By the way, market forces " not the community of global central bankers " called the shot in 1981 to end the inflation cycle of the 1970s that peaked in 1980. Interest rates in North America grew to over 20 pct. In the spring of 1981, long bonds were yielding over 15 pct, which meant that bond prices were at a multi-generational low.

It was the great buy of a generation, just like I think the events I speak of today have set up gold (like oil in the past two or three years) to be the buy of this generation, depending of course on who assumes the chair of the U.S. Fed., and the legacy intended to be left by this President.

Bill's Portfolio:

The ALTR Dec 2005 22.50 put (LTQXS.X), bought July 28 at 1.50, traded Friday Aug-19 all contracts at $1.75 (1.65 bid, offered 1.80). So that's a three-week gain of +16.7 pct.

Actually, buying puts is a rank speculation that I seldom do, except after I see the equity market in a state of free-fall, which is hardly ever the case. Typically, for option trades, I write puts and sell covered calls, which I do to add income or lower the cost base of portfolio holdings.

I am following this LTQXS.X trade only because I entered it for one primary reason, but decided to hold it for a secondary reason. Altera management had made a faux pas, which I figured the market would seize upon, but then management quickly corrected the error of their ways.

Still, at the time, I felt the industry peers, the chip stocks, were dipping because of a slowdown in the economy, so I stayed with the trade, more or less as a window into that action. So far, my forecast proved accurate.

Do you recall, I said: And, while I wouldn't normally select ALTR as the one in this group to short (I was trading with my heart!), last week I said: I'll hang in because I think (i) the peer group looks vulnerable, and (ii) the broad market looks to be weakening."

Let's have a look at the most prominent mid-cap chip stocks: Semiconductors -Midcap USA.

I'll discuss these changes in the section on Sector ETFs. Let's get on to a subject that holds the interest of many traders: Google.

Two weeks ago I alerted you to changes I saw underway in the GOOG market. Last week I continued because I sensed I was on to something.

This week all hell broke loose.

Tell me that the equity market is not a good predictor of news! You see, you and I may not be in the boardrooms, but secrets are not kept confidential for too long when money is on the line.

There are friends and family, colleagues and secretaries, and their friends and families, and eventually cab drivers, barbers, religious leaders and, my heavens, even media reporters and Talking Heads, who soon catch wind.

I wrote an article this week on GOOG -- the first was at 7:57 am Thursday, and the second at 10:12 am Thursday, so I'll leave it at that.

But, based on the huge volume in that stock, there is more of the story to come.

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Sector ETF:

Here are the ETF charts for sectors 10 (energy: XLE), 15 (basic materials: XLB), 20 (industrial: XLI), 25 (consumer discretionary: XLY), 30 (consumer staples: XLP), 35 (healthcare: IYH), 40 (financial: XLF), 45 (technology, semiconductor: SMH), 50 (telecom: IYZ) and 55 (utilities: XLU).

Here is the weekly performance of all these Sector Index Funds in the same type of table I provide for the Dow 30. The table shows the list sorted by performance Week over Week (W/W), i.e. 1W%N, but also shows the Friday net change and pct change from Thursday.

You can do this table yourself by inserting the following string into the window called "Summaries" at www.investertech.com, and then clicking on "Performance". After the table comes up, you can click on various table headings for different time frames:

XLE XLB XLI XLY XLP IYH XLF SMH IYZ XLU

For the week, just two of these popular Sector ETFs were up and eight were down. The two that were up -" XLP (+0.43 pct) and XLF (+0.13 pct) -- were up a minor amount, but three of the eight losers, XLE (-3.97 pct), XLB (-2.73 pct) and XLY (-1.68 pct), were off a lot.

So how can the media tell you the market rally continues?

Kudlow last evening said: The Spring/Summer Rally is still intact (whereupon he mentioned the market being up +10 pct) ...If things are so bad, why was today so good?"

Same old; same old. All I can say is that (1) Kudlow suffers delusions, and (2) he ought to get down off that Bull before he gets hurt.

The fact is that since March 30 (about 141 days), the Dow 30 has moved from 10,540.93 to 10,559.23 (all of +18.3 pts or +0.17 pct). That is an annualized return of +0.44 pct. So Larry must be invested in a lot of very high yielding stocks, and some phenomenal Nasdaq high-flyers, and of course no bonds, to be able to make up those 10 pct returns in just over a third of a year, as he claims.

What we need is more Truth In Media, like we get from CNN (yuk, yuk).

But, as I say, the sector ETFs were mostly down on the week because this was another crummy week in the market " four in a row. At what point does x in a row" determine a trend?

