Reality Check With Rosenberg May24

Reality Check With Rosenberg
Submitted by Tyler Durden on 05/24/2011 12:16 -0400

http://www.zerohedge.com/article/reality-check-rosenberg

From David Rosenberg's latest Breakfast with Rosie, from Gluskin Sheff

Reality Check:

• The S&P 500 is no higher now than it was on February 7. Yet, so many pundits still believe we are in a flaming bull market.
• QE2 failed to provide for a sustained acceleration in the pace of economic activity.
• The housing inventory background is horrible
• Over half of the NYSE is now trading below its 50-day moving average (thanks to Richard Russell).
• M3 has fallen at a 1.5% annual rate since QE2 started (thanks to CLSA's Russell Napier); in other words, credit is still not being created.
• The Nasdaq is the first of the major averages to have broken below both the 100-day and 50-day moving averages. The Dow and S&P 500 have so far just pierced the former, but we all know the Nasdaq is a leading indicator. As an aside, in the last 12 months the Dow has broken below its 50-day moving average three times and from that point to the interim bottom, we saw the Dow plummet 4.5%.
• Ditto for FTSE, on an international scale, and it is down 1.1% year-to-date. Same goes for the cyclically-sensitive Korean Kospi, which is now flat for the year.
• Whenever bond yields and bank stocks go down in tandem, it rarely foreshadows anything good. So far this year, the yield on the 10-year note is down 11 basis points while financials have sunk 2.9% and underperformed the market by 765bps.
• If inflation is on everyone's brain, then why is the S&P 500 basic materials sector the only other one down for the year?

So many things are at critical technical junctures too:

• The 10-year note hugging the 200-day moving average (and the 50- and 100-day trendlines are now heading down in yield).
• But gold was up yesterday on the same day that the dollar was up — and bullion is hugging the bullish 50-day m.a. line very nicely.
• The CRB has broken below each of the 50- and 100- day trendlines and there is 5% to the downside before the 200-day threshold is tested.
• For the loonie, which too has suffered the indignation of breaking through the 50- and 100-day lines, is 2.2% away from that key test.
• Oil just broke below the 100-day m.a.
• But even with oil down, the Transports are giving it up — down 1% yesterday even in the face of a 2.4% slide in oil prices — and down in seven of the past nine sessions (when Transports sell off when oil is down then a very important bearish economic signal is being flashed).
• The DXY has already broken the 50-day ma. to the upside and is on the precipice of taking out the 100-day.

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