Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

No Sign of an Economic Recovery Yet? Look Again at BDI, Copper and Homebuilders

Stock-Markets / Financial Markets 2009 Feb 17, 2009 - 06:26 AM GMT

By: Donald_W_Dony

Stock-Markets Best Financial Markets Analysis ArticleThere are a number of early economic signals that are beginning to slowly surface that has not yet caught the attention of financial media. These slight changes to the commodity, bond and equity markets are the early indicators and building blocks of the next economic recovery. Throughout 2009 additional evidence is expected to gradually surface. Here are some of the most recent pieces of the recovery puzzle

The home builders sector (Chart 1) represents a parallel to leading indicator to the U.S. housing market. As this market was the root cause of the financial crises, any stability in the home builders sector would provide an important clue to a possible bottom in the deeply depressed American housing market. More than three years since the market began correcting, inventories are now flattening, prices are coming back down to earth, and sales are approaching stability. The peak in the U.S. housing market occurred in the second half of 2005, whereas the top in the home builders sector developed in May 2005.
Technical models indicate that renewed upward pressure should develop over the next six weeks. This is encouraging especially since the sector has already found stable price support since November.

The price movement of Copper (Chart 2) is a vital indicator to the economy for this metal moves with the business cycle. After the waterfall collapse in the second half of 2008 from $4.00 to $1.25, copper appears to be finding a floor and good price support at the $1.40 to $1.60 range. With the enormously wide application use of copper in areas such as consumer electronics, plumbing, computers, industry and homes building, price firmness for this metal indicates building strength in the global economy.

The Baltic Dry Index (Chart 3) is another economic gauge that is displaying some returning life. The BDI is a number issued daily by the London-based Baltic Exchange. The index provides an assessment of the price of moving the major raw materials by sea.

The index covers dry bulk carriers carrying a range of commodities including coal, iron ore and grain. This index fell from over 11,000 at its peak in early 2008 to a dismal 700 in December. Some of the reasons for the advance are the slow unfreezing of credit and the decline of the iron ore stockpiles in China.
Technically, the index still remains down but is currently establishing a base. Only an advance over the 2000-3000 resistance level would suggest a reversal has begun.

The growing stability in base metals is another early sign of the recovery. Zinc, nickel and lead are all forming solid price bases for the first time since early 2008. Zinc, in particular, began to recover back in September, over five months ago.

There is also a slow but gradual shift out of consumer staples and into select consumer cyclicals. For the first time in over a year, the relative performance of both sectors is now equal. Bull markets require the consumer to move their funds out of the safety of staples and into discretionaries. Models are suggesting that this transfer is starting.

Other pieces of evidence include the calming of the Volatility Index (VIX), the narrowing of the TED spread and changing yield curve in the bond market.
Though many of these elements are relatively minor in their context, they are the silent building blocks for the next economic recovery and bull market.

Additional research can be found in the February newsletter. Go to and click on member login.

Your comments are always welcomed.

By Donald W. Dony, FCSI, MFTA

COPYRIGHT © 2009 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present.  He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.   

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms.  He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

Donald W. Dony Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in