Sector 10 (energy: XLE, IYE, VDE, OIH, PBW and IXC)

This week XLE was down "3.97 pct, wiping out the previous week's spectacular gain of +3.68 pct. XLE closed Friday at 48.18, which is not unexpected when Crude Oil prices came down.

Here's the XLE Weekly, Daily and Hourly data charts:

XLE Weekly data:

XLE Daily data:

XLE 60-Minute data:

Last week I wrote:

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XLE has made a remarkable run since mid-May when it was 38. It is now above 50.

Do you recall the day I called the cycle bottom, giving you the news the night before? I was so brash, I even made it a headline!

Should it be sold? Traders like to hang in with their winners, so I'll not recommend selling, but if you are an Intra-Day Trader or an Intra-Week Trader, you might keep the sell button handy. Longer-term traders ought to continue holding onto positions until the technical indicators turn south on the Weekly and Monthly data, or Crude Oil declines into the mid-fifties."

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This week, the RSI has gone negative for the Weekly AND the Daily data, so the 50.55 high set the Friday a week ago was the cycle top in my view. I think it's downhill from here, not just for XLE, but because XLE has been leading the broad U.S. equity market higher, I think the Dow 30 is now turning bearish.

On Friday, the Bulls made an attempt to rally the Dow in the morning, taking XLE up +1.71 pct on the day, but by 11:00 am ET, XLE rolled over, taking the whole market with it. It was left to MRK (and a Texas jury award of $253.4 million to the widow of a man who died thinking he was poor) to deliver the coup de gras.

But that's another story.

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

Here's the XLB Weekly, Daily and Hourly data charts:

XLB Weekly data:

XLB Daily data:

XLB 60-Minute data:

A stronger USD and weaker commodity prices this week (which I forewarned last week) served to push XLB down "2.73 pct W/W to 28.10, which is now below the M40 (40-Week Moving Average) of 28.99.

Besides, the Weekly AND RSI for XLB is negative, so traders who want to go long XLB, as they see a strong economy, ought to be prudent.

For now the USD is on the technical rebound " just waiting for Congress to return and start spending again, so that the USD can, very soon, resume its southerly path. Until that happens, you have to bide your time.

Short-term, if only the Basic Materials sector did not include the Chemicals, Paper & Forest Products, Iron & Steel, Base Metals and Industrial Minerals, which all thrive when the global economy expands. That would leave just Gold, which interests me.

The rest of the Basic Materials also interest me for the long-run, just like the Industrials (which I review next), because that's the kind of long cycle I think we're in (to be confirmed by the President's choice for Fed Governor).

Ultimately the fast growing global economy will start to take off again, caught up in economic expansion of China, India, Russia and Brazil. But for now there are hiccups, particularly with consumer spending in North America and Europe, which of course is driven by jobs, many of which are being sent to the emerging economies where costs are lower.

It seems that the major employers of North America and Europe cannot handle both high energy costs and people at the same time. That would be kind of like thinking and talking simultaneously, which Big Company management has repeatedly failed to show they can do.

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

Here's the XLI Weekly, Daily and Hourly data charts:

XLI Weekly data:

XLI Daily data:

XLI 60-Minute data:

The Industrials ETF (XLI) were another loser on the week, down "0.73 pct W/W, to 30.05.

Note that the M40 is now higher at 30.23, and the RSI for both the Weekly AND the Daily are negative. Like many of the others, that's a double whammy.

Traders (the successful ones at least) are typically net short at times like this.

A week ago I wrote: Like XLB, the long-term cycle for XLI appears ready to point down." I think that's enough fair warning.

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Sector 25 (consumer discretionary: XLY, IYC and VCR)

Here's the XLY Weekly, Daily and Hourly data charts:

XLY Weekly data:

XLY Daily data:

XLY 60-Minute data:

Consumer Discretionary Spending stocks (XLY) had a major hit this week as it is becoming more obvious that the Middle Class of North America and Europe is rapidly disappearing. The retail stores of the relatively rich and famous are doing well. But the retailers who serve the rest of us are quickly finding that Bill Cara knows of what he speaks when he has been saying for months now that WMT is proving that the majority of their customers have no tickee for laundry.

Oh, the auto lots were busy for a while " just as long as the manufacturers were giving them away. But will the public ever accept anything other than employee pricing in the future?

I don't think so, but then again maybe those manufacturing employees will be in places like China and India, and we'll be told that we cannot expect to get the same deal on a car made by an employee who earns $5,000 a year!

Oh what a tangled web these capitalists weave.

So yesterday we learn that consumer spending in France has literally fallen off the table. Other than bringing a smile to the face of CNBC anchor Mark Haines, this is not a good situation.

I see Formula One car races in Europe are suffering hits to their attendance, and new races are being run in places like Dubai, China, Malaysia and Turkey, where all the money is fleeing to. Oh my!

