Big Mac Index

January 18, 2012

From time to time, The Economist runs a chart of the Big Mac Index.  It may be the only market index named after a hamburger!

They use it to illustrate purchasing power parity, the idea that the same item should cost about the same amount in every currency.  The graphic is below:

Source: The Economist

One of the stunning things, to me, was that despite an absolute pummeling of the Euro lately, the Big Mac is still more expensive in Euros!  Despite the weakness we’ve seen already, maybe there is more to go.  It’s cheapest to clog your arteries in China and Russia, which is a potential argument that the yuan is still too low.

Source: Fox News

I have to admit I’m actually a little hungry after writing this post!  Next time I suppose I should leave out the picture of the burger.

 

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High RS Diffusion Index

January 18, 2012

The chart below measures the percentage of high relative strength stocks that are trading above their 50-day moving average (universe of mid and large cap stocks.)  As of 1/17/12.

The 10-day moving average of this indicator is 84% and the one-day reading is 86%.

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