Just as important however is the fact that we trade a market of stocks, and 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.

;.. nobody knows for sure where share prices are going. The fact is we take risks. It's just that I'm not easily sold, and 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."

---

So last week I went on to say that I hardly believe the commodities bull market is over. This week there were multiple events of the geopolitical kind that pushed the oil and metals prices higher.

U.S. inflation is now up +4.0 pct Y/Y and for Canada the figure is +2.8 pct. These numbers are outside the comfort zone of central bankers in both countries, so rates will continue rising.

Except for the U.S. 30-year bond, Treasury yields also went higher, and the yield curve inverted further, so there will be a point soon, I think, where equities reach a point of no return. Either corporate dividends are raised or equity prices will fall.

Given the massive credit balloon in the U.S. and in many other countries, any pullback in the growth of the global money supply will take the economy by the neck and squeeze the life out of it. It would simply lead to a major recession, and there are too many industries from commercial lending banks, to income trusts and REITs, to real estate developers, to oil producers, to retailers, etc, that would suffer immensely.

If, as and when that were to happen, the Bear Market of 2006 would begin. It hasn't yet, but it might be coming up on the horizon.

Global Market Summary

U.S. Equities : The past four days were largely uneventful, except that the small cap stocks rallied into over-bought territory

International Equities: Japan enjoyed a good week. The Nikkei Dow is over 16,100 again, after surviving a test of the primary uptrend line (just over 15,000). The other markets look nervous, but not in any trouble yet

Dow 30: There was a flat week in the Dow. Over the past five trading sessions, there were 18 stocks down and 12 up. But in the past four days, the ratio would actually be positive

U.S. Sector ETFs: 5 up and 5 down over 5 days, but 7 up and 3 down this 4-day week
10: Energy (XLE): up +1.2 pct W/W based on geopolitical events
15: Basic Materials (XLB): up +0.2 pct W/W on the metals
20: Industrials (XLI): up +0.4 pct W/W (BA up again this week)
25: Cons. Discretionary (XLY): -0.5 pct W/W for continued losses
30: Cons. Staples (XLP): up +0.2 pct W/W based on KO and PG
35: Healthcare (IYH): flat on the week, even with PFE up again
40: Financial (XLF): +1.4 pct W/W (JPM was a leader)
45: Technology (SMH chips): worst performer, down -2.5 pct W/W
50: Telecom Services (IYZ): down -1.1 pct W/W
55: Utilities (XLU): up +0.7 pct W/W, which continues to surprise

Bonds: U.S. bonds lost a little more this week. The U.S. treasury yield curve also inverted more deeply. Strong inflation data was ignored, and in fact called "benign" and "tame"

Commodities: Higher this week, but only due to geopolitical events. Do you find it interesting that these events usually happen soon after commodity price trend support levels hold? I for one believe that capital markets are often held hostage by political machinery, including terrorists

Oil & Gas: Up +2.6 pct W/W after being up +1.9 pct a week ago Fri. Technical support held a week ago and a rally started, as a week ago I had indicated was likely

Gold: Gold up on the week after being up +1.7 pct on Fri. All trendline support levels for precious metals held the previous week after extreme weakness early in the month. So my positiveness in the past week bore fruit

Goldminers: The goldminer stocks rallied sharply on Friday, up +2.5 pct for the U.S. and +1.9 pct for the Canadian miners, saving the week

Forex: USD and Euro were flat W/W, but Friday had USD up and Euro down following geopolitical crises in the Middle East and Africa.

---

Sector ETF:

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.

Over the past five trading sessions, it was a matter of 5 ETFs up and 5 down. But this week (4 days only in the U.S.), it was 7 up and 3 down.

