6 April 2006

Safe Haven | McHugh's Daily Market Briefing

Safe Haven | McHugh's Daily Market Briefing: "Purchasing Power IndicatorDJIA/S&PShortBuyFeb 16, 2006DJIA Up 214 Points
DJIA 14 Day StochasticDJIAShortBuyApr 4, 2006New Signal
Secondary Trend IndicatorDJIA/S&PIntermNeutralOct 31, 2005DJIA Up 764 Points
NDX 14 Day StochasticNASDAQ 100ShortBuyMar 29, 2006NDX UP 19 Points
NDX Purchase Power IndicNASDAQ 100ShortBuyMar 14, 2006NDX Up 42 Points
RUT Purchase Power IndicRUTShortBuyMar 14, 2006RUT Up 34 Points
HUI 30 Day StochasticHUIShortBuyMar 24, 2006HUI Up 32 Points
HUI Purchasing Power IndicHUIShortBuyMar 14, 2006HUI Up 46 Points

We now have all of our short-term signals on 'buys.' Liquidity is lifting all boats higher, including precious metals. Only Bonds and the Dollar are struggling, which would make sense if monetary inflation is the driving force behind nominal valuation rallies. Nevertheless, we can profit handsomely playing call options even if the gains are strictly due to fiat currency expansion. Tonight the Dow Industrials have generated a new 'buy' signal in our blue chip key trend-finder indicators. The DJIA 14 day Stochastic Fast measure rose sharply, we might add, to 53.33 from 26.67, and blew past the Slow reading at 34.00. This new 'buy' signal confirms the 'buy' from February 16th, 2006 in the Purchasing Power Indicator, which rose to a new high of 92.72 Tuesday. What this is telling us is that the forces of supply and demand have favored higher prices since February 16th, and now breadth momentum has turned positive and is rising sharply, what we normally see at the start of rallies. We have no way of knowing how long this blue chip equity rally will last, or how far up it will go. Usually we see at least 200 points after these signals first agree on a new trend.
Blue Chips S&P 500/DJIA

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