That's the foreign carry trade (borrow at cheaper rates in one country and invest at higher rates in a different country) that I have written about previously, which as a reader pointed out serves in this case to boost the USD and depress the Yen. That in turn makes it easier for Japanese exporters to sell their goods, and more difficult for Americans to sell theirs.

And as Japan has the world's second biggest economy, the total amount of currency involved is huge. And the worst of it is that this particular carry trade will continue to grow as long as the gap between U.S. and Japanese interest rates grows.

Normally a country would want to protect its currency. But, the Japanese are somewhat unafraid of the impact of a falling Yen in terms of the ability of U.S. exporters to sell there because of that country's restrictive trade practices. So they can afford to keep their interest rates low, and behind the curve, at least for a while.

Meanwhile, the Americans are in South Korea trying to sign the biggest free trade agreement since NAFTA, and Korean farmers and others are protesting violently. Reactions like that, or by placing costly tariffs on imported goods, is how a global trade war starts.

What is happening on the world economic stage today is like a Drought on the Serengeti Plain where, as the environment withers, the normal predatory food chain also breaks down. The strongest animals start to eat whatever they can find.

As I see it, unless the G20 nations can resolve serious forex and trade issues, the global economic picture is going to be a worsening one.

Long-time traders can see this clearly. They can see that the world's biggest retailer (WMT), the biggest durable goods manufacturer (GM), the biggest soft goods manufacturer (KO), and the biggest semi-conductor technology manufacturer (INTC) are in six-year primary bear markets.

Many companies in the S&P 500 are managed with a short-term perspective -- meaning that accounting tricks and share buybacks make growth rates appear solid and sustainable, but aren't. Management of these companies ought to be studying what's happening in the real world to their industry leaders.

In the short term, smaller companies can be more nimble, but in the long run, they all get cleaned out by the same broom.

With the offshoring of high-quality manufacturing jobs and capital, Americans are fully employed today at jobs that don't pay enough to support a lifestyle they thought they had earned the right to have. Consequently, their life savings and their credit lines are now being used to maintain the status quo. Polls show they don't like it.

They want better. What they are getting is worse.

And that situation will continue to get worse until global forex and trade issues are resolved, which would alleviate the pressure on Corporate America to offshore jobs, and the pressure on American owners and managers of capital to offshore the money needed to build and operate factories elsewhere.

What's being left behind is a weakening USD and increasing inflation. Then the tail starts to wag the dog, and the economy spirals out of control. And like hyenas on the Serengeti, or Brutus to Caesar, the private equity players appear on stage.

And the downtrodden workers and disorganized owners of capital lay down and await the ultimate blow.

These things don't happen overnight, or in weeks or months, but they are happening. You know it as well as I know it.

Long-time traders like me who have lived and worked in the good times know what's happening, and we worry about the future that awaits our children.

Support for the U.S. Administration has today fallen to the lowest rating ever in the polls, and despite daily pep talks from the leaders their actions (in growing the money supply, for instance) speak volumes.

For the quarter ending Jan-16-06 (last figures available), the growth of M3 was +7.7 pct Y/Y, which is a gain from the corresponding previous week figures of +7.6 pct, and of +7.5 pct the week before that. Each week the M3 grows faster.

If you have been watching the U.S. M3 numbers, you will have already noted a significant rise, which is a clear indication of the reflation underway today to meet the nation's fiscal needs.

Despite the huge run-up in money available in the system, the U.S. 4Q05 GDP (economic activity) grew by only +1.1 pct, down from the Wall Street consensus estimate annual rate of +2.8 pct. And now friends of the Administration are desperately generating stories that 1Q06 GDP is going to grow at over +5 pct (annual rate).

But traders see the truth in the primary trend of America's leading corporations. With a GDP growing at such a fantastic rate, the early indication is always seen in the stock market, in stocks like WMT, INTC, IBM, GM, F, GE, and on and on. But that's not happening.

What is happening in the U.S. equity market today is that the energy companies are leading because of abnormally high cash flows due to record high commodity prices. But those commodities are largely being produced elsewhere, which creates wealth elsewhere, and a lower USD as these higher-priced goods are imported. Then a lower USD leads to higher prices, which leads to a still lower USD, etc.

Clearly there is a problem here that the U.S. public is not being properly informed about. Despite the inflation-generating money being provided, the economy is sliding into recession. For an owner of capital in the U.S., that's the worst of all possible worlds, so the strategy is simple: move the capital offshore, which in turn weakens the domestic economy even more.

Without a major rise in U.S. GDP, which itself would create new money, the moment that government stops printing it at the pace they are today is the moment that interest rates will pop.

Do Americans want a devalued currency or higher interest rates? That's the story today. It hasn't changed.

As I say, so far, the decision of those in authority happens to be a devalued USD because the Administration and the bankers on Wall Street know to a man and woman that higher rates would soon pass the tipping point to destroying the booming real estate market.

