Morning crew, Dutch team had a win last night, hopefully Argentina tonight.
This chart shows the unemployment rate for the civilian population unemployed 27 weeks and over. The June number is 4.4% unchanged from 4.4% in May. This measure gives an alternate perspective on the relative severity of economic conditions. As we readily see, this metric is significantly higher than the peak in 1983, which came six months after the broader measure topped out at 10.8%.
The chart shows the real (inflation-adjusted) monthly average of daily closes. We're using a semi-log scale to equalize vertical distances for the same percentage change regardless of the index price range. The regression trendline drawn through the data clarifies the secular pattern of variance from the trend those multi-year periods when the market trades above and below trend. That regression slope, incidentally, represents an annualized growth rate of 1.70%.
The Bearish View The peak in 2000 marked an unprecedented 160% overshooting of the trend about double the overshoot in 1929. The index had been above trend for nearly 18 years. It dipped about 6% below trend briefly in March of 2009, but at the beginning of June 2010 it is 33% above trend. In sharp contrast, the major troughs of the past saw declines in excess of 50% below the trend. If the current S&P 500 were sitting squarely on the regression, it would be hovering around 845. If the index should decline over the next year or two to a level comparable to previous major bottoms, it would fall to the low 400s.
The Bullish Alternative A critical factor for the reliability of a regression analysis of stock prices over many decades is the accuracy of the inflation adjustment. The Bureau of Labor Statistics (BLS) has been actively tracking inflation since 1919 and has estimated inflation rates back to 1913 using data on food prices. In 1982, however, the BLS began incorporating changes to the Consumer Price Index (CPI), which is used to calculate inflation. These changes have resulted in much lower "official" inflation rates than would have been the case if the method of calculation had remained consistent.
I have been posting data about the BDI dropping for 20 straight sessions etc, In price movements the figures have nearly halved but we are certainly know where the extremes of 2003-2010. To note we are finding the lower end of the BDI, or flat number area in the 2000's.
In regards to copper I have an ETC chart channeled with both bullish and bearish sentiment. Large broadening top, in the middle - green line resistance & red line support. Im a bear so looking below, green lower channel at $26 could find support if the center red support is taken out. My 2011 level would see us $18 - $20 range in the first quarter. I will be adding contracts to the long side around $26.
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