In reviewing the last few years of omens that showed up via my trust stockcharts.com model, they tend to argue that problems could be arising (they show up early) and tend to confirm the movements by the rate structure of the market taht the economy is weakening. In 2007, there were a bunch of these omens according to my chart and the reason was simple; people were buying rate senstive issues on the NYSE and as rates fell, the stock markets fell - as the 10 year versus S&P shows on the chart. From what I can see, this omen does not lead to collapses in stock prices though from one of my other friends, she said that it has not showed up as much as I am showing and it is more powerful than I am letting on. Till I see that data, I will stick with this model and argue that while the "omen" is not a good thing, I do not believe it is as powerful as people would like. Further, one of these omen's showed up near the market highs in August of 2007 when liquidity was a problem in the marketplace and the markets proceeded to rally to new highs in November. So I remain skeptical of this indictor.
Another indicator that is bothering me a tad is my on balance volume model which is starting to roll a bit. This argues that the downside volume is starting to pick up the pace versus the upside volume over the past quarter. If this continues the indicator will roll over and perhpas get confirmed by the rest of my market model. While it is bothering me, I remain long term bullish at the moment.
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