The bottom line is that there is a credit bubble (where Americans can borrow no more against assets and incomes) amidst a slowing economy. The residential real estate market in many cities is on the verge of collapsing.

Try to understand the balance here: (i) the Fed and the Treasury can cause the M3 to grow enough to keep rates down, in which case precious metals, commodity prices and real estate continue to boom, or (ii) the Fed must raise the Bank Rate, which further inverts the yield curve, in which case they push the economy into recession and soon pass the tipping point where precious metals, commodity prices and real estate begin to fall.

The key really is to be found in (i) Japan's interest rates and the foreign carry trade, and (ii) the ability of the U.S. government and its Administration to hold the line on spending and debt, and the U.S. consumer to continue spending without increasing debt.

Then, maybe.... but, no, I'm betting on gold. And if international economies were a little stronger I'd have a bigger weighting in oil & gas.

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Global Market Summary

U.S. Equities : U.S. broad equity markets were down this week: the Dow 30 (down "1.04 pct), S&P 500 (down "1.53 pct), Nasdaq (down "1.81 pct), and the small cap Russell 2000 (down "1.09 pct) all down.

International Equities: It was also a weak week for international equities. Japan was down "1.77 pct, the U.K. was down "1.42 pct, and Canada was down "1.11 pct this week. This was a hangover from last week's party in Davos.

Dow 30: There were 6 up and 24 down. Not very pretty.

U.S. Sector ETFs: 0 up and 10 down. Not at all pretty.
10: Energy (XLE): Over-weighted: The # 9 best performer for two weeks now; good for a trade last Friday?
15: Basic Materials (XLB): Over-weighted: Down "1.7 pct W/W, but metals were ok
20: Industrials (XLI): Market-weighted: 2nd best performer (HON, BA and CAT; still a loser (UTX)
25: Cons. Discretionary (XLY): Under-weighted: no more credit to buy stuff, GM down "2.7 pct
30: Cons. Staples (XLP): Market-weighted: down "1.4 pct W/W with MO down "4.1 pct
35: Healthcare (IYH): Under-weighted: down "1.1 pct W/W with PFE down "2.7 pct
40: Financial (XLF): Under-weighted: down "1.8 pct W/W with C down "3.9 pct
45: Technology (SMH chips): Market-weighted: down "3.0 pct; worst performer this week (INTC)
50: Telecom Services (IYZ): Market-weighted: best performer (T up +3.5 pct W/W), but still a loser
55: Utilities (XLU): Market-weighted: down to 31.66; can't beat 7 week old high (32.75)

Bonds: TLT actually gained +0.38 pct W/W to 90.85 based on the opening hour move on Friday to save the week; could be bounce off over-sold level, but with the USD jumping and the 10-year Treasury jumping both at the open, this was likely foreigners (read Japan) using the carry trade

Commodities: The index was down just "0.3 pct, after recovering Friday (+0.8 pct) like it did a week earlier

Oil & Gas: NY Crude oil lost "2.9 pct W/W to 64.76, but on Friday was down "3.3 pct. Weakness started Wed, and grew (volume) Thus and then slid in price on Fri.

Gold: Gold gained +$9.30 (+1.7 pct) W/W to $568.86. Friday was the down day, after an ok start (although I did pre-warn to raise stops), down -$3.29 or "0.6 pct on the day

Goldminers: $XAU gained +0.7 pct W/W to 147.75, while the TSX XGD (Canadian miners) was up +1.6 pct to 70.74, as alerted last week.

Forex: The trade-weighted USD was up +0.65 pct to 89.89, but almost all of that was Friday (+0.57 pct). This was likely foreign buying of 10-year bonds at the open on Fri.

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Sector ETF:

Here are the ETF charts I follow for the ten sectors of the U.S. equity market: All had a bad week.

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)

55 (utilities: XLU)

Here is the weekly performance of my favorite ten Sector Index Funds. The table is sorted by price performance Week over Week (W/W), i.e. 1W%N, but is otherwise unsorted.

