Market Update 8/11/06
You know the market are weak when stocks, bonds and gold all fall on the same day.
The market sold all three asset classes today because retail sales numbers came in unusually high. This served as a grim reminder that we still haven't seen any evidence yet that inflation is calming. Fresh rate hikes are on everyone's mind.
Adding to the Friday jitters is that next week we see a boatload of economic data. This includes the key inflation numbers: CPI and PPI, as well as housing starts, initial claims and consumer sentiment. There'll be lots to move the markets next week.
…some investors focus on the oversold stochastic; more troubling is how the recent bear flag is in the processing of resolving itself downward; then there's the declining death-struggle embrace of +D and -D lines
While the NASDAQ traded in a 50-point range this week -- trying to decide what to do -- the smart guys in bonds, gold and the dollar were busy. All three gave the same message: take this rate-hike thing seriously.
…bonds sold off on the prospects of more hikes, but for now it looks like little more than profit taking -- volume has been light; after rallying 7%+ off the May bottom, bonds are generally back down near their 200-day
…if the Fed is going to keep dogging inflation, gold loses a big part of its hedge appeal; now at both the 50-day and trendline, the fat lady is center stage and ready to sing; oil is looking shaky as well -- could commodities be ready to resume their correction?
…this is where part of the money has been flowing -- the totally disrespected dollar, now back at resitance; it's no accident that while bonds shed 1.3% this week, the dollar added 1.1%
Finally, as you ponder the charts this weekend, keep in mind that the fundamental leadership is doing terrible. This week, while the NASDAQ lost -1.3%, the IBD100 tumbled -4.4%. In fact, it's down -6.2% in August so far.
The market looks very dicey. Stay defensive.
Have a good weekend.
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