Wednesday, June 06, 2007

 

Step II


This first graph is from May 24th. I did the labeling back then and it looks like it is holding up. Pay attention to the small 4. It is the fourth wave down in a larger pattern and is a good place to look for support as the market falls.








Here is a chart I did yesterday or early this morning. I am too tired to keep track of time. As you can see and know from watching the markets today, the lower trend line was broken. This doesn't mean the up trend is over but it does mean we have to start looking for support and a point where we call the trend over. As I said in the comments to The Next Step, 13,000 looks good to me. Too early to tell but we have been in an up trend since 2003 and the world is percolating with bubbles that are ripe to burst.

Finally a daily chart of the ten year note futures. I have expressed my surprise that interest rates are rising (price runs inverse to the interest rate so as prices fall, as in this chart, interest rates rise) in what is supposed to be a weak economy with little sign of inflation. Of course, everyone else could be working on this assumption and you know what happens to markets that get unbalanced in one direction? Yeah, neither do I . At least I used to think I did. One thing I do know is that rising rates are not good for our favorite bubble. But they are good for my favorite bond coupon clipper.

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