And just for good measure, let me show you a single retailer stock, the once great Sears (now Sears Holding Corp " NDQ: SHLD) " going from $163 to $135 in five weeks, as the popular James Cramer was blowing that paper up you know where.

Isn't that valuable real estate under the feet of big consumer stocks like MCD (McDonalds), PKS (Six Flags) and SHLD (Sears) a tired story by now? I guess the street-talkers must think that all consumers are stupid traders because they keep that story moving like a chain letter.

So SHLD is down "17 pct in five weeks. I don't like those returns, but then, if you've been reading my blog, you didn't suffer either.

As I say, when their lips are moving...."

Isn't trading fun when you get to see how the game is really played?

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Sector 30 (consumer staples: XLP, VDC, RTH and IYK)

Here's the XLP Weekly, Daily and Hourly data charts:

XLP Weekly data:

XLP Daily data:

XLP 60-Minute data:

The Consumer Staples (XLP) ETF was up +0.43 pct W/W, which is the best performer of the ten I follow. But it all happened in a couple hours on Thursday.

XLP closed Friday at 23.18, just six cents above the M40. I'm not impressed.

Thursday's bump in XLP took the Daily RSI positive, but Friday was weak, and the Weekly RSI is negative, so I'd be careful if you are long.

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

Here's the IYH Weekly, Daily and Hourly data charts:

IYH Weekly data:

IYH Daily data:

IYH 60-Minute data:

IYH was down "0.88 pct W/W. As I wrote last week: I'd be surprised if the (IYH) cycle topping process does not unfold through August."

But little did I know at the time of a Merck loss in a Texas courtroom, to the tune of -$253.4 million in the first of several trials over deaths alleged to be attributed to Vioxx.

This Big Pharma situation is going to turn real ugly, and traders in the space have to exercise prudence and stand aside.

One thing I learned about American culture is that if you ever lose in a courtroom, the victor gets to say any nasty thing they possibly can or would like to against the defendant. Yesterday, I watched the plaintiff's lawyer actually state for public consumption (paraphrasing from recollection): Merck can't just decide to kill people in order to make a buck."

That is just so far over the top, it speaks to some of the ills of America.

The plaintiff's lawyer was not prosecuting a criminal trial involving murder, nor could he ever prove that one of the finest management teams in the history of healthcare management ever intended to harm a single person, nevertheless commit murder for money.

Some will say that this particular man's actions, on the courthouse steps, speak only to the emotions of the moment, or at worst to the man himself. To that I say, just think about the hours now being spent this weekend by law firms across America getting ready to do the same thing.

This story "- a quarter of a billion dollars awarded to a widow -" is not over by a long shot. It was not a class-action lawsuit. Traders who are long MRK saw the stock collapse in the minutes following the decision. Next week, traders who are long other Pharma stocks are going to have serious doubts about staying long.

So kiss this baby goodbye.

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

Here's the XLF Weekly, Daily and Hourly data charts:

XLF Weekly data:

XLF Daily data:

XLF 60-Minute data:

XLF still looks weak to me, but this week XLF did move up +0.13 pct W/W (i.e., 4 cents), to 29.75. The M40 is 29.48.

As long as bond yields fall off as they did this week, then the financial sector stocks and ETFs stand a good chance of making some gains. But for the group to do well, real wealth has to be created in the economy. This group of stocks never performs well when inflation is increasing. Yes, CPI/PPI were well up, but the strength in the bond market is a near-term phenomenon. Longer-term, always go with the fundamental rule that inflation raises rates and yields, and hurts financials.

I told you a couple weeks ago that I was changing my focus to the interest-rate sensitive segment of the capital markets because that is the current scare, not that crude oil at all-time highs aren't hurting us.

The bigger picture is that, at some point in a rising rate scenario, the trajectory for interest rates will intersect what will be the tipping point for the inflated real estate market. And when the wealth effect caused by rising home prices (and the available mortgage refinance money) is history, traders can then wave goodbye to the Bulls in this space.

And financials being so much a part of the American economy now, the U.S. equity market will sink. That's not to say it will happen for sure because inflation with comparatively low interest rates could keep the real estate game going for a while in hopes that economic renewal in other sectors (like technology for instance) kicks in.

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

Here's the SMH Weekly, Daily and Hourly data charts:

SMH Weekly data:

SMH Daily data:

SMH 60-Minute data:

After being down about "3.0 pct over the prior two weeks, the SMH was down only "0.19 pct W/W this week. That was due to the strong rally in the bond market on Thursday. Don't count on that as a sustainable trend.

SMH this week closed at 36.24, which is still well above the M40 (33.53), but the gap is narrowing.

