I spend a great deal of my day reading everything that is written about geopolitics and the stock market.
The one thing I know is that everyone talks their book.
The stuff gets so deep, you have to stop sometimes and see what is really going on…
Here are five simple charts that can’t be spun.
Night in the RUTs
The Russell 2000 is the index made up of stocks that have a small market value. These are called small market capitalization stocks — or “small caps.”
A market capitalization is the true value of a stock. It is found by multiplying the total number of shares by the share price.
The median market cap for the Russell 2000 is $448 million.
That means that these are the little guys. They are fast and nimble and don’t get bailouts.
This is the index that represents the true America. They are the first ones into recessions and the first ones out.
The RUT has been the best performing U.S. Index over the last two years — or what I like to call “the longest sucker rally in history”.
For those who don’t know, a double top formation is bearish. We are, right now, at the point where everyone made their money back after the crash.
In other words, after two long years, folks who stuck by the market have seen their 401Ks and pension plans back to where they were…
These people are now sellers.
Inflation
Here is a chart of inflation in the United Kingdom.
In the United States, CPI is highly manipulated as it is tied to Social Security payments. In the U.S., the Fed is saying that the core rate of inflation rose 0.2% last month.
But as you can see, in the UK it is over 4% — and climbing. Inflation is here.
Another sign is that disposable income dropped by the largest amount in two and half years, according to the Commerce Department’s report today.
People have to buy food and gas.
Oil Top
That said, oil looks a bit toppy here…
Now, don’t get me wrong; I am very bullish on the long-term price of oil.
But after all the global shocks we’ve had over the last month, it looks like it has gotten ahead of itself.
We are well above the trend line, have a double top, and the Moving Average Convergence/ Divergence indicator shows a cross that is well above the center line…
These are short-term bearish indicators. You should plan on buying below $97 a barrel.
And look at that volume — you have to love the speculators.
Like a dog returning to vomit, they always come back for more.
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Natty Gas
Natural Gas, on the other hand, is starting to get some love.
I’ve been telling you to buy it for about six months now. This is the best five-year buy you can make right now.
The Greenback
Oil gas and the UK CPI are going up because the dollar continues to fall…
Will we take out the 2008 low?
Of course we will.
National Health Investors Inc.
Here is one you may consider… Interest rates are cheap, health care spending is about to launch, and REITS are taking off.
NHI is a health care REIT. The company buys health care real estate and provides mortgage loans.
They pay a 5.20% dividend, have a p/e of 15.40, and a 75% profit margin!
The share price is hitting new all-time highs.
Christian DeHaemer
Editor, Wealth Daily
