Tuesday Outlook: What Green Shoots?

June 22, 2009



The story is front and center: GS is reported (later denied) able to pay huge bonuses to employees this year. (Guardian story is here.) How can this happen, especially now? TARP money to trade with thanks to US taxpayers. Warren Buffett and Senator Dick Durbin knew exactly what was going to take place when they invested with the in-crowd. They, and other insiders, got the vig and you got the tab. End of story. It’s as simple as that, isn’t it?

Today was a rough day to put it mildly as markets tumbled hard on reports from the World Bank that growth (also known as “green shoots”) will be er, “worse than expected”. This news crushed previously healthy commodity and stock market rallies.

Volume picked up and breadth was awful.






Perhaps “the tell” was the rollover in the Summation Index, as demonstrated by the chart below. It can rise to 1200-1400 and stay there for longer than you can imagine before it rolls over. Then a top is often the result. “Sell in May and go away?”

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