But since I have a plan to get there, and I am well on my way, you can take it to the bank that I'll get there within a year, just as much as my two May 16 headline articles precisely called the cycle bottoms of both the Oils and Golds the evening before.

By that million hits number, I figure I will have 100,000+ readers who spend an average 10 minutes daily on the Bill Cara website/blog.

One million minutes a day talking to serious investors as well as financial/investment advisors, from about 75 countries, is a lot of influence. No kidding!

Using a rather rough rule of thumb, I'd say, at that point, that traders who personally own $100 billion in capital would be reading me daily. And since such a large percentage of readers are capital managers and advisors, the blog's influence could possibly run to a trillion dollars of capital.

But who's really counting right?

I know one dollar-related fact: this blog, which in late-December followed the Trader Wizard Blog that I started on April 6, 2004, as well as TW, has cost me in out-of-pocket costs precisely zero dollars. Even the graphics came in 2002 from a shelf company I owned, and the web hosting from TickerHost.com has been donated.

Now that I have validated the self-empowerment concept of the web log, I do intend to spend some dollars hiring administrative help. I can't keep spending 44 hours a week on a website and blog, when 30 of those hours are involved with publishing tasks.

I figure only about 10 to 14 hours a week are spent actually writing, i.e., composing and editing. The rest of the time comes free because anything I do for the website/blog that is related to the market, I have to do anyway.

Blogging is actually a joy because, frankly, trading in securities is mostly waiting. At least when you are on the sell-side you have people to see, phone calls to make and take, and so forth, but when you don't have partners or clients, the buy-side is devoid of obligations to communicate to people.

So this way I can lounge around in cottons, watch the sailboats on the lake and listen to the geese make a fuss outside my window, all while I blog when the impulse hits me.

You know I'd like to retire, but maybe I am. That's what I tell people anyway. My wife even asked me recently, "What do I tell people you do?" My answer was that I'm planning for the rest of our lives, and that pretty much sums it up.

There are some family matters on both sides that must still be resolved, but then, it's upward and onward to the sun, sand and sea of the Caribbean.

Where, otherwise, life won't change much for me. I'll still be watching the sailboats and the birds, and trading and blogging. Thank goodness.

2005-05-28 Report

I happen to really appreciate the presentation of CNBC World, and wonder why CNBC America can't measure up. Not even close.

Does the selling culture of the U.S. deem it necessary that the audience of security traders in America have to endure some 14 consecutive hours of propaganda just to get a window into the capital market? At least Canadians have ROBTV as well as CNBC World.

As I see it, which some of you will dispute, CNBC has taken on the tasks of (i) creating volatility for Wall Street's sell-side, (ii) pumping stock for "friends", and (iii) setting the market stage for future Wall Street selling programs. This is so blatant; I think they ought to be regulated.

Without volatility, traders don't buy/sell nearly as frequently, and TV ratings drop, advertisers pay less, and so forth. So every week there is a crisis (or two or three) manufactured at CNBC -- from North Korean nukes pointed at the West Coast, to the Saudi security forces on alert on account of King Fahd's illness.

Every week it's a new emergency, only to be forgotten the following week.

Oh, this week we also saw a lot of TV pumping of stock for friends. I'm beginning to wonder if America has decided to go the route of the Japanese keiretsu. On the GE-owned television network (NBC), you get to see the same parade of names there and on CNBC, from Trump to Martha, and all their friends; Ford, Home Depot, Mark Burnett,; I could give you a full list of the names, but I think you know them by now.

And with GE's CEO Jeff Immelt over in India on Friday, saying he's going to increase the business there by 600 pct, can't you just wait to see whether its CNBC's Ansana, or ;well it couldn't be Mathisen because he'd get lost at Kennedy airport;or whomever gets the Special Assignment to head over in June to Mumbai to prime the GE pump?

Now, you know, I changed my blog rules this week, and I promised myself and you that I'd keep this content strictly on the high road, but, really, I've never been called Bill Pollyanna. When you're a securities trader, there are a lot of things that just don't fly under the radar, no matter how low you set it in order to take that high road.

And the day you ignore what really is going on in capital markets is the day that trading becomes perilous, and far too risky to do on your own. So bear with me as I try to tone down the rhetoric. It's never easy, and this week was no exception.

---

Bill's Portfolio:

I do believe we are experiencing a broad equity market process that has enjoyed a bear market correction over the past five weeks. The rally now appears to be toppy and ready to continue its decline.

At the close Friday, I sold the two leaders of the Dow 30 this week: Exxon Mobil (NYSE: XOM) and Intel (NDQ: INTC). They are not very likely to be leading the pack next week.

On Friday afternoon, listening to CNBC's Ron Insana repeat every eight minutes, as if we hadn't heard it ten to fifteen times earlier in the day, that (i) 85-year old "Saudi King Fahd has been taken to hospital, gravely ill", and (ii) "Saudi security forces are on alert, with weekend leave cancelled", during which charts of Crude Oil prices were flashed on the TV monitor. It was all too much.

So much for the segue to my (recent Intra-Month Trader) decision on Exxon:
Sold to you!

As to Intel, that sale was for a different reason. The INTC "story" this week was that Apple were thinking of switching to Intel chips. In addition to the extreme Over-bought condition of INTC, with stochastic indicators bouncing off 100 for the STO and in the 90 range for RSI, there is a doubt in my mind that Apple would actually commit to the costs of switching to a new technology. And I don't think Intel is so hard done-by that they are going to give it away free.

