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(WIR #19 May 14) This weekend, I'm here to tell you that within days I believe you are going to become frightened. I just hope that ‘in extremis' doesn't prevent you from taking action.

You see, as well as 2000-2002, I remember 1969, 1974, 1981, 1987, 1990, and 1994.

To me, 1974 was the worst because it dragged on so long, and 2000 was bad too. The most traumatic " 1987 " thankfully was over quickly.

I can't really say of course, not having been there, but, if I ever have to face an executioner, I'd want a swift ending.

In Spain, it is called 'estacada'. The Death of the Bull. I think we're going through that process now. Pray that the Bear is ruthless and fast.

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Yes, I think we are now in the claws of the bear. Later in this report I'll tell you how I think the bear should be managed if you didn't take the previous action of selling stocks and bonds. But for now, I'll explain some of my reasoning for thinking that equity markets are in a bear.

1. I believe the Producer Price Index will turn negative in the 4Q06 because of a major deceleration in the U.S. economy, which will lead to loss of pricing power, massive inventory write-offs.Traders are thinkin 3 to 9 months forward to when the major business corporations will be issuing warnings and negative guidance reports.

2. I believe that U.S. GDP will fall to an annualized rate of just +1.2 pct in 1Q07 (barely avoiding a recession). I am worried that the Fed may over-shoot their monetary management program. I think the rate hikes should pause for one to two FOMC meetings so that a clearer economic picture can be seen.

3. The equity markets in Japan, Europe and Canada, which are not subject to the ubiquitous sales job of the the U.S. Administration, Wall Street and Big Media, at least not anywhere nearly to the same extent, are now leading the global equity market down sharply. The S&P Global 1200 is in much steeper decline than the U.S. S&P 500.

4. Wall Street is putting on appearances that the Dow is doing better than it really is. The top six market cap stocks in the Dow 30 have (in order of cap size, starting with the biggest) the following 6-month price performance (-1.0 pct, -3.6 pct, +2.6 pct, -20.8 pct, -1.2 pct, and +2.2 pct). So the biggest of the blue chips are down over the past six months. So why has the Dow risen from 10717.50 (Dec. 9-05) to 10,891.92 (Jun. 9-06)? The smallest six market cap stocks in the Dow 30 are all up, and significantly so (in order of cap size, starting with the smallest) with the following 6-month price performance (+15.2 pct, +7.1 pct, +16.8 pct, +6.2 pct, +8.6 pct and +6.9 pct). The American investor has been led to believe things are ok because General Motors, AT&T, Caterpillar, Alcoa, United Technologies and Honeywell shares are up when in fact they should be worried that the mega giants Exxon Mobil, GE, Citigroup, Microsoft, Wal-Mart and Johnson & Johnson are underwater. But if you don't look, you might as well be blind.

5. Ian Notley taught me in 1981 something that I'm going to pass on to you now, twenty-five years later. He said that at the point of a full scale battle between the bulls and bears look the direction that the Generals are taking. He meant of course General Electric and General Motors. Well we know that GM has already been captured and is in the hands of bankruptcy and private equity people. So we can replace GM with TM (Toyota Motor), which is the new King of the Road. And we'll look at XOM too, which is the biigest market cap in the world (just ahead of GE), and the company that puts more fuel into our cars, and energy into the global economy than any other. So in the current battle, where are these Generals in the most recent four weeks? GE is down -1.3 pct, Toyota is down -13.8 pct and Exxon Mobil is down -7.3 pct. This is worse than the S&P 500 performance, so the Generals are fleeing the Bear.

6. I haven't read Richard Russell in close to 20 years but a long time ago I learned something from his approach to Dow Theory, which seemed a reasonable one. He opined that the largest companies in the Dow representing capital interests and the largest ones representing the American consumer had better be up in price over 6 months or that would be a technical indicator (maybe he said confirmation?) of a Bear. Well, over 6 months XOM (down -1.04 pct) and GE (down -3.62 pct) fit the bill. And WMT (down -1.19 pct) and PG (down -4.49 pct) also fit the bill. So I'll ring this one up for Richard Russell of the Dow Theory Letters.

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In addition to these points, I have given you my concerns over recent months, which culminated in the May 14 Week In Review that warned of shock and awe.

