Perspective

On the longer term, the highs in late April – early May were likely to end the business cycle that arose out of the end of the panic in March 2009.

In January, our Momentum Peak Forecaster signaled that the speculative surge could complete by around April. Using the outstanding examples of 1973 and 1980, the recession would start virtually with the end of speculation.

We have since concluded that the recession started in May.

On the nearer term, our work on credit spreads indicated that some heavy liquidation was possible in the fall. Spread products, stocks and commodities came under a lot of pressure from August into late September.

That this did not continue was indicated by the number of attempts by the S&P to break support and the inability of the gold/silver ratio to take the extra leg up.

A very key point...