Symbol	Close	Net	%Net	1W %Net	2W %Net	4W %Net	YTD %Net	3M %Net	6M %Net	Yr %Net
IYZ	23.79	-0.06	-0.25%	-0.34%	2.50%	2.23%	3.57%	2.41%	-2.46%	1.62%
XLI	31.44	-0.07	-0.22%	-0.57%	1.55%	-0.69%	-0.60%	4.56%	3.49%	4.14%
XLY	33.14	-0.15	-0.45%	-0.87%	0.58%	0.24%	0.42%	2.22%	-4.41%	-1.92%
IYH	63.55	-0.30	-0.47%	-1.09%	0.00%	-1.01%	-0.13%	4.51%	-0.06%	10.29%
XLP	23.20	-0.18	-0.77%	-1.40%	0.13%	-0.85%	-1.02%	0.04%	-1.23%	-1.57%
XLB	31.08	-0.28	-0.89%	-1.65%	3.22%	0.06%	0.52%	11.44%	6.99%	6.40%
XLF	31.58	-0.13	-0.41%	-1.83%	0.83%	-2.17%	-1.93%	3.27%	4.60%	4.99%
XLU	31.66	-0.16	-0.50%	-2.13%	-3.21%	-0.57%	-1.06%	2.36%	-3.06%	9.82%
XLE	55.22	-0.51	-0.92%	-2.52%	-2.11%	5.83%	4.78%	8.21%	13.43%	41.92%
SMH	37.10	-0.48	-1.28%	-2.96%	-0.67%	-4.77%	-2.16%	5.67%	-2.21%	18.80%

Ten out of ten were down. Corrected the 9 up and 1 down picture of a week earlier. Not much else to say.

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

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

XLE Weekly data:

XLE Daily data:

XLE Hourly data:

XLE was down "2.52 pct to 55.22. Weakness set in mid-day Wed. and went into Thurs. morning. Friday morning looked god but the open was terrible, with widespread selling taking XLE to an oversold condition, followed by a bounce.

A week ago, I recommended, "I still think it is wise to scale back positions by selling into this strength."

Crude oil in NY (Light Sweet Crude) at $64.76 suffered a "2.9 pct setback W/W. A week ago I said: "Once the Nigerian situation is put under control, and there are further reports of economic slowdown, it is likely that oil prices will pull back further."

A covered call strategy may earn some options premium, but on strength you need to scale back. Again, this is not to say I'm bearish on XLE (I'm still over-weighted due to corporate operating cash flows); but the economic signs, and technical (momentum) indicators are weakening, so the stocks will increasingly come under pressure.

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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 Hourly data:

XLB, like XLE, had a bad day Thurs. Coincidentally (but maybe not), the DBC commodity pool from Deutsche Bank started trading Friday morning.

XLB was helped by the metals but crushed by the other commodity-price sensitive producers. Those companies need a stronger economy, so go tell that to the "Snow" man the next time (probably soon) that he tells you that the economy is just fine.

XLB went down "1.65 pct W/W to close at 31.08.

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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 Hourly data:

XLI was down "0.57 pct W/W to 31.44. HON, BA and CAT (three of the six Dow 30 stocks that actually gained this week) led the way. But UTX (-2.67 pct) was a spoiler by taking the elevator down.

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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 Hourly data:

A major credit bubble in the U.S. is worrisome to the Administration and Corporate America, but these are problems that can be managed if there is enough liquidity in the system. But with a slowing economy plus a domestic carry trade that no longer works because there is a negative yield curve, the only hope is (i) print money, and (ii) the foreign carry trade.

Unfortunately the latter alternative only works if U.S. interest rates are rising faster than abroad. So the reflation alternative is being implemented non-stop.

But in that case, the USD is likely to fall and interest rates likely to rise, both of which are poison to Americans. It means the average worker needs to demand higher wages, and that is putting pressure on Corporate America. And that pressure is leading to (i) offshoring jobs, (ii) declining profitability, or (iii) bankruptcy.

This is hurting the manufacturing companies " the ones that comprise XLI, so they have to raise prices, which then hurts the retailers, because they have to raise prices, which they can only do if consumers can pay those high prices.

Consumers can continue to spend " even at higher prices " if they have (i) incomes that rise faster than costs, (ii) savings and investments they can cash out, or (iii) borrowing capacity.

So now we are back at the credit bubble, which is a key reason that companies that comprise the consumer discretionary spending sector, like Wal-Mart, and the auto manufacturers (GM and Ford) and the household appliance manufacturers, etc, are having trouble.

XLY was down "0.87 pct W/W to 33.14. The sector is under pressure, and will get worse before it gets better. Yes there are deep pockets (e.g., luxury goods) where spending is not a problem. But across the spectrum, this sector is hurting, and management of the winning companies (Starbucks, Apple, etc) either have new products, hot brands, or foreign markets that are opening quickly.

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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 Hourly data:

XLP (Consumer Staples) was down -1.40 pct to 23.20.

The 800-pound smoking gorilla, Altria (NYSE: MO), stumbled "4.05 pct W/W. So blame it on King Kong.

It's no longer chump change for Americans to buy a pack of cigs, so Altria is looking to China and elsewhere.

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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 Hourly data:

IYH (Healthcare) was down "1.09 pct W/W to 663.55, with Pfizer (NYSE: PFE) (down "2.73 pct, oh, no!) pulling it down.

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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 Hourly data:

The Financial ETF (XLF) was down "1.83 pct W/W to 31.58, but I went short at 29.13, so I'm still underwater " but getting closer to land.

