Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Cup of Jo: The Market's Jittery Feel


Last week's enthusiasm has been short lived as investors fret over interest rates with the yield on the 10-year surpassing the psychologically important 5% mark.


"In the business world, the rearview mirror is always clearer than the windshield."
(Warren Buffet)

Key Points:
  • Interest rate fears resurface as 10-year heads toward 5%
  • 2 & ½ ST-uptrend in jeopardy
  • 5/24 presented a bearish engulfing day
  • 50 dma lurks below
  • Financial complex fails to confirm
  • Record issuance of corporate debt

Market Commentary

Given the market's "jittery" feel, I believe now is an appropriate time to outline the current state of the "Four Sisters." On May 24, the Sisters experienced a bearish engulfing day (outside day) but then proceeded to run higher during the holiday shortened week on the heels of strong economic data. This enthusiasm has been short lived as investors fret over interest rates with the yield on the 10-year surpassing the psychologically important 5% mark.

Against this backdrop of anxiety, Morgan Stanley's bearish call on European stocks certainly caught the attention of many as the DJIA broke its 2 & 1/2 month ST upward-sloping trend (13,500). The next level of interest for the eldest Sister will be the horizontal support level of 13,440. If breached, the 50 day moving average is in play.


Click for larger image


Click for larger image


Click for larger image


Click for larger image

One main concern I've had for awhile is the apathetic action of the financials. The XLF as seen below was unable to confirm a move higher as each recent attempt stalled dead in its tracks. With a Stochastic divergence and weakening RS line, a test of its 50-day moving average is likely if the XLF violates its May low on a closing basis.


Click for larger image

Nonetheless, we need to realize the importance of the credit cycle. The record $143 billion of corporate debt issued last month will certainly pave the way for more LBOs, M&A and stock buybacks. And with the spread on junk hitting its lowest historical level last Friday, one could presume that a sell-off in equities could be dampened by another flurry of corporate spending.

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely= reflects the analysis of or opinion about the performance of securities an= d financial markets by the writers whose articles appear on the site. The v= iews 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 indivi= dual investor or category of investors to purchase, sell or hold any securi= ty, or to take any action with respect to the prospective movement of the s= ecurities markets or to solicit the purchase or sale of any security. Any i= nvestment decisions must be made by the reader either individually or in co= nsultation with his or her investment professional. Minyanville writers and= staff may trade or hold positions in securities that are discussed in arti= cles 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. N= othing on this website is intended to solicit business of any kind for a wr= iter's business or fund. Minyanville management and staff as well as co= ntributing writers will not respond to emails or other communications reque= sting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.



Featured Videos