So the "timing" of the news along with the over-bought technical indicators, plus my overall view of the equity market, led me to sell INTC late Friday. Like the Bocelli/Brightman song I am listening to as I write this material: "It's time to say goodbye."

Besides, the market cap of INTC has gained, in just six weeks, $34 billion, which happens to be almost the total market cap of McDonalds (NYSE: MCD), grown from the first days of Ray Kroc, which just happens to be 50 years ago in case you're wondering. I can see no reason for that 6 week move in INTC, so, just like XOM, I'm gone from INTC for now.

I say "for now" because both INTC and XOM are on the Cara Global Best 100 Companies list, and sometime in the next few months (possibly), there will be a Cara Accumulation Zone encountered for each, where I will be in buying these stocks.

Yes, Intel has had a tough time of it for the past six years, as I'll point out later, but last time I looked, Intel sales have grown from $29 billion to $38 billion. Somebody is buying those chips, and the operating margins are still running a very healthy 45 pct. So, I'll be back.

Another stock that should have been sold at the end of last week, for the same reasons as XOM and INTC, was AIG.

In the case of AIG, the "news" was that New York State Attorney General Eliot Spitzer was going to continue playing the game of "Pin The Tail On The Donkey", which no longer interests me. I think we've all been there, done that.

A few short-sellers, however, were closing positions on that "news" " just like they do when a certain CNBC TH starts talking about the beautiful music that would be made if the AIG Board would just hire Bob Rubin as CEO.

That helps the other short players in AIG " the Gnomes I wrote about last week " make even more on the downside as there is less competition to face when they too have to buy in at the bottom, as all shorts ultimately have to be covered.

The reality for AIG is that State and Federal regulators are all over this company like a wet blanket, and they likely will not stop until they uncover the paper trail offshore that leads to an understanding of how this corporation: (i) truly compensated its senior executives, (ii) organized transactions that let's say altered the landscape of the global insurance industry, and (iii) possibly hid a few billions from the tax authorities.

That's not a good reality to be placing one's hopes and dreams on. I say three strikes and you're out. So, AIG, "you're fired" " or is that "you're sold!"?

AIG is nowhere close to being on the Cara Global Best 100 Companies list (although just like Merck, it used to be), and, based on the other factors to consider, would not be held long by me in any event.

The point I am making is that AIG plus XOM and INTC were the three Dow winners on this week #21 "- AIG up +4.91 pct, INTC up +3.95 pct, and XOM up +5.17 pct W/W.

When traders are lining up to buy these stocks, why not say, "sold to you!"?

I published these insightful notes back after the Dow 30 closed at 10,973.65.

For years we've made the case that the market is a game that plays people. Without enough self-discipline to control one's emotions, an investor will never be successful. He or she will simply be conned by every ‘head fake' and outright deception that Wall Street can serve up in their constant pursuit of greed.

Every individual investor has to have a plan and to work that plan. We'd like our Journal to carry a guarantee of investment success, but that's not possible. What is absolutely certain however is that with just two things " facts and common sense " anybody can take on Wall Street and win.

At the turn of the century, Charles Dow in fact said: "The man who is prudent and careful in carrying on a store, factory or real estate business seems to think that totally different methods should be employed in dealing with stocks. Nothing is further than the truth."

The Journal I referred to was my Dow 30 Journal that I published weekly on three web sites, in the 1990s (including AfterHourTrades.com and Trading-Ideas.com, which might still be around).

The publishing date was, in fact, August 14, 1999 (Week 32-1999). Yes, that was two thousand, one hundred and fifty three days ago.

And for those who are counting, the Dow 30 has since fallen, in those 2,153 days, a total of 431 points (-3.93 pct). And during that time, I wonder if we could count the number of times that certain THs at CNBC have told us that the market was "a moonshot", "a rocketship", "soaring into space", or some other incredibly stupid description.

And during those almost six years, I also wonder how XOM, AIG and INTC have performed (based on prices that have been adjusted for dividends and splits)?

Well, fueled by much higher oil prices, XOM has gained +65.6 pct from $34.29 to $56.80. AIG, pulled down by criminal indictments and regulator actions, has fallen -2.0 pct, from $57.53 to $56.40. And largely due to the collapse of the Internet Bubble five years ago, INTC has lost "28.0 pct, from $38.87 to $27.39.

Is it any wonder why people are investing more in real estate these days?

But here's the point. Charles Dow (the man who founded the Dow Jones Company " i.e., Wall Street Journal and Barron's " and the Dow Jones broad market indexes) was a prudent man. If he saw a line-up of willing buyers eager to buy an over-priced house, he'd sell because that is what is called a "Seller's Market".

Why sell during a Buyer's Market?

Charles Dow appreciated the concept of selling into strength. It was part of the basis for his famous Dow Theory.

Traders in securities have to employ the same prudent and careful methods as they would in carrying on a store, factory or real estate business. I know because Charles Dow told me so about 100 years ago.

This week I took his advice with the Weekly leaders in the Dow 30. Over-eager buyers were coming to me, and so I accommodated them, which seemed to be the "prudent and careful" thing to do.

