Professor Elam

Tuesday Jan 5 2009

The weekly exponential moving averages called the decrease in rates, and the decrease in stocks shown above pretty well. We previously posted these MAs on the stock market. The SPX is at the top. Notice that yields followed the stock market down. IN the recovery yields have followed the market up. 

Conventional wisdom has it that yields should be rising as the Government issues more debt. But if the stock market turns down, what will yields do the same in the face of the massive government desire for more money?  The best answer will be to continue to examine this chart For the time being, rates are trending up against resistance at 4%.

Two different markets but the same graph. Robert Prechter's group at http://www.elliottwave.com has identified this as 'All the Same Market' with stocks bonds and even oil looking like the same chart pattern. 

So we suspect oil will continue up, particularly if the dollar weakens and as China and other holders of dollars seek to diversify out of them and into physical commodities.