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September 9, 2006
Week #36 (2006-09-09) in Review (FINAL)
This is a week we can all agree that Mulally 'got his'. The question is, when do we 'get ours'.
Boeing had paid Alan Mulally a base salary of $825,000 plus $736,000 bonus. Moving over to captain a sinking ship does have its rewards though as Ford Motor Co has agreed to pay him $2 million base annual salary plus 4 million stock options and 600,000 restricted stock units plus $7.5 million signing bonus plus $11 million to replace the Boeing future compensation package he walked away from. I wonder how many points his agent got.
The one thing that Mulally didn't get was something acceptable to replace his Lexus. Maybe Ford would like to give him a Taurus to show him how bad things really are.
Now why would an individual investor care about Ford or General Motors now that those two leading American corporations have become dependencies of (i) the NYC banks (who worry about a Ford-GM credit failure bigger than all of Central and South America combined, in the unlikely event the latter should ever happen at once), and (ii) Washington (where Job One is to fool the American people into believing that working two jobs at McDonalds is better than one at a factory like Ford or GM?
Speaking of McDonalds, Value Line reported on the company this week, exposing the truth about what's wrong with the U.S. economy.
Instead of creating wealth, entrepreneurs and capitalists like Alan Mulally and the good folks at McDonalds have decided to get theirs. Sell assets for royalties, and use the cash flow to increase dividends and buy-back shares because that, ladies and gentlemen, is going to increase the stock price (for now) and incidentally their personal bonuses (for as long as they hopefully have the gig).
From your pocket to theirs. Why?
If you are interested in holding shares of an auto manufacturer, why not just look to (Cara 100) Toyota Motor, which doesn't need the likes of people like Alan Mulally or Bob Rubin and his colleagues at Goldman Sachs? Toyota simply manufactures cars (like the Lexus) that intelligent people want, and they make good money doing it, and have credible financial statements to boot.
So Washington doesn't want you to bet on sports (they had another internet gaming executive arrested this week); they'd rather you gamble on Ford and GM shares in an equity market they tell you is transparent and fair, and not controlled by Washington and Humungous Bank & Broker. Not!
McDonalds [GICS 30, Dow 30]
(MCD: Yahoo Finance file)
(MCD: StockChart chart)
(MCD: Investertech chart)
(MCD: ADVFN Financial Data)
(MCD: ADVFN Financial Data)
(MCD: Value Line Report Sep. 8: next one is due Dec. 8)
Toyota Motor Corp [GICS 25, Cara 100]
(TM: Yahoo Finance file)
(TM: StockChart chart)
(TM: Investertech chart)
(TM: ADVFN Financial Data)
(TM: ADVFN Financial Data)
One of the readers sent a report by the "Counterparty Risk Management Policy Group" of Humungous Bank & Broker. This is the Plunge Protection Team (PPT) at work, which you may find of interest.
In it, you'll get to read about the why and how our markets are no longer free, but carefully controlled by Henry Paulson et al. You'll read about subjects like 'Private Counterparty Surveillance' and ‘Moral Hazard' that I bet 99 pct of you have never heard of.
Oh yes, you'll read (i) about the massive credit bubble, not of our doing, (ii) reasons why hedge funds are not directly regulated, although common sense dictates they ought to be (iii) unconscionable conflicts existing at Humungous Bank & Broker that are not permitted in any other aspect of our society, but which HB&B says is not a problem, and (iv) the procedures by which these financial service companies organize and control us.
It may be their report, but it is incumbent upon the most serious and capable among us to analyze it and tell the others what they ought to know is going on in the boardrooms of the Money Center Banks and Washington. We all have a stake in this.
On a different plane, "John" sent this recommended reading list.
Contrary Investor-Interesting review of break in transports and implications.John Mauldin- Thoughtful review of recent Fed comments and one particular speech. If they walk the talk may put commodity bulls on the ropes.
BCA- wondering if supply is finally set to ramp in commodity space.
Note that the comments associated with these notes are from "John" (who is an industry professional) who is concerned that I may be swimming upstream against too many forces that oppose the commodity Bull. In any case, since he is not prepared to join the equity Bull market proponents at the moment, he is advising a much heavier cash weighting for the next couple months.
I cannot disagree. I think this market is being propped up during the U.S. political campaign season, and is not pricing in risk that is close to being appropriate to current conditions.
Last week I wrote: "So at what point are we now in the market cycle? All things considered, I think we are still early in the Bear, which started May 10, and which that week I called a Bear. If, in future weeks, I come to believe I am wrong, I'll certainly tell you; Yes, I am impressed with the Summer rally, but the Summer is almost over now. Can this market rally through the Fall to new highs in Nasdaq and the Dow 30? I don't think so."
The market did not rally this week, and I'll tell you why, and what I think was the cause of the summer rally.
