A quick reminder:  I will be traveling this weekend, so I’m sending out an abbreviated version of our weekend piece tonight (Thursday night).  Therefore, if you don’t get a chance to read it until this weekend, it might sound off-base…if something big takes place on Friday…which isn’t out of the question given that the employment data coming out that morning…..Actually, there are more bullet points than usual in this week’s edition, but most of them are much shorter than usual…….Anyway, have a great weekend!

Table of Contents:

1)  What has really been going on in the bond market is a “normalization” process that was always inevitable.

2)  The banks stocks continue to act very poorly.  It’s going to take a while for them to work through their issues.

3)  Price-to-sales is a much better indicator for valuation than P/E…and it remains very elevated.

4)  That said, on the bullish side of the ledger, the S&P 500 Equal Weight Index IS much closer to fair value.

5)  Updating the charts on the S&P 500, the NDX Nasdaq 100, and the Russell 2000.

6)  There seems to be some “forced selling” going on in the bond market….Also, let’s look at the chart on the 10yr note.

7)  Warning:  High yield spreads are widening out in a meaningful way.

8)  The energy stock have fallen…like we thought they would, but natural gas is breaking out to the upside!

9)  Gold has become extremely oversold and over-hated.

10) The Presidential Election Cycle theory has not worked well in half of the election years of this century.

11)  The Fed cares about keeping the banking/financial system stabile…not about preventing bear markets in stocks.

12)  Summary of our current stance:  It’s not different this time when it comes to the bond/stock divergence.

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