This morning the Dow is up 20 at 12181 and the SPX is up 1.2 at 1320.16, The rest of the major indexes are up small, except the Transports, which are trading off 10 at 5060. While the DOW and SPX are making new recovery highs, the Transports continue to signal there is something wrong with the continuing advance with its persistent non-confirmation.
Oil is off again, trading at 87.38, Gold is up 17 at 1364 and silver is making another run at $30, trading at 29.94. The Euro is up slightly at 1.364 and the dollar is back under 78, trading at 77.72. The bond market continues its slide, with the 10 Year Note trading at 3.660 and the long Bond trading at 4.707.
It is the Bond market that is most worrisome....the Note has taken out the support established in mid December and looks to be in free-fall. The Bond has taken out significant support and also looks to be in free fall. It becoming clear that the FED has lost what ever control they thought they had with the longer end of the yield curve. With the 2 year Note at 0.792, the 2s30 spread is at 391 basis points. I am not sure if it is a record, but it is darn close. It is this spread that has historically been the measure of inflation expectation.. and it is really shouting "Look At Me!" I have been in the Deflation Now camp for a couple of years, but it is beginning to look like Chris Martensen and John Williams and the rest of the Inflation Now chorus are gaining the upper hand.
This is going to be a really interesting year.
Our Momentum Change indicator Sell signal first generated 1/20 and confirmed 1/28 is still in effect, yet it has moved to a neutral position. I await either a new confirmation of our Sell signal, or a new Buy signal to enter new trading positions.
Best To Your Trading.
Bill
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