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fib_1618

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Reply with quote  #1 
I thought I would bring up an observation that might be of "interest" to the board.

The first chart shown below is the combination chart of the interest rate sensitive advance/decline issues that is posted here each weekend at Technical Watch. As you will note, the latest data is showing that all three of these breadth indicators look to be either in the process of topping or have already started to move lower as is the case with the REIT data. Now after such a vigorous 6 month run to the upside, one could reasonably expect that some sort of rest would probably be warranted. But as the next two longer term yield charts of the TNX show, this may be more than just a simple rest to the extent of future money flow into this asset class and that higher longer term rates are just around the corner (and therefore lower prices in this same debt instrument).

As an additional point of reference, the third chart had been previously coined as the "7 Percent Solution" where it would seem that stock prices have seen their best longer term run to new highs as long as rates have remained below this same 10 year yield.

If we are indeed bottoming here, the first area of possible resistance will come at around the 5.5% level (the 2001/2002 highs).

In the fullness of time.

Fib








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fib_1618

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Reply with quote  #2 
Updated combo chart as of 12/29/06 showing continued new all time highs for the Bond CEF and Preferreds A/D lines. With the current REIT A/D line's non confirmation of higher highs, this would suggest a probable short term "trading range" for the 10 year note....at least for the next month or so.

Fib




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Dave's LinkedIn Profile

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"As for it being different this time, it is different every time. The question is in what way, and to what extent" - Tom McClellan

"An economist is someone who sees something happen, and then wonders if it would work in theory" - Ronald Reagan

"What we see depends mainly on what we look for" - John Lubbock

"The eye sees only what the mind is ready to comprehend" - Henri Bergson

“Answers are easy; it’s asking the right questions which is hard” - Dr. Who - 1977

"You know the very powerful and the very stupid have one thing in common - they don't alter their views to fit the facts, they alter the facts to fit their views (which can be uncomfortable if you happen to be one of the facts that needs altering)" - Dr. Who - 1977

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