Comments on: Picture du Jour: Watch the stock/bond ratio http://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/ Prieur du Plessis’s international investment blog Sun, 29 Jan 2012 22:06:48 +0000 hourly 1 http://wordpress.org/?v=3.1.1 By: Prieur du Plessishttp://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/comment-page-1/#comment-2031 Prieur du Plessis Sat, 05 Apr 2008 13:48:21 +0000 http://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/#comment-2031 Sugam: Regarding the DJ Transportation Average, the following article by David Gaffen appeared in the Journal on April 1:"If conventional wisdom – and a mountain of economic data – suggest that the US economy is falling into, if not already in, a recession, why are the transportation stocks doing so well?"Investors often look at transportation stocks as a bellwether for the economic outlook. Transportation, in one way or another, is an integral part of many major industries; if manufacturers are seeing slack demand, they will ship fewer goods."However, through Friday, the Dow Jones Transportation Average has gained 4% on the year, hardly an indication of a dire economic situation, while the Dow Jones Industrial Average is down 7.9% and the broader Standard & Poor's 500-stock index is off by 10%."‘It's a very interesting contradiction, because here we are in what most people think is going to be an extended economic slowdown and yet we have much better action, certainly among the truckers and railroads, than one would expect,’ said Kenneth Tower, chief market strategist at Covered Bridge Tactical."Since the stock market is a predictor – not always correctly – of growth, the rally in transportation stocks reflects expectations of a rebound in economic growth later in the year, just as it fore-shadowed the decline in late 2007."What strikes some as odd about the rally is that transportation companies still face significant head winds, particularly from energy costs. High fuel costs cut into the profitability of airlines and shippers such as FedEx and UPS. But perhaps this has been factored in, both by shippers and investors. The American Trucking Associations' truck-tonnage index was up 3.5% in February from a year earlier, suggesting a rebound from economic weakness." Sugam: Regarding the DJ Transportation Average, the following article by David Gaffen appeared in the Journal on April 1:

“If conventional wisdom – and a mountain of economic data – suggest that the US economy is falling into, if not already in, a recession, why are the transportation stocks doing so well?

“Investors often look at transportation stocks as a bellwether for the economic outlook. Transportation, in one way or another, is an integral part of many major industries; if manufacturers are seeing slack demand, they will ship fewer goods.

“However, through Friday, the Dow Jones Transportation Average has gained 4% on the year, hardly an indication of a dire economic situation, while the Dow Jones Industrial Average is down 7.9% and the broader Standard & Poor’s 500-stock index is off by 10%.

“‘It’s a very interesting contradiction, because here we are in what most people think is going to be an extended economic slowdown and yet we have much better action, certainly among the truckers and railroads, than one would expect,’ said Kenneth Tower, chief market strategist at Covered Bridge Tactical.

“Since the stock market is a predictor – not always correctly – of growth, the rally in transportation stocks reflects expectations of a rebound in economic growth later in the year, just as it fore-shadowed the decline in late 2007.

“What strikes some as odd about the rally is that transportation companies still face significant head winds, particularly from energy costs. High fuel costs cut into the profitability of airlines and shippers such as FedEx and UPS. But perhaps this has been factored in, both by shippers and investors. The American Trucking Associations’ truck-tonnage index was up 3.5% in February from a year earlier, suggesting a rebound from economic weakness.”

]]> By: Thoughts From The Frontlinehttp://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/comment-page-1/#comment-2026 Thoughts From The Frontline Sat, 05 Apr 2008 05:14:48 +0000 http://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/#comment-2026 <strong>More Thoughts on the Continuing Crisis...</strong>Thoughts on the Continuing Crisis If the Rules are Inconvenient, Change the Rules Let's Re-arrange... More Thoughts on the Continuing Crisis…

Thoughts on the Continuing Crisis If the Rules are Inconvenient, Change the Rules Let's Re-arrange…