(WIR #19 May 14) Global Market Summary

International Equities: Technically speaking, the Japanese and Canadian equity markets broke down on Friday.

U.S. Equities : Ten of 10 ETF's and 25 of the Dow 30 were down. A week ago we had just two good days " Thurs and Fri. This week it was the opposite. But this time is different.

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In the four weeks since I wrote those prophetic words, the Japanese and Canadian markets are down -14.5 pct and -7.4 pct respectively. Nasdaq (-6.4 pct) and the S&P 500 (-4.3 pct) were also down.

I avoided that pain.

A week ago I wrote that I saw a major shift in the bond market. It was a warning that the economy is in worse shape than the U.S. Administration is prepared to admit.

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Here is what I wrote in the Week #22 in Review (June 3).

(WIR #22 Jun. 3) We have reached a point where banks cannot make money in their credit departments so new consumer and business loans will be tougher to get, which will force asset sales. With its insatiable appetite for money, the U.S. government is now crowding out the private sector.

These are the sure-fire signs of an economy ready to go into recession.

---

Last week I gave you additional words of advice:

The good news for the gold players is that unless the Fed chooses to dump the rest of its gold on the market and buy T-bonds in order to support the USD, they simply have to stop raising rates or even drop them, and that will cause gold prices to pop.

---

Ultimately that is going to happen or else the economic cycle, which is now slowing quickly, will go into recession. And that is what worries investors about Bernanke. They are afraid that the next Fed rate hike (June 29) or the one after that (August) is the one that will break the back of economic growth in America.

There are days when I think that recession is inevitable and there are days when I see the opposite. So I figured that I best turn to my friends at the quantitative analysis and economic forecasting firm called RiskFile for a second opinion, which would be based on their economic/quant models.

I am now working on a paper with my Vancouver BC-based RiskFile associates, entitled "Why Investors Worry About Ben Bernanke".

Because my Chinese is not so hot, I'll finish and publish that paper " in English. I'll then get some translation help to publish it Monday in Chinese, which I think is important because the U.S. economy very much impacts China and vice versa.

Since the RiskFile people are all fairly recent immigrants to Canada from Beijing, all of them young, smart (and well-educated) quant people with CFA's, the paper will also be available for the media in China and my associates can handle queries in Chinese.

I can assure you our paper will not be an ad hominem attack on Bernanke's character " despite my joking at times, I happen to think he's a brilliant and upstanding person.

Our intention is to get people to think about the economic circumstances the U.S. finds itself in today, which is the backdrop for the 2006 bear market that has now started.

I cannot do more. Now let's see how the week went.

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Global Market Summary

International Equities: The major international equity markets were down between -5 and -10 pct this week.

U.S. Equities : The S&P 500 was down -2.8 pct, the Nasdaq down -3.8 pct and the Russell small caps down -4.9 pct W/W, which is about half the losses taken elsewhere in the world.

Dow 30 : 2 up -- 28 down this week, which makes it the worst week since I started to blog 113 weeks ago.

U.S. Sector ETFs: Ten of 10 ETF's I track were down. The two worst were Basic Materials (XLB) and Energy (XLE), down -6.8 pct and -6.6 pct respectively. But the Tech Semi-conductors (SMH) were also smashed, ending the week down -5.9 pct. And the great American Industrial conglomerates (XLI) fell down -4.4 pct W/W.

First segment: most influenced by global commodities, forex and capex spending
10: Energy (XLE): #9 (-6.6 pct); oil price recovery; global econ worries
15: Basic Materials (XLB): #10 (-6.8 pct); econ issues or futures trading?
20: Industrials (XLI): #7 (-4.4 pct); global econ worries
Second segment: most influenced by U.S. consumer spending and economic growth
25: Cons. Discretionary (XLY): #6 (-2.5 pct); can't afford new shoes?
30: Cons. Staples (XLP): #2 (-0.8 pct); Defensive PG perks up
35: Healthcare (IYH): #3 (-1.5 pct); a bad week when #3 is down -1.5 pct
Third segment: most influenced by U.S. interest rates and general economic health
40: Financial (XLF): #4 (-1.7 pct); Can't lend $$$ at a profit
45: Tech (SMH chips): #8 (-5.9 pct); INTC slips under $18
50: Telecom Services (IYZ): #5 (-1.8 pct); high dividends not enough
55: Utilities (XLU): #1 (-0.2 pct); bonds up again this week helped

Bonds: The big swing in the yield curve last week (with long rates coming down a lot and short rates going up a lot) continued this week. The 30-year Treasury yield is down -7 basis points this week; but the 2-year is up +9bp and the 3-month T-Bill yield is up +6 bp. This is a fragile bond market waiting for the Fed to act on the 29th.