Symbol	Close	Net	%Net	1W %Net	2W %Net	4W %Net	YTD %Net	3M %Net	6M %Net	Yr %Net
XLE	53.63	0.65	1.23%	1.88%	1.71%	-3.68%	1.76%	5.43%	10.19%	24.46%
XLU	32.53	0.10	0.31%	1.62%	2.42%	1.02%	1.66%	2.85%	1.78%	13.38%
XLF	32.89	0.07	0.21%	1.01%	3.59%	2.33%	2.14%	1.58%	12.25%	10.96%
XLI	32.66	0.04	0.12%	0.80%	3.16%	3.72%	3.26%	3.35%	9.86%	7.15%
XLB	31.72	0.09	0.28%	0.13%	2.45%	1.08%	2.59%	7.45%	15.81%	2.62%
IYH	64.90	0.16	0.25%	-0.03%	1.88%	2.06%	2.00%	4.07%	5.24%	10.02%
XLP	23.68	-0.12	-0.50%	-0.21%	1.89%	1.46%	1.02%	0.00%	3.05%	1.67%
IYZ	25.04	-0.04	-0.16%	-0.56%	3.90%	5.97%	9.01%	4.99%	5.61%	7.65%
XLY	33.45	-0.06	-0.18%	-1.12%	0.78%	0.51%	1.36%	-0.68%	-0.15%	-0.39%
SMH	36.95	-0.11	-0.30%	-4.52%	-4.00%	-3.02%	-2.56%	-0.57%	1.59%	9.45%

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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:

Two weeks 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. "

Then one week ago, it was: "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."

This week, the picture is clearer. The trading rally did happen, with XLE down to about 51.50 or lower on Feb 14 and 15. But on Fri 17th there was a gap open to the upside, followed by a sell-off. Then after the holiday Monday, there was a similar gap open to the upside on Tuesday am (54.50), followed by a sell-off. The same thing happened on Friday, with XLE closing the week at 53.63.

This oil market is on hinges, depending on geopolitical events; but if Crude Oil settles back, then the oil stocks will most likely come down from here, which is why I have been selling into rallies.

And the reason I am still portfolio overweighted is that: (i) there are some energy plays that are promising (in a short-term over-sold market), like "stockman" says (independent oil & gas companies and pipelines), and (ii) generally I like the sector's corporate cash flow and high dividend yields on the large cap stocks.

---

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: "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."

Voila. There you have it. CPI was up +0.7-pct, and the market initially didn't like it (for XLB). Btw the market (you and me) ignored the talking heads who told us "there ain't no inflation".

XLB closed at 31.72, up +0.22-pct W/W, but +0.28-pct was Friday's gain. In a rising inflation environment, XLB and XLE are still the places to be, but you have to look at the components. This week, for instance, as crude oil prices lifted on geopolitical worries, the chemical company stocks got hit (since they have to buy oil to process it into chemicals, and the economy isn't strong enough to pass along the price increases in this particular sector).

So DuPont Chemical (DD) got hammered and so did Lyondell (NYSE: LYO).

When oil prices come down, those share prices will most likely rise. In fact, for a trade, do you see the depth to which the RSI has fallen, particularly on the LYO? This is something you should be looking at.

And what does that mean? Yes, you buy. Particularly if, as and when the price of oil is falling.

And, for instance, after the stock has had a terrific run to the upside, and the CEO is making the rounds of Financial Entertainment TV, where personalities like Kudlow and Cramer are bowing at their feet, as in the case of the Lyondell CEO last summer, you take one look at the RSI and say just one thing to your broker: "Sell".

And now when you see LYO below RSI=30 on the Weekly and Bi-Weekly (which means it is close on the Monthly), you know it's in your Accumulation Zone. Then you swing over to the Daily and Hourly Data series to watch the RSI for a bottoming out, particularly on sharply down days, like the past two.

Before pulling the trigger, you look at all the peer group stocks because you don't want to see the stock you are ready to buy out of sorts with the peers in that industry. Many of these stocks are direct competitors, so they share the same markets and cost components. There ought to be some degree of synchronicity in their trading patterns.

And since the Monthly RSI is still above 30, you maybe buy half, or maybe you write some puts along with some purchases.

First of course, you have to like the company. In the case of LYO, I do; it's on the Cara Global Best 100 list because the company has (i) relatively good fundamental and quantitative performance against (i) the broad market e.g., the S&P 500 or the S&P 1200, and against (ii) its industry or sub-industry peers, which you can see by checking the data at Yahoo Finance (i.e., competitors).

And the coup de gras is to hit that buy (or sell) button right about the time you observe a popular talking head tell the TV or print media audience that (your stock) is extremely bad (or good).

It's not that these people (like e.g., Cramer) are 100-pct wrong (that's not true), but just that when they say "sell" to a large audience and you are ready to buy, they make your job easier.

If you buy, you want to buy into weakness. If you sell, you want to sell into rallies

Is this starting to make sense?