Ask yourself how big are the Global and U.S. equity markets, and how big is just one part of it, the commodities sensitive component. Therein sits the answer to what is happening today in the market.
As you know, in this Report I delve into ETF's by market structure. I split the market into three segments as follows:
First segment: Energy, Basic Materials and Industrials -- most influenced by global commodities, forex and capex spendingSecond segment: Consumer Discretionary, Staples and Healthcare -- most influenced by U.S. consumer spending and economic growth
Third segment: Financial, Tech, Telecom and Utilities -- most influenced by U.S. interest rates and general economic health
When interest rates are rising, the first segment stocks are typically in growth mode. That's because the economy is growing on a value-added basis, due to previous central bank liquidity injections. But at some point in the business cycle the economic growth becomes excessive, leading to speculation and inflation. To counteract this phenomenon, money from central bankers and commercial bankers is withdrawn and/or becomes harder to get, and rates rise.
When interest rates are falling, and the USD strengthening, the first segment is usually retracting. Capital is being pulled from the first segment and invested in the third segment, which are the Financials, Techs, Telecom and Utilities.
These actions can be caused by direct central bank intervention and/or from regular market action that is anticipating certain central bank activity.
So to see what's happened to global equity markets in the past quarter, let's look at the composition of the S&P 1200 largest companies, and also the S&P 500 large U.S. companies that is a component of the S&P 1200, and the stock performance of the component groups.
You'll see that a of Friday's close, the S&P 1200 had an aggregate market cap of $23.71 trillion, including a U.S. S&P 500 component of $11.75 trillion, which is almost exactly 50 pct the global total of what are the biggest capitalized companies in the world.
Global S&P 1200 performance table:strong>
U.S. S&P 500 performance table:
In the past quarter, the share performance of the S&P 1200 was +2.11 pct, which when added to dividends gave a Total Return (TR) of 2.52 pct. But the U.S. S&P 500 had a share performance of +2.26 pct and a TR of +2.65 pct, so the non-U.S. S&P 700 was about +2.0 and 2.4 pct respectively.
In the big picture this quarter, capital is coming out of Segment 1 energy and industrials, and going into Segment 3 utilities, telecom and financials and into Segment 2 consumer staples and healthcare.
This capital move has happened, I think, because: (i) equity traders have become defensive because the 2002-2006 stock cycle is due for a correction, (ii) central banks and commercial banks have begun to campaign against inflation and speculation, (iii) the major economies of North America and Europe, which have grown at a faster pace than their long-term average largely because of housing market inflation and speculation, are now naturally retracting as interest rates and costs of holding real estate investments rise and profits are being taken, (iv) forex trading has become so extreme that international trading in goods and services has been unduly affected " in the U.S. and abroad.
I see nothing unusual in this process. But I continue to opine that risks in the Segment 3 stocks (43.8 pct of total capitalization in the U.S. and 46.2 pct globally), particularly in the biggest components (financials and to a lesser extent in the techs), is not fully understood or appreciated by traders.
Seemingly safely hedged positions have to be unwound at certain times, which sends a flood of hot money running in the opposite direction. Back and forth, as the derivative markets escalate. At some point there will be increasing dissatisfaction that turns to disillusionment and finally disengagement by the independent trader as government and central banks step up their market interventionist tactics, trying hard to save the financial system from a systemic collapse.
The clouds are growing darker, I am afraid, and the problems are not being caused by the independent trader but by a triumvirate of government-gnomes-and-bankers. Independent traders have turned to mathematical trading decision models as a defense, and these are the programmed trading decisions that are swinging sectors like energy and technology from first to last and back again, from week to week.
I think humans are getting tired of it all, and want the system fixed. It won't be of course as long as the people running the major economic powers and money center banks of the world can 'get theirs'.
The rest of us will stand in line.
Global Market Summary
International Equities: This was a four day week in North America, although business as usual elsewhere. But, no matter, the equity markets were down everywhere. Not by much in markets like China, but a lot elsewhere, such as -4.0 pct in Canada, -3.0 pct in UK, and -2.2 pct in Russia.
U.S. Equities : The major market indexes went from a prior "all-round terrific week on the upside" to a broadly-based loser. Nasdaq Composite was down -1.3 pct, the Russell 2000 small cap was down -1.8 pct, while the Dow and S&P 500 were down -0.6 pct and -0.9 pct respectively.
Dow 30 : There were 13 Dow stocks up and 17 down, but the winner (+9.5 pct) GM is a fringe player compared to the biggest losers, Boeing (-2.8 pct), JNJ (-1.7 pct), Citigroup (-1.3 pct), Exxon Mobil (-1.3 pct) and Proctor & Gamble (-1.2 pct). Wal-Mart and McDonalds were both strong, as were the consumer discretionary and staple sectors.