The SMH RSI is still up for the Weekly data, but falling for the Daily data, and still above the important 30-line. So, there may be enough near-term weakness in store for the SMH, which could possibly set the Weekly RSI to a negative.

All of that is dependent on future prospects for the bond market. If you see another bond market rally this week like we saw on Thursday, then the SMH will likely have a run up higher. In that case I'll have to close my ALTR Dec-05 22.50 puts, which I may do anyway because there are much weaker semi-conductor stocks on the board to be short.

Here's a look at the leading chip stocks. They still bear watching, if you're long because if the bond rally does not happen here, but, instead, the bonds sell off, raising yields, I believe that the techs will sell off.

This is the sector that traders on the Bull side look to for leadership. They have now apparently lost that leadership from the Energy stocks, so the Techs must come through for them, or else their game is going to be in full retreat.

At the risk of beating a dead horse, here is the 30-Minute data price chart for INTC. I have repeatedly said it was back in May that I sold INTC at 27.39 Well look at INTC now. Intel has dropped to 25.65, down "6.4 pct in three months.

That's a $10 billion haircut to the market cap for INTC. As I wrote last week: I suppose if Dell is having a perceived problem moving pc's, then I can have a perceived problem in Intel chips not flying off the shelves."

My problem is that Wall Street only wants to tell you the good stories, and when you notice that share prices are going down for some unexplained reason, the THs all point to you as a person who is always seeing the glass half empty.

The truth is that I see it both ways, and that helps me to know what to look for. So, when I see and hear a TH blowing smoke on an over-played story, I pay more attention to the trader tools in my own toolbox.

And I find that exciting, even if my wife thinks its boring, as she told me today while preparing to go out for a bridal shower.

At least it's not another funeral.

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Sector 50 (telecom: IYZ, VOX and IXP)

Here's the IYZ Weekly, Daily and Hourly data charts:

IYZ Weekly data:

IYZ Daily data:

IYZ 60-Minute data:

It has become very hard for me to see clearly what is happening in the telecom services sector. IYZ was off this week, down "0.50 pct W/W to close Friday at 23.90. It's getting close to the M40 (23.47).

IYZ closed at a weekly high of 24.17 in Week #30, right before the new telecommunications bill, and then has sold off a bit over the past three weeks. I haven't yet got a sense where this sector is headed.

For sure I don't want to be in stocks of debt-laden companies, and I don't know whether telco or cable will ultimately be the big winner, and Voice over Internet Protocol (VoIP) is a rapidly growing phenomenon, so there are lots of pressures on stocks here.

It could be that the recent mergers and acquisitions in this space will take some time to work out. And it could be that a few more major deals are still to happen before this sector gets back into play on the long side.

In the meantime, I like mobility, and I like certain foreign mobile operators in Russia and China.

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Sector 55 (utilities: IDU, XLU, and VPU)

Here's the XLU Weekly, Daily and Hourly data charts:

XLU Weekly data:

XLU Daily data:

XLU 60-Minute data:

XLU was down "0.32 pct W/W to 31.64. It was down almost "2 pct over the preceding two weeks. The Weekly RSI is down, but the M40 (29.53) is still well below the present price level. So there is some protection on the downside for those who are long.

Utility stocks seem to be splitting into two groups, the grandfather's kind of utility, fully regulated, heavily burdened with debt, and so forth, versus the ones that are in exciting fields like gas pipelines and nuclear power.

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Bonds:

Interest rates and bond yields, which had been in a constant rising state, then took a bit of breather for a couple weeks, now actually have come down quite a bit.

The bond market performed relatively well this week.

Weekly data charts:

Daily data charts:

Hourly data charts:

From the U.S. Fixed Income (Bonds) Yield Table at Yahoo Finance, the 10-year T-Bond is now yielding just 4.20 pct, down sharply from 4.38 pct. At the same time, the 3-month T-Bill yield has stayed in the same 3.34-3.35 range, as it has been for a couple weeks. The 30-year T-Bond yield dropped a lot from 4.57 pct to just 4.41 pct.

The yield spread has narrowed a lot " to 107 bp on the 30-year to 3-month spread, and 20 bp on the 10-year to 2-year spread. That's a new low for the past couple years, and, regardless of the THs talking stupid these days, this is a serious indication of economic problems.

The market is saying there is no more risk buying long bonds, and yet there is no corresponding increase in capital projects underway. So corporations are in a state of contraction.

Is that because they fear more terror, or more domestic problems caused by job cutbacks (via outsourcing or a dry-up in consumer demand), or just the lack of pricing power?

I don't have an answer. I just call it like I see it.

And I don't like what I see. Moreover, I don't like hearing TH's trying to explain away this phenomenon as being part of a new capital market paradigm, yada yada.