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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 (Industrial sector) was up +0.37 pct W/W to 32.66. XLI has had a good couple of weeks leading the market up, and this week Boeing (BA) was the sector leader once again.

But maybe enough is enough for XLI. The RSI data is looking a little toppy. The key here is to watch GE.

Another note is that January factory durable goods orders in the non-defense industry were down sharply. It was the biggest drop in 5 ½ years. Boeing, for example, sold 204 airplanes in December, but just 39 in January. Economists will be looking to see if next month continues that way, which could soon become a trend. The multiplier effect then spreads quickly through the economy if that is the case.

And remember, share prices usually precede these economic data figures by 3 to 6 months. When purchasing and sales agents start to see changes at the end of a phone line, they begin to buy and sell stocks accordingly. Then share prices react. It's only months later that the economic data starts to be assembled and reported.

---

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 down -0.51 pct W/W to 33.45.

Except for the sell-off Thursday pm and Friday am, which I could not link to sector news, the trading in this consumer discretionary sector, and also in the consumer staples sector, was unremarkable.

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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 +0.21 pct W/W to 23.68, which is just 5 cents. Like XLY, XLI had a bad Thurs. pm and Fri. am.

The sector strength this week was in KO and PG.

---

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 flat on the week, up just +0.09 pct, which is 6 cents, to 64.90. PFE did show some strength, however.

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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 +1.42 pct W/W to 32.89. Last week I wrote that "JPM is having a great YTD". JPM also enjoyed a good week this week.

The U.S. Treasury yield curve went more deeply inverted this week. That means the commercial lending operations of banks will be stressed even more.

But the financials sector is comprised of more than just commercial lenders; there are also insurance companies and brokers, real estate developers, REITs, specialty finance companies, asset managers and broker-dealers.

Each of these industries and sub-industries has unique drivers of revenue and costs. Certainly not all of them are burdened by an inverted yield curve or even by the economic implications of an inverted yield curve, or rising rates. The mergers and acquisitions departments and the bond underwriting departments are examples of beneficiaries of the economic conditions that exist today.

Besides, many of these financial companies are thriving in the emerging economies of China and India.

The 2H05 and 1Q06 strength of this financial sector, however, has been a surprise to me. And that has taught me a lesson, which is that it is hard to blog consistently to a variety of audiences, when, in cases like this one, very short-term trading is what is required to make a profit.

---

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 again the worst ETF this week. Intel (INTC) was once again a major loser. But are things really that bad?

Here is the problem: when the economy slows, you'd expect to see (i) a strong bond market (because bonds are better risk management instruments than equities), and (ii) a weak semi-conductor market (because there is a manufacturing slowdown in chip-intensive autos and consumer games, etc.). But there are economic segments that are strong, and some of those require specialized chips made by companies that are smaller than Intel.

Unless traders can get down into the details of the broad market indexes, they will miss the rotational factor. For example, as INTC and TXN have been traded down, others in this sector, like AMD and MU have traded much higher.

During the week, I made note of the low RSI on the Monthly, Weekly and Daily for INTC. Did you see the late flow of buy orders in INTC on Friday? That's interesting because the sector RSI is weakening, so it could be that profits are being taken in some of the leaders and trade proceeds being put into INTC.

I once worked with somebody who would say, "Don't show me a trade unless you can show me a paired trade". In other words, fund managers have to be almost fully invested most of the time, so if they buy something, it usually requires them to sell something at that point. And if they want to keep their portfolio similarly weighted, they would sell, possibly in this case, an AMD and buy an INTC.

You might want to go back to my last week's notes (WIR #07) in this section to see what I wrote about INTC.

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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: "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!... 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."

A week ago, the move from Tuesday am through Friday pm was phenomenal. This week, however, right from the get-go on Tuesday (after the holiday), this group was under selling pressure. T was off -3.1 pct on the week.

So, it seems I had it right. This week, IYZ went down -1.07 pct to 25.04.

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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 +0.71 pct to 32.53. After a huge move in the first hour on Tuesday, the rest of this week looked to me like XLU could not break to new high ground. And now that the Daily RSI is extended on the upside at 75.5, it appears that XLU may sidetrack or start to move down.

