By
Tom Dyson, publisher, The Palm Beach Letter
Monday, July 27, 2009
The bull market is back on... almost.
The S&P 500, the most important stock index in the world, is racing to new highs. Two weeks ago, I was ready to proclaim the bear market rally "dead." Then the market whipsawed. It broke to new nine-month highs last week and is now closing in on the 1,000 milestone...
But wait... what about Russia?
To help me keep track of the major trends in the market, I maintain a list of 87 exchange-traded funds (ETFs). These ETFs represent every major stock sector, currency, commodity, and country index. I calculate the three-month performance of each ETF and then order them first to last. By analyzing this list, I can immediately tell which sectors the money's flowing into and which sectors it's leaving.
Russia represents everything stock-market bulls are in love with: Growth in third-world consumption, scarce commodities, global trade, and cheap labor.
Russia topped my ETF performance list from the moment the stock market started rallying in March... until it topped out in June. If Russian stocks aren't soaring, there's a problem.
Below is a chart of Russian stocks, as measured by the Market Vectors Russia ETF (RSX). They made new bull market highs in May, pulled back during June, and started rising again in July. Unlike the S&P 500, Russia has not made new highs.
As Jesse Livermore, the original and most famous trend trader used to say, "As the leaders go, so goes the entire market."
Besides Russia, financials, homebuilding, and Indian stocks led the recent market rally. All those charts look a lot like the one above.
Until you see these sectors make new highs, you should remain skeptical of the current rally in the S&P… even though it's enticing.
When I see these sectors make new highs, I'll be ready to issue the "all clear." Until then, I recommend you keep your powder dry...
Inergy LP (NRGY)... pipelines
TC Pipelines LP (TCLP)... pipelines
Buckeye Partners (BPL)... pipelines
TEPPCO Partners LP (TPP).. pipelines
Sunoco Logistics Partners LP (SXL)... pipelines
Cerner (CERN)... health care IT
Hatteras Financial (HTS)... mortgage REIT
DynCorp (DCP)... military contractor
Baidu (BIDU)... Chinese search engine
China Life (LFC)... China's largest insurance company
China Housing & Land (CHLN)... Chinese real estate
Aluminum Corporation Of China (ACH)... aluminum
Starbucks (SBUX)... expensive coffee
P.F. Chang's (PFCB)... expensive Chinese food
Bed Bath & Beyond (BBBY)... expensive furnishings
AmeriGas Partners LP (APU)... propane distribution
P.T. Telekomunikasi (TLK)... Indonesian telecom
NEW LOWS OF NOTE LAST WEEK
Central Pacific (CPF)... bank
S&T Bancorp (STBA)... bank
Popular (BPOP)... bank
First Merchants (FRME)... bank
UCBH Holdings (UCBH)... bank
First Busey (BUSE)... bank
Susquehanna (SUSQ)... bank
KeyCorp (KEY)... bank
Green Bankshares (GRNB)... bank
Pinnacle Financial (PNFP)... bank
The Dollar Should... Rise? By Dr. Steve SjuggerudFriday, July 24, 2009
There's got to be some reason to buy the euro... How about because it's cheap relative to the dollar? Wrong again! And this is the one that really gets me...
This Precious Metal Is a Great Buy Right Now By Dr. David EifrigThursday, July 23, 2009
Right now, you would need 71 ounces of silver to buy one ounce of gold. This difference in value is wildly out of step with centuries past. And it's not going to stay that way...
The Last Cheap Asset Class Today By Dr. Steve SjuggerudWednesday, July 22, 2009
So the recession is over. No doubt about it. The Script nailed it. Now that it's over, you won't believe what goes up next...
How to Get 20% a Year Out of Your Property By Tom DysonTuesday, July 21, 2009
Today, the Seven Sisters Inn is famous across the country as one of the finest bed and breakfasts in America. Here's the thing: The owners weren't able to cover their mortgage costs... and this week, the bank will sell the Seven Sisters Inn in an online auction.
