Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Nolte Notes - Market Equilibrium

Stock-Markets / US Stock Markets May 22, 2007 - 12:52 AM GMT

By: Paul_J_Nolte

Stock-Markets Ladies and gentlemen: we have reached cruising speed, the turbulence of a few months ago is merely a memory and with the added boosts from mergers and acquisitions, we should be flying by the moon in just a couple of weeks. While just a bit fanciful, the markets are not interested in stopping or even slowing down for economic reports that conflict with the view that all is well in the world of investing. While the current euphoria over stock investing will likely last for a while longer, we are surprised at the few actual declines in the markets over the past two months. Housing, the kill-joy of the economy (along with the recent poor reports on retail sales) still shows little in the way of good news, as starts looked ok, but permits (the future construction) declined again – as did the index of sentiment of home builders n general.


Energy prices are having an impact upon retail sales as well as miles driven, as retail sales were punk – although reasons why ranged from weather (when is it not?) to an early Easter. For the first time in over 20 years, average miles driven has actually declined – not enough to slow the lack of supply of gasoline, but a point worth noting – we are likely close to a painful price in a gallon of gas. Home sales as well as durable goods orders are up for review this week, but outside a large surprise, the deals will remain the primary focus for investors.

While the Dow was making record closing highs nearly every day and the SP500 is closing in on its all-time high, something interesting is occurring below the surface – a lack of participation by the rest of the market. Over the past month, the once hot small cap arena has actually declined and technology stocks have stalled over the past three weeks. The former has a large impact on the advance decline line, the latter on the psyche of investors. Last week both the SP500 and Dow tacked on better than 1%, however there were more declining stocks than advancing ones for the week.

Since May 8th , the Dow has added over 250 points, yet five of the nine trading days showed more declining stocks than advancing. Also of note: our volume accumulation figures remain below the peak set over a month ago, and if price is to follow volume, the markets are building vulnerabilities that are likely to resolve themselves with lower prices over the summer. The external “noise” of mergers and deal making is hiding the deterioration underneath the markets. This doesn't mean the markets decline immediately, but once they begin, the may fall further than many expect to repair the erosion that is occurring today.

For the first time since July of last year, the long bond is yielding more than short-term bonds. The inversion of the yield curve was calling for at least an economic slowdown (which we have seen) and the beginning of a return to a more normal curve (usually a percent to one and a half percent) may be beginning, which would actually be good for the economy. As with most things “monetary”, the effects of these changes are not likely to be felt for 9-16 months into the future. For now, we are still feeling the last rate hike in June and the nine-month inversion that followed. Our bond model dropped one last week, but remains in positive territory, calling for lower rates in the future.

By Paul J. Nolte CFA
http://www.hinsdaleassociates.com
mailto:pnolte@hinsdaleassociates.com

Copyright © 2007 Paul J. Nolte - All Rights Reserved.
Paul J Nolte is Director of Investments at Hinsdale Associates of Hinsdale. His qualifications include : Chartered Financial Analyst (CFA) , and a Member Investment Analyst Society of Chicago.

Disclaimer - The opinions expressed in the Investment Newsletter are those of the author and are based upon information that is believed to be accurate and reliable, but are opinions and do not constitute a guarantee of present or future financial market conditions.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in