---

Bonds:

Bonds in the U.S. sold off a bit this week as yields lifted by +3 to +6 basis points (bp) from T-Bills through the 10-year Treasury Notes. And as the yield on the long bond, dropped, the treasury yield curve became even more deeply inverted.

Whatever anybody says about the U.S. bond market " and books are being written every day " it is a fact that (i) rising rates, and (ii) the inverting yield curve, combine to tell you that conditions are not right for continued growth of equity prices (as measured by the broad market indexes).

One day in the next quarter or two, there will be a point where the stock market starts to free fall. And equity traders are closely monitoring the bond market, awaiting that day when they feel it might be wise to switch from equity yields to interest yields.

As equity prices are now above 11,000 on a closing weekly basis for the Dow, and the S&P 500 at 1289, it is a fact that corporate dividends have to be increased in order to keep the dividend yield competitive with the rising interest yield.

The dividend yield on the S&P 500 (SPX) is now just 1.71 pct, while the 2-year U.S. Treasury Note is yielding 4.71. That +300 bp spread is just too inviting.

Watch for the tipping point.

Weekly data charts:

Daily data charts:

Hourly data charts:

US Treasury Bonds

Maturity	Yield	Yesterday	Last Week	Last Month
3 Month	4.38	4.38	4.33	4.22
6 Month	4.50	4.49	4.46	4.31
2 Year	4.71	4.70	4.65	4.43
3 Year	4.69	4.68	4.62	4.40
5 Year	4.63	4.60	4.54	4.39
10 Year	4.57	4.55	4.53	4.47
30 Year	4.52	4.50	4.50	4.65

Municipal Bonds

Maturity	Yield	Yesterday	Last Week	Last Month
2yr AA	3.10	3.09	3.07	3.00
2yr AAA	3.11	3.09	3.07	3.00
2yr A	3.01	3.09	3.27	3.18
5yr AAA	3.21	3.20	3.22	3.12
5yr AA	3.23	3.23	3.25	3.11
5yr A	3.30	3.28	3.29	3.24
10yr AAA	3.55	3.53	3.57	3.44
10yr AA	3.53	3.51	3.56	3.44
10yr A	3.71	3.64	3.63	3.56
20yr AAA	3.93	3.91	3.97	3.95
20yr AA	3.94	3.92	4.00	3.90
20yr A	4.08	4.04	4.11	3.93

Corporate Bonds

Maturity	Yield	Yesterday	Last Week	Last Month
2yr AA	4.82	4.80	4.76	4.57
2yr A	4.89	4.86	4.82	4.62
5yr AAA	4.83	4.84	4.82	4.62
5yr AA	4.92	4.89	4.86	4.71
5yr A	4.95	4.93	4.89	4.77
10yr AAA	5.15	5.17	5.21	5.10
10yr AA	5.16	5.13	5.15	5.04
10yr A	5.20	5.16	5.17	5.13
20yr AAA	5.48	5.50	5.56	5.49
20yr AA	5.75	5.74	5.76	5.65
20yr A	5.67	5.65	5.65	5.66

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 +14 basis points, from +17 bp a week ago. The 30-year T-Bond yield is sitting at 4.52 pct.

And T-Bills have moved up to 4.38 pct. And the spread between the yield on the 10-year Treasury paper (4.57 pct) to the 2-year (4.71 pct) is now a negative "14 bp.

So each week for the past five, the spread there has gone from +2, to "5, to "9, to "12, to now -14.

As I continue to say, it "must be tough on the lending banks". I wonder, in fact, if the loan loss reserves for some of the smaller U.S. banks are high enough, or their financial strength strong enough, to withstand a recession and all that "R" word implies for some local communities.

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 (TLT 20+ year) did move higher, while the others (IEF 7-10 year and SHY 1-3 year) did move lower in price this week.

That seems to be saying that the CPI data that came out this week (i.e., up +0.7 pct M/M, which is the fastest growth in four months) is not a factor, and that rates are going to come down.

If true, that would be quite a change for the SHY and IEF, which have been hammered down in price since July 2003.

I think there is a different dynamic at work " or actually a couple. The new 30-year Treasury is in demand by bond portfolio managers who are notionally inclined to buy the long bonds and sell some of their mid-range bonds. Call that a matter of housekeeping, which is not likely to go on and on.

There is also the foreign carry trade, which has been encouraged by Japan, China and India, whose authorities would like to see a strong USD, which leads to more buying and investing abroad, and less selling of exports to those countries.