Commodities: $CRB was down -2.9 pct W/W but the crude oil price was down just -1.0 pct. The action was in the metal futures pits, being down between 5 and 10 pct across the board this week. As speculation in metals had been greater than in the oils recently, it would appear that those who are short metals, and would like to see speculation come out of the metals, are pushing hard. But I am thinking of why I started to blog in the first week of April 2004 after I saw a major shift in capital markets as the same groups used the same tactics, which worked for a few weeks, leading to the boom in metals prices for the past two years. This battle is not over.

Oil & Gas: Re: $WTIC futures, I wrote a week ago that robust economic growth in China and India have resulted in high prices, but any (talk of) recession in the U.S. or Europe would drop these prices for a period. Interesting how "R" worries dropped the related share prices but not the oil prices.

Gold: $GOLD did not hold the $619.20 cycle low, as the price plunged Friday by $11.88 taking the week down $36.40 (-5.71 pct). $SILVER, $PLAT and $PALL were down -8.4 pct, -4.4 pct and -9.9 pct respectively this week. $GOLD now at $601.60 has reached a second point where I will enter long trades, using the tactics explained when I dipped a toe in as $GOLD fell below $660 a month ago.

Goldminers: A week ago it was only the Friday trading that saved the week. This week, margin accounts long the goldminers got tossed with the bathwater. For some who were over-weighted, the forced sales were worse. The $XAU (U.S. gold and silver miners index) and XGD (TSX gold miner ETF) were down -10.6 pct each this week.

Forex: A week ago I wrote that "the $USD was down -1.41 pct and the Euro was up again, and that trend continued on Friday. Interesting that U.S. bonds were strong when the USD dropped almost -1.0 pct on Friday, so I gather that forex traders are thinking that the Fed will back off, while bond traders are thinking that the economy is softening, which would be an inflation fighter." This week $USD went the other way, up +1.74 pct, while bonds also strengthened, as Street talk got on the same "Fed is a hawk" story.

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Sector ETF:

I speak my mind. A week ago I wrote:

This short week, finance and tech came in #5 and #10 respectively, so once again there is no leadership. The #1, #2 and #3 were Utilities, Oils and Telco Services. Other than taking the index prices back up to falling moving average lines, do you really think these three are going to rally the bulls for a new assault on the Dow 12,000?

Stop day dreaming.

Utilities and Telco moved higher due to long bonds going higher due to concerns about a softening economy, and hopes for rate relief from the Fed.

And oil moved up one day (Friday) when some rumors and political nonsense started up about Iran enriching uranium. The only people getting enriched from that kind of talk (i.e., possible war) are Texas oil men, which now that I think about it;

Did I catch your attention?

This week, boom; the roof caved in " here, not in Tehran.

Ten out of ten ETF's I follow (and 28 of the Dow 30) were down. This is no place for day dreamers.

For the U.S. equity market, as you know, I study it top down by sector. 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.

Table 1: Cara ETF List

Sort columns by clicking on column header.

