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Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Thursday, March 24, 2011

Stock Market Note

Sensitive materials prices comprise an economic leading indicator. Industrial commodities
composites present a challenge because of their price volatility week to week. But I map them
closely because they help substantially with bond trading and also because materials prices and
the materials sector stock composite (XLB) can sometimes be very helpful in trying to sort out
broad stock market direction in that they sometimes give you a little "heads up" on the market

There looks to be a test ahead for the materials sector. As you will see on the chart below, the
relative strength of the XLB as well as the narrow industrial metals group composite both face
resistance just ahead. Successful breakouts might well help support recovery of the SP 500.
(XLB). Failures at resistance could signal that more caution might be in order.

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