THE *REAL* BOB'S WEEKLY STOCK MARKET COMMENTARY - 03/15/96
Bob McCullough
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Peering Into the Market's Future - Week Ending March 15, 1996
The stock market rebounded nicely last week in spite of continued weakness in
bond prices. Bonds tried a recovery early in the week, but dropped
significantly on Friday when the Industrial Production Report and the Michigan
Index came in stronger than expected.
The dollar dropped last week as we had expected (Hot link here for U.S. Dollar
Chart in original). Its 26 week Formula Y continued to drop , continuing the
bearish "McCullough Hook" which has formed under the 6 week moving average of
the 26 week Formula Y. Technically, the dollar chart is still slightly
bearish.
Commodity prices moved up again last week (Hot link here for Commodities Chart
in original). The 20 week Formula Y oscillator for the CRB has pulled back up
and is in neutral territory. The technical outlook for commodity prices is
neutral.
Short term interest rates continued to rise last week because of continued
strong economic reports (Eurodollar prices drop when short term interest rates
increase.) (Hot link here for Eurodollar Chart in original). The Eurodollar's
26 week oscillator is still falling. It now looks like the Fed won't be easing
short term interest rates anytime soon. Expect the Eurodollar to drop some
more and then settle into a trading range.
The bond chart is a sick puppy right now (Hot link here for Bond Chart in
original). The 26 week Formula Y for bonds is now just bouncing along the
bottom of its plot as bond prices sink. Bond prices still haven't found their
equilibrium point yet and will probably drop some more for a while. The
intermediate part of the yield curve has been especially hard hit as the
possibility of a Fed easing fades more each passing day.
The S&P 500 index rebounded nicely last week (Hot link here for S&P500
Chart in original). Its 13 week Formula X oscillator issued a stock market buy
signal as we had anticipated the week before. The 13 week Least Squares
Momentum is still positive, indicating that the long term trend is up.
The stock market showed firmness last week and held up nicely after the severe
drop on the previous Friday. Volatility has diminished also. Investors can
move cautiously back into the market again.
(Scroll down to get weekly S&P500 Chart in original.)
Bob McCullough
Liberty Research Corporation
Investograph Plus
Email: inv...@libertyresearch.com
Web Site: http://www.libertyresearch.com/