Last week I made mention of the trading of Dubai Ports World, which this month purchased London-based Peninsular and Oriental Steam Navigation Co, which in turn owns or controls the most important seaports along the U.S. east coast from New York City to Miami. I pointed that out not to inflame emotions or to get political but because I see this case as one of many issues that will determine how Americans are going to permit their government to manage their future.

In the same vein, last year there was vocal opposition, rightfully or not, that stopped the acquisition of Occidental Petroleum by China state-controlled CNOOC (NYSE: CEO). As you know CNOOC is on the Cara Global Best 100 Companies list, so trust me I am apolitical about such things.

Interesting to me in the Dubai Ports World case was the change in focus of the AP article from being one of public fears (5:36pm ET) to being one of a local lawsuit (11:08pm ET). You won't see the first article that delved into the same fears expressed by Lou Dobbs because AP changed the article by Ted Bridis.

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Fear Escalates on Foreign Control of Ports
Saturday February 18, 5:36 pm ET
By Ted Bridis, Associated Press Writer
Fear Escalates Over Sale of Port Operations to Arab Firm; Lawmaker Seeks Citizenship Requirements

Firm Sues to Block Foreign Port Takeover
Saturday February 18, 11:08 pm ET
By Ted Bridis, Associated Press Writer
Company at Port of Miami Sues to Block Takeover of Shipping Operations by an Arab-Owned Business

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This kind of thing (subsequently pulling and changing the whole perspective of a published article) is called managing the news, which I think vested interests and the sell-side are too prone to do. The public consumes what they are fed, and what they are fed comes largely from public relations firms. Good or bad, I would just like to hear and read the news without the spin.

I point this out because it is important for buy-side traders to have a strong personal viewpoint on everything that might involve their trading in securities. Sometimes time proves you right (e.g., me with commodities) and sometimes you are wrong (e.g., me with a host of things from Apple to the U.S. real estate market). But unless you are critical, you'll end up like the children in the story of the Pied Piper.

In the 2H99, I had a trading perspective and was adamant in my writing that the Wall Street sell-side was deliberately sucking the buy-side into the worst trading decisions I had seen in 25 to 30 years. While the crash did not happen overnight, I stuck to my guns and avoided the pain most people suffered for the next three years.

It is not easy to be negative on the market when in the short term prices are rising, as they have started to rise again in the past two weeks (and may go up for weeks longer). Every rally has some basis of truth and reasonableness to it, and like happened in 1999, the one today does also (particularly if commodity prices drop, world peace sets in, global currency imbalances are resolved, and so forth).

Hey, it's possible.

More important is the fact that we trade a market of stocks, rather than the stock market. There are elements to it that will rise for legitimate reasons and some parts that move because of public relations and speculation. It is up to us on the buy-side to figure this out.

The questions today are: (1) why is telco hot, and chips not, and (2) is the commodity rally over? Have oil and metal prices peaked, so that the economy can now move ahead based on lower costs?

If you are a bondholder, or a (new) homeowner with a sizeable mortgage, or you are bullish on financial, utility, transportation, consumer, and tech stocks (which is the majority of you), that's what you'd like to see. But if you are watching the inflation data and commodity prices and interest rates rise, then you probably have a different perspective. Like me, you are over-weighted in metals and energy.

We all have a different perspective on market prices" tha's what makes a market, i.e., where buyers and sellers come together to do trades. But my point in all this is only to say that in order to be successful you have to make up your own mind on the issues, and not mindlessly follow the crowd. The crowd is being led.

At the tops and bottoms of markets, the push and pull becomes exaggerated. For instance, popular TV guy Jim Cramer has said he believes that traders ought to buy Google up to $600 or whatever. The Barron's cover story last week however shows GOOG going down with the ship, perhaps to $188 before coming back. That's quite a spread.

To start this month, GOOG was trading about $432, and it had been as high as $475 in mid-Jan. So when GOOG dropped below $340 on Wed, that represented a loss of "28 pct in exactly a month, which was quite a ride.

I point this out because nobody knows for sure where share prices are going. The fact is we take risks. It's just that I'm not easily sold. Nobody does my thinking for me. I prefer to sleep well so I base my trading decisions on the basis of a mixture of fundamental, quantitative, technical, and economic indicators and I err on the conservative side.

It pays off.

Global Market Summary

U.S. Equities : Except for Intel (and to a lesser extent Microsoft) pulling down the Nasdaq performance this week, the broad market in the U.S. climbed almost 2.0 pct on the week.

International Equities:

Dow 30: There was a strong gain in all the U.S. equity markets this week. There were 25 of 30 Dow stocks up, and except for Friday, it would have been 28 of 30.

