-If we were only watching the bond market, we would think we were already in recession. If we were only watching the stock market, we would think the economy is accelerating. In simplest terms, we are getting quite the conflicting signals.-
-As we write this, amazingly, the 10 year is now yielding 2.473 as it drops markedly again. As we write this, the 1 month yield is right at the 10 year yield. In the past, quite often, this presaged a recession. But again, the stock market has been saying otherwise.-
-As far as the market, we can only describe the past few days in TECHNOLOGY as a mini-melt up. The all-important SEMICONDUCTORS are leading the charge in spite of so many fundamentalists saying the group should be going down. They have forgot the number 1 rule…price first, everything else second. We just have a problem believing we were going into a recession or worse with this group leading. Near term, the big issue is that we are seeing a bit of froth but so far not a biggie. Froth often leads to pullbacks.-
-But we are open to anything. If price changes, we will let you know but something is up. Something is not right with yields tanking like this. We know there is trouble elsewhere around the globe as we have talked about it for months.-
-If this continues:-
-We guarantee that the next move will be the Fed lowering rates. The fed cannot have fed funds above the 10 year yield. This will be a double guarantee if the economic numbers head south.-
-FINANCIALS should under-perform. Short rates above long rates? Not good…and in the past couple of days, most everything financial has been hit hard to the south side while tech has been bought up to the north side. Just a few days ago, these financials were trying to go topside. Exceptional weakness can be seen in the REGIONALS (KRE).-
-UTILITIES will continue to outperform with REITS right behind. These groups love lower rates. Of course, we doubt the REITS stay up if the economy gets in real trouble.-
-Needless to say, it’s getting a little weird out there. We don’t usually watch rates as closely as we watch stocks. This is one of those times.-


A little reversal yesterday but not a biggie but a few things noteworthy.

TRANSPORTS still aint happening and now a name like UNP rolls over. FDX hit hard this morning not going to help.

FINANCIALS were edging out of range but by the close, tucked their head in like a frightened turtle.

Notice how AAPL pulling back…pulled back the NASDAQ. Nothing wrong if it pulls back some more.

HOUSING aint happening. Small and mid still lagging decently.

Why do we mention these areas? Because it is easiest to isolate weakness when a market is ascending.

Fed day today…blah blah easy money!


BOEING (BA) is down $9 this morning. We receive a decent amount of emails each day on our thoughts. Our answer to all is that “WE DON’T KNOW!” People actually get mad when we tell them we just don’t know. We don’t know:

What kind or what size lawsuits there will be.

How long it will take to get the planes back in the air.

How much it will cost to get the planes back in the air.

How many, if any orders will be cancelled.

What kind of government investigations there will be…and there will be investigations on this plane’s approval.

And of course, how the market treats all this. We know there have been some good trading moves both up and down. We know pundits are coming out in droves telling you what kind of value the stock is at these levels. (THEY DO NOT KNOW)

We just do not know the day to day. We can continue to look at support levels. We can look for accumulation and distribution but that can change overnight because of the news.

As always, it is your money.


We write less in better markets because it is mostly in bearish markets we separate from the pack. Remember, wall street is a fully invested, fed driven vehicle. With the central banks, we suspect you could clip off several thousand, if not more points.

The most important part of the equation remains a clear lack of institutional selling. It can start coming out of nowhere but even in the down week, it was just a pullback and we easily segued off the negative side on the Friday reversal two Friday’s ago.

The SEMIS are on the move.

The FINANCIALS set up here.

NEW HIGHS have been picking up but still not even close to very good.


RUSSELL 2000 weak.


MID-CAPS weak.

While better, FOREIGN MARKETS not even close to the U.S. The best markets are strong worldwide markets.

Bullishness and froth are showing up with some huge IPOs coming out.



Another gap to the upside…4th this week…though futures been pulling back in past few minutes.

Most global economic numbers continue to head south while markets head north. One hopes that the markets are flushing out an acceleration.

ADBE, ORCL gapping down…2 big tech names…AVGO, ULTA gapping up. Full report over the weekend.