World markets signal slowdown; S&P 500 in denial

Chinese stocks look weak

The Shanghai stock index looks very weak, making lower lows:

American stocks may be disconnected from reality

In my experience, U.S. markets are generally the poorest reading of economic reality. Both Canada and China (stock indices) tend to reflect global conditions better, in the short term. I can only speculate why, but possibly it's due to less hedge fund and central bank involvement.

My bull index shows an 'uncertain' global market. A quick chart review shows me:

Overall message

Credit and money markets are a wreck (t-bill rates near zero, TED spread rising, European bond and institution problems). Therefore, I think that stock indices in Canada, Japan and China offer a more accurate view – things are steadily deteriorating worldwide.

The US indices are, I think, somewhat disconnected from reality. Perhaps American stocks are in denial about the global slowdown. Or perhaps this time, the USA will sustain the world economy while Asia slows down and Europe collapses!

- Perpetual Bull