The market environment is very uncertain, what with currencies pushed and pulled in a fashion that directly affects commodities, and, as a consequence, the entire world economy. I do not know whether the dog is wagging the tail, or the other way around. So for now, a neutral position is advisable.
In the base metals sector, SMN still has an EV pattern pointing up. Avoid base metals!
XOP and OIH are sporting a very negative EV pattern, good evidence that the campaign against "evil energy speculators" is still in full swing.
Selling is underway in SRS, and buying in IYR. This move is confirmed by the EV patterns in Treasuries, which have yet to attract short sellers, indicating that no one expects interest rates to rise anytime soon. This leaves us with only two options: a market down move or more printing to buy newly issued Treasuries. Unless the debt ceiling is removed, issuing new debt and therefore printing fresh money to buy such debt is not legal.
Yesterday, I received a private mail asking how the OB/OS signal is calculated. This is the answer:
The objective of the OB/OS panel is to find out the extent of the money movements by monitoring the status of each of the 94 sectors. Each sector receives a rating between 1 and 10, depending on the status of both its price and MF patterns. The higher the rating, the more bullish the sector becomes. The resulting number is then normalized between -100 and +100.