But now that inflation is starting to poke its head up in those countries, there will have to be a credit tightening cycle started there, just like in America, so it appears to me that rates will rise on a global basis for a while. That situation will attract international capital to those bond markets.

That is not good for U.S. bonds, and ultimately it will hurt equity prices too.

So unless there is a recession in the U.S., I don't see a healthy bond market. And if there is, I don't see how the U.S. equity market (PE of 19.4 on the SPX and 19.6 on the DJIA) can hold up.

And if there is continued strength in the U.S. economy and more inflation as well, then the U.S. equity market could continue to rise for a while, but eventually the residential housing market boom will blow up, leading to all kinds of sectors and industry groups in trouble.

I see the U.S. as a case of heads you lose; tails you lose. Unfortunately, the supply side economics of Kudlow and Friends in the GOP has not worked this time. What it is doing is sowing the seeds of inflation because a terrific credit balloon has to be matched by terrific money supply growth in the absence of a hyper-strong economy.

This will end badly. These people can only say there is no inflation, and that the economy is cranking on all cylinders, for so long. People can see with their own eyes that things are not so great. It shows up in their bank balance, and growing debts, and fewer times out to the movies, etc.

Consumer Finance -USA -- Weekly Data Charts

Consumer Finance -USA -- Daily Data Charts

Consumer Finance -USA -- Hourly Data Charts

With the PR surrounding the Rudman Report re the Fannie Mae multi-billion dollar accounting scandal, placing the blame (conveniently) on one or two gentlemen, and away from the CEO and the Board where it belonged, and the CPI data (+0.7 pct M/M and +4.0 pct Y/Y) was spun as being "benign" and "tame", there was another lift in these share prices.

But I don't know how much longer this charade can go on.

The American taxpayer may think they are getting relief from the fiscal policies of this Administration, but when these Asset Backed Loans start to blow up, which they will at some point as rates continue to rise, it will affect the price of their homes, and their stocks.

Do you know what the opposite of "Wealth Effect" is?

You got it.

And the holders of the shares in these Government Sponsored Enterprises (GSE) will too.

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Commodities:

A week ago I wrote: "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? ; 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."

It pays to listen to the "Wizard": $CRB was up +0.84 pct; $WTIC up +2.64 pct; $GOLD up +1.26 pct and $SILVER up +3.58 pct this week.

Actually Friday was quite a week.

Weekly CRB Commodities Index:

Daily CRB Commodities Index:

A week ago, I put on my surgeon's garb after telling you with a degree of precision that $CRB would cease to free fall, and it did. I opined that it might be a good time to buy, and let's see; $CRB was up +0.84 pct to 328.90.

Of course, on Friday this commodity index was up +1.48 pct. So, hopefully it keeps lifting on Monday.

Weekly Crude Oil:

Daily Crude Oil:

$WTIC (NY Crude Oil index based on the near futures) happened to rally +2.64 pct this week, including +3.91 pct on Friday, to close at 62.91.

And you were questioning why I had been calling a trading rally in seven Canadian oilsands stocks a few days ago.

But, again, this is a trading rally. I may buy a few for a short-term swing, but mostly (as in my net position across the sector), I'm a seller into strength.

At times, you just have to pick your spots, and hope that in this case some bombs and rockets go off in those places in the world where we've gotten accustomed to seeing that kind of bad stuff.

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.

Two week ago, with gold in free fall, I wrote: "It appears that we have an opportunity to accumulate some of the gold shares."

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

So this Friday, $GOLD was up +1.65 pct, taking it up +1.26 pct W/W to $559.15. Consequently on Friday the U.S. gold stocks were up +2.5 pct and the Canadian gold stocks up +1.9 pct on Friday, pushing these indexes up about +1 pct on the week.

I think it's going higher. Soon.

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 (Silver index based on the near futures contracts) was very strong this week, up +3.58 pct W/W, including a gain on Friday of +2.62 pct, to $9.77.

I think it's going higher. A lot higher, and soon.

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 strongly up +2.52 pct W/W to $1,037.80. The Platinum metal price was up +1.28 pct on Friday.

The charts tell me it's going higher.

