Presentation on theme: "State of the Market August 2010 Daryl Montgomery August 31, 2010 Copyright 2010, All Rights Reserved The contents of this presentation are not intended."— Presentation transcript:
State of the Market August 2010 Daryl Montgomery August 31, 2010 Copyright 2010, All Rights Reserved The contents of this presentation are not intended as a recommendation to buy or sell any security.
Background Material for the Talk Moving Averages – 50-day, 200-day plus 10, 20, 30, and 40-day. Bollinger Bands – plus or minus 2 standard deviations from a ~20-unit moving average. RSI – relative strength index, 80-overbought, 20 oversold, 50 divides bearish and bullish MACD – moving average convergence divergence, zero divide bullish bearish, peak and bottom numbers variable DMI – Directional Movement Index, +DI (blue), - DI (red) and trend line.
Disconnect Between Economy and Markets Economy is clearly deteriorating yet markets haven’t had a big sell off yet. Similar picture happened in summer 2008 when Credit Crisis was accelerating. Market dropped sharply in the fall 2008 to catch up with reality. Either the market will fall apart or the economy will re-accelerate strongly. November election keeping market up.
Currency Summary U.S. $ bounced off 200-day, still in rally pattern. Euro still in bear pattern, hasn’t rallied to 200-day. Japanese Yen rally to 15-year highs against U.S. $ big story.
Metals Gold is bullish and rallying and trying to convincingly break to a new high. Silver still range trading and at top of range. Silver is economically sensitive. Mining stocks stuck have not gone to new highs and confirmed gold rally. Nova Gold (NG) 50-day MA trying to bounce off 200-day.
Energy and Food Oil has been range trading for months. Charts in bear pattern since June. Seasonal weakness starts by September. Natural Gas looks like it is trying to test bottom from last year. Watch it! Wheat has had a big rally and food commodities have turned bullish.
Stocks and Bonds VIX has calmed down from its jump in the spring. Big rally off the bottom was extreme and unusual. Dow, S&P 500, Nasdaq and Russell 2000 had bear sell signals in July. DJT Monday. Interest rates have had sharp sell off globally. Looks like a liquidity trap.
Volatility Index VIX: Three-Years Weekly 10, 40-Week Moving Averages and RSI, DMI, MACD