U.S. Sector ETFs: 9 up and 1 down, with RSI pointed higher
10: Energy (XLE): up +0.9 pct W/W and this was 9th best of 10 ETFs
15: Basic Materials (XLB): up strongly +2.4 pct W/W (and AA down "1.6 pct)
20: Industrials (XLI): up strongly +2.1 pct W/W (HON and CAT up)
25: Cons. Discretionary (XLY): +1.1 pct W/W— peaked Thurs?
30: Cons. Staples (XLP): up +1.8 pct W/W— peaked Thurs?
35: Healthcare (IYH): up +2.2 pct W/W— peaked Thurs?
40: Financial (XLF): +1.6 pct W/W (AIG down "0.7 pct)
45: Technology (SMH chips): -0.6 pct W/W (INTC, MSFT and DELL)
50: Telecom Services (IYZ): huge move (+4.03 pct W/W) (VZ and T )
55: Utilities (XLU): (+1.7 pct W/W) but got over-priced Friday

Bonds: U.S. bonds gained a little this week " entirely on a gap open on Friday

Commodities: Decline this week, but looking better after all trend support levels held

Oil & Gas: Down "2.5 pct W/W but up +1.9 pct on Fri. Technical support held and week ended on a rally

Gold: Flat on the week after being up +0.9 pct on Fri. All trendline support levels for precious metals held

Goldminers: Canadian miners fared better; solid rally for all miners on Fri " after South African miners rallied Friday

Forex: USD and Euro were flat W/W, but Friday had USD down and Euro up.

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Sector ETF:

ETF trading is now the vehicle of choice for active individual traders, and for many institutions. I spend a lot of time on the Amex.com site for this reason.

For the U.S. equity market, as you know, I study it top down by sector. Here are the ETF charts for the ten sectors I follow:

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	25.31	0.13	0.52%	4.03%	6.39%	9.05%	10.19%	8.25%	5.55%	9.95%
XLB	31.65	-0.03	-0.09%	2.43%	1.83%	5.11%	2.36%	8.32%	11.92%	4.66%
XLI	32.54	0.14	0.43%	2.13%	3.50%	5.10%	2.88%	5.04%	8.25%	6.69%
IYH	64.84	-0.08	-0.12%	2.09%	2.03%	2.03%	1.90%	4.31%	3.69%	11.29%
XLP	23.63	-0.10	-0.42%	1.81%	1.85%	1.99%	0.81%	1.24%	2.96%	0.64%
XLU	32.30	0.29	0.91%	1.70%	2.02%	-1.25%	0.94%	3.43%	3.10%	10.16%
XLF	32.43	-0.13	-0.40%	1.60%	2.69%	3.54%	0.71%	2.82%	9.12%	7.71%
XLY	33.62	-0.21	-0.62%	1.11%	1.45%	2.03%	1.88%	1.97%	-1.64%	-1.35%
XLE	53.01	0.37	0.70%	0.89%	-4.00%	-6.03%	0.59%	8.14%	11.67%	28.85%
SMH	37.89	-0.81	-2.09%	-0.58%	2.13%	1.45%	-0.08%	4.93%	3.58%	13.95%

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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:

A week ago, I wrote: "XLE was down "4.85 pct W/W to 52.54 on very large volume. XOM was down "3.2 pct. That's two bad weeks in a row for XLE " a tough Feb, after a terrific rally in early through mid-January. Probably another down week to come before a rally... By the end of next week, I expect to see a brief rally, and I think it would be wise to sell some additional positions into strength. "

I still think it is wise to scale back positions in XLE by selling into this strength. 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.

I want to see the USD weaken before I stop selling a little XLE into every short-term rally. Ultimately, I expect to average weight the XLE, but that is not likely to happen until the broad market declines enough to where I want to start buying the financials, consumers and techs across the board.

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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:

A week ago I wrote: "XLB was down "0.58 pct W/W. That's two tough weeks in Feb for the Basic Materials, with weakness probably extending into next week before any rally.... As oil prices come down, the chemicals industry group (which uses oil as a raw material) will do better."

This week started bad for XLB, but Tuesday was a great day, and even though AA was down "1.56 pct on the week, XLB was the 2nd best sector ETF, closing at 31.65, up +2.43 pct W/W. Thursday was also a good day.

The jury is out until next week's CPI number comes out. If it's on the high side, then there will be a short-term reaction down on the XLB (fears of Fed tightening), but longer-term that's a help.

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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:

Except for a dip on Monday, XLI has a solid week (HON and CAT up, and no losers) to close at 32.54, up +2.13 pct W/W.

A week ago I wrote: "The Bulls seem to want the Industrials to be the market leader here. The RSI looks good on the Weekly and Daily price data."

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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:

XLY was up +1.11 pct W/W to 33.62.

A week ago I wrote: "I noted earlier that a relatively few stocks like NWS.A, EBAY, TGT and LOW took XLY higher on Friday afternoon. I don't see the same strength across the board in this sector." For this week, the broad market was up almost +2.0 pct and this sector ETF was lagging the leaders, especially after MCD took a hit on Friday.