Citigroup (NYSE: C) had a tough week, down "3.86 pct. And the carry trade is now a carry loss with the 10-year Treasury yield at 4.51 and the 2-year yielding 4.56, up from 4.48. In fact that was quite a Friday morning when the two-year money switched into 10-year paper, which the Bond King said was the right thing to do.

Hmmm. Sure doesn't help the equities in this sector that rely on the carry trade.

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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 Hourly data:

The chip sector was taken down by Intel (NDQ: INTC) this week (-4.29 pct W/W), so SMH was the worst performer, down "2.96 pct to 37.10.

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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 Hourly data:

A week ago I wrote: "The Telco Service ETF (IYZ) was the 2nd best ETF out of ten, after being 3rd best each of the two weeks before that. What's happening here?"

Maybe Cramer knows; IYZ was the best performer this week, on the back of T, which was up +3.48 pct W/W, helping IYZ to a small loss on the week of "0.34 pct to 23.79.

You did notice that the big winner ETF was a loser.

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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 Hourly data:

Seven weeks ago I opined that XLU would not likely surpass its cycle high of 32.75 in this Bull Market cycle, and it has not. This week, XLU was down "2.13 pct to 31.66.

I don't see where the upside drivers are if the oil and gas are down, and bond prices are generally in a slow melt.

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Bonds:

Have a look at the Weekly data chart for the 3-Month Treasury Bill. Doesn't that picture look like a roller-coaster heading into the sky? And the 2-year jumped this week from 4.48 to 4.56 yield! That number took the yield curve distinctly negative, as the 10-year yield is now at 4.51 courtesy of huge buying at the open on Friday.

Last week I wrote: "This week there was a massive sale in the 10-year Treasury's by foreigners, and CBOT traders took on record long positions. I have a feeling that something is ready to burst. You know, this bond market needs minute-by-minute monitoring, which is why, for income accounts, I would rather stick to high dividending equities. I understand those better and don't have to stay watching the ultra-highly levered bond market where the hot money in the big bank trading rooms moves much faster than me."

That was the first shoe to drop. This Friday came the other, what with massive offshore buying of the 10-year Treasurys.

So Friday was quite a day with bond prices up and oil and gold down at the open. If you don't trade by the hour, I wouldn't worry about it.

What I would worry about is the approach maybe taken in the next quarter (or two) by Ben Bernanke to solve America's monetary woes. You see; credit card and bank loan interest rates (which are greatly affected by the Fed rate) can only go so much higher before Mom & Pop need some help at the end of the month.

Weekly data charts:

Daily data charts:

Hourly data charts:

US Treasury Bonds

Maturity	Yield	Yesterday	Last Week	Last Month
3 Month	4.26	4.27	4.24	3.99
6 Month	4.41	4.39	4.34	4.15
2 Year	4.56	4.57	4.48	4.29
3 Year	4.52	4.54	4.45	4.27
5 Year	4.47	4.49	4.43	4.27
10 Year	4.51	4.55	4.50	4.34
30 Year	4.62	4.69	4.69	4.53

Municipal Bonds

Maturity	Yield	Yesterday	Last Week	Last Month
2yr AA	3.05	3.04	3.01	3.03
2yr AAA	3.06	3.05	3.00	2.99
2yr A	3.09	3.10	3.04	3.15
5yr AAA	3.18	3.17	3.15	3.18
5yr AA	3.20	3.21	3.16	3.20
5yr A	3.29	3.30	3.27	3.30
10yr AAA	3.58	3.57	3.54	3.53
10yr AA	3.56	3.55	3.52	3.52
10yr A	3.70	3.72	3.68	3.69
20yr AAA	4.04	4.04	4.02	3.99
20yr AA	3.99	3.99	4.00	3.96
20yr A	3.94	4.03	4.07	4.15

Corporate Bonds

Maturity	Yield	Yesterday	Last Week	Last Month
2yr AA	4.69	4.70	4.62	4.44
2yr A	4.74	4.76	4.66	4.49
5yr AAA	4.72	4.75	4.67	4.57
5yr AA	4.78	4.80	4.75	4.59
5yr A	4.85	4.87	4.81	4.66
10yr AAA	5.16	5.18	5.13	5.07
10yr AA	5.11	5.14	5.08	4.96
10yr A	5.16	5.20	5.16	4.99
20yr AAA	5.47	5.50	5.49	5.46
20yr AA	5.77	5.73	5.66	5.56
20yr A	5.62	5.69	5.69	5.55

Tilt. This week, bond yields fell at the long end, and rallied in the 2- to 5-year paper. So the yield curve inverted. In fact there is a negative spread of 5 basis points between the 10-year and 2-year Treasury instruments.