There ought to be some form of tangible reputational capital that these people bring to TV programs like CNBC. So when they embarrass themselves greatly, the Great Trader's Ombudsman could make the appropriate deduction, so that the next time we see the same people we see that their value has been in free-fall.

And then there ought to be a rule that if their reputational capital falls below a certain level " like zero " it would be illegal for CNBC to allow them back on the air.

I personally would like to be sitting in the Producer's Chair at CNBC, and every time I heard another stupidity out of the mouths of some of these guests, I'd quickly flash on screen their personal fund performance, along with a smiley of course.

I mean why does CNBC package up some of this nonsense as anything other than entertainment?

And since it's all vaudeville anyway, I'd like to be the guy at the side of the stage with hook in hand. Then every time Robert Froehlich starts to move his lips....YANK.

The serious problem today is that yields are rising, and the yield spread is narrowing, continually. There is no form of rolaids, zantac, bonine, dramamine, emetrol, or kaopectate that will quickly relieve that situation. Unfortunately.

If the spread stays as flat, or flattens even more, and the yields are simultaneously moving higher, that is always bad for equities. That is the condition known as stagflation that neither government nor Wall Street want to talk about. They'd rather tell you about Baidu.

For the U.S. economy to head back to good health, I continue to say: the yield spread must widen. But the only way that is possible would be for short rates to collapse, which is not going to happen under Greenspan. And if the long rates rise, the mid rates will follow, causing " at some point " a melt down in the real estate market. That seems to be what's in store for Americans, and I don't see a way out. Some say oil prices could come off significantly, but if they do, that will mean the U.S. economy is quickly losing its strength, which again is bad for U.S. equities."

I think the U.S. equity market will really start to dip quickly if the U.S. bond market starts to trade either up or down outside a very narrow price range. The stock market is trapped in a corner, which will only be resolved in a positive way over the long term. There is no quick fix to this one.

Two weeks ago, I started to monitor the crucial interest-rate sensitive securities, and will continue to do that.

US Bond Funds -- Monthly Data Charts

US Bond Funds -- Weekly Data Charts

US Bond Funds -- Daily Data Charts

US Bond Funds -- Hourly Data Charts

As you can see above, the bond market started to take on a stronger look from the 9th through the 16th, and then made another nice move up on Thursday the 18th.

But what's in store for bonds here? I don't know; however I'm betting that the economy is not as bad as some people think and that yields will start to rally again, taking bonds down.

I also think the U.S. government twin deficit issue will be given more (needed) publicity as Congress gets back to work. That ought to weaken the USD, putting more pressure on those foreign investors who have been buying U.S. treasuries. Gold should continue higher, as interest rates move up the line, and the USD trails behind.

On the consumer finance side, Fannie Mae took a mid-week beating a week ago, and that continued this week across the whole group. I think this industry sub-group is headed lower, mainly on weakness that I perceive is happening in the real estate market.

Any more weakness of the economic data, like we've had in recent weeks, will more than likely pull down these stocks further. It's time to stand aside, if you are still long.

Consumer Finance -USA -- Weekly Data Charts

Consumer Finance -USA -- Daily Data Charts

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Commodities:

Last week I wrote: The M40 for $CRB is now up to 298.74, and rising. The problem is that M40 won't hit 300 because I think next week $CRB will pull back and consolidate. The strength this week in bonds led me to that belief. Also, the Oct-05 Crude Oil contracts (U.S. Light Sweet Crude on the NYMEX) are now priced a few cents below the Sept-05 contracts. It pays to look at these things, and put two and two together. So, I see bonds holding at about these levels, and the spread between the Sept-05 and Oct-05 contracts widening on the downside) which ought to be enough early next week to scare the day traders who are long energy and precious metals."

Actually, it pays to read my weekly reports because bonds didn't weaken, and traders long energy and precious metals last week did take it in the ear this week. And what's nice about it is that I explained why that was likely to happen.

As for the oil market, last week I wrote: When I called the oil market at a bottom in a headline article on May 17, little did I know or even ponder the possibility of crude oil contracts heading straight up to $67.37 from $48.05. Anyway, that's a +40.2 pct increase in three months, which is simply unsustainable. I think by the end of next week, I'll be writing that the boom in energy prices is over for this intermediate-term cycle at least. The issue in my mind today is, will crude oil contracts hit 62 before they hit 70, and I think the answer is yes."

This week the price of both major commodities, crude oil and gold, were down. Once again, I made the right call. At some point, even my biggest critics have to acknowledge that I'm not flipping coins here.

The $WTIC crude oil index (continuous contracts EOD) closed Friday at 65.79, down "2.35 pct W/W, which was a big move since on Friday the day trading took this index up +3.17 pct). So, the rest of the week was a killer for those who were long crude oil contracts.