Weekly Palladium EOD Continuous Contract Index:

Daily Palladium EOD Continuous Contract Index:

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

After $PALL had a superlative week a week ago, it was flat this week. On Friday, Palladum was up +0.99 pct on the day, but that took the price to $290.79, which was -0.07 pct on the week.

If gold, silver and platinum all have a run here, so too will palladium.

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) lifted +0.89 pct W/W to $220.71. On Friday, it was up +0.33 pct.

Base metal traders like those who trade the precious metals complex, appreciate those high inflation (CPI) numbers, as came in late this week from the U.S. and Canada.

I suppose if a global recession is in the cards, the price of the metals, but mostly the base metals, will be adversely affected.

But then it is possible to have global inflation at the same time as a U.S. recession. That would really sink the USD and rally Gold to very high levels.

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Weekly U.S. Goldminers Index:

Daily U.S. Goldminers Index:

If you followed me in the past week or two, you saw I correctly called the end of the short-term sell-off in gold shares. I see too many so-called "geopolitical" events in the world that are pushing people in less stable countries to be putting some gold into their garden, for a swift exit to safer regions.

Moreover, I see too many factors that portend a lower USD in the future, so that the OPEC producing nations don't want to receive those weakening USD as payment for their crude. And as the USD falls in price relative to currencies in other gold producing countries, it stresses the profitability of goldminers there, which ultimately leads to local production slowdowns, and higher gold prices across the board.

So I think the pressure stays on for higher prices in the goldminers for quite a while.

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 trade-weighted $USD was up slightly +0.15 pct W/W to 90.64. On Friday, it was up +0.24 pct, and so I am presuming that as oil and gold lifted up with geopolitical concerns there was a so-called rush to quality.

Actually, I think it was a matter of FOMO, but I can't prove it, so I'll leave it there.

As I have said, 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 the $USD must fall.

Weekly U.S. Dollar Index:

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

The Euro (priced in USD) dropped -0.33 pct W/W to 118.75. There was a loss on Friday of -0.42 pct, so you can see that the USD had been weaker during the week, and got strong on Friday " after the news broke on several fronts in Saudi Arabia (a attack on their largest oil refinery), and escalated civil strife between Sh'ite and Sunni factions in Iraq, as well as policy changes (stopping future in-flights by American carriers) in Venezuela, and the Nigerian fighting growing in concern.

But, longer-term, I think the Euro and the Yen will outperform the USD.

Weekly Euro Dollar Index, priced in USD:

Daily Euro Dollar Index, priced in USD:

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International Equities:

Most of the international equity market indexes grew stronger this week.

Japanese equity market ETF: EWJ

The EWJ (Japanese equity market ETF that trades in USD in the U.S.) was up +3.91 pct W/W to 13.82. It gained along with oil. Trading remains erratic, however.

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 +0.51 pct W/W, closing at 19.70.

EWU has enjoyed a solid run for four months except for the third week in December and the first week in February. Its future seems closely linked 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

Once again at the end of the week, the EWC had a great day Friday with higher oil and gold prices (going up +0.95 pct on the day) to close at 23.32, which was a gain of +0.30 pct W/W.

Except for October, the EWC has enjoyed a terrific nine months. But, its future 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 flat week for the U.S. market.

The Dow 30 was down W/W by -0.48 pct to 11,061.85. The other major indexes were up: S&P 500 up +0.17 pct; Nasdaq up +0.21 pct, and the Russell small caps up +0.77 pct.

As I see it, the small caps are way over-bought here based on the RSI and Stochastic indicators (same methodology " not unique indicators, but with nuances). But one look at the Hourly data for Thursday and Friday of the Russell Small Caps vs the Dow 30 shows the opposite direction of these markets.

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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. Actually the table says 1W (1-week), but it represents 5 days. With the holiday Monday (President's Day), the data includes the prior Friday.

So, based on 5-days trading, there were 18 Dow stocks down and 12 up on the week. But the prior Friday was very weak, so the 4-day data (this week) would be slightly positive here.