U.S. Sector ETFs: There were 2 ETF's up (XLY +0.9 pct and XLP +0.5 pct) and 8 down, with last week's big loser (-3.0 pct) XLE also being this week's big loser (-3.1 pct). In 21 trading sessions in the past month, the price of $WTIC Crude Oil has dropped from a high of 77.70 to a close this week at 66.25. Big Money has left Big Oil.
First segment: most influenced by global commodities, forex and capex spending
10: Energy (XLE): #10 (-3.1 pct); Still last as Crude Oil prices fell again
15: Basic Materials (XLB): #4 (-0.5 pct); Improved some on Friday
20: Industrials (XLI): #5 (-0.2 pct); CAT and UTX were up
Second segment: most influenced by U.S. consumer spending and economic growth
25: Cons. Discretionary (XLY): #1 (+1.1 pct); From #2 to #1
30: Cons. Staples (XLP): #2 (+0.1 pct); Barely a winner
35: Healthcare (IYH): #7 (-0.5 pct); MRK was up +1.3 pct
Third segment: most influenced by U.S. interest rates and general economic health
40: Financial (XLF): #3 (-0.0 pct); Flat over three weeks
45: Tech (SMH chips): #9 (-2.3 pct); Back & forth, #9 to #1 to #8 to #1 to #9
50: Telecom Services (IYZ): #4 (-0.0 pct); Flat
55: Utilities (XLU): #8 (-1.2 pct); Weak
Bonds: A strange week as Big Money rushed into T-Bills and short-term bonds, but the long-term TLT took a hit. Inflation is still about.
Commodities: Inflation might be apparent in the data, but traders are following the interventionist tactics of central bankers and taking profits in the commodities, particularly oil.
Oil & Gas: $WTIC futures were down -4.3 pct W/W to 66.25, after being down -3.2 pct the previous week. Traders seem to be thinking that, from mid-July, in the absence of hurricanes or war on the Israeli-Lebanon front, and a rapidly declining North American economy, that it's time to take profits in oil. Traders go with the flow " not the oil production but the momentum of share prices in the oil sector. In that regard, foreign oil stocks (Canada, China and Europe) were off bigger than the U.S. oils this quarter.
Gold: $GOLD dropped -2.3 pct W/W to 610.48, perhaps seeking a bottom in the 590-600 range. This was a week where $USD was king and the precious metals not so precious. But the Little Paupers will succeed in the end because the $USD is only paper.
Goldminers: The goldminers were down about -4 pct in the U.S. and just under half that in Canada. A week ago I pointed out that the majors were not winners;
Forex: $USD had a powerful week from the pre-open following Labor Day. Four days does not make a trend, particularly when the only apparent reason was a sell-off in oil to 66. Should oil sell down to 55, however, that would be a different story as the U.S. economy could crank back up on its own, without support from the Treasury and the Fed.
Sector ETF:
Eight of ten sector ETF's were down, but this was a short week, and five of the eight losers were down -0.50 pct or less. So I wouldn't read too much into it. The market could have gone the other way.
The consumer discretionary and staple stocks were the only winners, and barely so for the staples despite Wal-Mart's and McDonald's gains of +4.5 pct.
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 (ETF's). The following table is sorted by price performance Week over Week (W/W), i.e. 1W%N.
Table 1: Cara ETF List
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
You can do this table yourself by entering the following string into the Summary window at Investertech.com 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.
For a list of components to any ETF, simply go to the AMEX.com web site, and click on ETF's. I do that frequently.
Also, Yahoo Finance has an ETF info service in beta testing right now that looks interesting. At Yahoo Finance, key in the ETF ticker symbol of your choice and explore on the left nav bar all the stuff that's available today or coming, including the top ten holdings.
This is still being developed and has many mistakes. EWC (Canada) shows two stocks in the top ten that are not even Canadian. CNR is a large cap Canadian-based railroad, but a ticker symbol for something else.
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)
Sector 10 (energy: XLE, IYE, VDE, OIH, PBW and IXC)
This week, XLE was down -3.09 pct. A week ago it was down -2.95 pct. The price of $WTIC (West Texas Intermediate Crude) closed Friday at 66.25 and appears to be over-sold short-term.
XLE from stayed in #10 spot performance wise this week, which will likely improve next week. Longer-term, the XLE component share prices are likely to be supported by the heavy cash flow generated at 60+ oil, and by the share buy-backs and high dividend yields.
Previously I wrote: "The thing to watch out for is the negative divergence of RSI to the rising price trend for the Monthly price series. At some point, the loss of momentum will catch up to the XLE, which has enjoyed a terrific run to the upside this past year." So, now the market is starting to adjust. After a corrective buying wave of a few days or couple weeks, there will likely be more selling.
The point is that XLE still has risk due to market reaction to falling crude oil prices, but there are fundamental reasons for traders to stay here, just as they go to defensive ports in a storm like the consumer staples and healthcare, which are for the stable cash flow.
