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Ominous sign for Wall St.

  1. juz50

    568 Posts.

    I do not normally like to be the prophet of doom, but a current important US indicator bears paying attention to:

    The 10 year Treasure Bill Note rate has again breached 4.00% to the downside, closing in New York at 3.97%. The yield is now at a 40 year low. Traditionally, the yield from the share market, and the 10 year note yield run in tandem. This would indicate that Wall St. is due for a correction so that the share market yield comes into line with the 10 year note yield. Since the note yield has always been the 'senior partner' in this relationship, the share market always falls in line with the 10 year bond rate. If this is extrapolated, the potential for a real share market collapse, is evident and very scary.

    It is also interesting to note that three key computer manufacturers in the US are today facing a frightening prospect - Honeywell has issued a profit warning for Q2 and Q3, HP has taken the extraordinarily stupid decision to tackle Dell head-on in the business that Dell has pioneered and been highly successful in that is direct selling of computers with minimum lead time delivery, and the chart of IBM shows the IBM share price precariously perched at a key support level on a head and shoulder pattern that if this support level were to be breeched on the downside, IBM could lose 25% of its market capitalisation before hitting adequate support.

    Protect yourselves.

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