And with the 3-Month T-Bill up from a yield of 3.89 at the close of Week #01 to 4.26, just four weeks later, that makes business tough for the lending banks. So now they all want to be traders, i.e., take your (deposit) money, and run with it offshore.

Interest rates and bond yields.

US Bond Funds -- Monthly Data Charts

SHY Monthly data series chart:

IEF Monthly data series chart:

TLT Monthly data series chart:

AGG Monthly data series chart:

LQD Monthly data series chart:

TIP Monthly data series chart:

US Bond Funds -- Weekly Data Charts

SHY Weekly data series chart:

IEF Weekly data series chart:

TLT Weekly data series chart:

AGG Weekly data series chart:

LQD Weekly data series chart:

TIP Weekly data series chart:

US Bond Funds -- Daily Data Charts

SHY Daily data series chart:

IEF Daily data series chart:

TLT Daily data series chart:

AGG Daily data series chart:

LQD Daily data series chart:

TIP Daily data series chart:

US Bond Funds -- Hourly Data Charts

SHY Hourly data series chart:

IEF Hourly data series chart:

TLT Hourly data series chart:

AGG Hourly data series chart:

LQD Hourly data series chart:

TIP Hourly data series chart:

Consumer Finance -USA -- Weekly Data Charts

Consumer Finance -USA -- Daily Data Charts

Consumer Finance -USA -- Hourly Data Charts

A week ago I wrote that "with existing home sales growth coming to an end, and credit tightening ahead of a round of bad debts backed by real estate, I'd say CFC is not likely to have any power left." Ka-boom! CFC plunged "3.4 pct to 32.85 after the CEO (Cramer and Kudlow's friend) says the Countrywide financial business is good but he just might have to let some people go.

I suspect the residential real estate mortgage lending biz is not so hot these days.

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Commodities:

The commodities markets were up big on Friday ($CRB moved up +0.8 pct), but the index actually fell on the week, down "0.31 pct to 345.90.

Maybe DBC entered the equation on Friday (and Wed-Thurs selling as well, which set up a nice opening morning rally after the opening oil sell-off subsided)

Weekly CRB Commodities Index:

Daily CRB Commodities Index:

Weekly Crude Oil:

Daily Crude Oil:

$WTIC, which is the continuous contract for Crude Oil, closed the week at 64.76, down "2.88 pct from 66.68, which was down "1.02 pct the prior W/W.

Weakness in the oil sector started Wed., with high inventory volumes, and picked up momentum on higher trading volume Thursday and then plunged in price at the open on Friday. I had thought there might be a rally Friday at the open. Of course the drillers and oilfield services stocks did rally later in the morning, and I was looking for a quick trade (or as I mentioned a sell-into-strength opportunity for those accounts that needed to scale back on over-weighted positions in the energy sector.

Integrated Oil & Gas - Canada

Oil & Gas Exploration & Production -Canada

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Gold:

I did a bigger write-up a week ago on gold. Today I am rushing because I still have 16 hours work to do in the 12 hours before I leave for the airport. So I'll be brief.

The $GOLD contracts were up on the week by $9.30 to $568.86 (+1.66 pct). That was pretty good, but on Friday, there was a forex move and a big buy on the U.S. 10-year Treasury Notes, which scared away the gold buyers. So Friday gold took a hit of "$3.29 or "58 pct. Not bad, but just enough to scare a few weak hands.

Weekly Gold EOD Continuous Contract Index:

Daily Gold EOD Continuous Contract Index:

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

Weekly Silver EOD Continuous Contract Index:

Daily Silver EOD Continuous Contract Index:

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

$SILVER moved up +0.158 (+1.65 pct W/W) to 9.734, but it came down at the end of the week after being up a lot. On Friday, silver dropped -$0.13 03 "1.34 pct.

Weekly Platinum EOD Continuous Contract Index:

Daily Platinum EOD Continuous Contract Index:

This interactive chart shows the recent trading for the Platinum metal index.

Three weeks ago, when Platinum closed at $1,035.10, I wrote: "Platinum is part of the precious metals complex that has broken out to the upside again."

This week, PLAT was up $16.40 (+1.54 pct) to close at $1,083.10. And that included a drop of -$6.60 on Friday!

Weekly Palladium EOD Continuous Contract Index:

Daily Palladium EOD Continuous Contract Index:

This interactive chart shows the recent trading for the Palladium metal index.

PALL made a huge move this week, going up $40.50 (+14.50 pct) to close at $319.74. Isn't that a spectacular move? Even Fri., it was up $9.43.

Must be the Metal Men of Zug.

Weekly Copper EOD Continuous Contract Index:

Daily Copper EOD Continuous Contract Index:

This interactive chart shows the recent trading for the Copper metal index.

Copper was the story of a week ago when the contracts zoomed +6.7 pct W/W to close at $221.49. That was five straight days higher this week, including a terrific Friday, up +1.41 pct on the day. This week was more of the same until Friday, when it was flat.

