Wednesday, May 28, 2008

The Larry Kudlow Pinstripe Indicator

After having watched and listened to Larry Kudlow in amazement for years, a hidden indicator has finally been spotted. It was there in front of us all the time. This indicator has to do with the width of the pinstripes on his suits. If he is wearing a conservative tight small pinstripe suit with narrow widths, what he is talking about might have some value. Might is the key word. However, if he is wearing one of his wide stripe suits, beware because the "BS" indicator is going to be flashing in the red for sure.

About six weeks ago when oil was under $120, Larry was saying that if oil could have just a 10-15% correction, the Dow and S&P 500 would be off to the races ready to make new highs. Did anyone really think that if Crude went back to $105 from $120 that would be a reason to put on the rally cap? I guess some people did and still do. It is easy to refuse to view the price of oil as something that is here to stay. With gasoline at $4.30 a gallon, energy is now a burden of ever increasing weight. So if oil has a correction later in the year from $150 to $120, Larry will tell us it is time to load up the canoe for the new bull market, again.

Light Sweet Crude with linear regression channels(click to enlarge)

S&P 500 Index with linear regression channels(click to enlarge)

S&P 500 Index Opening Range Levels(click to enlarge)