---

Sector ETF:

Last week I wrote: "Many of the bears have fallen off the wagon, and joined the bull side this week. All it took was for ten out of ten sector ETFs (that I follow) to be up on the week. But it was not just a case of being up a little bit. Seven of ten ETFs were up over 3 pct week over week (W/W), and one was up almost 5 pct, and only one of them was up less than 2 pct. Wow!"

So, was it a Buyer's Market, or a Seller's Market? Let's have a look!

This week, using my ETFs as indicators, the Oils (XLE) were up +5.93 pct, and the Semi-conductor stocks (SMH) were up +2.04 pct W/W. But you already know that because the 800-pound gorilla in each ETF "- XOM and INTC "- had remarkable weeks.

And you also know by this point what I think of that.

Yes, of the ten ETFs I monitor, these are two that scream out to me, "Sell! Sell! They are XLE and SMH, and so I sold.

As for the other eight, only one (XLP, Consumer Staples) was down W/W. But, am I impressed that 9 of 10 ETFs were up? Not really, and that's because the gains in every case were minimal. In fact, no other ETF gain on the week was over 0.67 pct, and that could be accomplished with a couple-point move in a couple stocks.

Here are the ETF charts for sectors 10 (energy: IYE), 15 (basic materials: IYM), 20 (industrial: IYJ), 25 (consumer discretionary: XLY), 30 (consumer staples: XLP), 35 (healthcare: IYH), 40 (financial: IYG), 45 (technology: IGM, IGV and IGW), 50 (telecom: IYZ) and 55 (utilities: IDU).

The hourly data ETF charts in the following interactive links are for the 10 industry sectors. I have taken a screen shot of some of them.

Last week, I decided to add an extra chart for each ETF because I was anticipating a cyclic change. I had thought that maybe the previous week's selling was quite overdone. This week I have done the same because the latest round of buying appears to me to terminal for some of these ETFs (XLE and SMH) and close for a few others.

10 (energy: XLE, IYE, VDE, and IXC)

XLE closed Week #20 at 42.00, which is up +5.93 pct on the week. XLE had been down "5.57 pct the prior week; so I boldly stepped forward on May 16 with an Intra-Month buy recommendation after the market close.

The question now is, did I just catch the proverbial ‘dead cat' bounce? Well closing XLE at $42.00, after buying XLE eight sessions earlier at $38.63 (note all closing day prices), the gain was +8.72 pct. So, ring the cash register.

Last week I wrote: "My sense is that traders will play the energy stocks up and down as Crude Oil trades in a range of $45 to $50 a barrel (Lt. Sweet). Politicians would like to tell you that crude oil is headed to $30 and below because that will allay the public's inflation fears. And, the equity bulls will tell you that at $45 oil, the oil companies will make a ton, the rest of society can handle the high price, and the economy is going to grow nicely with oil at that level. In other words, it's all about selling one's best-case scenario. This is synthesis, not analysis. You can ignore it. You can also ignore Greenspan's remarks on Friday that energy prices are under control, yada yada. My thinking, when I hear a prominent central banker speak like that, is "hello politics, so long intellectual honesty". That speech was not worth the napkin he disposed of after lunch. We have to watch oil prices carefully and make some objective assessments. If the price goes up here (when there is plenty of inventory on hand), that is speaking to (i) higher inflation, and/or (ii) higher growth prospects for the economy. If it goes down, it's a sign that there may be (i) deflation on the way, and/or (ii) a slowing economy likely to unfold. ."

I also wrote during the headline May 16 article, that Crude Oil prices were likely to soon move from the cycle low prices just above $48 up to about $51.50, based on economic factors that I could see unfolding.

$WTIC closed this week at $51.85, after hitting a high of $52.00 (EOD, Continuous Contract basis for Lt Sweet Crude). So, I nailed that recommendation as well.

There is now, however, technical resistance of the 50-Day Moving Average at $52.71. I don't think $WTIC will close above that next week, and will now fall back into a $45-$50 trading zone. Which is part of the reason I exited XLE at the close on Friday.

Here's the XLE Hourly and Daily data charts:

XLE Hourly data:

XLE Daily data:

15 (basic materials: IYM, XLB, and VAW)

The Basic Material ETF XLB closed up 0.50 pct to 28.03, but unfortunately Friday's gain of +0.36 pct was 70 pct of that. Still, other than some of the sector components, like the Chemicals, I like the sector. Most THs hate it.

I think there is a little more upside to XLB, but it would probably be less risky to go directly to the sector strength, which are the golds.

It just hit me that when I write about the ETFs each week I never put a dollar sign in front. I do that with a purpose. It's because an ETF, while a traded security (which ought to be recognized as a dollar value), is different than a stock.

A stock is a security based on an underlying Company (which has corporate fundamentals to consider), whereas the ETF is a pool of stocks. I need to think about the two in different ways, so it helps me subconsciously not to put a dollar sign in front of the ETF price. That's all.

It's just like I put a "+" to a pct gain and a "-" to a pct loss, which is a duplication, but one I do with the purpose of really not missing the point. You see, it's little tricks like that that help me be just a little bit more productive.

Not to bore you, but I have always likened securities trading to Formula One car racing, where the tools and resources we have at hand are the engineering and chassis of the car; but the driver, meaning you and me, are the ones that push that car to win or not.

I want to be a winner, so I need to go quick with the time resources I have available to me. Every little trick helps cut the corners and get me to the finish line ahead of the other drivers.