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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 up +1.81 pct W/W to 23.63. Like XLY, XLI had a good Tues and Thurs.

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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) had a great week from just prior to Monday's close through the close on Friday. And then the really good news came out for Merck shareholders as the company won again in court.

IYH this week was up +2.09 pct to close at 64.84. MRK was the leader, up +5.1 pct W/W " and that was before the federal case was announced as being a winner in trial.

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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:

XLF (Financials) was up +1.60 pct W/W to 32.43. JPM is having a great YTD.

After AIG gained +3.9 pct a week ago, this week it lost "0.71 pct.

The yield curve is now seriously inverted and worsening, which is usually bad for the Financial sector, but most banks today are not highly dependent on their income from loan operations. Today's banks are traders, so the sector will sell off if, as and when the broad market comes down.

You'll note that I'm trying to explain away my mistake. Ouch.

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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:

SMH (semiconductor technology) was the worst ETF this week. In fact of my ten, it was the only loser. It was a loser because INTC was the biggest loser in the Dow 30, down -3.5 pct on Friday alone, which took INTC down -3.2 pct W/W, and the SMH down -0.58 pct W/W to close at 37.89. Am I surprised?

A week ago, I wrote about SMH/Intel: "SMH had the strongest week of all these ETFs, but SMH peaked mid-day Thursday. On the week it was up +2.72 pct, closing at 38.11...If you look closely at the INTC chart however, you'll see a one-hour pop at the open Thursday and some strength Friday afternoon, which took INTC up +1.4 pct on the week. Most of the rest - since Feb 2 - has been spent in distribution."

You have to be observant about these things. And as you know, a week ago I was traveling from this country to that and another, on big planes and small ones. But I still took the time to look at the details of the market with a view to Cara's Trading Rule #3.

This week I said that INTC had dropped into my Accumulation Zone. You see I like the financial strength, the past five year's operating performance, the quantitative measurements of Intel against its industry peers, and the RSI, which has fallen to the 30 line across the various time horizons. So I looked again at the financial summary of INTC presented at ADVFN. Although some of the current operating and balance sheet data is missing (which skews the graphs), the picture is clear: Intel deserves to be the 800-pound gorilla, and a member of the Cara Global Best 100 Companies.

With my concern for the overall market, I am not prepared to put 100-pct of my available resources (set aside for chip stocks and INTC) into buying INTC right now. But I think $20 is a fair price, and in spite of the fact that options premiums are small because traders are generally not worried about their risks in this market, every time I see INTC (or any of the Cara 100) trading well below its longer-term norm, and on extreme weakness for the day, I'll take a bite (or a potential bite) by writing a put or nibbling at the stock.

If INTC drops to $18, I'll buy a little more. In fact, the lower it goes, the bigger my appetite. Like Garth Brooks "You'll never hear me complain 'cause I got friends in low places". At least I'm not disappointed like all traders who were buying INTC from $26 to $28.50 through Nov-Jan.

And that's how you win at this game. It's not what you do today that is important. It's (i) what you do over the long term, and (ii) what you don't do (which is buy) when traders are bursting out with enthusiasm.

I don't need a crowd around me to feel good. I don't care what other traders are doing; I just need the common sense to buy low and sell high.

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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:

IYZ (Telecom Services) was again very strong. A week ago, IYZ was up +2.27 pct W/W and this week it was up +4.03 pct, closing at 25.31. I am amazed.

A week ago, the strength came from Verizon (NYSE: VZ +1.6 pct W/W). This week it came from " VZ, up +4.82 pct! And T was up +2.91 pct!

I've been wrong on this group. They had been oversold; then went through some tough mergers. I am surmising now (a little late), that those massive mergers will be hugely accretive.

And I had been focused on the legacy fixed-line operations, post-merger costs, etc. But if you look at the RSI on the Monthly and Weekly data, you will see (once again) that the news was being printed in advance. I missed it because I was listening to too many stories.

In mid-Oct and the end of Dec, the Weekly RSI hit 10. Why were you not screaming at me!. Look at the money we could have made.

I can't do this all by myself you know! :-)

Btw, IYZ did zip, zilch, nada, from the 27th to the afternoon of the 8th; then broke to the upside (with VZ re the merger news as I recall " but check that). It's been quite a ride since then. From about 23.90 to 25.30 in 7 sessions (+5.9 pct) is quite remarkable.

But IYZ needs lower interest rates or a stronger economy for the long-run, and short-term, I think I saw it peak on Friday afternoon.

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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:

XLU (Utilities) was up +1.70 pct to 32.30. A couple months ago, I indicated that XLU had peaked, and so far I have been right.

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Bonds:

All I can say is beware of gap openings. The bond market this week was marginally higher W/W, but the whole gain happened at the open on Friday.

