Mark Manning
The market continued its volatile behavior Friday as it appeared Republicans and Democrats were deadlocked on the proposed $700 billion bailout plan for the financial sector.
I do expect to see some type of decision in the next couple of days, but I don't think the volatility is going to subside in the near future. The one positive in the short term is the very high level of cash sitting on the sidelines, according to Rydex Mutual Funds Money Market Index, and any approval of the rescue plan will likely be followed by institutional investors moving the market higher to draw that cash into the market. In my column on RealMoney today, I pointed out that the intermediate- and long-term indicators in chart patterns of the S&P 500 and banking sector are still pointing to more downside ahead. Major problems remain -- the credit crunch, rising unemployment and slowing worldwide growth. Furthermore, I doubt that the bailout plan is anything but a drop in the bucket to cover the unknown derivatives that could still blow up in the credit markets. That said, today I want to explain how investors can use charts of certain companies to help project the state of the economy and global growth. These stocks are often leading indicators of what is to come in the general market, so it's important to pay close attention to the price action. The first one I watch carefully is Cummins (CMI Quote - Cramer on CMI - Stock Picks), a company specializing in manufacturing, designing and selling diesel, natural-gas engines, electric-power generation systems and other engine-related products. This company markets its products worldwide, and it has been a very good indicator of growth rates.
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