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
XLU	32.48	0.28	0.87%	-0.18%	3.80%	2.82%	1.50%	2.78%	2.65%	6.21%
XLP	23.78	-0.01	-0.04%	-0.75%	-1.29%	-0.34%	1.45%	-0.46%	1.97%	1.71%
IYH	60.58	-0.32	-0.53%	-1.54%	0.28%	-0.10%	-4.79%	-6.00%	-2.45%	-0.62%
XLF	32.69	-0.11	-0.34%	-1.68%	0.06%	-2.53%	1.52%	0.43%	3.22%	11.38%
IYZ	24.93	-0.08	-0.32%	-1.77%	0.36%	-1.85%	8.53%	-0.76%	4.88%	7.00%
XLY	33.13	-0.09	-0.27%	-2.47%	-1.28%	-3.78%	0.39%	-0.21%	-0.57%	0.39%
XLI	32.84	-0.28	-0.85%	-4.37%	-3.27%	-7.47%	3.83%	0.92%	4.99%	8.81%
SMH	32.57	-0.23	-0.70%	-5.87%	-4.21%	-10.03%	-14.11%	-10.67%	-12.96%	-5.79%
XLE	52.80	-0.62	-1.16%	-6.60%	-3.86%	-10.10%	0.19%	2.56%	0.63%	24.32%
XLB	30.58	-0.27	-0.88%	-6.80%	-4.50%	-11.44%	-1.10%	-0.78%	0.96%	9.21%

You can do this table yourself by entering the following string into your browser and then clicking on the link for Performance. XLE XLB XLI XLY XLP IYH XLF SMH IYZ XLU . You can also add more ETF's " up to 30 in total.

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)

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There was an attempt to rally the market on Thursday afternoon, and except for the Energy and Basic Materials also on Tuesday afternoon.

But any rally is heavily sold into by the big Fund capital managers who are looking at lots of liquidity today but who are starting to think ahead to what happens when liquidity falls off in a bear market and they can't find a bid to hit.

So this is the time you want to keep your eye on the equity market volume and also the options market volatility (measured by VIX).

When markets go bearish, traders seem to become like deer caught in the headlights; they freeze. The volume drops off and the put and call premiums start to grow with the added anxiety.

There is nothing pretty about bear markets.

First the denial, then the anger, then relief and withdrawal after the margin calls, and finally the capitulation as and when the remaining good holdings are thrown away. Then the post-crash disgust, and then the blame. And then the hope that some bank advisor can lead the lost puppies home;

This will be my eighth time through it. I learned how to handle it. I think it started in 1981 when I first heard the expression "When their lips are moving;" as the answer to the question "How do you tell the liars in this market?"

Those were the years when I was stunned to see so many clients afflicted with credulity syndrome. If you haven't heard the term "dewy-eyed" before, I think you ought to look it up. These are the slack-jaw booyah buddies of a famous CNBC personality I see today.

They didn't learn much in 1999. Perhaps they weren't in school yet.

But you'd think that bear markets would teach them something other than to point a finger at Bush or Bernanke.

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

This week, XLE was down -6.60 pct to 52.80. A month ago it was 59.

But -6.60 pct loss in a single week makes XLE the second worst performer of the 10 ETF's I monitor.

So not even Wall Street's turning the June calendar to "Hurricane Season", or alert to a Pre-nuked Iran Rally would help the oils. Even the Tuesday rally was good for less than an hour.

You have to learn how to speak certain words in rapid staccato fashion when you see a bid in a bear market " "SOLD TO YOU".

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

XLE Weekly data:

XLE Daily data:

XLE Hourly data:

Table 2: Senior oil & gas equities

Sort columns by clicking on column header.

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
XOM	58.80	-0.77	-1.29%	-4.62%	-4.42%	-7.34%	0.56%	-1.52%	-1.04%	3.65%
CVX	57.53	-0.33	-0.57%	-5.30%	-3.29%	-8.26%	-2.62%	4.37%	-3.51%	4.92%
CEO	71.35	-1.14	-1.57%	-6.85%	-8.04%	-13.46%	3.12%	-10.63%	-0.07%	32.50%
TOT	60.92	-0.46	-0.75%	-7.67%	-7.16%	-57.26%	-53.16%	-51.07%	-52.93%	-45.99%
ECA	47.76	-0.23	-0.48%	-8.17%	-0.77%	-8.12%	2.27%	11.80%	-5.67%	26.52%
IMO	34.47	-0.07	-0.20%	-8.54%	-68.55%	-67.48%	-66.86%	-63.35%	-66.56%	-53.94%
SU	75.14	0.94	1.27%	-8.80%	-6.44%	-14.65%	14.67%	6.90%	16.91%	84.44%
STO	26.62	-0.38	-1.41%	-10.85%	-8.87%	-16.55%	10.32%	3.10%	13.57%	42.35%
PBR	78.71	-1.94	-2.41%	-11.88%	-8.48%	-24.31%	5.34%	-8.06%	9.78%	69.63%

The TOT and the IMO data errors (post-split) still haven't been cleaned up. It's my data vendor at fault, but it is on my To Do list (which is overflowing).