And Friday's drop in yields across all the U.S. fixed income series " from Treasuries, to Muni's and Corporates " all simultaneously, makes me think the Fed and or the Bond King or Citi and the Saudi Prince were behind this.

Let's look at the big picture here.

Except for a couple weeks in mid-Nov and late-Dec (which helped the equity rally), bond prices were going down, down and down. For five months, from late September til now, bond yields have been rising. So why, with PPI and CPI rising, would they fall now?

Well, they might fall, if bond traders perceived the inverted yield curve was signaling economic slowdown and/or recession. But that would cause the equities to crap out, which is not the case, so what is really happening here to change the game?

I don't think a thing, and unless I see a major follow through of what happened on Friday at the open (booming bond prices), I'm not biting.

I figure they don't call this weekend the President's holiday for no good reason. :-) The "snow" man himself likely caused that bond rally on Friday morning " just to please the "boss" man.

Let's see what happens next week.

Weekly data charts:

Daily data charts:

Hourly data charts:

US Treasury Bonds

Maturity	Yield	Yesterday	Last Week	Last Month
3 Month	4.33	4.33	4.33	4.15
6 Month	4.46	4.46	4.48	4.25
2 Year	4.65	4.67	4.67	4.31
3 Year	4.62	4.65	4.64	4.26
5 Year	4.54	4.57	4.58	4.26
10 Year	4.53	4.58	4.58	4.33
30 Year	4.50	4.56	4.55	4.51

Municipal Bonds

Maturity	Yield	Yesterday	Last Week	Last Month
2yr AA	3.07	3.08	3.04	2.99
2yr AAA	3.07	3.06	3.04	2.97
2yr A	3.27	3.14	3.23	3.10
5yr AAA	3.22	3.22	3.19	3.11
5yr AA	3.25	3.25	3.22	3.11
5yr A	3.29	3.29	3.30	3.18
10yr AAA	3.57	3.58	3.56	3.45
10yr AA	3.56	3.58	3.55	3.44
10yr A	3.63	3.70	3.65	3.52
20yr AAA	3.97	3.98	3.99	3.92
20yr AA	3.99	4.03	4.02	3.88
20yr A	4.11	4.12	4.06	3.94

Corporate Bonds

Maturity	Yield	Yesterday	Last Week	Last Month
2yr AA	4.76	4.79	4.81	4.43
2yr A	4.82	4.84	4.84	4.52
5yr AAA	4.82	4.81	4.79	4.55
5yr AA	4.86	4.88	4.89	4.58
5yr A	4.89	4.93	4.97	4.66
10yr AAA	5.21	5.17	5.18	5.02
10yr AA	5.15	5.18	5.21	4.92
10yr A	5.17	5.22	5.22	5.01
20yr AAA	5.56	5.50	5.50	5.42
20yr AA	5.76	5.73	5.71	5.65
20yr A	5.65	5.71	5.71	5.56

This was another tough week for the Treasury market, with the spread between the 30-year and the 3-month yields now down to (yikes!) just +17 basis points. The 30-year T-Bond yield continues to drop over the past month, from 4.69 pct to 4.62 pct to 4.55 pct to 4.50 pct this week.

And T-Bills have moved from about 4.13 pct to 4.33 pct. So the spread narrows.

In fact the spread between the yield on the 10-year Treasury paper (4.53 pct) to the 2-year (4.65 pct) is now a negative "12 bp. So each week for the past four, the spread there has gone from +2, to "5, to "9 to "12.

Must be tough on the lending banks.

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:

The Lehman bond series did move higher in price with the opening move on Friday.

On the week, the 20+ year (TLT) was up +0.72 pct. But here is my point: the opening move on Friday was a gain in price of +0.80 pct. So, the rest of the week was a loser.

Longer-term, I see more pain ahead for bondholders. And I really don't care what the Bond King Bill Gross says. You show me a collapsing CPI next week and I bow twice a day to California for the next month. Otherwise, I'm sticking to my plan.

Consumer Finance -USA -- Weekly Data Charts

Consumer Finance -USA -- Daily Data Charts

Consumer Finance -USA -- Hourly Data Charts

Last week I wrote: "After a pump job on January 26 and the morning of the 27th, Fannie Mae (NYSE: FNM) has declined a lot. This week, FNM was down "2.4 pct... On the other hand, Freddie Mac (NYSE: FRE) was up Thurs and Fri to close the week up +1.6 pct."

So what happened this week? Fannie and Freddie were in tough. It seems that all the housing starts in the world can't help these lame ducks, especially Fannie Mae.

If you look back 3 months to the end of November, there has been just two major moves " and that happened to be gaps to the upside followed by what I interpret as being solid distribution.

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Commodities:

A week ago I wrote: "This was the week that a severely over-bought commodities market corrected. Unfortunately most of the damage was done while I was in an airport and returning to Toronto on Friday. What a day! On the surface, the correction does not look complete, so I will focus on this aspect of the market on Monday."

