A Trepidatious Trader
For the first time since 2009, earnings growth for S&P companies has turned negative, which is a significant warning sign.
What are the more concerning sectors that suggest the bull case is not clear? The transportation index is not confirming Dow theory and looks to be breaking down from a set-up similar to WTI crude, which has yet to tip its hand. Lowered guidance by FedEx (NYSE:FDX) and Caterpillar (NYSE:CAT) are contributing to the breakdown. Although the market can rally without them, history dictates that it's not a sustainable move. It should also be noted that the SMH is mirroring the TRAN, and both are breaking down from their respective trendlines of support established in March 2009 and validated in October 2011. It should be noted that semiconductors led the rally out of June and are now lagging.
Click to enlarge
The US dollar should be a major headwind going forward as the asset class continues to be debased. Again there is a clear technical picture forming here and it's rather bearish. What we need to be on the lookout for is a bullish shift that negates the bearish pattern and forms a bullish bias, as other asset classes have had the previous 100 days.
Click to enlarge
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.