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Typically, I write Market Observations on Financial Sense that are either very narrow or very broad in focus. On this occasion, it will be a broad market observation as I check in with the asset classes, major indices, and sectors to identify trends, strengths, and weaknesses within Mr. Market. There will be a lot of charts because I think like John Murphy, the chief technical analyst at www.StockCharts.com, the technical work is the leading indicator of the fundamental work. I believe it’s better to agree with the market than to be asking the market to agree with you, but that’s just my personal bias as a market technician.
Let’s start at the top and then work our way down. The first choice one has in forming a portfolio is about asset class, of which there are three: equities, bonds, and commodities. I guess you could say there might be a fourth: cash (or other such short-term maturity/liquid funds). One’s exposure to each is highly dependent upon your growth or income versus risk objective for investing; however, if none of that mattered we should take a look at each class on its own merit. The first of which is equities.
Equities
There are many possibilities within equities: domestic versus foreign, large versus small, and mature versus growth; but if the broad market isn’t healthy, it is likely most of the subgroups above will have a tough time.
“As they say on my own Cape Cod, a rising tide lifts all boats. And a partnership, by definition, serves both partners, without domination or unfair advantage. Together we have been partners in adversity—let us also be partners in prosperity” John F. Kennedy.
So equities are all partnered in the same pool of global liquidity as multinational companies (business) and the internet (communication) have broken down barriers, such that one likely cannot rise or fall without affecting the other, and vice versa. We saw this clearly in 2008 when many thought that foreign markets would be able to avoid a decline in the U.S. economy—such was not the case.
I look to the indices when gauging overall price health. Many quote the big 30 in the Dow Industrials or the S&P 500. Many forget about the Wilshire 5000. Now that’s an ocean of an index with plenty of boats. If the water isn’t rising for the Wilshire 5000, then it probably isn’t for most of the corporate boats in the U.S market. It’s pretty clear to me that the Wilshire 5000 has experienced a “v-spike” recovery from the Libya/Japan events. The “V” in v-spike discusses the shape of the chart, but I think it can also refer to vertical because that’s exactly the direction the market has taken since March 16th.
We have stalled near the February highs without a breakout recently. Complimenting the stall here, the RSI has not broken to higher, “bullish” hemisphere territory above 70. You can think of it as operating like a satellite. We are in lower orbit and need some momentum to push this market to the bullish outer orbit. 60 is a reading that typically rebuffs bear market rallies and ongoing bull market corrections/consolidations. It is my belief that we will further consolidate sideways unless we get some new blood as shown by a breakout of more than 1-3% in the Wilshire 5000. Such a breakout would likely be confirmed by 1) volume and 2) a day in which 90% of the NYSE advances higher, a.k.a. breadth.
For the whole story: http://www.financialsense.com/contributors/ryan-puplava/intermarket-analysis-and-drivers
Japan's nuclear crisis likely to boost demand for LNG
- The Australian
- April 08, 2011
THE Fukushima nuclear disaster has spurred a jump of up to 10 per cent in Japanese demand for liquefied natural gas and could move the oversupplied global LNG market into balance over the next year, industry experts say.
Speaking yesterday on The Australian-UBS Market Insights Panel, Santos chief executive David Knox said Japanese LNG buyers were already approaching suppliers, looking for fuel to help fill the gap left by the big power supply outages from the earthquake and tsunami.
"Effectively they're going to be asking for 10 per cent more LNG supply for the next few years," Mr Knox said.
"In the longer term, it will be much more interesting because we have globally been assuming that nuclear stations will be built . . . if those stations are delayed, even by a few years, it will make quite a substantial change in LNG demand."