Well, if you followed me this week, I started to show you mid-week that I was getting interested in buying again " the oils and the golds.

By the end of the week, the $CRB closed down "1.64 pct, but that's after bouncing off a low of 319.75. In half a month from Feb 1's high of 350.96, that was a decline of "8.8 pct.

And do you know how many commodity-trading experts that made around the world? I don't know the answer, but from the sound of breaking ankles as traders jumped off the commodities bandwagon, I'd say there are quite a few "new" experts today.

Hahaha.

Just take a look at every single oil and precious metal trendline and see what happened to the crashing prices. They bounced! In every case there was a rally off the technical support.

Now, that's not to say, the short-term trend reversal is intact; but I'll tell you there are a few million so-called experts who again doubt themselves today.

Weekly CRB Commodities Index:

Daily CRB Commodities Index:

A week ago, I wrote: "The $CRB commodities index dropped -14.30 (-4.13 pct) W/W to close at 331.60. It was oil; it was metals... The 200MA is close by at 319.28, so I don't think this index will drop much further than that " at least not for a while."

So what happened? The $CRB stopped falling at 319.75. Is there a better surgeon in the crowd?

The 40-Week Moving Average (40wma) for $CRB is now 320.78, and the index closed Friday at 326.15. Let's see why.

Weekly Crude Oil:

Daily Crude Oil:

$WTIC (NY Crude Oil index based on the near futures) dropped "2.50 pct W/W to close at $61.29. But the low was 59.20 before bouncing back.

Last week I wrote that the long-term "200dma/40wma (60.47) are close by, so there is still a reasonable amount of support here.... I suppose the unseasonably warm weather through the North-east U.S. and Canada this winter has served to build up oil inventories, which depressed the price. The price level contains a substantial risk premium related to Middle East, Venezuela and Nigerian oil supply issues or potential issues."

So this week we had a cold snap and the Nigerian conflict erupted on a major level around the oil fields. So the oil prices bounced.

And last week, as you know, I pointed you to seven Canadian oil stocks that were getting hammered, as potential beneficiaries of a bounce. And, while many of you thought I might be trying to catch a falling knife, these stocks were up about +2 pct this week across the group. Nexen (NYSE: NXN) was up +4.5 pct.

Maybe that's why you tune in. Some of you really like it when I grab that knife. :-)

Ah, but most of you know the odds are in my favor.

Integrated Oil & Gas - Canada

Oil & Gas Exploration & Production -Canada

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Gold:

Weekly Gold EOD Continuous Contract Index:

Daily Gold EOD Continuous Contract Index:

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

A week ago, gold traders around the world were in a panic, and I was sitting in airports. So I wrote last Saturday, "$Gold (Gold index based on the near futures contracts) dropped -$17.41 (-3.06 pct) W/W to $551.45. But Friday alone, $Gold was down -$12.85 or "2.28 pct). The low was $545.35 on the near futures and about 543 on the spot (cash) market, so gold held at about where I anticipated, after rising to almost $580 where I anticipated...
The 50MA is $534.29, but first technical support is at $541, which you can see at www.Stockcharts.com. I think gold will hold here... " Yes, I predicted that gold would hold there.

And where did it hold?

There was a spike on Tuesday to $535.11, before $GOLD closed Friday at $552.17, up +0.13 pct on the week, so the 50dma did hold. $GOLD was up +$4.79 (+0.88 pct) on Friday.

In an article written at the very bottom early this week, I wrote: "It appears that we have an opportunity to accumulate some of the gold shares. But rather than call it as a Buy this time, I'm going to give you the tools and let you make the call."

Then on Thursday noon, with spot gold up to $542.00, I wrote: "There is no reason why it won't go up from here. Hang in." By Friday morning GLD (spot gold) have moved higher to $552, closing at $549.50.

Actually, this is not magic. I hold the keys to Ft. Knox.

In my dreams. :-)

Weekly Silver EOD Continuous Contract Index:

Daily Silver EOD Continuous Contract Index:

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

A week ago, I wrote: "$Silver (Silver index based on the near futures contracts) dropped -$0.36 (-3.71 pct) W/W to $9.37. But on Friday alone, it was down -$0.26 (-2.75 pct)... The 50MA is $9.00, which is a measure of support."

So, (yawn), the low was $9.05. Now the 50dma is 9.08.

But $SILVER closed the week up +0.67 pct to $9.44.

And the Silver Crazies are ecstatic... and relieved.

Weekly Platinum EOD Continuous Contract Index:

Daily Platinum EOD Continuous Contract Index:

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

$PLAT closed down "2.75 pct W/W to $1,012.30, with the 50dma now at 1017.54.

Yes, there was a price breakdown in the Platimum metal price this week, but Friday saw a nice recovery of +$3.40, up +0.34 pct on the day.

