Morning Briefing, 11/15/2002

[21st Century Alert]

Title: Morning Briefing, 11/15/2002

FRIDAY a.m. November 15, 2002   by David Nichols Yesterday was a good old-fashioned "strong trend day". The markets gapped up and powered higher the whole day, closing at the highs. Bonds got hammered, which is the confirmation you want to see during a rally in stocks. I know I keep bringing up the relationship between bonds and stocks. But it's really pretty amazing right now. I hate to even say it for fear of jinxing it -- but if you're clued into this relationship it's making interpreting this market easier than usual. It comes down to this: you can't trust a move unless it is confirmed by both stocks and bonds. The inverse relationship can clearly be seen on a chart with bonds and stocks overlayed. This is a chart of US bond futures (USZ2 -- green line) with the S&P 100 (OEX -- blue line). It's like a mirror image. The subtlety in interpretation now involves gauging the relative strength and weakness of the two markets. For example, bonds had a strong move up after the Fed rate cut, and stocks dropped -- but not as strongly. That was a hint that this move was corrective, and not a strong trend, as both markets weren't really moving to the same degree. Now we're seeing bonds drop sharply, and stocks rise sharply. At least we saw this yesterday. This is also what was seen on the move off the bottom after October 10th. So it looks like the primary trends are re-asserting themselves right now. A sneak-peek at the weekly chart shows another bullish candle forming. Of course it won't be official until today's close. Barring a major sell-off today -- which isn't likely on expiration day -- the weekly uptrend will look very healthy moving into next week. With the OEX bouncing off the 10 week moving average, it now looks perfect for a trip up to the 40 week average, right around 490. The all-important weekly VIX is also continuing its downward momentum, which confirms the uptrend. As I pointed out the other day, this weekly VIX still has a long way to fall to get to levels associated with previous tops. Again, the Squeezeometer will no longer be included in the Morning Briefing, as it's now available exclusively to subscribers of Erlanger Squeeze Play. Phil's service is an outrageous bargain at $30 per month, and there are even big discounts available if you opt for the yearly rates. Personally, I can't even fathom why anybody would participate in the markets without subscribing to Phil's service. It's not just essential reading, it's mandatory reading.   Definitions   This Morning Briefing is brought to you by 21st Century Alert. Your 21st Century Alert subscription offers so much more. Click here to go to 21st Century Alert's Web site. You can find this article on the Web at: http://www.21stcenturyalert.com/page/tcx/morningbriefing/2002-11-15/ To remove yourself from our mailing list, or to get your username and password so that you can access the Morning Briefing archives on our Web site, click here.