As I'm guessing some of those traders are hedge funds, I'm questioning how many were properly hedged, and if they can effectively work out of major loss positions before the owners of that capital start pulling the plugs.

The $CRB commodity index was down on the week by "2.41 pct, to 315.18, and that loss too also includes a Friday gain of +1.10 pct.

But, I'm pleased to say, you read the news here a week ago.

And don't forget that I gave you not one but TWO moves in advance. So I was really starting to get into the dance. I wrote: They'll be back in a couple weeks, because they know that inflation is headed to America as the USD weakens, the U.S. Congress returns next week to spend more taxpayer dollars, and trade deficits will grow wider in future months, if not in the next month or two. As I say, inflation is not yet a problem in the U.S., but the trend is positive. If the economy were to heat up later in the year or next, there would be even higher energy prices (based on greater demand), plus higher interest rates, and higher commodity prices."

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Gold:

And last week I wrote: (About gold) I'm getting a little nervous for the goldminer stocks here. I think they might be in for a rest for a couple weeks, before continuing their move to much higher levels. The Sept-05 contracts for the bullion are trading 446.80 (438.40 a week ago), and Oct-05 at 449.20 (440.50 a week ago). The forward spread has widened to the upside, so traders are projecting higher prices ahead. I'm just not as positive, that's all. Give it a couple weeks, and I'll be very positive. Gold has just broken out of its consolidating trading pattern, but before it moves higher I expect it to test the support levels at 444. So I don't think it will close next week above the prior intermediate-term cycle of 447.05 on the continuous contracts (see stockcharts.com)."

Gold and the goldminers, as forewarned, had a bad week.

This interactive chart shows the recent trading for the Gold Bullion index.

The $XAU (Philly gold stocks index) closed this week at 96.22, down "3.74 pct W/W. It had been up +5.37 pct a week earlier, and even the barbershop was getting into it.

So, I wrote: $XAU was up this week +5.37 pct. A week ago this gold stocks index was up +4.53 pct. Time for a breather. The M40 (94.26) may be tested next week."

HOW GOOD IS THAT?

$XAU M40 this week = 93.96.

I'd like to start ringing bells and going ka-ching, but I had to stop. Seems a few friends of Kudlow and Cramer like to send me poison darts every time I give you a bad forecast.

Actually, doesn't happen that much anyway. So why should I care?

The Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF, which trades under the ticker symbol TSE:XGD was likewise performing as I forecasted.

First, what did I write a week ago? I think it was: (TSX: XGD) up +3.61 pct W/W, after being up the prior week, +5.99 pct. The index now sits at 52.80, with the M40 at 49.86. I think the M40 will be tested next week, which will likely upset the short-term gold stock players. Longer-term there is little to worry about. "

Hmmm.

Here is the 30-Minute data price chart for the TSX Goldshares index.

XGD was down "3.53 pct W/W to 50.93 (M40=49.74), but you knew that already, didn't you?

Ka-ching! Ka-ching! Ka-ching! Ka-ching! Ka-ching!

Here too are the interactive charts of the leading goldminers on the board. This week we'll still look at the Hourly data charts.

Last week I wrote: I hope the conservative longer-term trader is not going to be shaken out of any near-term pull back." This might continue, so hang in. Greenspan and Kudlow hate gold you know, and it's not Kudlow " as good as he is " that I'm worried about.

List #1

List #2

List #3

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Forex:

So let me see if I got this right? Before it actually happened, a week ago in the Week #32 in Review I gave you this week's news in most of the equity Sector Funds, in Bonds, in the Consumer Finance stocks, and then Commodities, Crude Oil, and Gold and Goldminers. So, can I take a bow now or do you want me to go onto Forex, where I had this to say:

The USD closed at 86.97, down "1.20 pct W/W, from 88.03 last week. The M40 is now 84.95, which I think will be taken out (on the downside), eventually. Just not for a while."

Geez this is fun.

$USD was up this week +1.87 pct W/W to 88.60. M40 (85.07) was not taken out.

The $XEU again closed down "2.74 pct W/W to 121.68. The M40 (127.90) is safe for another week.

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International Equities:

The Canadian market was not flying high again this week. Neither were the Brits or the Japanese.

And you have to admit; I called that too.

Japanese equity market ETF: EWJ

Japan (EWJ) was down "0.27 pct W/W to 10.92. This sideways move consolidates a breakout of the two-month sideways trading range for EWJ, and is consistent with the recently stronger Yen..