Weekly Palladium EOD Continuous Contract Index:

Daily Palladium EOD Continuous Contract Index:

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

The $PALL had a superlative week. The Metal Men of Zug must have returned. The price was up +1.50 pct W/W to close at $291.00. And on Friday, $PALL jumped up +$11.46 (+4.10 pct) on the day.

That's quite a day.

The 50dma for $PALL is now at $279.16, which was severely tested by a low of $269.92 before the move back to $291.00.

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 (Copper index based on near futures) dropped this week "1.02 pct to $218.76. Most of the loss (-0.69 pct) was on Friday.

$COPPER 50dma is now $212.41, so the low of $211.80 held.

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Weekly U.S. Goldminers Index:

Daily U.S. Goldminers Index:

Last week was a severe test. I wrote a week ago: "The U.S. goldminer index ($XAU) closed down 9.09 (-6.15 pct) W/W to 138.66. On Fri, it was down "3.1 pct. The XGD Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF TSE:XGD closed down "5.98 pct W/W to 66.51. The 50dma is 65.54. If the index drops below, I will scale back and protect profits."

What happened is that these indexes of goldminer share prices held their technical support levels.

$XAU closed up +0.19 pct to $138.93, on the strength of Friday's rally, when it went up +1.13 pct. A low of $133.29 was hit, and the 50dma is now $135.70.

But the key, as I had suggested, was the Canadian goldminer index. The XGD (on the TSX) closed up this week +1.74 pct to $67.67. The 50dma (now $66.34) did hold.

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:

The USD was flat this week. The trade-weighted $USD was down slightly "0.07 pct to 90.50. On Friday, it was down "0.23 pct, and has a rising MA, so the technical support is close by. I continue to believe that if the Treasury keeps printing, and the Fed does not tighten unreasonably, and the PPI/CPI numbers keep expanding, that $USD must fall.

Weekly U.S. Dollar Index:

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

The Euro (priced in USD) dropped very minimally to 119.14, a loss of "0.03 pct W/W. There was a gain on Friday of +0.28 pct.

Weekly Euro Dollar Index, priced in USD:

Daily Euro Dollar Index, priced in USD:

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International Equities:

This was yet another "tough week for Japanese equities as USD was pulled out and sent home, starting at the beginning of the month".

The other major markets I follow (U.K. and Canada) fared somewhat better.

Japanese equity market ETF: EWJ

The EWJ (Japanese equity market ETF that trades in USD in the U.S.) was down "2.06 pct W/W to 13.30. It peaked along with oil at the end of January.

The Nikkei 225 index has support at about 15,000, which I have already said seems seems reasonable. And, "whether the Nikkei Dow drops lower to join a full-blown Bear Market is unlikely because China is a favorable trading partner and China's Currency (Renminbi) is growing stronger."

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 EWU (U.K. equity market ETF that trades in the U.S. in USD) was up +0.46 pct W/W, closing at 19.60. EWU has enjoyed a solid run for four months except for the third week in December and the first week in February.

Its future, however, is tied to equity markets in Europe and the U.S.

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

Regarding Canada, I wrote this week that the new Prime Minister (Harper), and Minister of Finance (Flaherty), and Ambassador to the U.S. (Wilson, who is a former Finance Minister and lately CEO of UBS Canada) and the longstanding Governor of the Central Bank (Dodge), are all able and extremely well qualified for these positions. Moreover, I believe that Canada will become like the U.K., more in tune with U.S. policies, which I see as a positive thing for business.

The EWC had a great day Friday with higher oil and gold prices (going up +1.17 pct on the day) to close at 23.25, which was a gain of +1.53 pct W/W.

Except for October, the EWC has enjoyed a terrific nine months. Its future, however, is tied to commodity prices.

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:

This week was a solid week for the U.S. market, and the rally started the previous Friday. Except for a few stocks like INTC (down "3.5 pct W/W) and MFST (flat), the broad market indexes were up about +1.9 pct across the board.

The only thing I noticed was the last hour sell-off into the options expiry, and ahead of the long weekend.