]]> By: Eduardo Mirahyeshttp://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/comment-page-1/#comment-2025 Eduardo Mirahyes Sat, 05 Apr 2008 01:25:14 +0000 http://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/#comment-2025 The current drop should take us back to just above 11,700 on the Dow and could conceivably drop below that. Until then shorts are the name of the game. Once we complete, can we begin to rise in earnest.www.exceptional-bear.com The current drop should take us back to just above 11,700 on the Dow and could conceivably drop below that. Until then shorts are the name of the game. Once we complete, can we begin to rise in earnest.

http://www.exceptional-bear.com

]]> By: Sugamhttp://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/comment-page-1/#comment-2022 Sugam Fri, 04 Apr 2008 23:52:09 +0000 http://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/#comment-2022 The VIX has broken through the 200 day average and the Dow Jones Transportation seems to be rallying with their 200 day moving average turning flat ( from a previous negative trend ) .... It feels like rally ( maybe short ) is on cards? Any comments on Transportation average? The VIX has broken through the 200 day average and the Dow Jones Transportation seems to be rallying with their 200 day moving average turning flat ( from a previous negative trend ) …. It feels like rally ( maybe short ) is on cards? Any comments on Transportation average?

]]> By: Prieur du Plessishttp://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/comment-page-1/#comment-2013 Prieur du Plessis Fri, 04 Apr 2008 14:16:45 +0000 http://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/#comment-2013 Mr Obvious: Good to see you visiting again. I agree that the previous high is of great importance. (I didn't refer to the trendline break in my text for the specific reason that I didn't think it was particularly significant.) But I will always read this together with measures such as spreads and other risk parameters that are very relevant to the stock/bond debate. Mr Obvious: Good to see you visiting again. I agree that the previous high is of great importance. (I didn’t refer to the trendline break in my text for the specific reason that I didn’t think it was particularly significant.) But I will always read this together with measures such as spreads and other risk parameters that are very relevant to the stock/bond debate.

]]> By: Mr. Obvioushttp://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/comment-page-1/#comment-2012 Mr. Obvious Fri, 04 Apr 2008 14:05:04 +0000 http://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/#comment-2012 I don't think much of trendlines constructed with only two contact points and was ready to mention that as a reason to ignore the chart. When I recontructed the graph on the Bloomberg terminal, however, there were three definite contact points. (I created a relative strength chart of UST4GP v. SPX ). I'd watch for the ratio to start taking out (or NOT take out) previous highs, like the one near the end of February, for further clues. I don’t think much of trendlines constructed with only two contact points and was ready to mention that as a reason to ignore the chart. When I recontructed the graph on the Bloomberg terminal, however, there were three definite contact points. (I created a relative strength chart of UST4GP v. SPX ). I’d watch for the ratio to start taking out (or NOT take out) previous highs, like the one near the end of February, for further clues.

]]> By: richard warrenhttp://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/comment-page-1/#comment-2010 richard warren Fri, 04 Apr 2008 11:17:16 +0000 http://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/#comment-2010 I don't know if I'm early...or stupid...but starting in February, I've moved funds from bonds to money market (on the assumption my bond funds will soon suffer large losses as rates move higher to counter inflation and growth). Of course I'm also redeploying those money market funds to equities as opportunities arise. I don’t know if I’m early…or stupid…but starting in February, I’ve moved funds from bonds to money market (on the assumption my bond funds will soon suffer large losses as rates move higher to counter inflation and growth). Of course I’m also redeploying those money market funds to equities as opportunities arise.

]]> By: PostOnFire.comhttp://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/comment-page-1/#comment-2009 PostOnFire.com Fri, 04 Apr 2008 09:45:17 +0000 http://www.investmentpostcards.com/2008/04/04/picture-du-jour-watch-the-stockbond-ratio/#comment-2009 <strong>Watch the stock/bond ratio for direction of markets...</strong>Is the worst of the credit crisis behind us? The short answer is that nobody actually knows. However, the so-called stock/bond ratio serves a useful purpose of indicating to what extent safe-haven buying of bonds as opposed to stocks is taking place, i... Watch the stock/bond ratio for direction of markets…

Is the worst of the credit crisis behind us? The short answer is that nobody actually knows. However, the so-called stock/bond ratio serves a useful purpose of indicating to what extent safe-haven buying of bonds as opposed to stocks is taking place, i…

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