Now this story will really bore you, but it a true one. In 1975 or 1976, I bought the first commercial key-to-disk data entry system in Canada. Everybody else was using punched cards. I was running my own data entry department for a medical and general insurance claims processing business I owned as part of my business and professional consulting practice I built after leaving PriceWaterhouseCoopers in 1972. Along with general insurance claims processing, I was submitting over 70,000 medical claims a month to the Ontario Health Insurance Plan (called OMSIP at the time " back when govt called a spade a spade i.e., it was Medical, not Health). The data center was running three shifts. The punchcard machines (capable of doing 8,000 keystrokes per hour output) were taken out and the electronic stuff brought in as productivity moved immediately to over 20,000 keystrokes per hour. So I called the Ministry of "Health" who sent over their top people to observe my operation. I was miffed because I was sending them tape/disk and they were sending it out to a datacentre (I once used) to convert it back to punchcards to fit into their machines. So the staff started taking notes, in shock that my output was 250 pct faster than theirs. The difference is that I am always thinking about how to do something faster, and they being govt people were, I guess, thinking about their Monday to Friday jobs and their three-week holidays, and so forth.

Back to the blog, and to the XLB.

Here's the XLB Hourly and Daily data charts:

XLB Hourly data:

XLB Daily data:

I think the Gold Bear is coming out of hibernation.

I am starting to see a change in the correlation between gold (which is a Basic Material) and the USD versus gold and economic data. In recent years, gold was trading with almost total correlation to USD. But now, as factory utilization gets to be at extremely high levels, as commodity prices are taking hold (i.e., pricing power), which is being worked into the economy, and interest rates are starting to shift toward the move north, and PPI/CPI advances are hard to ignore "- even for the blind " there is a change in the way gold is reacting in the market.

The change might be subtle, but my antennae tell me it's happening. I quoted a story from Standard Chartered Bank that reported that China and India investors were buying more of the gold physicals. Inflation in those countries is rising. That could be a cause for the market shift.

20 (industrial: IYJ, XLI, VIS, and IYT)

The Industrials ETF (XLI) was up just +0.20 pct W/W, which is really making a statement because key Sector 20 components, UTX (up +2.60 pct) and Boeing (up +1.81 pct) were strong.

Maybe the Durable Goods report this week, where the govt defense spending was down dramatically had something to do with that.

You know, Boeing supporters (and PR copywriters) can only manufacture the crapola so long that Boeing is primarily a manufacturer of commercial aircraft. Investors " at least the Gnomes " know where BA's bread is buttered, and I think the building geometrically has five sides.

XLI has been basically flat since the 18th, which is seven and a half trading sessions. I don't see too much fuel in the jet, and so I think I avoid the flight, thank you.

Traders in this sector, like the Basic Materials, have to be closely watching the USD action in the next month.

Here's the XLI Hourly and Daily data charts:

XLI Hourly data:

XLI Daily data:

25 (consumer discretionary: XLY and VCR)

A week ago, the Consumer Discretionary Spending stocks (XLY) were the big winners. XLY was up +4.65 pct to 32.87. This week, XLY was up a further +0.67 pct to 33.09. But, in my books that's not enough. Besides Friday was absolute flat, zero-zero.

So XLY has been fairly flat for seven trading sessions, but there is, I believe, a little more fuel in this (gas) tank, so, while risky, I think there will be some gains here for another week or two.

Actually, that pun is a good one, because if, as and when Crude Oil prices fall back to the $45-$50 range soon, as I anticipate, the gasoline prices (is it gasoline or gasolene? Bloggers who are global ought to create the new standard for English) will drop, which makes that car trip to the retail mall easier on the pocketbook.

Last week I wrote: "I feel that with the push of Wall Street and Financial Entertainment TV (CNBC), XLY is probably the place to make some money on the long side in the next month." I was being sarcastic and serious at the same time.

That's not really speaking with forked tongue, but I still ought to cut it out.

Here's the XLY Hourly and Daily data charts:

XLY Hourly data:

XLY Daily data:

Then last week I did get serious for a bit: "More than worrying about PPI/CPI, or what the Fed might do, the consumer just started to spend, which showed up in the prior week's monster Retail Sales report. That's the power of mass media. That retail spending can be sustained only by more jobs or higher personal disposable income, however. So, the jury is out for XLY in the July-August period." Funny how I can just go from being silly to being serious; from the long view to a by-the-minute perspective; from discussing XLB to getting into a discussion of punchcards in 1975.

But the trick is to keep moving on, or else this blog doesn't get finished.

30 (consumer staples: XLP and VDC)

Consumer Staples (XLP) was the only of my ETFs that was a loser this week. XLP was down "0.47 pct W/W.

Last week my forewarning was accurate: "After a period next week where I believe XLP has to consolidate (+3.02 pct) gains made this week, I expect to see a couple more weeks of rally."

Here's the XLP Hourly and Daily data charts:

XLP Hourly data:

XLP Daily data:

35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)

Healthcare (IYH) was flat W/W at +0.05 pct to 61.73. Last week I wrote that: "after several fairly good weeks;the jig is up. Be wary. IYH had just two strong trading hours the whole week. Friday was mildly down (-0.16 pct), but did you see Merck (NYSE: MRK)? That was the ONLY Dow 30 component that was negative on the week, and it was down "2.51 pct. But, IYH was not just rolling over ready to die because of Merck. Did you see JNJ?"

