I usually rely on fundamental securities analysis. However, relative price movements sometimes add to my confidence in my analysis of the macro economy.

In this case, the relative strength index (RSI) for the S&P is helpful. This article on StockCharts.com provides background on the RSI.  http://stockcharts.com/help/doku.php?id=chart_school:technical_indicators:relative_strength_in

This indicator on BigCharts.com shows that the S&P 500 may be oversold; you can see what happens when the RSI falls below 30.

The yield on the US ten-year note keeps dropping. Today it's trading around 1.74% - a new low for that number. In addition to the Fed's "operation twist" that buys these notes to keep mortgage rates low, investors are avoiding risk and buying these securities.

The intra-day spread of this instrument over the three-month bill is only 1.67%, or 167 basis points. Banks need a wider spread than this to make much money.

Jamie Dimon at JPMorgan and Ben Bernanke the Fed are probably having a little chat about the situation right now...

There's probably a great buying opportunity ahead for equities, we may want to keep our cash on the sidelines until it appears.

The moving average convergence/divergence line (MACD) has turned down with a vengance.

The depth of this decline is usually the result of pent-up selling. Although some economic data is strong, investors may want to preserve cash until confidence returns to the markets.

This equity market weakness shouldn't last too long. Signs of strength are building in the commercial paper market.

Not only is the volume of paper increasing, but the yield curve is positive. Businesses must have a good reason to add to their cash reserves...such as an optimistic outlook for increasing sales.

Eurasia Group thinks that the "golden age of gas" energy will come with "golden rules" that will limit the investment potential of this new era in energy production.

Another set of investment ideas is on the Internet at http://www.investorplace.com/2012/05/3-funds-riding-trends-you-can-bank-on/

The author, Kyle Woodley - Assistant Editor of InvestorPlace.com, likes the growing trends in computer chips (found in almost everything we buy), cloud computing (growing at 60+% annually) and gaming (addictive).

The yield curve is flatter than it has been since the end of February. The 3-mo./10-yr. spread is only 184 basis points. The VIX reflects investors' fear and is a little higher today at 17.

The markets are still worried about problems in the Eurozone. Investors should read the comforting outlook for the Euro on Eurasia Group's website - where the issue is considered a "red herring" and "the single most overrated risk of 2012."

http://www.eurasiagroup.net/media-center/view-press-release/Eurasia+Group+publishes+Top+Risks+for+2012

Therefore, when this minor downturn in equities is behind us, the market should continue its plodding uptrend.

For a glimpse into the future, read the article in "The Economist" magazine describing the next industrial revolution. http://www.economist.com/node/21553017

The future of manufacturing may increase US output by $20 billion - $55 billion annually, improve working conditions, and benefit society.

This stock market volatility is reminiscent of last fall - even the issues are the same!

The bond market still points to lower S&P prices over the near term. The strengthening US economy may put an end to this volatility soon and allow the rally to continue.

Investors continue to take money out of equities and buy bonds. The US Treasury 10-year note yields less than 2% yet still attracts new money. Don't people know that these historically-low rates can't last forever?

As Dave Glen, CFP, CFA at Boston Private Bank and Trust writes, "... a tiny 25 basis point rise in interest rates (next year implies a) capital loss of 2% which will negate the coupon income for the entire year."
http://randomglenings.blogspot.com/

This asset re-allocation cannot last much longer. Have hope that this minor correction will be shallow and brief. Wait for bond quality spreads to narrow - and then buy equities like there's no tomorrow!

More signs of trouble...

Reuters news flash: "Americans brace for next foreclosure wave"
Foreclosures were delayed during bank investigations. Now those old problems are ready to resurface.

This time, ordinary people with regular mortgages may be foreclosed. These folks are falling behind in payments as the slow economy puts pressure on their finances.

This article highlights problems in Ohio such as those of this trucker.

http://www.reuters.com/article/2012/04/04/us-foreclosure-idUSBRE83319E20120404