This week, the copper contracts moved up in price by +3.52 pct to $229.28. Simply amazing!

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Weekly U.S. Goldminers Index:

Daily U.S. Goldminers Index:

The U.S. goldminer index ($XAU) closed up +0.65 pct W/W to 147.75.

XGD Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF TSE:XGD closed up +1.56 pct W/W to 70.74.

Those gains included the losses on Friday, where $XAU dropped "2.87 pct, and XGD was down "2.16 pct.

Here are the Weekly, Daily and Hourly data charts for the TSX Goldshares (XGD) index:

XGD Weekly data:

XGD Daily data:

XGD Hourly data:

For an interactive look, here are links to the Hourly data charts of three groups of proven goldminer stocks. You can click on the tabs for the Monthly, Weekly and Daily data charts.

List #1

List #2

List #3

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Forex:

Weekly U.S. Dollar Index:

Daily U.S. U.S. Dollar Index:

The USD had a winning week, going up +0.65 pct to 89.89. But this was mostly Friday, which jumped +0.57 pct due to foreign buying of the 10-year Treasury notes at the open on Friday.

I still think the trade-weighted USD index is headed south.

Weekly Euro Dollar Index, priced in USD:

Daily Euro Dollar Index, priced in USD:

The Euro (priced in USD) was soft this week, down "0.70 pct to 120.23. Of course, it was mostly Friday, when the cross rate dropped "0.65 pct against the USD.

German confidence seems to be picking up, so maybe the Euro is going to strengthen against the USD. Would be good for gold at Turin or anywhere.

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International Equities:

A week ago, I wrote: "the Japanese equity market was up +7 pct and the Canadian and European markets were up +3 pct. Other than Michael and Catherine and Brad and Angelina looking pretty in Davos this week, what else looks so good to traders that equity prices have to rally so much?" Apparently nothing!

This week the Japanese and U.K. equity markets dropped, but Canada managed a slight gain on the week, which is to say a slight against an old Prime Minister. Canadians are liking what they are hearing about the cut in capital gains taxes and the reduction in federal sales tax rates, but remember the new PM (Harper btw) has got a minority government and will be slow to push ahead any meaningful legislation.

Japanese equity market ETF: EWJ

This week, the Japanese equity market ETF (EWJ), priced in USD, was down "1.77 pct W/W to 13.89, which is not to say there are problems in a Bull Market there. It's just consolidating gains of +7.0 pct made a week earlier.

Longer term, I'd agree with pundits who think it's time to stop playing the Japanese and Korean stocks " they've had a great run " and to switch into China and Taiwan.

Here is the Japanese (EWJ) equity market ETF Weekly, Daily and Hourly data charts:

EWJ Weekly data:

EWJ Daily data:

EWJ Hourly data:

U.K. equity market ETF: EWU

The U.K. equity market, as represented by EWU (priced in USD), closed down "1.42 pct W/W to 120.23. Not bad because the prior week's run up had been +3.24 pct.

I still think EWU is getting long in the tooth.

Here is the United Kingdom (EWU) equity market ETF Weekly, Daily and Hourly data charts:

EWU Weekly data:

EWU Daily data:

EWU Hourly data:

Canadian equity market ETF: EWC

I haven't checked to see who the new Minister of Finance is going to be, but I'm sure that the choice will be a good one. The govt however seems to be on a campaign to reduce taxes, which means they need a Parliament that is willing to cut spending.

That's fine but already I hear the military needs new equipment and so forth, and the numbers look awfully high. Maybe finally the Canucks are going to station soldiers across the Arctic North and shoot back at passing U.S. diplomats.

These things happen. Long term, I think Harper will become a great friend of America, like Brian Mulroney.

As to the EWC (Canadian market ETF that trades in USD in NYC), it was up +1.11 pct W/W to 23.70 (26 cents American). Like Alberta oil and Northern Ontario goldminers, the EWC has had a great run. It is toppy, and likely to commence a bear phase this quarter, like many other international markets. So I'm cautious mid-term at the same time as I'm bullish longer-term.

Here is the Canadian (EWC) equity market ETF Weekly, Daily and Hourly data charts:

EWC Weekly data:

EWC Daily data:

EWC Hourly data:

(Japan, Taiwan, Hong Kong, Singapore)

(U.K., Germany, France, Italy)

(Canada, Mexico, Brazil, Australia).

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U.S. Equities:

U.S. broad equity markets in Week #05 were back into a negative pattern similar to Week #03: the Dow 30 (down "1.04 pct), S&P 500 (down "1.53 pct), Nasdaq (down "1.81 pct, and the small cap Russell 2000 down "1.09 pct W/W.

The performance chart of the Dow 30 this week shows 6 stocks up and 24 down. I did take note, you may recall, that the gains of a week ago seemed to be speculative, and I did not think the outlook was so positive for this week.