A week ago I wrote: During the week, I called a change in my outlook for Japan. I hope you missed it because the Friday report on Japan's GDP is a real bummer. Anyway, here was my article: EWJ alert, Thurs., August 11, 2005, 5:44 AM You see, when I suspect something big in the works, I'll work overnight for you guys! And now I have to spend the weekend making apologies. Japan is going nowhere. The truth is that the Nikkei 225 didn't do a thing on Friday as the 2Q05 economic report on the GDP showed a soft quarter, up at an annual rate of just +1.1 pct, which was well down from the anticipated +2.0 pct. So, with the awful GDP data, the rally in the Nikkei Dow was stopped in its tracks. Next week, I expect to see a sell-off in the EWJ."

No real sell-off, but the Nikkei Dow sold down a bit.

Hourly Data for EWJ:

U.K. equity market ETF: EWU

The U.K. market (EWU) was also down "1.84 pct W/W, to 18.69. I am not surprised. Last week I wrote: Still, with the anticipated action in Japan, Canada, and the U.S., I remain mildly negative on EWU. A week ago I wrote the technical indicators for EWU are not strong for the Extra-Year Trader. There is plenty of time ahead to accumulate stocks at better prices, as I see it. Same story; in spite of the nice rally over the past several weeks."

Hourly Data for EWU:

Canadian equity market ETF: EWC

The EWC had a real pullback, down on the week by "3.21 pct W/W, to 19.58.

Last week I warned you:

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Another excellent week (for EWC), up +3.16 pct W/W to 20.23. That's an unbelievable move after being up over +4.5 pct the prior three weeks. I use the word unbelievable" not because it's not a fact, but simply because it won't be a fact for much longer. As you read earlier, I see a pull back coming in the oils and golds, and some of the other commodity prices that benefit Canada.

I also see a trade war with the U.S. over the softwood lumber dispute that Canada won once again in international court, but that the U.S. once again refuses to accept, or pay back the unfairly collected duties. Regrettably, this puts Canada into the position of having to retaliate, and then the U.S. will follow up with another case of an eye for an eye". In any event, the word Trade War" was plastered across the page one headline in Canada's National/Financial Post this week, and that's a word traders anywhere do not want to hear " unless of course they're short equities. "

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I did make some comment about idiot politicians" in the U.S. going to make this worse, but this week, Canadians got the word from their elected reps in Ottawa that idiocy travels far and wide in this continent, including at home.

Hourly Data for EWC:

For an interactive look, here are 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:

I continue to warn that the following charts for the Weekly and Daily data series of the broad U.S. equity market indexes indicate that RSI and Stochastic data values (both are similar calculations by the way) are at very high levels, which typifies the topping out of an intermediate-term bull market cycle.

It might get worse, and proceed to a full long-term bear market, but traders will have to look to the power of the key market drivers (i.e., commodity prices, interest rates and consumer buying decisions) to make that call.

This week, oil prices (costs to consumers) were down a little, but not at the fuel pump, consumer spending down again, the USD trying to recover before it gets beaten down by VIPs in Washington, and equity prices coming off even though interest rates were on the decline this week.

I hope you can see that the broad U.S. equities are not moving higher. There are no drivers in place to make that happen.

If oil prices contract, that means the economy is slowing even more.

If the economy speeds up, so too will inflation, and interest rates. That ought to be the killer of the real estate market.

Armageddon on Wall Street gets a little closer month by month, so I continue to advise readers to protect your portfolio. At the very least, do not chase stocks higher on rallies.

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

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

For the week, the $DJX (Dow 30) was down "0.39 pct W/W to 10,559.23. The Nasdaq Composite down "0.99 pct to 2135.56. $SPY was down "0.87 pct W/W to 1219.71. The $RUT small caps were also down this week "1.13 pct W/W to 652.51.

Kudlow on Friday evening told you the Wall Street Rally is intact. Are you getting a message there?

The U.S. equity market is dead in the water, while, until this week at least, Japan, Canada, the U.K, etc, had been flying.

As I noted a week ago, and for a few weeks now: So why bother buying U.S. equities or bonds or real estate today when tomorrow there will be many bargains to choose from?"

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

You can do this table yourself by entering the following string into your browser and then clicking on the link for Performance.

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.

This week, in the Dow 30, it was 14 up and 16 down. But the big losers were bigger losses than the winners were up for the week. Weakness persists.

The five biggest winners this week: HPQ, up +10.24 pct; MO, up +4.68 pct; KO, up +1.85 pct; PG, up +1.85 pct; and C, up +1.26 pct.

This week, unlike a week ago, there is some firepower on the winners list. Still there's no pleasing me. I'd rather see GE, WMT and MSFT on this list instead of HPQ, MO and KO.

For the five Dow losers this week, MRK led the pack, down "8.15 pct. Then AA, down "5.45 pct, WMT, down "4.35 pct, XOM, down "3.65 pct and GM (again) down "3.01 pct.