Symbol	Close	Net	%Net	1W %Net	2W %Net	4W %Net	YTD %Net	3M %Net	6M %Net	Yr %Net
DIS	27.98	0.27	0.97%	3.44%	4.72%	11.56%	14.67%	12.10%	10.16%	-0.60%
BA	74.31	0.41	0.55%	2.43%	3.19%	8.13%	5.64%	7.01%	10.70%	37.76%
PFE	26.37	0.23	0.88%	2.17%	0.11%	5.27%	10.89%	21.86%	5.23%	-0.11%
JPM	41.66	0.55	1.34%	2.06%	4.75%	5.23%	3.66%	7.43%	23.07%	13.58%
KO	42.23	0.20	0.48%	1.54%	3.00%	1.88%	3.25%	-0.98%	-3.65%	-1.01%
PG	61.50	0.02	0.03%	1.27%	3.15%	4.56%	4.63%	7.88%	12.60%	14.25%
UTX	58.89	0.34	0.58%	1.19%	3.84%	2.38%	4.17%	8.25%	16.06%	17.76%
MMM	73.91	0.26	0.35%	1.18%	2.48%	1.66%	-6.57%	-5.40%	3.63%	-12.29%
CAT	72.70	0.35	0.48%	1.03%	6.21%	11.55%	25.78%	25.32%	36.63%	56.08%
C	46.85	0.05	0.11%	0.88%	2.31%	-0.34%	-4.95%	-5.05%	8.83%	-3.00%
AXP	54.87	0.30	0.55%	0.72%	3.45%	2.91%	4.36%	4.71%	-1.03%	0.96%
XOM	60.42	0.59	0.99%	0.28%	0.83%	0.78%	3.34%	0.92%	2.62%	-1.16%
HON	41.48	0.05	0.12%	-0.24%	4.96%	10.88%	10.73%	12.23%	9.36%	10.08%
HD	41.63	0.05	0.12%	-0.55%	6.61%	3.04%	0.95%	-2.02%	4.34%	5.07%
GE	33.14	-0.12	-0.36%	-0.63%	0.67%	0.39%	-6.30%	-7.79%	-1.19%	-6.78%
MSFT	26.63	-0.03	-0.11%	-0.67%	-0.11%	0.49%	-0.78%	-4.62%	-0.67%	4.97%
AA	30.16	0.07	0.23%	-0.69%	-2.93%	-2.01%	0.87%	12.16%	10.11%	-4.13%
IBM	80.10	-0.10	-0.12%	-1.00%	-0.37%	-0.77%	-2.39%	-9.80%	-1.50%	-13.54%
MO	72.45	-0.93	-1.27%	-1.02%	0.88%	-1.76%	-3.37%	-1.31%	4.08%	11.14%
AIG	66.97	-0.23	-0.34%	-1.77%	-0.22%	0.80%	-3.81%	-3.04%	11.90%	-1.79%
JNJ	57.76	-0.83	-1.42%	-2.07%	-1.35%	-1.60%	-6.28%	-6.34%	-7.21%	-12.34%
VZ	33.81	-0.11	-0.32%	-2.14%	3.52%	6.72%	11.29%	6.15%	3.11%	-4.76%
MRK	35.10	-0.31	-0.88%	-2.45%	2.21%	3.39%	7.18%	13.92%	26.12%	9.72%
WMT	45.45	-0.25	-0.55%	-2.53%	-0.55%	-1.88%	-1.69%	-10.12%	-0.22%	-11.68%
MCD	35.34	-0.25	-0.70%	-2.83%	-2.64%	1.14%	5.43%	4.84%	7.16%	8.24%
DD	40.32	-0.25	-0.62%	-2.89%	0.30%	1.28%	-6.36%	-5.84%	0.80%	-24.69%
T	27.57	-0.37	-1.32%	-3.09%	1.62%	8.08%	11.57%	11.71%	15.31%	14.11%
INTC	20.36	0.07	0.35%	-4.64%	-3.05%	-5.26%	-20.38%	-23.57%	-20.25%	-14.09%
HPQ	32.02	-0.35	-1.08%	-5.88%	1.33%	1.33%	11.30%	8.99%	19.84%	56.65%
GM	19.99	-0.60	-2.91%	-10.28%	-9.71%	-13.28%	5.77%	-15.01%	-41.67%	-45.52%

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.

Now if anybody asked you which of the Dow stocks have out-performed over the past 52 weeks, you could immediately say: Well, Hewlett-Packard (HPQ) is up +56.7 pct, and Caterpillar (CAT) is up +56.1 pct.