This week it was Pfizer (NYSE: PFE) that was the 800-pound gorilla in the healthcare sector holding things back. PFE was down -0.77 pct on the week (Viagra causes blindness?).

Offsetting the Viagra story was the Genentech story and a few others in the biotech group. You know, when TV wants to entertain, they can really do a great job in the pharmaceuticals area.

But sooner or later, people in Washington are going to listen to their constituents, and not the lobby's from the Business Roundtable. Healthcare costs are pushing inflation, even as drugs necessary to sustain the lives of the elderly and many others are not part of that "core" CPI number.

You know, living life can be costly, and out-of-control healthcare cost is a principal driver of inflation.

Here's the IYH Hourly and Daily data charts:

IYH Hourly data:

IYH Daily data:

40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)

The Financial XLF went nowhere this week, being up +0.27 pct to 29.33. Most of that came Friday, possibly anticipating problems with a Euro after the French vote.

Can you believe the possibility of a currency without a country? Such is the impression I get from watching CNBC America; however, the Europeans might not be voting to state their objection to using a common currency, the Eurodollar, as I had understood this issue.

My European readers, including Mark (from Vienna?), have corrected me that the French and the Dutch this week are holding a referendum to say "Yes" or "No" to the European Union's constitutional treaty, which establishes a new set of rules for the enlarged Union. This has nothing to with a decision for or against the common currency, the Euro.

The uncertainty of the vote probably has to help the U.S. banks, comparatively speaking. However, these U.S. banks have many other issues to deal with: (i) interest rates are starting to head north, which cuts profits, and (ii) there are now too many loans turning up in a bad debt category, after spending the last couple months in the doubtful category.

I think the risk to traders is to hang in, rather than to exit, this sector. As for me, I'm out of these Financials. Thank you.

Like I wrote a week ago, "At times, you just have to stand back and watch."

Here's the XLF Hourly and Daily data charts:

XLF Hourly data:

XLF Daily data:

I continue to think it makes sense to review all high (interest & dividend) yielding securities like junk bonds, REITs and Utility stocks. Locking in profits might be wise.

45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, and MTK)

SMH was up +2.04 pct this week to 34.53 after being up +3.08 pct last week, after being up +2.53 pct the prior week, and up +3.89 pct the week before that. That's quite a string of pluses. Size pluses too.

Too bad it's over.

Last week I wrote: "This week SMH broke above the 40 Week MA, and next week it could go even higher. Still, I think this rally is now getting long in the tooth." So on Friday, out the door went SMH along with INTC. It was nice while it lasted. Thank you.

INTC and the chip stocks did look good.

Here's the SMH Hourly and Daily data charts:

SMH Hourly data:

SMH Daily data:

50 (telecom: IYZ, VOX and IXP)

The Telecom Services sector (IYZ) was up +0.56 pct on the week to close at 23.14. Almost half that gain was made on Friday.

As I said two weeks ago, "IYZ actually looks like it is terminating a bull phase that started back in 3Q02."

Here's the IYZ Hourly and Daily data charts:

IYZ Hourly data:

IYZ Daily data:

55 (utilities: IDU, XLU, and VPU)

Two weeks ago I remarked: "I have one word to say about the Utilities (XLU): "TIMBER." These stocks can be labelled Prime Douglas Fir, and marked for cutting."

Then the following week, XLU was up +2.47 pct W/W. This week was more like it, but still up +0.50 pct. At least things were going pretty much my way until Friday, when XLU went up +0.43 pct.

Those 10-year U.S. T-Note yields are NOT staying down below 4.10 for long. I really believe that, even though Bond King Bill Gross apparently does not.

Here's the XLU Hourly and Daily data charts:

XLU Hourly data:

XLU Daily data:

---

Bonds:

There was both a flattening action across the yield curve as well as an increase in yieldsfrom mid-week in the bond market.

From the U.S. Fixed Income (Bonds) Yield Table at Yahoo Finance, the 30-year T-Bond (actually 26 years) is yielding 4.42 pct, which is down a single basis point.

But the T-Bill yield moved up to 2.79 pct from 2.73 pct a week ago and 2.66 pct two weeks ago. It is now above the 2.76-pct level of five weeks ago.

The spread between 30-year T-Bonds and 3-month T-Bills had dropped from 194 basis points, to 181 bp to 177 bp, up to 191 bp three weeks ago, then back down to 182 bp to just 170 bp a week ago. This Friday, the spread is down to 163 bp.

The more important indicator, which is the spread between the 10-year and 2-year T-Notes, had fallen from 76 bp, to 65 bp, 57 bp, 56 bp, 54 bp and 47 bp in recent weeks. Clearly the spread has been narrowing. This week, the 10-year to 2-year spread dropped down to just 44 bp.

If there truly is economic expansion, this rapidly flattening yield curve is giving a different message. What it says to me is that as interest rates at the commercial banks start to rise, in the midst of a falling yield market (i.e., rising bond prices), there is not enough business borrowing in the system to drive significant economic expansion.

But as I said last week, hey, I'm no economist. Not an employed one anyway.

---

Commodities:

Commodity prices started rising this week. A week ago I reported that commodity prices had stopped falling,

I wrote: "CRB topped out at the start of March just as the equities topped out. Now the equities have had a bounce last week, so it will be interesting to see if the CRB follows through with an upside bounce as well."