Now if the oil price were to fall to 55 or 45 or to the Steve Forbes forecast of 35, the balance would shift. Earnings and cash flow would not be sufficient at very low oil prices to sustain investor interest. But, failing a severe global recession or depression (yikes!), there is not a high probability of that scenario playing out.
What is happening here is precisely what I opined several weeks ago: as oil prices fall, the high cost Canadian oil sands projects come under immediate scrutiny. The operating leverage works against the shares of companies like Imperial Oil, Suncor, etc. And that is happening this week. IMO fell -9.3 pct and SU -7.9 pct.
Day traders are waiting to hit the Buy button after they see the corrective rally in oil prices start to take hold. And when that happens, the Cdn Dollar will rally, and the Toronto Exchange equity index will also rally. So, if you want to sell, that's when you sell.
Here's the XLE Monthly, Weekly, Daily and Hourly data charts:
XLE Monthly data:
XLE Weekly data:
XLE Daily data:
XLE Hourly data:
Table 2: Senior oil & gas equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Big Oil (Exxon Mobil and Chevron Texaco) were down -1.3 pct and -0.3 pct respectively as Big Money seemed more intent on coming out of the Canadian oils and Brazil and Europe.
All the stocks I follow in this sector were down this week and many were thoroughly sliced and diced on Friday. Just like my face.
Oil & Gas Exploration & Production -Canada
A week ago I wrote that "This week, Canadian oil and gas stocks fared poorly " Suncor and EnCana included. With the relatively high cost to produce in the oil sands, these stocks are particularly volatile. As the price of crude falls into the mid-60's or lower, these stocks will have major losses."
Enough said. These stocks will also have very good days ahead, although I wonder if the small independent trader wants to be day trading them.
Sector 15 (basic materials: IYM, XLB, IGE and VAW)
The Basic Materials ETF (XLB) lost -0.47 pct W/W to close at 31.75.
A week ago I wrote something I still feel strongly about: "But these are economic cyclicals that may have downside ahead. If Industrial Production is going to flourish and crude prices decline, these are solid companies and good looking stocks. I'm just not sure I'd want to chase them here."
Here's the XLB Monthly, Weekly, Daily and Hourly data charts:
XLB Monthly data:
XLB Weekly data:
XLB Daily data:
XLB Hourly data:
Table 3: Senior metals and steel equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The week was a mixed bag. Phelps Dodge (PD) was strong because copper prices stayed high, and because the company is earning a small fortune in break fees on the Inco (N) deal that Brazilian RIO is acquiring.
Sector 20 (industrial: IYJ, XLI, VIS, and IYT)
The Industrials and Transport sector ETF (XLI), aka capital goods producers, was down moderately -0.19 pct this week to 32.19.
The UPS executive interviewed by CNBC helped pump the stock.
Here's the XLI Monthly, Weekly, Daily and Hourly data charts:
XLI Monthly data:
XLI Weekly data:
XLI Daily data:
XLI Hourly data:
Table 4: Senior capital goods makers and transportation
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Brazil's Embraer (ERJ) was up +8.24 pct W/W to $41.78. That's a 4-week move of +22.0 pct, which is more than outstanding. It's amazing.
Sector 25 (consumer discretionary: XLY, IYC and VCR)
The Consumer Discretionary sector ETF (XLY) was up +1.12 pct W/W to 33.29, which is only a dime, but enough to put XLY into top spot.
The minute that traders decide that their brothers and sisters have too few coins in their jeans, this sector will suffer. Heads or tails came up heads this week again.
But if its heads for XLY and tails for XLE; Later it'll be enough coin to fill up the SUV but not to pay the house mortgage, and as some wag said on CNBC, "People can sleep in their car, but they need that car to drive to a pay check".
Somebody a while back said in the comment section that people will walk away from their house when they realize they can't simply chop off an extra bedroom or two to cut the mortgage rate down to size.
Yes, I see credit problems on the horizon, and that will hurt XLY. Of course the banks could simply forget that the borrower has negative equity in the house, and decide to go into the long-term real estate investment market by putting the "home-owner" deeper in debt.
Here's the XLY Monthly, Weekly, Daily and Hourly data charts:
XLY Monthly data:
XLY Weekly data:
XLY Daily data:
XLY Hourly data:
Table 5: Senior consumer discretionary equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The Big Spenders had another good week, although nowhere near last week's. I mean EBAY was up just +2.3 pct this week, which puts it up +14.8 pct in 4-weeks.
Sector 30 (consumer staples: XLP, VDC, RTH and IYK)
This week the Consumer Staples sector ETF (XLP) gained +0.08 pct to close at 25.54, which is a loss of just 12 cents. Wal-Mart (+4.5 pct after being up +3.6 pct a week earlier) and Walgreen (+2.9 pct after +4.3 pct a week ago) kept their cash registers in working order.
Traders are trying to hide in these defensive places. At least until the end of the quarter " Sept 29.
