Our anticipated A-B-C correction is postponed as the U.S. FED continues to throw dollars at the capital markets with QE causing the U.S. to export food inflation which will likely end with a commodity bubble. The Double Dip Recession Issue is dead and the recovery is on thanks to the US Fed and QE2. A strong recovery may be pending as U.S. private payrolls increased 50,000 but in spite the smaller-than-expected increases, the headline unemployment rate fell sharply to 9.0% from 9.4% in December. Fed Chairman Bernanke just stated that the economic recovery hasn't been strong enough to significantly reduce unemployment
Not strong enough? Be careful what you wish for - the Fed won’t let up until the recovery gets out of control – inflation is the next big problem. Keep an eye on the US 10-yr T-Note which is now breaking up to the 4% level almost back to pre-financial crisis peaks – yes interest rates are rising in spite of QE2! Our weekly 10-yr T-Bond yield chart displays a bullish higher 18-month low (bullish for yields – bearish for bond prices) positive departure analysis and early positive relative outperform vs. the S&P500.