$CRB was up +2.59 pct W/W to 300.89. So the cycle low of 292.06 held, which was above the 40-Week MA of 290.45.

Is it not strange how all week the CNBC "personalities" (which is an apt description) reported (incorrectly) that commodity prices were falling?

Crude Oil (of the Light Sweet variety) did move up to the $52 mark this week, but is expected (by me at least) to fall back under $50 soon, which will help keep the CRB index in check from moving much higher here, if in fact oil prices do weaken.

From about Week #8-2005, I have printed the following list of oil stocks in their sub-industry groups. I will continue to do so until another market driver takes the lead. For example, interest rates may be the next key driver for or against rising equity prices.

10101010 Oil & Gas Drilling

10101020 Oil & Gas Equipment & Services

10102010 Integrated Oil & Gas

10102010 additional list.

10102020 Oil & Gas Exploration & Production

10102020 additional list.

10102030 Oil & Gas Refining & Marketing

10102040 Oil & Gas Storage & Transport Companies in storage and/or transportation of oil, gas and/or refined products.

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Gold:

Gold prices, like many other commodities, stopped the descent this week. $GOLD was up on the week +0.62 pct. That's not much, but it's a start!

Actually the start was on Friday. The $GOLD was up +0.62 pct on Friday. I hope it's not a one-day phenom.

This interactive chart shows the week for the Gold Bullion index.

The Philly Gold & Silver stock index (XAU) was up a powerful +7.10 pct this week to 86.46. It had been up +2.20 pct the week earlier too.

The Canadians also took the XGD north too, by +6.87 pct to 45.74.

Last week I wrote: "The Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF, which trades under the ticker symbol TSE:XGD is an interesting chart. I see the index bottoming here. In fact, let's look at the Monthly, Weekly and Daily data charts from Investertech to look at the RSI that is clearly bottoming. Gold stocks are in the Cara Accumulation Zone.

There are some pundits who are all over TV these days proclaiming expertise at these gold things, and while they have the patter down nicely, I just tune out. We know the best quality stocks of the bunch (Goldcorp is clearly one of those); and we know the PE multiples are very high, but that is no reason to hold back.

We've taken long positions in the golds for a reason: things are not quite right in the global financial system. Currencies are out of whack. Trade wars are erupting. PPI/CPI are trending out of normally acceptable limits. "Tiny Bubbles" are popping all over the world in various cities from Australia, through China, Europe, and North America. The living yield curve is starting to lie flat.

I could go on. Suffice it to say, there is nothing wrong with a small holding of gold or goldminers today."

By now you also recall I wrote a headline article, Goldminers to recover tomorrow, Mon., May 16, 2005, 4:10PM, calling the cycle bottom to the minute. I followed up with an article this Friday called, appropriately, Golds and the ‘art' of trading, Fri., May 27, 2005, 11:48 AM.

This table (published in the P.S. to that article, after the close Friday) illustrates the accuracy of that call.

Here are the interactive charts of the leading goldminers on the board.

List #1

List #2

List #3

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Forex:

The U.S. Dollar softened a little this week.

The USD closed this week at 86.46, which was down "0.17 pct. Not much, but a start maybe.

Last week I wrote: "It's true that the technical chart of the USD shows a higher high followed by a higher low. But there still must be a test of the 83.36 recent cycle-low, set I think on (or about) April 22. I also see a test of 81.28 in the offing, because I know how many technical traders trade the USD contracts."

Actually, I do expect one more decline in the USD before stabilizing and starting to rise to a point where a Big Mac costs something close in the English and French countryside as it does on Times Square.

I mean with the USD so low, the Europeans can pretty much hop a plane to come to America to eat nevertheless vacation, and buy their favorite designer clothes at nickel and dime store prices.

Unless there is some kind of forex adjustment coming up, I'm afraid a vacation trip to Europe is pretty much out for a lot of Americans and Canadians. It's actually cheaper to over-fly Europe and head on to China. That's kinda like it's cheaper for me to fly Toronto-Ft Lauderdale/Miami than to Montreal. And whenever that USD dips, Canadians do take advantage of it.

But oy vey, the governor of the Bank of Canada has decided he doesn't like that, so he's keeping the central bank rate below that of the Fed, just so the Canuck Buck can fall a little more, helping out Canadian exporters. This is a Trade War, after all! ;even if it hurts us vacationers from the Great White North from enjoying the Gold Coast of Florida as often.

The Europeans have been playing the game too because they don't want their people flying Boeing to NYC to enjoy the sights when they could be home at work making Airbuses, which would happen if the Euro or Franc, whichever it's to be, is crapped out.

You know, with Mr. Joe playing the same game in China, things are getting under the skin of the American Mr Snow, and his boss too (of that, I am certain).

But, two can play that forex game.

And boy do the gold bugs ever hope they do. They have been waiting for twenty-five years for Gold to get back to $800 (exclamation point).

That means many of these traders weren't even alive. They became gold bugs because these things kind of run in the family.

"I am buying gold. My mother made me do it."

"Dad told me that Pierre Lassonde Newmont guy is a freaken genius, so I bought a ton of the NEM Dec 2005 32.50 calls at $5.00, and I'm dreaming of a Audi Christmas."

The $XEU closed up +0.30 pct to 125.83, which is a far cry from 132.50, but Friday (+0.60 pct) was a good start.

Alert. Here comes the Cara mantra: "I'm still staying long gold and short the USD until after Mr Joe speaks to the People."