Here's the XLP Monthly, Weekly, Daily and Hourly data charts:
XLP Monthly data:
XLP Weekly data:
XLP Daily data:
XLP Hourly data:
Table 6: Senior consumer staples equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The booze companies (Bud -4.0 pct and DEO -1.6 pct) were a little tipsy.
Somebody's cheating; I know I had my share.
Sector 35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)
The healthcare ETF (IYH) was down -0.49 pct W/W to close at 64.58, but Friday was an exceptionally good day as Bristol-Myers came back strong.
I'm wondering if the Mad One on CNBC has lost his charm. Since he bad-mouthed BMY a few weeks ago, the stock has a 4-week performance of +11.3 pct, which is outstanding.
Here's the IYH Monthly, Weekly, Daily and Hourly data charts:
IYH Monthly data:
IYH Weekly data:
IYH Daily data:
IYH Hourly data:
Table 7: Senior healthcare equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Bristol-Myers Squibb (BMY) has stayed in the Cara 100 because I still can't make up my mind.
I thought "I must have a thick skin" but this week the surgeon started removing it. That's quite a feeling as the scissors rip your face apart and a nauseating experience as the laser gun burns away your flesh. Pretty hard to ignore when one of the excisions was right at the nostril and the other a couple inches away. Unfortunately, disease is something that focuses the mind and leads one to rapid decisions.
Even more unfortunately, staying protected from the sun is something I needed to do " we all need to do " from a very young age.
For the record, BMY was up +6.6 pct this week due to a friendly judge. I wish that judge was more in tune with generic drugs, but that's another story.
Sector 40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)
The Financials ETF (XLF) lost 6 cents (-0.03 pct W/W to close at 33.46.
Lehman Bros (LEH) (+3.6 pct), Goldman Sachs (GS) (+0.8 pct) ad Morgan Stanley (MS) (+1.4 pct) made it back and then some, but have you ever noticed that on the days that the Fed seems to be extra-active that's when the Fed owners do very well.
In any case, XLF jumped to 3rd place in this week's performance rankings.
Here's the XLF Monthly, Weekly, Daily and Hourly data charts:
XLF Monthly data:
XLF Weekly data:
XLF Daily data:
XLF Hourly data:
Table 8: Senior financial company equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
So Lehman Bros got clobbered -4.2 pct two weeks ago and came back with a gain of +3.6 pct this week, which is good for a 4-week gain of +1.7 pct and a gain YTD of just +1.8 pct.
So I guess you can say that Lehman made its year this week.
Sector 45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, MTK and SMH)
Last week I wrote, "SMH gained +3.27 pct W/W to close at 33.84. Two weeks ago, SMH rocketed +8.2 pct, so clearly the semi-conductors are part of the driving force for the market moving higher. Is this mostly an Intel thing (INTC was up +5.2 pct this week alone), or is there a major booking of new chip orders around the world? Is it possible that chips have stopped dipping? Well, I don't think it could be the latter if, as CNBC reported from Silicon Valley, Intel is likely to announce a new round of staff cuts " 10,000 to 20,000 " this week. The recent rally could be traders closing shorts and/or bottom fishing, but we have to keep our eye focused on the ball here. GNSS is only one clue, but to me it says the industry is not yet healthy."
This week the chips dipped. SMH dropped -2.29 pct W/W to close at 33.31. No, the industry is not healthy.
Here's the SMH Monthly, Weekly, Daily and Hourly data charts:
SMH Monthly data:
SMH Weekly data:
SMH Daily data:
SMH Hourly data:
Table 9: Senior technology equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Only Oracle in the software group was up. Big Money might be racing sailboats with Larry Ellison, but it was not flowing out of oil into techs this week.
As I opined a week ago, the big rally did not fool me. I don't see a fundamental reason to buy these stocks after the rally I forecasted many weeks ago " back on July 22, immediately before the tech rally.
That rally is now long in the tooth, but I think still has a bit of wind left in those sails. The Daily RSI 7 on the SMH has just tacked north, and the Weekly RSI 7 is just at 54.6.
Sector 50 (telecom: IYZ, VOX and IXP)
The U.S. telco sector ETF (IYZ) was down -0.04 pct W/W to close at 26.83.
The S&P 500 GICS sector 50 group has actually had a pretty fair performance of +18.2 pct YTD, but the Global 1200 comparative performance (including the S&P 500) is up just 9.6 pct YTD, which means that the place to be invested in telco was in the U.S., and the place I have been saying all along has been in AT&T (T). Too bad I didn't catch it early.
I was too busy thinking legacy fixed line systems, competing cable systems, port-merger disappointments, and so forth. But the Big T has been impressive, and the dividend yield is carrying it right along. And, just think, no stock buy-backs yet.
As you can see from the Yahoo data on the IYZ telco ETF, T and VZ, the two Dow 30 companies, make up 40 pct of the IYZ.