When you look down the recent performance of the oils, you can see that the rest of the world has caught on to the notion of bear market, but "dewy-eyed" Americans still haven't got with the program.

Too many still believe in Goldilocks and the Pied Piers of Wall Street.

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

The Basic Materials sector ETF (XLB) was down a gazillion pct this week. I think a loss of -6.8 pct in a week counts as a "gazillion". XLB closed at 30.58. A month ago XLB closed the week at 34.64.

This week a loss of -6.8 pct qualifies for worst of the ten ETF's I monitor.

Can it get worse than this? Are you still reading Goldilocks?

Get with the program.

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

XLB Weekly data:

XLB Daily data:

XLB Hourly data:

Table 3: Senior metals and steel equities

Sort columns by clicking on column header.

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
N	62.57	0.82	1.33%	-5.54%	-0.45%	-7.34%	44.60%	33.13%	34.44%	65.79%
AA	30.18	0.11	0.37%	-7.34%	-4.67%	-16.21%	0.94%	4.86%	6.16%	10.63%
BHP	39.40	-0.03	-0.08%	-8.05%	-8.56%	-18.88%	12.57%	15.14%	20.86%	51.25%
NUE	49.26	0.36	0.74%	-8.61%	-9.55%	-12.88%	42.04%	10.90%	45.52%	90.05%
GGB	13.48	-0.17	-1.25%	-8.61%	0.07%	-20.47%	-22.57%	-41.16%	-19.28%	45.73%
PD	79.01	-0.98	-1.23%	-9.12%	-8.32%	-18.27%	5.81%	17.03%	9.13%	77.39%
PKX	58.47	-0.68	-1.15%	-10.36%	-10.39%	-21.42%	16.36%	0.27%	21.06%	31.69%
RTP	194.20	-1.70	-0.87%	-10.59%	-12.13%	-20.73%	2.85%	7.47%	11.26%	62.37%
ACH	67.85	-2.52	-3.58%	-12.25%	-15.89%	-28.59%	-14.55%	-31.10%	-7.56%	26.35%
RIO	21.72	0.40	1.88%	-54.18%	-54.28%	-61.13%	-49.49%	-50.23%	-48.04%	-23.52%

Do you recall a week ago my telling you of the b.s. coming from Wall Street regarding the "hot" story regarding aluminum? I wrote, "Wall Street is now selling the story that aluminum in China is going to do nicely. Hmmm. Tell that to the shareholders of China Aluminum (ACH), which was down -4.2 pct W/W and -7.6 pct over two weeks, and down -21.2 pct over 4 weeks; Do I go on?... Down -29.2 pct over 13 weeks." Funny right?

Not so funny.

Somebody was paid to go on CNBC to tout Alcoa (NYSE: AA). Consequently, AA a week ago was second best performer on the Dow, up +2.9 pct W/W.

Then you heard my warning loud and clear. This week AA was 3rd worst of a Disastrous Dow week. AA crashed -7.34 pct. This week.

Eliot Spitzer, can you make handcuffs available for a Citizen's Arrest? I'm starting to think that the entrance to CNBC studios ought to be renamed Perp Walk.

This nonsense just has to stop.

I am really impressed that Canada's ROBTV does the Video Replay thing, and then makes archives available via the Net for the world to see. You know what that tells me? That these Canadian Talking Heads that venture on to that network are either honest or stupid, and I am going to give them credit in that I think there is a lot of honesty there.

But if CNBC were to do the same video replay service, we'd have the incriminating evidence. I'd start posting those files on my Hall of Shame.

My point is this, if a "personality" works for an enterprise that is working strategies around the TV performances of their staff, that's wrong. At least rename the network "Spin City" and dress the clowns in the proper attire.

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

The ETF for the Industrials and Transport sector, aka capital goods producers, (XLI) was down -4.37 pct W/W to close at 32.84. That's actually a relative improvement. You see, XLI was #7 worst out of 10 this week after being #8 out of 10 ETF performer for three weeks in a row.

