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Morning Matters:

Weekly Chartbook Review
by Geoff Garbacz

Is the equity market toast or this another correction like we saw in June/July, October and January/February. Many are jumping to the conclusion that the complexion of the market has changed and the up move since March of 2009 is over. Is it over or is this a panic?

This morning we update the weekly chart review of the 50 day moving average and the slope of this moving average on several leading indexes. Weeks like this are EXACTLY why we review this technical indicator. It tell us when to run for the hills.

We are still positive on most of our asset classes. The ones that have turned negative have done so ever so slightly. Therefore, the world is not coming to an end at this point and this is not 2007 or 2008 even though many think this is a replay. Why?

The pain of 2007 and 2008 is in their minds and they do not want to relive that event. Even the professionals have battle fatigue syndrome, maybe they have worse battle fatigue than the retail investors, and are in a panic. Probably one of the best investors I know grilled into my head "buy them when others are selling and sell when they are being bid to crazy levels."

2007 and 2008 will repeat this year if the European Union is blown apart. However, the odds are not in favor of this. Yet the market is acting like the European Union is going to be broken up. The workout of Greece and other countries takes time but the market is not giving it time. But it will.

Each chart shows the 50 day moving average and our indicator that shows the slope of the moving average. Green is positive slope and red is negative slope.

We highlight below the S&P500, Russell 2000, NASDAQ Composite, UUP, EEM,TLT, HYG and CFT. Right now the S&P 500, Emerging Market ETF (EEM)and High Yield (HYG) should not be purchased. Once these move back to green then you can be a bottom fisher. This dialogue will continue on Monday.

All charts are created from www.erlangerchartroom.com and if interested in using this indicator in Chart Room please feel free to send us an email by using the Contact Us section from the home page.

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