AT&T [GICS 50, Dow 30]
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Investertech chart)
(T: ADVFN Financial Data)
(T: ADVFN Financial Data)
(T: Value Line Report Jun. 30: next one is due Sep. 29)
T was up +0.71 pct this week and a robust +26.9 pct YTD. The question is, why, when the emerging economies are growing so fast and mobile phones are all the rage, are telcos there not just jumping like T?
Here's the IYZ Monthly, Weekly, Daily and Hourly data charts:
IYZ Monthly data:
IYZ Weekly data:
IYZ Daily data:
IYZ Hourly data:
Sector 55 (utilities: IDU, XLU, and VPU)
The Utilities ETF (XLU) lost -1.18 pct W/W to close at 34.36.
After hitting a 52-week high a week ago Friday at $61.18, Exelon (EXC) hit a speed bump. The group was down.
Again, go to the new Yahoo Finance site for ETF's like XLU and you will discover lots of useful information.
Here's the XLU Monthly, Weekly, Daily and Hourly data charts:
XLU Monthly data:
XLU Weekly data:
XLU Daily data:
XLU Hourly data:
Bonds:
There were some strange goings-on in the U.S. Bond market this week.
Yields were down across the board, except nominally so at the long end. The Big Money was clearly flowing out of oil into T-Bills and short-term bonds.
But at the same time, the Utility stocks were down by -1.2 pct and the interest-sensitive financials and bonds were all down across the board.
Meanwhile the home-builders were way up on Thursday as traders said they were expecting the Fed to pause in their hiking of rates.
And with a Fed rate at 5.25 pct but a T-Bill rate at 4.78 pct, how long can that wide of a spread continue?
You can see I am confused, but this was a week that following Labor Day, I was shocked to see the $USD getting goosed every single day prior to the open of the stock and bond markets in NYC.
Interest rates and bond yields.
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 4.78 | 4.81 | 4.86 | 4.92 |
| 6 Month | 4.89 | 4.90 | 4.90 | 4.92 |
| 2 Year | 4.80 | 4.80 | 4.75 | 4.91 |
| 3 Year | 4.73 | 4.74 | 4.68 | 4.87 |
| 5 Year | 4.70 | 4.72 | 4.67 | 4.85 |
| 10 Year | 4.77 | 4.78 | 4.72 | 4.93 |
| 30 Year | 4.91 | 4.93 | 4.87 | 5.04 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 3.54 | 3.54 | 3.51 | 3.62 |
| 2yr AAA | 3.51 | 3.54 | 3.51 | 3.58 |
| 2yr A | 3.61 | 3.59 | 3.58 | 3.76 |
| 5yr AAA | 3.60 | 3.61 | 3.59 | 3.68 |
| 5yr AA | 3.62 | 3.63 | 3.60 | 3.68 |
| 5yr A | 3.64 | 3.66 | 3.61 | 3.72 |
| 10yr AAA | 3.76 | 3.78 | 3.73 | 3.90 |
| 10yr AA | 3.74 | 3.76 | 3.71 | 3.88 |
| 10yr A | 3.97 | 3.99 | 3.86 | 4.04 |
| 20yr AAA | 4.15 | 4.16 | 4.12 | 4.26 |
| 20yr AA | 4.14 | 4.16 | 4.11 | 4.26 |
| 20yr A | 4.23 | 4.24 | 4.23 | 4.35 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 5.22 | 5.22 | 5.19 | 5.33 |
| 2yr A | 5.30 | 5.31 | 5.28 | 5.42 |
| 5yr AAA | 5.26 | 5.23 | 5.30 | 5.36 |
| 5yr AA | 5.30 | 5.32 | 5.27 | 5.45 |
| 5yr A | 5.39 | 5.41 | 5.37 | 5.54 |
| 10yr AAA | 5.60 | 5.57 | 5.76 | 5.71 |
| 10yr AA | 5.56 | 5.58 | 5.50 | 5.70 |
| 10yr A | 5.67 | 5.70 | 5.65 | 5.85 |
| 20yr AAA | 5.89 | 5.90 | 5.91 | 6.06 |
| 20yr AA | 6.09 | 6.10 | 5.99 | 6.24 |
| 20yr A | 6.14 | 6.15 | 6.10 | 6.27 |
Interest rates and bond yields.
T-Bill yields dropped this week by -8 basis points from 4.86 to 4.78. Just two weeks ago the T-Bill yield was 4.96 pct, so clearly traders are quickly jumping into cash and near cash.
They are also going into short-term bonds as the yield on the 2-year Treasury Notes dropped -5 bp to 4.70 pct after dropping a week earlier by -10 bp from 4.85 pct.
Meanwhile the yield on the 10-year and 30-year ended down just -1 bp in each case to 4.77 pct and 4.91 pct respectively. This is a crazy market as traders are shying away from the 30-year and going for the 5-year and 10-year instead. That's definitely not a sign of a healthy economy.
