July 22, 2010

See previous post.

Short-term: 1 green, 3 yellow – tending yellow
Intermediate-term: 3 green, 1 red – no tendency (the yellow lights from yesterday all went green)
Stock targets: 20% swimming, 28% neutral, 52% sinking

Intermediate-term indicators are flashing green. Just as they were on June 18 at the peak last time. Like last time, this could be whipsaw point. The underlying stock targets are a bit broader than then so there is a better chance of a breakout above resistance than then and a better chance that if a whipsaw happens here it won’t be as sharp and widespread. The technicals for the indices show a little more room to run. Still, far better to pick and choose those stocks that have already broken above resistance or never had much of a correction than to buy an index.

The disconnects between the Treasury bond market, the corporate bond market, and the stock market are enormous. T-bonds are anticipating deflation – corporate bonds are anticipating slow growth – stocks are anticipating pretty good growth and even inflation. Two of them are wrong.

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