Charts of the Day

The first chart that I wanted to highlight is of the Euro/Yen cross (the relationship of the Euro relative to the Yen), which I have mentioned in the past. Smart market watchers like Dennis Gartman have been talking about this "cross" and watching it as a barometer for global investors' willingness to take risk.

You can see below that the cross is now breaking to new highs since last October. The idea here is that the backdrop for financial assets is more benign now, and that should help equities move higher if cash continues to come off the sidelines.


The second chart is of crude oil prices. The chart below looks like it is painting a picture of a bottom in crude prices. The stochastic indicator at the bottom of the chart looks like oil is definitely overbought in the short-term, but could continue to work higher after a breather.

As oil is tied to the growth in the global economy, higher prices would lend themselves to the reflation theory, that the coordinated global stimulus packages are having their desired effect of stimulating economic growth again. Stay tuned.

The last chart is of the 10-year Treasury yield. If this were a chart of a stock, I would look at it and say it has been building a nice base, and looks like it is ready to move higher.

A move higher is okay in the sense that the big global recession and deflation worries are subsiding. I don't want to see rates run too high, because that would temper the economic recovery we are looking for. But I suspect the Fed would step in to buy Treasuries, as it has stated it would do, in order to keep a lid of rising rates.