As I say, "It is kinda hard for companies that are laying off workers to make their numbers, except of course productivity numbers. But productivity goes to an infinite number when you lay off everybody and just move from showroom to factory sale."

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

XLI Weekly data:

XLI Daily data:

XLI Hourly data:

Table 4: Senior capital goods makers and transportation

Sort columns by clicking on column header.

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
ERJ	34.55	0.53	1.56%	-0.46%	4.29%	-10.05%	-12.00%	-13.97%	-11.02%	9.51%
GE	34.07	-0.50	-1.45%	-1.70%	-1.02%	-1.27%	-3.68%	1.91%	-3.62%	-7.42%
TYC	26.69	-0.26	-0.96%	-2.95%	-1.95%	-2.80%	-9.95%	3.57%	-4.64%	-7.65%
BA	80.50	-0.69	-0.85%	-3.94%	-3.00%	-8.74%	14.44%	10.55%	14.89%	24.86%
UTX	60.05	-0.26	-0.43%	-4.73%	-3.75%	-8.77%	6.23%	3.82%	8.59%	13.07%
MMM	80.57	-1.18	-1.44%	-4.97%	-3.23%	-7.57%	1.85%	11.32%	4.72%	5.24%
CBE	83.83	-0.72	-0.85%	-5.36%	-6.85%	-9.11%	13.47%	1.55%	16.27%	23.06%
CAT	67.52	0.63	0.94%	-7.27%	-8.71%	-15.20%	16.82%	-6.74%	17.75%	39.82%
HON	38.10	-0.80	-2.06%	-7.52%	-6.02%	-12.49%	1.71%	-8.19%	6.87%	5.45%

Brazil's aircraft and defense industry contractor Embraer (NYSE: ERJ) had a relatively good week, going down -0.46 pct W/W, which was about 1/10th the average loss in this group.

Take note of GE over the past year. As good as CEO Jeff Ehrlich can dance -- he's like a Donald O'Connor dancing and singing in the sunshine in a Hollywood classic -- his GE stock is down over 12 months by -7.42 pct. It's off -10.0 pct YTD!

GE even lost its perch as world #1 capitalized company " to the chagrin of the pension-dependent employee staff of CNBC. And Jeff is even an important member of the Board of Directors of the Federal Reserve Bank of New York. His stock's performance muct be downright shameful to his colleagues from Lehman Bros and Citigroup on the same Board.

And take note of those two great American Industrialists Mr Caterpillar and Mr Honeywell. They happen to have stumbled -14 pct in the past four weeks.

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

The Consumer Discretionary sector ETF (XLY) was down -2.47 pct W/W to close Friday at 33.13.

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

XLY Weekly data:

XLY Daily data:

XLY Hourly data:

Table 5: Senior consumer discretionary equities

Sort columns by clicking on column header.

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
SBUX	35.89	-0.35	-0.97%	-0.28%	1.27%	-1.78%	16.26%	1.53%	16.34%	30.22%
JCP	64.32	-0.77	-1.18%	-0.74%	5.41%	-2.52%	13.94%	6.70%	18.19%	25.18%
NKE	81.13	0.48	0.60%	-0.81%	1.86%	-0.22%	-5.61%	-4.55%	-5.55%	-4.46%
BC	34.92	0.04	0.11%	-2.81%	-4.09%	-10.48%	-14.45%	-10.44%	-13.44%	-20.47%
DIS	29.33	-0.54	-1.81%	-4.21%	-2.72%	-1.58%	20.20%	4.56%	17.09%	7.00%
WHR	84.25	-0.25	-0.30%	-5.87%	-4.65%	-7.45%	1.91%	-1.52%	1.34%	25.28%
EBAY	30.58	-0.64	-2.05%	-6.28%	-9.74%	-4.50%	-31.22%	-20.22%	-29.65%	-17.57%
CCL	37.27	-0.13	-0.35%	-7.15%	-7.08%	-21.62%	-31.70%	-25.03%	-31.44%	-27.62%
TM	100.55	-0.94	-0.93%	-8.22%	-7.73%	-13.82%	-5.90%	-5.10%	4.19%	39.89%

How about Mr. Auto Toyota being down -8.2 pct W/W and -13.8 pct over 4 weeks? Is that not a shock?