And you could even say that you know three (3) stocks they could never guess were down every possible time frame measurable -- from 52-weeks, 6-Months, 3-Months, YTD, 4-Weeks, 2-Weeks, 1-Week and even 1-Day. And the Cara Dubious Trading Performance Feat of the year goes to (drum roll please); Wal-Mart (WMT), IBM (IBM), and Johnson & Johnson (JNJ).

And two of those three ain't bad companies; WMT and JNJ are still on the Cara Global Best 100 Companies list, which just goes to show there are horses for courses.

You don't take a Clydesdale into the Kentucky Derby, right?

And as for advice, wasn't JNJ the favorite stock (next to GOOG) of that Wall Street genius, James Cramer? Well if you hung in with your JNJ (and didn't overwrite options), your capital is down one-eighth (less dividends) over the past year.

My point is that there is nothing wrong with active trading. In fact, if you don't do it, you lose. If you buy and hold, you lose.

But if you buy and sell, you can win. You can even beat Wall Street.

Let's use General Motors (GM) as a case in point.

GM is trading again in the teens and is down a crushing -45.5 pct over the past year, is up +5.8 pct in 2006. So if you were watching the market closely, say week to week, you could have bought and sold off the RSI technical indicator " and beat the portfolio performance of 95-pct of hedge fund managers " people who have been trained at Wharton School of Finance and London School of Economics, have an IQ north of 125, and armed to the teeth with computers, algorithmic trading programs, advisors, research reports, and so forth.

Seriously; you would have beaten their fund performance.

Now, I didn't say their personal performance, but that's another story. These people are not living in multi-million dollar golf course estate homes, driving Mercedes 500's, and watching the F-1 Grand Prix of Monaco live for no good reason;

But going back to General Motors, these fund managers are like me; they have the experience to recognize a fox in the henhouse.

Do you recall the day I threw my hands in the air (I guess about eight months ago) when General Motors was said to have signed a deal with the UAW, and CNBC's Phil LeBeau went on-air in Chicago at something like 3am CT to start his rant about how exciting the GM situation was?

You must remember me shouting: "Go Go LeBeau!". I think I even made it a headline article.

Talk about fleecing the lambs!

Don't get me wrong; everybody " even Warren Buffett " gets fooled sometime. In fact Warren lost a few billion shorting the USD this past year.

But if you see a talking head screaming "Buy, Buy! Load up the truck!" for days and weeks on end, and you use common sense when you see the stock price not going north in leaps and bounds, you have to figure that the Gnomes are selling.

Back to this week's results.

The Dow 30 winners this past 5 days:
DIS, up +3.44 pct (but still down over 52 weeks)
BA, up +2.43 pct (@ +37.8 pct is the 3rd biggest winner over 52 weeks)
PFE, up +2.17 pct (and down over 52 weeks)
JPM, up +2.06 pct (and up +13.6 pct over 52-weeks based on past 18 weeks or so)
KO, up +1.54 pct (another 52-week loser)
PG, up +1.27 pct (very highly correlated with JPM over 52 weeks trading)

The Dow 30 losers this past 5 days:
GM, down "10.28 pct (like the proverbial toilet seat, up & down, w/ lots of flushing)
HPQ, down, -5.88 pct (still the Dow's #1 winner over 12- and 6-months)
INTC, down "4.64 pct (if not up 7 cts Fri., would be like WMT, IBM, JNJ)
T, down "3.09 pct (up +11.6 pct, which is Dow's 3rd best YTD)
DD, down "2.89 pct (down -24.7 pct over 52 weeks),

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 AIG, AXP, C, JPM and MSFT. If you want free access, I guess you have to register there individually from now on.

Wrap up:

Yesterday I finished a one-hour, twenty minute appointment with my dentist, and after much freezing and Tylenol 3, it did take quite a while to finish this WIR.

I have yet to meet a pain-free dentist, just like I have yet to see a market top that doesn't fool the majority -- and later feel even worse than a root canal.

Yes, getting through a root canal and a post yesterday has made today a difficult one. Five more to go, so I'm warning you now.

"Changes in Lattitudes" will, however, become my favorite tune in 2006. Like the equity market, I'll be going south.

But unlike the market, I'm likely not coming back to the Great White North for a while, possibly ever on a permanent basis. Upon reaching paradise, I figure why leave?

You can even bury me at sea; The water's beautiful, and the fish get last dibs.

BCara@BillCara.com