Ett utdrag ur WTs kommentar idag. De är fortsatt skeptiska och försiktiga. Jag kanske mjuknar lite i min positiva syn, men mest handlar det för mig om att undvika att följa med ner i en större korrektion. Sen vill jag nog vara med på uppsidan igen.
It is difficult for us to get excited about equities when leading indicators, arguably the most important set of data points for financial markets, look set to roll over. Across time, this development has usually led to a very different backdrop for stocks. Does this mean that the market cannot go up any further? No, of course not. It does mean, however, that the risk reward for stocks is about to change dramatically. Indeed, stocks have risen every single time since 1950 when leading indicators were rising, while they have only been up about 50% of the time following their peaks. If anything, it is always some sort of inflection point, one that provides investors with an opportunity to review their thesis.
As we see it, the debate for stocks is not about this Friday's employment report or even next month's employment report. It is increasingly about 2011 and what the year might bring for the economy in U.S. and abroad. On the international front, the one development that could make us more constructive toward U.S. equities would be to see the Asian equity markets hit new highs. This is critical since we are talking about the economies that have been the incremental growers of world GDP in the past decade. Most of these equity markets have been floundering for the past six months which is never a good sign for growth. The fact that the S&P 500 is outperforming the world equity index is troubling as this last occurred in 2007 and then before that in 2000.
The China market is one whose performance is particularly lackluster. Clearly, equities are paying attention to the re-emergence of inflation in that country. While we do not normally pay much attention to specific technical patterns in the market, technicians refer to what is currently happening to Chinese equities as the "death cross". The name alone got our attention. Essentially, it is a downside move by the 50-day moving average below the 200-day moving average. Time will only tell if this is anything significant but it is worthwhile tracking since it relates to the largest grower of the world's economy.