But not even a much stronger USD this week was an absorber.

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

The Consumer Staples sector ETF (XLP) was down -0.75 pct W/W to close Friday at 23.78, which is only 18 cents in funny money. XLP was #2 in the Cara ETF list this week as traders turned defensive.

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

XLP Weekly data:

XLP Daily data:

XLP Hourly data:

Table 6: Senior consumer staples equities

Sort columns by clicking on column header.

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
PG	54.45	-0.29	-0.53%	0.93%	-1.47%	-2.16%	-7.37%	-10.84%	-4.49%	-1.55%
WAG	42.61	0.79	1.89%	-0.09%	3.17%	4.82%	-6.12%	-5.77%	-7.87%	-6.45%
DEO	67.08	-0.17	-0.25%	-0.39%	1.15%	-2.44%	12.63%	7.23%	12.17%	13.14%
KO	43.55	0.16	0.37%	-0.77%	-1.85%	0.39%	6.48%	3.13%	3.99%	-0.80%
BUD	45.21	0.12	0.27%	-0.90%	-3.42%	-1.91%	3.53%	7.18%	5.07%	-4.92%
PEP	59.93	-0.20	-0.33%	-1.22%	-1.04%	2.71%	0.28%	0.18%	1.46%	8.02%
WMT	47.13	-0.17	-0.36%	-1.46%	-4.69%	-0.25%	1.95%	4.11%	-1.19%	-0.88%
WFMI	64.60	-0.74	-1.13%	-1.66%	-5.14%	-7.85%	-16.21%	1.56%	-15.08%	10.54%
MO	71.07	-0.22	-0.31%	-2.44%	-1.46%	-0.39%	-5.21%	-2.17%	-1.13%	3.37%
ABV	39.00	-0.68	-1.71%	-10.30%	-7.36%	-16.45%	1.19%	-6.47%	3.09%	25.00%

In the previous short-term stock cycle, this sector bottomed on May 19th ahead of all the others. I perceived it as a flight to safety at the time, and I hold to that. PG for instance was up close to 1 pct this week, and with all the Guinness on tap for the World Cup soccer matches (millions and millions of gallons), Diageo (NYSE: DEO) was only down -0.4 pct.

And, yes, BUD must be worried because as "Official Beer to the World Cup", the management must be dismayed that their stock is down -3.4 pct over the past two weeks. You see, this is an international sport where people globally dring Guinness. BUD is a NASCAR kinda thing.

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

The healthcare ETF (IYH) was down -1.54 pct W/W to close at 60.58. That makes it #3 best performer, a notch above the prior week.

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

IYH Weekly data:

IYH Daily data:

IYH Hourly data:

Table 7: Senior healthcare equities

Sort columns by clicking on column header.

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
AET	41.65	0.87	2.13%	2.66%	8.55%	4.89%	-11.44%	-17.95%	-13.14%	3.89%
JNJ	61.38	-0.18	-0.29%	1.05%	1.54%	4.32%	-0.41%	4.49%	2.16%	-7.50%
BMY	24.95	-0.30	-1.19%	-1.27%	1.38%	1.34%	7.36%	9.29%	15.19%	-0.40%
AMGN	67.64	-0.77	-1.13%	-2.23%	-0.76%	0.54%	-15.83%	-8.84%	-15.15%	12.64%
GSK	54.65	-0.75	-1.35%	-2.39%	-1.83%	-4.11%	7.24%	1.98%	7.83%	9.30%
BMET	34.98	-0.36	-1.02%	-2.56%	0.06%	-5.82%	-5.15%	-1.52%	-6.14%	-9.17%
UNH	45.77	-0.48	-1.04%	-2.58%	7.90%	3.16%	-25.85%	-19.98%	-27.30%	-10.57%
PFE	23.53	-0.33	-1.38%	-2.73%	-1.34%	-5.16%	-1.05%	-10.12%	12.15%	-14.90%
DNA	78.51	-0.18	-0.23%	-4.59%	-1.86%	-0.39%	-16.48%	-6.29%	-20.19%	-0.75%
NVS	53.74	-0.37	-0.68%	-4.72%	-4.87%	-5.27%	0.50%	-1.83%	2.75%	8.92%

This week, the Cara 100 stocks Aetna (NYSE: AET) and Johnson & Johnson (NYSE: JNJ) were up +2.7 pct and +1.1 pct respectivefully.