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International Equities:

I always thought of Canada as the Land of Oil, Gold and Honey, and this week was more proof of it. Unfortunately, Canada, like Japan and the U.K., and the USA and a few other equity markets as well, looks toppy.

I'd be nervous if I was 100-pct long this market.

Japanese equity market ETF: EWJ

Japan (EWJ) was up +0.99 pct on the week to 10.16. Much of that was Friday (+0.59 pct).

In relative terms, I like the Japanese market because it's always better to be geographically close to your biggest purchasing agent (China), especially one whose currency is close to getting a boost.

Once again, looking forward to the next couple weeks, I don't see a lot of reasons to be bullish on Japan.

Hourly Data for EWJ:

Daily Data for EWJ:

U.K. equity market ETF: EWU

The U.K. market (EWU) was up +0.34 pct on the week; Friday was up +0.22 pct to 17.93.

There are a lot of problems with the economy and forex considerations in Europe and the U.K., so I do not see much reason to be bullish here either.

Hourly Data for EWU:

Daily Data for EWU:

Canadian equity market ETF: EWC

Two weeks ago, I wrote: "EWC now looks a bit oversold for the very short-term." And just like that, the EWC rallied +1.82 pct W/W. You know, some people can flip a coin and call the result seven times in ten. Do you think?" This week, EWC was up again, +2.86 pct to 17.27.

Hourly Data for EWC:

Weekly Data for EWC:

Not bad, eh, for a bunch of oil men, cattle men, gold, zinc, copper and nickel miner men, fishermen, woodchoppers and loggermen.

With all these Canuck men around you might think " if you could overlook Pamela Anderson, Celine Dion, Shania Twain, Avril Lavigne, and a few other Canadians like that " that Canada is just chock full of men who work outdoors in the snow and rain.

Ain't so, Canada has a stock exchange in Toronto that is mostly run by men wearing blue and gray suits in banking towers, and insurance towers, all carrying their Kitchener-Waterloo Blackberries. But, it is also true that Canada needs oil and metal prices going north, and this week was a very good one. Next week? I'm not so sure, particularly for Oil.

A Canadian reader sent me a note to ask about how best to set up a future for his young family. I replied, well you can start by investing for the long-term in the Canadian Oil Sands (Imperial Oil and Suncor) plus a couple Financials (Royal Bank of Canada and Manulife Financial) and a Goldminer like Goldcorp.

Since something like 93 pct of my readers are non-Canadian and would normally trade NYSE, AMEX and NDQ markets, where these stocks are inter-listed, here is my Canada monitor, just in case you have any interest.

Don't let the bad day Friday for Potash Corp (NYSE: POT) fool you. It's a terrific company (the world's largest in its field), albeit a bit smelly " but that's the nature of fertilizer. (Pun intended, and not a bad one;nature, got it?) And, very well managed.

It's just that, at Friday's close of $90.05, POT's kind of at the high end of it's 52-week range of $42.42-$92.00, and now the PE is up over 26.

Let's now have a look at the hourly data charts of the various international equity markets as represented by the U.S.-listed and dollar-denominated ETFs:

(Japan, Taiwan, Hong Kong, Singapore)
(U.K., Germany, France, Italy)
(Canada, Mexico, Brazil, Australia).

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U.S. Equities:

Here is the 60-minute data chart of the Dow, S&P 500, Nasdaq Composite, and Russell 2000 (small cap) indexes.

Last week set a new record (for this blog) with 29 of 30 Dow stocks being up W/W. This week, things were not so rosy.

Hey roses and fertilizer! I always said this is blogging thing is all about Free Association Thinking.

This week, there were 18 up Dow stocks and 12 down. The big loser in the Dow this week was Big Auto, GM, down "3.49 pct. The next four losers W/W were HON at "1.40 pct, PG at "1.27 pct, C at "1.09 pct, and PFE (that Viagra story!) at "0.77.

The winners, some already noted were: XOM at +5.17 pct, AIG at +4.91 pct, INTC at +3.95 pct, UTX at +2.60 pct and BA at +1.81 pct.

There wasn't much movement in any of the major U.S. equity market indexes because this is Memorial Day Weekend, and Friday was Getaway Day. This might even have been Getaway Week for that matter.

And lest we forget to honor the brave souls who have died in the service of their country; there are apparently some 1600 U.S. soldiers who have died in Iraq since that War was officially declared over. Our hearts should go out to their families, not just on this celebratory weekend, but as long as America stands free.

Which will be forever because there will always be American soldiers standing by to protect all of us in the free world. Thank you.

The following table shows the price performance of the Dow 30 stocks, which I sorted by 1-week price change.

You can do this table yourself by copying the following list of the Dow 30 stocks and entering them in the window for "Summaries" at Investertech.com.

AA AIG AXP BA C CAT DD DIS GE GM HD HON HPQ IBM INTC JNJ JPM KO MCD MMM MO MRK MSFT PFE PG SBC UTX VZ WMT XOM

After you bring up the list, click on the Performance tab. To sort for the relative price performance for any recent period, you just need to click on the column header of the period that interests you.

Here are the Dow charts from Investertech.com that I broke into groups of ten, which you can add technical indicators for as well. (list one) (list two) (list three)

You know, I still cannot fathom the thinking of Elaine Garzarelli of Garzarelli Research, who proferred her latest market call, which is that the Dow and S&P 500 is headed for a 25 pct rally from here. But, as I said, Elaine is touted as a superstar analyst for her many excellent market calls, and some people pay attention.