Friday was just unbelievable for the metals, which got smashed, and oil was down more in a week than I recall for some time. So if this means a rapidly slowing U.S. economy, I understand the interest in going to cash and short-term bonds, but I don't know why the $USD was so strong this week.
Since the forex and commodity markets were in such a state of flux and this was a shortened week, I'm just going to leave it there.
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:
Everything here was weak this week. But with the $USD so strong, I feel it's just time to stand back and try to get a better handle on what's going on.
Table 11: Interest-sensitive securities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Consumer Finance -USA -- Weekly Data Charts
Consumer Finance -USA -- Daily Data Charts
Consumer Finance -USA -- Hourly Data Charts
Commodities:
The $CRB made another significant move down this week, losing 1.55 pct W/W, which wasn't near as bad the previous week (-3.22 pct).
When was it that I remarked that commodities looked like the game might be over, and then when the 50-day and 200-day (40-week) Moving Averages could not hold their technical support a week ago I wrote: "Over and out".
This week the oil market (down -4.25 pct) was the biggest contributor for the $CRB dropping off to 320.39.
The 200-day MA for $CRB is now at 337.58, while the price is down to 320.39. Not good if you are long commodities. The question now is, are they over-sold and ready to rally, and if so, can they rally up through the 200-day MA, which is now a resistance level.
A rising 200-day MA is a Bullish trend, and hen the price of your instruments are trading above that, you are a happy camper. Then when your prices fall below the 200-day MA, you ought to switch to being a worried camper. Finally, when the 200-day MA turns down, and your prices are below that, you are a stupid camper who needs to come in from the storm.
This week $WTIC (near oil futures) traded down from 70.20 to 66.25, which is a loss of -4.25 pct W/W. That is a lot. My initial thoughts are of hedge funds that were long oil and inadequately hedged. Will there be failures?
You know, there are many traders who are playing (i) the peak oil theory (ii) the let's stay long during hurricane season game, (iii) the next war is just days away idea, and/or (iv) the U.S. economy is always healthy line of thought.
Buy, hold and prosper? Maybe in well-managed mutual funds but not where time in the options and futures markets is the enemy.
Yes, the clock never stops.
Gold:
.
A week ago, I saw too many hot-to-trot precious metal bugs, so I wrote: "$GOLD didn't do much of anything this week, trading moderately higher by +0.28 pct to 625.09. There are three keys: one is the technical resistance of the 50-Day moving average, which is at 627.30, and another is the goldminers' story. The third is $SILVER. This week, the goldminers (arguably) and silver (for sure) told a positive story for traders who are long precious metals."
"Arguably" was a key word because I went on to say that the major gold miners were going nowhere.
And that 50-day MA concept is now showing stress, and I'm forced to turn to the 200-day MA as my line in the sand.
That means to the weak-kneed, the $GOLD contracts are at 610.48, just north of the 200-day MA at 590.48. You see that area just below 590? You don't want to go there
Oh, it's ok for the "Gold"man Sachs because He knows all. But for the rest of us mere mortals " those who never accumulated $700 million from employment like the "Gold"man Hank " we don't want to see that 200-day MA violated.
We don't even want to see the 50-day MA violated, but at a 50-d MA of 630.64, we have surely been violated.
Friday was no bowl of cherries at the office nevertheless the hospital. $GOLD dropped -1.01 pct on the day. Sympathy pains maybe?
Weekly Gold EOD Continuous Contract Index:
Daily Gold EOD Continuous Contract Index:
This interactive chart shows the recent trading for the Gold Bullion index.
Just five trading sessions ago in NYC, $SILVER leaped ahead +4.45 pct on the day to close that Friday at 12.95. This week $SILVER was down -6.32 pct to 12.13.
What a difference four days makes. Pretty soon it's going to be as bad as condo prices in South Florida. Ouch!
The 200-day MA is 10.90. Safe for now.
But $SILVER had a bad month on Friday, where in a single session it dropped -3.85 pct. Whoa! I don't need that kind of sympathy.
Weekly Silver EOD Continuous Contract Index:
Daily Silver EOD Continuous Contract Index:
This interactive chart shows the recent trading for the Silver Bullion index.
$PLAT also lost ground, closing down -1.73 pct W/W to 1233.40. The 200-day MA is, however, nowhere near by at 1127.29. Safe for now.
But we don't want too many days like Friday, which dropped -2.17 pct on the day! Otherwise $PLAT will become $SPLAT.
Weekly Platinum EOD Continuous Contract Index:
Daily Platinum EOD Continuous Contract Index:
This interactive chart shows the recent trading for the Platinum metal index.
$PALL dropped a lot this week, going down -4.18 pct to close Friday at 332.50. But Friday alone it was off -6.13 pct on the day. Tough day at the office. Absolutely $APALLING.