GM, a week ago, was down 1.82 pct, and the week before that "4.43 pct. GM is now down to 33.51, which is now well below the price I got eight weeks ago ($35). So, Go Go LeBeau!

I even followed up that first article with another one, less than a month ago, when GM missed its quarter, and yet the stock was still up at $36.83. Mind boggling. Yes, 33.51 LeBeau. Aren't your friends pleased?

Last week I wrote; I guess traders have figured out that no tickee, no laundry" means consumers only buy cars when the Big Three are giving them away." I should have thrown in my usual or can't get to the Wal-Mart sales when gasoline is over $3.00 a gallon. End of the week, and a dollar short."

I remember a really telling incident during a presidential race of a few years back when Pres. Bush (the father) was stumped at a retail store cash register when he saw a bar code reader. My, would you look at that thing!" he told the cameras.

How can you understand their pain if you can't relate to the people?

Until I saw that video with my own eyes, I figured that 100 pct of people knew what happened at a retail store cash register. But, I guess even in this day and age there are people in positions of power and control who just hand the platinum card to the server, or, just as likely, hand it to staff to pay for laundry" as well as the usual luxury fare.

Yes, I'm concerned about the plight of real people, and the real economy, not the stuff that Washington VIPs pay Hill & Knowlton to tell us about.

And I think people are hurting.

Moreover, I think every Family Practice physician in America knows this by the stories they hear, the problems they face every day now, and the pills they are prescribing to help their clients make it to the next paycheck.

Yes, I care about social equity. It's easy for me to sit here making wisecracks about Talking Heads who don't have a clue what's going on in the real world. I wish I could do more about it.

But, it's been a long day. I have to wrap up.

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)

(AA) (AA) (Here is the Jul. 22 Value Line report on AA: next one is due Oct. 21)

(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 Jun. 24 Value Line report on BA: next one is due Sep. 23)

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

(CAT) (CAT) (Here is the Jul. 29 Value Line report on CAT: next one is due Oct. 28)

(DD) (DD) (Here is the Jul. 22 Value Line report on DD: next one is due Oct. 21)

(DIS) (DIS) (Here is the Aug. 19 Value Line report on DIS: next one is due Nov 18)

(GE) (GE) (Here is the July 15 Value Line report on GE: next one is due Oct 14)

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

(HD) (HD) (Here is the July 8 Value Line report on HD: next one is due Oct 7)

(HON) (HON) (Here is the Jul. 29 Value Line report on HON: next one is due Oct. 28)

(HPQ) (HPQ) (Here is the July 15 Value Line report on HPQ: next one is due Oct 14)

(IBM) (IBM) (Here is the July 15 Value Line report on IBM: next one is due Oct 14)

(INTC) (INTC) (Here is the July 15 Value Line report on INTC: next one is due Oct 14)

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

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

(KO) (KO) (Here is the Aug. 5 Value Line report on KO: next one is due Nov. 4)

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

(MMM) (MMM) (Here is the Aug 19 Value Line report on MMM: next one is due Nov 18)

(MO) (MO) (Here is the Aug. 5 Value Line report on MO: next one is due Nov. 4)

(MRK) (MRK) (Here is the Jul. 22 Value Line report on MRK: next one is due Oct. 21)

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

(PFE) (PFE) (Here is the Jul. 22 Value Line report on PFE: next one is due Oct. 21)

(PG) (PG) (Here is the July 8 Value Line report on PG: next one is due Oct 7)

(SBC) (SBC) (Here is the July 1 Value Line report on SBC: next one is due Sept 30)

(UTX) (UTX) (Here is the Jul. 29 Value Line report on UTX: next one is due Oct. 28)

(VZ) (VZ) (Here is the July 1 Value Line report on VZ: next one is due Sept 30)

(WMT) (WMT) (Here is the Aug 12 Value Line report on WMT: next one is due Nov. 11)

(XOM) (XOM) (Here is the Jun. 17 Value Line report on XOM: next one is due Sep. 16)

The two new Value Line Dow 30 reports this week were MMM and DIS. I hope you read them.

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A week ago I concluded with: This week was a stabilizing one for me. I am finding more hours for trading and blogging. The universe is unfolding as it should." I think you would agree. At least, I hope so.

Unfortunately my business associates decided to pull their application to establish a new full-service self-clearing broker-dealer offshore. I had been so looking forward to enjoying the Caribbean this winter in that context.

I may have to switch to plan B, C or D, or maybe even start a new one. ;-)

But as long as I'm having so much fun doing this blog, I can't complain. Except that maybe this week's Week #33 in Review took me too long to do. I was spending far too much time looking at myself in the mirror.

Hahahaha.

BCara@BillCara.com