I was going to say respectfully, but really they don't owe me anything. :-)

Besides some of the other Cara 100, here and there, were not so respectful this week. Then again, bad is good (right?) -- since we want to buy the stocks of Cara 100 companies when the prices have fallen to our Accumulation Zone.

For newbies here, a Cara Accumulation Zone is when the Relative Strength Index (RSI) technical indicator for the Daily, Weekly AND Monthly data series is below 30, and where the RSI on the Hourly data has risen to a new high, and where those conditions apply not to just one stock, but to a majority of its peer group.

Also, an Accumulation Zone is different than a BUY ALERT. The latter is a MAJOR BUY ALERT when the RSI on the Weekly, Daily and Hourly is cycling through a bottom. In a bull market that RSI level might even be at a 40 line, or in a strong bull market it could come at the 50 line. In addition, the majority of the peer groups have to have similar RSI readings.

A MINOR BUY ALERT ignores the Weekly data series and focuses only on the Daily and Hourly.

In a bear market, traders take short-lived trades, and then use the subsequent strength (called a recovery rally) to hit the bids, i.e., sell positions.

The execution aspect of trading is to buy low and sell high. To do that we have to learn how to dance, which is to say we need to understand the timing factors and the price motion in markets. It is a market of stocks -- not companies. Stocks are prices, and traders trade prices.

The analysis aspect involves the study of corporate fundamentals, the quantitative data (which is a mixture of fundamentals and share price data), and macro-economic factors that could affect the industry and corporate fundamental and quantitative performance in the future. My long-term trading analysis has led me to focus on a list of what I call the Cara Global Best 100 Companies. That is my Watch List (you may have a different list) because I have determined that these are high quality companies, and I don't want to assume unnecessary risk in trading low quality companies.

All of this is trading. It is not investing. Investing is something we do when the object of our intentions is now, or could soon be, under our control and influence, like when we buy ownership of a company or a home or investment property.

Microsoft, for example, is an investment of Bill Gates. Traders take positions in MSFT shares, which are only prices. MSFT last Friday will be different than MSFT this Monday -- but the Company will not have changed.

Unfortunately, the banker's sell-side has educated the public to think product, and to buy, hold and prosper with an investment in that product. If that's what you think, and you are a trader, then you will have to re-learn everything about capital markets. Trading is about portfolio management of capital, not ownership.

Now, let's get back to analyzing the sectors. What we are looking at are the key factors that drive share prices one way or another. The capital market is like a food supermarket and in the Equity Department, we are guided by the aisle signs, where prices are conveniently organized by sectors, industries and groups to help us make decisions.

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

The Financial sector ETF (XLF) was down -1.68 pct W/W to 32.69, which is an acknowledgment that the living yield curve is strangling the lending banks to death. The economy has got the bond market to price the bond yields cheaper than the overnight borrowing rate the banks get from the Fed. Ergo no more carry trade.

I haven't liked the banks for some time. You recall last week's note: "Where I see problems ahead is in the Financials. Any bear market means lower trading volume, which hurts the broker-dealers. And weeks like this, with the yield curve flattening and where the 10-year Treasury yield is BELOW the Fed funds rate, the lending banks run into problems. When they borrow short and lend long at a negative spread, bad things happen to the P&L. Moreover, if, as and when the economy does go into recession, the loan growth slows and the loan losses and bad debt provisions increase, which means the profits would definitely fall."

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

XLF Weekly data:

XLF Daily data:

XLF Hourly data:

Table 8: Senior financial company equities

Sort columns by clicking on column header.

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
C	49.77	-0.18	-0.36%	-0.74%	1.43%	0.59%	0.97%	6.62%	2.62%	4.23%
HBC	85.81	-0.08	-0.09%	-1.95%	-1.93%	-5.74%	5.06%	0.28%	6.93%	7.71%
MS	59.19