2009

May 26, 2009 · Posted in Uncategorized, Weekly Posts · Comment

World markets rallied today shrugging off North Korea’s little atomic tantrum yesterday. We will discuss the US , Brazilian, and Chinese markets below. First though we published a very special Members Only piece yesterday describing in detail our strategic portfolio and our strategy and tactics for trading it. We added multiple new positions today in the agricultural sector, energy and metals which you can find in our Portfolio Update Scorecard (Members only as well).

The Strategic Portfolio

Portfolio Scorecard 05/26/2009

Last week we stated that the US market may be in an extended cup and handle formation and that were this to complete the results would be a strong rally higher. We have not completed that formation yet. Looking at the US indexes we see that the S&P is the one that looks most worrisome. The broader NYSE composite and the Nasdaq composite show more underlying strength and more positive chart patterns. The S&P needs to stay above that 875 line and needs to move up and crack overhead resistance on higher volume. many are commenting on how low the volume is. If in fact we are in a consolidation phase as we expect, then low volume is normal but we have to finish the consolidation and move higher on strong volume.

SPX 05/26/2009

NYSE Composite 05/26/2009

Nasdaq Composite 05/26/2009

Looking next at Shanghai we see that Shanghai has corrected as we expected and come right back to its trend line and bounced. So far, everything we see on this chart points to a continuation of the bull move that has been in place for some months.

Shanghai 05/26/2009

Finally, looking at Brazil we see that not only has Brazil stayed true to its trend line but is forming a very bullish ascending triangle. Look for Brazil to break higher in the next few days.

Bovespa 05/26/2009

Conclusions? In our view the US markets are most likely to continue higher with the broader market showing more strength than the S&P. That said, the US market could reverse at any time so we remain very focused on following our hedging strategy as outlined in our Strategic Portfolio post. China and Brazil look to continue strong so we are comfortable with our focus on them going forward.

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The following additional posts are highly relevant:

The Strategic Portfolio

The Most Important Question Facing Investors

How the US Dollar Will Lose Reserve Status

Chinese Gold British Debt

Brazil

China Part 4 - Playing the Dragon

China Part 3 Global Hard Assets

China: Part 2 - Bonds, Dollars, and Inflation”.

“The Fed and The Bond Market - Will Intervention be Effective?”

“The Coming Bond Debacle”

Fundamental Trends