Market Getting a Little Touchy

The market is getting more and more cross currents. I continue to believe that deflation is the bigger issue, not inflation.  As I have said many times, until the asset base is de-leveraged, nothing has been fixed since the 2007 bubble.  Also again I don’t think that we are in a new economic bubble, the market is just trying to reflate the 2007 bubble and except for stocks, farmland and NY real estate, things are only a little puffed up.

I watch a number of market indexes which provide me with an overview of the economic picture outside of stocks, and one index in particular does not look well.  It is made up of the commodity ETF DBC, Gold ETF GLD, copper, lumber, and the short Dollar ETF UDN. The short dollar is included because it reflects cheap interest rates (i.e the Dollar would be going up if the economy was well and interest rates were rising).

Technically, yesterday we saw a couple of early warning sell signals in two stock indexes, UTIL and the RUSSELL.

And we all know why this is happening.  This is a reflection of a Congress that was not willing to do what had to be done from a fiscal standpoint, and a Fed that accommodated this behavior.  If Obama is going to be sued, he should be sued for not playing hardball with the numbskulls in the House of Representatives.