Sunday, October 01, 2006

A couple of charts

It’s late Sunday night and I have only two charts to show. One is the YoY %change of the real personal consumption expenditure (PCE), smoothed out by the trailing three month average as I have been doing. August’s real PCE came at a minus 0.1% which pointed to the likelihood that the American consumers are finally tapped out. Much of the drop was blamed on the volatile auto sector, although real non-durables also took a step back. So much for the back-to-school sales! The trailing three month average is still positive, although the downtrend established in April is seen to remain firmly in place.

The second chart looks at the longer term S&P. The negative divergences that led up to the May decline remain in place. Could the S&P go on to test the upper trend line? I won't bet against it, but this is one train I'm not going to board.

It was surreal to see the cheer leaders on bubblevision comparing the Dow’s intraday high to the previous closing high, not to mention the non-confirmations of the other indices. But for a gold bull/stock bear like me, last month was hard to take. I’ve been tallying up the numbers for September and they weren’t pretty. We are not talking Amaranth here but one more month like that, I may not be able to afford the luxury of my own opinion. Even though some of it is attributable to my loose risk management, I’m once again humbled by the market. So with that I sign off for the night and hope October more to my liking.