For next week, I think you can go through the Weekly, Daily and Hourly (60-Minute) charts of the majority of the Dow 30, and the ten sector ETFs I monitor, and you will find almost all have falling RSI for each data series. That simply means that momentum is failing. Should it persist, then you will start to see current price levels turn very bearish.

Technically, there is support at S&P 500 = 1260, and at 1245, but frankly an objective technical analyst would say that the indicators are turning bearish.

This condition could persist for months depending on how much liquidity (M3) is pumped into the system, but unless the economy picks up, or interest rates (and bond yields fall), then traders are going to sell, and prepare their portfolios for a primary Bear Market.

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Here is the Monthly data chart of the Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.

Here is the Weekly data chart of the Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.

Here is the Daily data chart of the Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.

Here is the Hourly data chart of the Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.

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

Symbol	Close	Net	%Net	1W %Net	2W %Net	4W %Net	YTD %Net	3M %Net	6M %Net	Yr %Net
HON	39.23	0.70	1.82%	3.76%	9.46%	5.20%	4.73%	10.73%	0.77%	4.67%
T	26.79	0.27	1.02%	3.48%	8.42%	7.37%	8.42%	37.24%	32.49%	35.65%
BA	70.87	-0.83	-1.16%	3.37%	6.59%	0.77%	0.75%	8.20%	6.33%	36.29%
MCD	35.97	0.52	1.47%	2.62%	0.31%	6.23%	7.31%	8.25%	13.76%	12.20%
CAT	68.13	-0.26	-0.38%	0.89%	12.09%	14.95%	17.87%	27.39%	25.26%	48.43%
XOM	61.39	-0.56	-0.90%	0.16%	1.42%	5.34%	4.99%	4.81%	4.05%	12.60%
PG	59.68	0.03	0.05%	-0.10%	3.18%	1.67%	1.53%	6.65%	8.51%	12.10%
DIS	25.01	-0.09	-0.36%	-0.28%	-2.76%	2.46%	2.50%	0.44%	-2.95%	-13.16%
GE	32.85	-0.05	-0.15%	-0.30%	-1.56%	-6.76%	-7.12%	-3.33%	-3.98%	-8.93%
HD	39.82	-0.14	-0.35%	-0.45%	-0.87%	-0.65%	-3.44%	-2.38%	-5.71%	-4.21%
JPM	39.53	-0.46	-1.15%	-0.55%	3.89%	-0.53%	-1.64%	6.58%	11.01%	5.72%
WMT	45.49	-0.79	-1.71%	-0.76%	1.09%	-0.39%	-1.60%	-4.13%	-8.43%	-14.84%
MRK	34.39	0.57	1.69%	-0.89%	3.43%	3.65%	5.01%	16.66%	11.58%	21.05%
MSFT	27.54	-0.14	-0.51%	-0.90%	4.28%	2.04%	2.61%	4.16%	1.06%	5.19%
IBM	79.97	-1.26	-1.55%	-1.30%	-1.71%	-3.07%	-2.55%	-3.50%	-4.85%	-14.51%
VZ	31.61	0.07	0.22%	-1.65%	2.17%	-0.06%	4.05%	2.53%	-7.63%	-11.95%
AXP	52.33	-0.23	-0.44%	-1.82%	1.81%	-0.32%	-0.48%	5.23%	-5.68%	-5.56%
AIG	65.35	-0.12	-0.18%	-1.95%	-2.04%	-6.39%	-6.13%	-0.86%	7.08%	-1.40%
MMM	71.10	-1.05	-1.46%	-2.13%	-5.50%	-8.83%	-10.13%	-5.38%	-4.16%	-14.69%
JNJ	57.38	-0.27	-0.47%	-2.27%	-5.62%	-7.93%	-6.90%	-6.24%	-11.55%	-12.60%
AA	30.58	-0.07	-0.23%	-2.30%	6.18%	0.89%	2.27%	21.69%	6.55%	4.94%
HPQ	30.56	-0.35	-1.13%	-2.33%	-3.69%	3.95%	6.22%	6.33%	24.18%	53.57%
DD	38.90	0.01	0.03%	-2.33%	-1.57%	-8.98%	-9.66%	-9.56%	-9.64%	-19.13%
KO	40.88	-0.35	-0.85%	-2.60%	1.97%	-0.34%	-0.05%	-3.99%	-8.48%	-2.06%
UTX	57.18	-0.57	-0.99%	-2.67%	3.94%	2.14%	1.15%	11.01%	14.13%	13.79%
GM	23.15	-0.45	-1.91%	-2.73%	15.46%	12.82%	22.49%	-13.00%	-36.56%	-37.95%
PFE	25.28	-0.50	-1.94%	-2.73%	2.31%	2.85%	6.31%	15.59%	-6.13%	5.73%
C	45.06	-0.12	-0.27%	-3.86%	-1.38%	-7.32%	-8.58%	-0.86%	2.29%	-8.32%
MO	71.70	-0.33	-0.46%	-4.05%	-4.20%	-4.82%	-4.37%	-3.49%	6.22%	12.49%
INTC	20.74	-0.46	-2.17%	-4.29%	-4.69%	-21.05%	-18.89%	-13.19%	-24.96%	-7.33%

