live in a static, wonderful existence without problems – now and forever. However, nothing stands still. The economy grows faster, then slows down, sometimes severely, to correct the excesses. Why, in spite of all the money we spend to educate the pundits, do these awful oscillations keep coming? Because they do not know. They do not have a clue of what and why events unfold.

The Great Depression, the inflationary 1970s with their frequent recessions, the technology and housing bubbles, credit crises, the recent convulsions. Why? Because all the knowledge gained in premier schools is used with the sole purpose of achieving power. Moreover, power is achieved with class struggle and destruction of the weakest. This is what creates “progress”, some say.

Why is humanity staggered with disasters? Because we do no not know. What we study is used to win the fight. The fight makes our knowledge of history useless. Because we do not know the players. The constant of history is imbalance, inequality, instability. These wild seminal oscillations cannot be predicted or controlled. Only the winning power group will eventually convince us things are under control. Under their control.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

9/7/09

Thought of the day

When the ship sinks, people should have more relevant things to talk about than the salary of the skipper.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

9/6/09

Have a nice week-end ....

....and enjoy this music that makes you smile and forget what is going on in the world.

George

China is slowly changing

News. HONG KONG/FRANKFURT (Reuters) - Fair competition or Save the Planet?

That could ultimately be at play as China and the West, long at odds over trade in steel, textiles and auto parts, risk being sucked into a row over protectionism in renewable energy equipment such as solar panels.

German solar firms Conergy and Solarworld have voiced strong concern about the pricing practices of Chinese panel makers -- who undercut their German peers' products by around 20 percent. Chinese modules sell in Europe at about 1.70 euros per watt, according to a UBS report.Industry experts say U.S. firms share those German concerns.

My point. China has been changing. The interest of China is China. Not the global economy. Not the US deficit. Not the Yuan. They are slowly increasing the power of the state and tightening the rules of the game. That we like it or not.

If China becomes strong is to help China and control Asia. We will have to deal with this reality. The only way out is to become more competitive, more educated, and more business oriented. Otherwise they are going to humble us.

Hopefully Washington is listening.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

9/4/09

Double dip and commodities

If the economy is so strong, how come commodities are weakening (click on the graph to enlarge it)?

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

9/3/09

Gold, stocks, and trendlines

Gold is very strong. What does it mean for stocks?

The chart (click on the chart to enlarge it) shows the relative strength of gold relative to stocks.

A rising trend reflects a strong stock market relative to gold. A declining line says gold is stronger than stocks. The market is weak when gold is stronger than stocks.

I recognized a change in the trend on the graph. So I drew the red line. Yes, the relative strength broke on the downside a major trendline spanning 6 months. This is very important development that should not be ignored (see previous posts on this blog).

The break on the downside suggests gold is likely to remain strong relative to stocks for some time. This is bad news for stocks, according to this approach.

Of course, investors should check this conclusion against that of other indicators.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

I like to draw trendlines

I believe trendlines have an important role in investing. They are simple to interpret and are effective.

My basic rule is that the important trendlines span more than two months. When the price of the asset breaks on the upside or the downside, its move will last close to the time spanned by the trendline.

An example. I was looking at the graph of the S&P 500 and I drew two trendlines (click on the graph to enlarge it). The chart shows two trendlines. The first one is the Major Trend (green line). It shows the direction of the market since March.

This is an important trendline. If the market falls below it the odds favor a pause in the bull market of several months.

The second trendline is the red one. The S&P 500 moved below this line a few days ago. If my rule is close to be right, the market should pause for at lest one month.

Why? Because the trendline was spanning about two months at the time the break on the downside took place.

Time will tell, of course. There is no doubt the market is at a critical juncture according to this simple technical tool.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Seasonality of bond prices

As I wrote in a previous post, bond yields have a reliable seasonality.

I discovered this pattern when I was managing --many years ago -- $4 billion of interest rates derivatives.

I noticed then that yields tend to decline (and bond prices to rise) during the summer months.

Yields, instead, rise (and bond prices decline) more often than not during the winter months.

This summer yields behaved exactly as predicted by the seasonality pattern. The graph of TLT shows quite clearly this pattern (click on the graph to enlarge it).

Of course, the bond seasonality and the stock seasonality offer an interesting portfolio strategy.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

9/2/09

Watching trendlines

This chart of the dollar caught my attention (click on the chart to enlarge it). Watch the trendline. Is trending lower since March.

No big surprise. The dollar is weak. It reflects the messy state of our country.

One thought. What will happen to gold if the dollar breaks the trendline on the upside?

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Gold ... an interesting chart

The chart of gold is showing an interesting pattern (click on the chart to enlarge it).

The conclusion seems to be the opposite of what is happening to the bank stocks (see previous post).

Gold has been on a rising trend since April, as reflected by the direction of the trendline A.

The interesting pattern is provided by the trendline B. the duration of the trendline is almost 7 months. Its violation on the upside, based on past experience, could be meaningful.

Gold is in the process of breaking on the upside trendline B. It might set the technical stage for a strong rally in this important metal.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Follow the trend

The bank stocks give you a good idea of the trend of the market (click on the graph to enlarge it).

I noted in the previous post that the bank index violated on the downside the important trendline A, which spans 7 months.

Focus your attention now on trendline B. The bank stocks started heading lower, pointing to a week market. The trend was set by the bank index.

Bank stocks peaked in early August. I wrote a piece to beware the Ides of August. The bank index is now under the trendline B.

Is this the new trend to watch?

One trendline in its infancy should not be used as the final answer to where the market is going. Its trend, however, is one piece of information I do not ignore.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

9/1/09

Is the bank index breaking down?

The bank index is piercing on the downside an important rising trendline.

The importance of this trendline is that the bank index has been above it since March. I always believed that as the duration of the trendline grows, the violation becomes more important.

Bad news for the market? Time will tell. Stay tuned.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977