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Monday, February 06, 2012


Charts when you really think about them tell stories. This morning we have up three charts that you might normally see here so lets see what stories these charts are telling us and if any of them can remotely tell us where we are going.

Above is the 10 year. Notice the spike bottom at 1.69 back in late Sept/early October which also marked the market bottom (October 4 to be precise). From there we had a spike up to 2.40 when we learned from the Europeans that their debt problems were solved. Since then its been lower highs and 2 tests of 1.80 and so far the 10 year remains under 2. Europe's problems as we know are far from being solved.

Now we have the dow chart which has gone to 3 1/2 year highs as of Friday's close as markets here have figured out that Europe is Europe and while things are not great here, they are not falling off the cliff. So with everyone bearish markets took the path of least resistance and that was to move higher.

Now we have MLPS which really didn't have anything to do with Europe but followed the market down in August and September but then rebounded to new all time highs and now has been struggling with 400 on the index.

What does this all mean? Well quite frankly im not sure. The bond market seldom gets things wrong and it remains stubbornly under 2. It still seems to think Europe matters. Our stock market has pretty muched shrugged all of it off and is looking at stronger domestic data and moving up. MLPS which are essentially bond proxies were actually down in the face of last Friday's stock surge. I think that is mainly because people are moving into growth and away from the dividend payers as risk appetite appears to be increasing. MLPS not going to new highs here could be a lead signal that bonds are finally topping out.

In the end what do we do with all this? Honestly im not sure. Its hard for me to envision that with the dow at 3 1/2 year highs and nasdaq at its highs closed since way back in late 2000 that markets have more upside, but i though that many points ago. More people have been left dead and buried in the last few years on the notion that the secular bull market in bonds is over. So in the in end we have MLPS who just go about doing their business of moving oil and gas and raising distribtutions (for the most part) every quarter. To which the investor should just play along on the bull side until the bell rings that the party is over. So far im not ready to ring that bell but the dishes are being washed and the dessert has been served. It is getting late in the game.

Stock futures this morning are down at last check as Euro worries are around this morning about whether Greece will or won't default. Thats pretty much the same worry for the last 2000 points of dow upside. Oil is down on the idea that Iran may or may not attack Israel and Europe may or may not embargo them. Nat gas seems to be trying to put a floor around the low 2 dollar range as it has held that area twice. Its a rest stop on the way to zero. And the Euro is lower against a rallying dollar and rising bonds. So after a lower open my guess is that stocks will find a floor and try and move higher as that has been the recent trend.

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