My contention is that if (i) corporate earnings are not going to reverse trend and now head higher, and (ii) PE multiples are not going to expand from these relatively high levels, just how is the broad equity market going higher?

I'll say it again, "Tiny bubbles, maybe?

This happens to be a big week for the production of new analytical reports by Value Line. These reports are published free every thirteen weeks, i.e., every quarter year, which means that every week there is an average of 2.3 reports to read. That could be the most valuable twenty minutes research time you do every week.

This week, in fact, Value Line gave you double the usual reading material with five reports on Dow components: AIG, AXP, C, JPM and MSFT.

I can't say enough about the value of these reports. I take hard copies for archiving in a binder because once the new report is published, the old one is deleted from the web site at Value Line. I also take occasional charts of the different time series " Monthly, Weekly and Daily " and put them together with the VL reports. That way I have a hardcopy research binder to take with me on vacation when I'm out of sight of an ISP connection. ;-)

Actually, the joke is, I never go on vacation. A vacation is from a vocation. I haven't yet figured out how to take a vacation from an avocation!

Whether I'm on a beach, in a sailboat, or wherever, I am eating, sleeping and occasionally drinking, the capital markets are always dancing in my head. You see, the music never stops.

(AA) (AA) (Here is the Apr. 22 Value Line report on AA: next one is due Jul. 22)

(AIG) (AIG) (Here is the May 27 Value Line report on AIG: next one is due Aug. 26)

(AXP) (AXP) (Here is the May 27 Value Line report on AXP: next one is due Aug. 26)

(BA) (BA) (Here is the Mar. 25 Value Line report on BA: next one is due Jun. 24)

(C) (C) (Here is the May 27 Value Line report on C: next one is due Aug. 26)

(CAT) (CAT) (Here is the Apr. 29 Value Line report on CAT: next one is due Jul. 29)

(DD) (DD) ( Here is the Apr. 22 Value Line report on DD: next one is due Jul. 22)

(DIS) (DIS) (Here is the May 20 Value Line report on DIS: next one is due Aug. 19)

(GE) (GE) (Here is the April 15 Value Line report on GE: next one is due July 15)

(GM) (GM) (Here is the March 4 Value Line report on GM: next one is due Jun. 3)

(HD) (HD) (Here is the Apr. 7 Value Line report on HD: next one is due Jul. 8)

(HON) (HON) (Here is the Apr. 29 Value Line report on HON: next one is due Jul. 29)

(HPQ) (HPQ) ( Here is the April 15 Value Line report on HPQ: next one is due July 15)

(IBM) (IBM) ( Here is the April 15 Value Line report on IBM: next one is due July 15)

(INTC) (INTC) ( Here is the April 15 Value Line report on INTC: next one is due July 15)

(JNJ) (JNJ) (Here is the Mar. 4 Value Line report on JNJ: next one is due Jun. 3)

(JPM) (JPM) (Here is the May 27 Value Line report on JPM: next one is due Aug. 26)

(KO) (KO) (Here is the May 6 Value Line report on KO: next one is due Aug 5)

(MCD) (MCD) (Here is the March 11 Value Line report on MCD: next one is due Jun. 10)

(MMM) (MMM) (Here is the May 20 Value Line report on MMM: next one is due Aug 19)

(MO) (MO) (Here is the May 6 Value Line report on MO: next one is due Aug 5)

(MRK) (MRK) ( Here is the Apr. 22 Value Line report on MRK: next one is due Jul. 22)

(MSFT) (MSFT) (Here is the May 27 Value Line report on MSFT: next one is due Aug. 26)

(PFE) (PFE) ( Here is the Apr. 22 Value Line report on PFE: next one is due Jul. 22)

(PG) (PG) (Here is the Apr. 7 Value Line report on PG: next one is due Jul. 8)

(SBC) (SBC) (Here is the Apr. 1 Value Line report on SBC: next one is due Jul. 1)

(UTX) (UTX) (Here is the Apr. 29 Value Line report on UTX: next one is due Jul. 29)

(VZ) (VZ) (Here is the Apr. 1 Value Line report on VZ: next one is due Jul. 1)

(WMT) (WMT) (Here is the May 13 Value Line report on WMT: next one is due Aug. 12)

(XOM) (XOM) (Here is the March 18 Value Line report on XOM: next one is due Jun. 17)

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This weekend I'll be watching the Indy 500, not just to see if hottie Danica Patrick wins the prize but because I love auto racing " open wheel as well as NASCAR. Ms Patrick drives one of the Rahal cars. Bobby, from Ohio, married a Canadian girl after meeting her in Southern Ontario, driving at the Mosport circuit here.

More importantly, Danica Patrick is a young woman with fashion model good looks who, in qualifying, set the Indianapolis track record for speed. Even though at that speed it must be like driving a jet plane around the ground, for Danica it's all about beating the competition. In her case that happens to be men.

There are many women traders like Teresa Lo from Vancouver who routinely beat the men. And if Ms Patrick were to win the Indy 500, just maybe the glass ceiling for a woman succeeding in the race for President and Prime Minister, in North America, might shatter.

Like everything in life, and the capital market, it's just a matter of time.

BCara@BillCara.com