The Yahoo Finance three month ongoing chart of Cummins Inc. (CMI) and Donaldson Company Inc. (DCI), compared to the iShares Russell Midcap Growth Index (IWP), shows that these two pollution control companies, exemplify the fall lower of growth stocks ... CMI, DCI and IWP

The unwinding of the yen carry trade, better called the Euro carry trade, is the Deflationary Hurricane, driving these growth stocks lower.

Prudential (PRU) rose to 79.50 which is near resistance at 80.50 as Associated Press reported that the insurance sector advanced after Hurricane Gustav passed through the Gulf of Mexico without inflicting massive damage -- and the sky-high insurance claims that would have resulted.

Prudential's rise is actually a pop in a bear market that is to be sold, if one follows my investment maxim: in a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength.

Introduction

US stocks, VTI, turned lower Tuesday August, 12, 2008 on financial sector concerns and both a falling USD/JPY and EUR/JPY.

The world has passed through both 'Peak Currencies' and through 'Peak Dollar'.

Gold is rising as the world currency and means of preserving wealth.

Now that the Fannie Mae (FNM) and Freddie Mac (FRE) rally is ending as stock options expire on Friday, and the glowing reports are being posted, it's time to go short the leading component, that is the Education and Training Services of the consumer discretionary, XLY, sector as seen in this comparative chart of EDU and XLY.

Motley Fool Kristin Graham hypes up New Oriental, (EDU), so now it's a terrific and opportune time to go short this stock.

Evidence suggests the utility sector and bond market is acting adversely to the Wednesday economic report that inflation is rising.

1. The ongoing Google Finance chart of the dividend paying stocks, of VPU, DES, DLN and DOO shows that concerns over inflation have hit the utility stocks hard; they fell 4% on Wednesday the 16th, and Thursday the 17th, while the other dividend stocks as a group have risen 4% while the overall stock market, VTI, rose 2.5%.
2. The ongoing Google Finance chart of of interest rate sensitive sectors, VPU, TLT and DOO, shows that the utility stocks fell 4% on Wednesday the 16th, and Thursday the 17th, and Treasury Bonds, TLT, fell 2%.
3. The chart of the Intermediate US Government Bond ETF, TLT daily, as of July 17th, 2008 shows two fractal breaks lower with RSI falling below 50 and a bearish MACD crossover.
4. The chart of the interest rate on the 30 Year US Treasury Bond, $TYX daily, shows that the bond market place called interest rates higher on Wednesday July 16, 2008 and Thursday July, 17, 2008, in response to the Wednesday economic report that inflation is rising as well as the Federal Reserve's proposed guaranteeing and/or recapitalizing of Freddie Mac (FRE) and Fannie Mae (FNM); note the breakout of RSI of 50 and the MACD bullish crossover.

The Philadelphia Manufacturing Philly shows contracting orders and employment.

Stagflation, it's a fiat wealth killer: Headline inflation is rising while jobs, manufacturing production, real estate, and economic indicators are falling: stocks and bond wealth of all types will be turning down in value.

Stagflation in the US

Bond insurer fears sunk the market yesterday. And of greater import: the longer out government bonds didn't pick up the slack.

Investors Fleeing Out of Stocks and into a Market Top in Treasuries

Investors were fleeing the stock market Friday and investing in the 20 to 30 Year US Treasury Bonds, traded by the ETF, iShares Lehman 20+ Year Treas. Bond (TLT).