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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
HPQ	34.07	0.05	0.15%	8.12%	11.49%	7.37%	18.42%	17.48%	27.03%	63.33%
HD	41.86	0.00	0.00%	6.73%	5.12%	4.21%	1.50%	-1.53%	3.05%	0.12%
HON	42.18	0.60	1.44%	6.43%	7.52%	17.69%	12.60%	15.78%	9.62%	11.23%
MRK	36.05	0.07	0.19%	5.07%	4.83%	8.42%	10.08%	21.75%	17.96%	24.96%
VZ	34.78	0.23	0.67%	4.82%	10.03%	12.41%	14.48%	9.72%	5.23%	-2.52%
CAT	72.05	0.09	0.13%	4.80%	5.75%	18.54%	24.65%	25.37%	34.77%	56.94%
T	28.28	-0.17	-0.60%	2.91%	5.56%	14.45%	14.45%	40.84%	43.19%	45.62%
AXP	54.45	-0.03	-0.06%	2.74%	4.05%	5.93%	3.56%	10.00%	-2.82%	-0.09%
PG	61.00	0.27	0.44%	2.18%	2.21%	5.46%	3.78%	6.74%	14.19%	14.38%
JPM	40.78	-0.04	-0.10%	2.15%	3.16%	7.17%	1.47%	7.51%	18.34%	10.88%
DD	41.51	-0.01	-0.02%	2.02%	6.71%	5.04%	-3.60%	-1.77%	1.32%	-20.65%
XOM	60.55	0.30	0.50%	1.88%	-1.37%	0.03%	3.56%	5.52%	4.07%	4.16%
MMM	73.77	0.72	0.99%	1.60%	3.76%	-1.95%	-6.75%	-4.52%	2.80%	-13.93%
KO	41.79	0.20	0.48%	1.53%	2.23%	4.24%	2.18%	-0.19%	-3.51%	-2.81%
UTX	58.00	-0.20	-0.34%	1.52%	1.43%	5.44%	2.60%	7.91%	12.36%	14.29%
MO	72.87	-0.33	-0.45%	1.39%	1.63%	-2.63%	-2.81%	1.49%	7.38%	12.59%
JNJ	59.07	0.09	0.15%	1.16%	2.95%	-2.85%	-4.15%	-6.74%	-6.98%	-9.61%
WMT	46.25	-0.38	-0.81%	1.09%	1.67%	2.78%	0.04%	-6.07%	-1.83%	-12.36%
GE	33.61	0.26	0.78%	0.99%	2.31%	0.72%	-4.98%	-3.03%	-1.44%	-6.72%
DIS	26.91	-0.14	-0.52%	0.86%	7.60%	4.63%	10.29%	3.54%	2.36%	-8.31%
C	46.24	-0.20	-0.43%	0.61%	2.62%	1.20%	-6.19%	-3.55%	4.85%	-5.25%
BA	72.96	0.41	0.57%	0.59%	2.95%	9.73%	3.72%	7.85%	8.86%	35.97%
PFE	25.82	0.01	0.04%	0.55%	2.14%	4.49%	8.58%	20.94%	-1.30%	3.07%
GM	21.92	-0.36	-1.62%	0.23%	-5.31%	9.33%	15.98%	-3.14%	-35.66%	-41.09%
MSFT	26.70	-0.11	-0.41%	0.04%	-3.05%	1.10%	-0.52%	-4.54%	-0.93%	4.09%
AIG	67.42	-0.76	-1.11%	-0.71%	3.17%	1.06%	-3.16%	0.52%	9.63%	-3.24%
MCD	36.06	-0.31	-0.85%	-0.74%	0.25%	0.56%	7.58%	8.65%	6.47%	11.68%
IBM	80.71	-0.20	-0.25%	-0.76%	0.93%	-0.80%	-1.65%	-7.11%	-0.73%	-13.91%
AA	30.38	0.01	0.03%	-1.56%	-0.65%	5.49%	1.61%	14.86%	7.01%	-2.13%
INTC	20.61	-0.74	-3.47%	-3.19%	-0.63%	-5.28%	-19.40%	-17.92%	-21.00%	-12.78%

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 T 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.

I did some original research by playing with this data today. I started by sorting the Dow 30 by performance year-to-date because I wanted to see what's happening in this rally. I then studied the beta, PE, dividend yield, and market cap of the top 15 vs the bottom 15 price performers year-to-date, compared to their current market cap as a percentage of the YTD high. That would tell me those stocks that are presently favored vs not so favored.

Here is what I found:

1. Traders are chasing higher beta stocks
2. Traders are chasing higher PE stocks
3. Traders are chasing lower dividend yielding stocks
4. Traders are chasing lower market cap stocks of the Dow 30

For average beta, you can see the top 15 at 1.05 vs the bottom 15 at 0.91 (and 0.88 ex-GM).

For average PE, you can see the top 15 at 20.3 vs the bottom 15 at 16.4 (and 17.8 ex-GM). Also, I think that traders ought to be concerned about an average PE of 18.4 for the Dow 30. These are mostly staid companies that are growing slowly in absolute dollars, made to look like barnburners by managements who are intent on using positive cash flow to buy back shares rather than invest at positive (i.e., accretive) internal rates of return.

In point of fact, I don't mind the buy-backs, but I'd rather see the capital be returned as higher dividends, or be used to acquire smaller companies that when combined will be accretive to future earnings.