Here is what happened this week:

The only Dow 30 winners this week:
HON, up +3.76 pct
T, up +3.48 pct
BA, up +3.37 pct
MCD, up +2.62 pct
CAT, up +0.89 pct
XOM, up +0.16 pct

Last week I wrote: "Don't ask me why!" seven stocks were up over +5 pct W/W, and "Don't ask me why (the six losers) weren't down a little more". So this week there were only 4 Dow winners over +0.9 pct W/W, plus a total of 24 losers.

The six big Dow 30 losers this week:
INTC, down "4.29 pct
MO, down, -4.05 pct
C, down "3.86 pct
PFE, down "2.73 pct
GM, down "2.73 pct,
UTX, down "2.67 pct

So Week #05 was almost as bad as Week #03. This is called an ebb tide " the one where all the boats start to sink.

Here are the links to interactive 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)

This week's new Value Line reports for the Dow 30 components are KO and MO. Next week (Feb. 11) is WMT, which I'm looking forward to.

(AA) (AA) (Here is the Jan. 20 Value Line report on AA: next one is due Apr. 21)

(AIG) (AIG) (Here is the Nov. 25 Value Line report on AIG: next one is due Feb. 25)

(AXP) (AXP) (Here is the Nov. 25 Value Line report on AXP: next one is due Feb. 25)

(BA) (BA) (Here is the Dec. 23 Value Line report on BA: next one is due Mar. 24)

(C) (C) (Here is the Nov. 26 Value Line report on C: next one is due Feb. 25)

(CAT) (CAT) (Here is the Jan. 27 Value Line report on CAT: next one is due Apr. 28)

(DD) (DD) ( Here is the Jan. 20 Value Line report on DD: next one is due Apr. 21)

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

(GE) (GE) ( Here is the Jan. 13 Value Line report on GE: next one is due Apr. 14)

(GM) (GM) Here is the Dec. 2 Value Line report on GM: next one is due Mar. 3)

(HD) (HD) (Here is the Jan. 6 Value Line report on HD: next one is due Apr. 8)

(HON) (HON) (Here is the Jan. 27 Value Line report on HON: next one is due Apr. 28)

(HPQ) (HPQ) (Here is the Jan. 13 Value Line report on HPQ: next one is due Apr. 14)

(IBM) (IBM) ( Here is the Jan. 13 Value Line report on IBM: next one is due Apr. 14)

(INTC) (INTC) ( Here is the Jan. 13 Value Line report on INTC: next one is due Apr. 14)

(JNJ) (JNJ) Here is the Dec. 2 Value Line report on JNJ: next one is due Mar. 3)

(JPM) (JPM) Here is the Nov. 25 Value Line report on JPM: next one is due Feb. 25)

(KO) (KO) (Here is the Feb. 3 Value Line report on KO: next one is due May 5)

(MCD) (MCD) (Here is the Dec. 9 Value Line report on MCD: next one is due Mar. 10)

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

(MO) (MO) (Here is the Feb. 3 Value Line report on MO: next one is due May 5)

(MRK) (MRK) ( Here is the Jan. 20 Value Line report on MRK: next one is due Apr. 21)

(MSFT) (MSFT) (Here is the Nov. 25 Value Line report on MSFT: next one is due Feb. 25)

(PFE) (PFE) (Here is the Jan. 20 Value Line report on PFE: next one is due Apr. 21)

(PG) (PG) (Here is the Jan. 6 Value Line report on PG: next one is due Apr. 8)

(SBC/T) (SBC/T) (Here is the Dec. 30 Value Line report on T: next one is due Mar. 31)

(UTX) (UTX) (Here is the Jan. 27 Value Line report on UTX: next one is due Apr. 28)

(VZ) (VZ) (Here is the Dec. 30 Value Line report on VZ: next one is due Mar. 31)

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

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

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Wrap up

I'm getting closer to that margarita. :-)

The only problem is that my flight is NOT non-stop. I need to make connections to yet another country, and nobody has followed up, so I just might be having that margarita in Ft. Lauderdale in the mid-day sun on Sunday, that is if the storm has passed them by. I haven't checked.

Tonight I have an awful lot of computer work to do " that is, work on a new computer, which if not finished will be a killer for publishing on the blog next week. And I leave for the airport in less than 12 hours.

Don't worry, mon. Be happy!

BCara@BillCara.com