U.S. Market Indicators Are Also Offering Perspective Caterpillar (CAT) is the largest producer of large machinery in the world. If the world was entering a depression and things were worsening, CAT's stock would still be plummeting. Instead, it bottomed on March 12 and is now putting in a higher low. Similarly, Freeport-McMoRan (FCX) is the largest copper producer in the U.S. Copper is a commodity that is closely linked to economic growth. And FCX's share price looks like it bottomed last week on March 19. Despite yesterday's early morning bloodbath, FCX shares never broke to new lows. Taken together, these charts are suggesting that the market is in the process of bottoming. The one area of concern that has yet to give us the "all clear" is the credit markets. Credit Needs to Rally for Stocks to Explode High yield credit spreads DID put in a new low yesterday. They are now attempting to bounce. But unless credit bottoms, any rally in stocks will be short-lived. Put another way, if that last chart begins to rally in a significant way, stocks could EXPLODE higher. More to come… Best Regards, Graham Summers Editor, Money & Crisis |
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