In truth, I think Corporate America management is getting lazy. They are spending too much time putting capital into investor relations while they abuse the shareholders by playing on the corporate jets and yachts. They ought to be working 48 100-hour weeks a year to justify their personal compensation, and growing, not babysitting, their companies. What's happening in the real world is that Corporate America (and Corporate Europe) is becoming second and third fiddle to Corporate India and Corporate China, which are hungrier.

For the average dividend yield, you can see in my table the top 15 stock performers at 2.25 pct vs the bottom 15 at 2.81 pct (and 2.36 pct ex-GM).

GM, which has skewed these numbers, is cutting its dividend. In fact, for the Dow 29 without GM (which is a broken company basically in informal process of re-organization), the average dividend yield is about 2.30 pct.

If you take that yield and compare it to the top quality bond yield, over time, those who are interested in portfolio income will better understand the relative attractiveness between stocks and bonds.

For average market cap of the Dow 30, you can see the top 15 stock performers at $91.3 B vs the bottom 15 at $152.5 B (and $162.6B ex-GM). This is the point I have been making in the past several weeks, which is that the 800-pound gorillas (XOM, GE, WMT) are not leading this market higher.

Old-timers will remember the stories of the Nifty Fifty. What happened there was a branding exercise, somewhat similar to what is going on today in a manner of speaking: Traders are still doing dumb things by chasing the highest beta, highest PE, lower cap, and lower yielding stocks.

As the average age of portfolio managers drops, something seems to happen to their common sense. They forget about the things that Graham and Dodd taught people like Warren Buffett, and they go off on a game of musical chairs.

Listen up: these things end badly. Whether it is the 1Q06 or 4Q06, there are factors at work that will pull down this market, and the biggest losers will be today's leaders " that is the ones with the highest beta, the highest PE, lowest yields, and so forth.

I have told you about the Cara Global Best 100 Companies. These are companies I selected because they have very good business models, proven management, and proven, measurable peer-beating performance (revenue, earnings and dividend growth) over many years. Of the Dow 30, there are 13 on the Cara 100 list. But, in the data I just reviewed (i.e., year-to-date share price performance) for these 13, 10 are in the lowest 15 Dow performers YTD and only 3 in the top 15.

I see that as meaning the best quality stocks in the Dow are presently lagging. Meanwhile I am biding my time, waiting for the time to buy these long-term winners at even more attractive prices.

What concerns me is that 2006 may turn out like 2000, where in 1999 (like 2005) the U.S. Treasury pumped so much money into the financial system and capital market (without adequate compensatory steps being taken by the Fed) that craziness takes hold of the buy-side. At the peak of the market in 1999-2000, staid companies like GE and PG were trading at PE multiples of about 50 (I'll get the actual numbers from my Trader Wizard column and prove my point).

Let's switch to the present. Here is what happened this week: 25 Dow components were up, and just 5 down. And you know, if INTC, MCD and AIG hadn't traded on Friday, the score would have read 28 up and 2 down. What with the Treasury pumping, the new Fed head blowing air, and the bond market on wheels, what was to stop this equity market? The simple answer is nothing. Certainly not common sense.

And yes, my RSI technical indicators tell me the North American market (Dow 30, S&P 500, Nasdaq and Russell 2000) is breaking out to the upside again. You'll note I did not mention Canada, and I won't until a White Knight shows up at Farley's doorstep and sticks something into BAM's ear. Actually, I will, but that's going to be about the golds and other metal miners, including the explorers, which I'll be covering from the PDAC floor in Toronto March 5-8.

The Dow 30 winners this week:
HPQ, up +8.12 pct (after being up last week +3.11 pct)
HD, up +6.73 pct
HON, up +6.43 pct
MRK, up +5.07 pct
VZ, up +4.82 pct (after being up last week +4.97 pct)
CAT, up +4.80 pct
T, up +2.91 pct

The only Dow 30 losers this week:
INTC, down "3.19 pct
AA, down, -1.56 pct
IBM, down "0.76 pct
MCD, down "0.74 pct
AIG, down "0.71 pct,

Meanwhile, MSFT, which had been down "3.09 pct a week ago was up just +0.04 pct this week, which was a strong week across the board.

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 Dow 30 components are DIS and MMM. If you want access, I suppose you will have to register there individually from now on. Therefore I no longer intend to do Value Line's marketing free of charge. So I have removed the direct links from the WIR, and will cease referring to them.

Their loss.

In time, I think you'll see more individual registrations required for Web-linked info, even for loss-leaders like the once "free" Value Line Dow 30 quarterly reports. Anytime I have to give up my ID or my credit card info up to register for something, then it's not "free" as advertised. Which will mean that I'll now have to hunt down truly free alternative sources for the Little People.

Ultimately, Wall Street just wants you to turn over your capital to them anyway, right?

Wrap up

Yes, I have been singing a country song today:

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But, so much for Garth Brooks. Now I feel a Jimmy Buffett song coming on.

Is it "Margaritaville", or "Changes in Lattitudes"?

BCara@BillCara.com