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
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
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

No Sign of an Economic Recovery Yet? Look Again at BDI, Copper and Homebuilders

Stock-Markets / Financial Markets 2009 Feb 17, 2009 - 06:26 AM GMT

By: Donald_W_Dony

Stock-Markets Best Financial Markets Analysis ArticleThere are a number of early economic signals that are beginning to slowly surface that has not yet caught the attention of financial media. These slight changes to the commodity, bond and equity markets are the early indicators and building blocks of the next economic recovery. Throughout 2009 additional evidence is expected to gradually surface. Here are some of the most recent pieces of the recovery puzzle


The home builders sector (Chart 1) represents a parallel to leading indicator to the U.S. housing market. As this market was the root cause of the financial crises, any stability in the home builders sector would provide an important clue to a possible bottom in the deeply depressed American housing market. More than three years since the market began correcting, inventories are now flattening, prices are coming back down to earth, and sales are approaching stability. The peak in the U.S. housing market occurred in the second half of 2005, whereas the top in the home builders sector developed in May 2005.
Technical models indicate that renewed upward pressure should develop over the next six weeks. This is encouraging especially since the sector has already found stable price support since November.

The price movement of Copper (Chart 2) is a vital indicator to the economy for this metal moves with the business cycle. After the waterfall collapse in the second half of 2008 from $4.00 to $1.25, copper appears to be finding a floor and good price support at the $1.40 to $1.60 range. With the enormously wide application use of copper in areas such as consumer electronics, plumbing, computers, industry and homes building, price firmness for this metal indicates building strength in the global economy.

The Baltic Dry Index (Chart 3) is another economic gauge that is displaying some returning life. The BDI is a number issued daily by the London-based Baltic Exchange. The index provides an assessment of the price of moving the major raw materials by sea.

The index covers dry bulk carriers carrying a range of commodities including coal, iron ore and grain. This index fell from over 11,000 at its peak in early 2008 to a dismal 700 in December. Some of the reasons for the advance are the slow unfreezing of credit and the decline of the iron ore stockpiles in China.
Technically, the index still remains down but is currently establishing a base. Only an advance over the 2000-3000 resistance level would suggest a reversal has begun.

The growing stability in base metals is another early sign of the recovery. Zinc, nickel and lead are all forming solid price bases for the first time since early 2008. Zinc, in particular, began to recover back in September, over five months ago.

There is also a slow but gradual shift out of consumer staples and into select consumer cyclicals. For the first time in over a year, the relative performance of both sectors is now equal. Bull markets require the consumer to move their funds out of the safety of staples and into discretionaries. Models are suggesting that this transfer is starting.

Other pieces of evidence include the calming of the Volatility Index (VIX), the narrowing of the TED spread and changing yield curve in the bond market.
Though many of these elements are relatively minor in their context, they are the silent building blocks for the next economic recovery and bull market.

Additional research can be found in the February newsletter. Go to www.technicalspeculator.com and click on member login.

Your comments are always welcomed.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2009 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present.  He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.   

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms.  He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

Donald W. Dony Archive

© 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