Just for an extra measure of confirmation-this is the Dow-20, better known as the "Transports"-same idea, but not limited to shipping.
Thursday, September 23, 2010
The Baltic Dry Index
The Baltic Dry Index is volatile, but is often a leading indicator for the market. It is basically the cost of shipping dry goods via container ships. As you can see below it peaked on 9/10, the market peaked on 9/21-7 trading days later.
Just for an extra measure of confirmation-this is the Dow-20, better known as the "Transports"-same idea, but not limited to shipping.
That's some pretty sever price momentum the last two days
Just for an extra measure of confirmation-this is the Dow-20, better known as the "Transports"-same idea, but not limited to shipping.
7 comments:
Looks like we are seeing the pick up in volume
One very dangerous sign of asset overvaluation is that high-yield corporate "junk" bonds have returned to parity for the first time since June 2007. This sector has experienced all-time record amateur inflows during the past year from those who have negative emotional associations with equity index funds and who foolishly believe they are diversifying by owning bonds along with stocks
The herd chasing after big returns is never a good sign. I would guess that the big boys have been happily selling all they can and shorting the industry at the same time.
QS-they are also chasing yields which are quite higher on junk bonds. Considering the average pension fund figures they need an 8% return a year and are all deeply upside down, I'd think they flowed in as well as we just had a record setting JB auction a month or so back.
The issuers of junk bonds saw an opportunity with treasury yields that can't even keep up with the cost of living, they took advantage of demand and they sold their junk, however, most used the money to pay preferred dividends, not to pay down debt or reinvest in the company so that's just another time bomb waiting to implode as they default.
Is their an inverse ETF for these bonds?
Not that I know of, but I do recall a few names being thrown out in the news when it occurred, you can probably find the companies and look at them for a weakling
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