Weekly Palladium EOD Continuous Contract Index:
Daily Palladium EOD Continuous Contract Index:
This interactive chart shows the recent trading for the Palladium metal index.
Thank goodness in every dark cloud there happens to be a red lining.
$COPPER managed somehow to gain +3.09 pct W/W to 356.80 " over $10 on the contracts. Once, once again, "This is amazing when the "global economy is going to hell in a hand basket" story is so widespread."
I guess the $COPPER market is now priced in Chinese Yuan anyway, right?
If so, let's switch precious metals to glorious renminbi.
Actually, in the long-run, it is the paper tiger of a USD that is a dieing breed that faces extinction. Not Precious metals. And if China continues through the 2008 Olympic Games to crank out economic growth rates of 10 pct, I'd say that copper and gold are looking good.
Can you imagine how much gold, silver and copper (bronze) will be needed to produce those medals the Chinese athletes are likely to keep at home that summer?
Weekly Copper EOD Continuous Contract Index:
Daily Copper EOD Continuous Contract Index:
This interactive chart shows the recent trading for the Copper metal index.
Table 12: Senior gold equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The U.S.-listed goldminers ETF (GDX), and the Toronto goldminer index ETF (XGD) were down -4.04 pct, and -1.65 pct respectively. That's a hit, but it doesn't wipe out the gains of the prior two weeks.
The Fall is the season to buy the gold miners, and this season is shaping up pretty good actually. This week gave us a better buying opportunity.
To watch the moves in precious metal miners, you will have to monitor the individual stock charts, preferably in real-time, as follows:
NEM ABX AU GFI GG HMY GLG KGC BVN
15-minute data
60-minute data
Daily data
Weekly data
MDG LIHRY AEM BGO IAG EGO PAAS GOLD CDE GRS
15-minute data
60-minute data
Daily data
Weekly data
CBJ SSRI RGLD SIL NG KRY HL TSE_HRG TSE_GUY TSE_AGI
15-minute data
60-minute data
Daily data
Weekly data
NXG GSS MNG DROOY MFN RNO RANGY MRB CLG GRZ
15-minute data
60-minute data
Daily data
Weekly data
Here are the key Silver miners and the SLV ETF:
SLV SIL CDE HL PAAS SSRI SLW WTZ MGN
15-minute data
60-minute data
Daily data
Weekly data
"So the miners here need higher gold prices than the current 625 610 level. The price needs to move into the 650-680 level; Ultimately, I continue to see a gold price well above 800 (within two years), which will cause the share prices of producers and prospectors (even the well promoted penny stocks) to go much higher than at present. So I continue to believe that buying the pull-backs and selling when strength takes the RSI for the majors up to the 70's level on the Daily is the right tactic. This is a trading mentality, but with the extreme nature of the precious metal markets at this point, that's the way it must be done."
On Sept. 24 (Sunday), I will be down at the Toronto Gold Show (if my headache stops by then), and $GOLD stays above 590.
Otherwise I am moving early to Bahamas and going long silicon.
Here are the Weekly and Daily Data charts of the indexes:
The U.S. goldminer share trust ETF trades under the ticker symbol GDX.
Here are the U.S. Goldminer ETF (GDX) index Weekly, Daily and Hourly data charts:
GDX Weekly data:
GDX Daily data:
GDX Hourly data:
The Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF trades under the ticker symbol TSE:XGD.
Here are the Weekly and Daily data charts for the TSX Goldshares (XGD) index:
Forex:
The $USD gained too much ground this week. The gains were obscene. Four solid days and every day was a wide gap open to the upside.
Talk about priming the pump.
By the end of Friday, the $USD had gained +1.19 pct to close at 85.95.
I gather that politicians on the campaign trail are selling the "soft economic landing" lemonade. You know, I don't altogether disagree, but what's that got to do with pinning the tail on the stock price donkey other than both is a silly game.
Let's hear some good old fashioned rhetoric about twin deficits and what these political candidates are going to do to fix the problem sometime before the next millennium when the other People's Republic has to come with a bail-out plan.
That's when they'll be ‘getting theirs'; San Francisco, Sacramento, San Diego;Occidental;ExxonMobilPetroChina;
The point is, when are serious issues going to be addressed in the U.S., and the economic problems not whitewashed? When is a buck going to stay a buck? And a million dollar home worthy of a real life millionaire?
The Euro (priced in USD) lost -1.25 pct W/W to close at 126.74. Why, because the ECB didn't raise rates?
The British Pound, which was the star a week ago, going up +1.00 pct W/W, this week was down -2.09 pct on the week. Did the Brits and the colleagues in Europe just pack up shop? I thought they just got everybody back to work after a two-month holiday.
Weekly Euro Dollar Index, priced in USD:
Daily Euro Dollar Index, priced in USD:
Weekly British Pound Index:
Daily British Pound Index:
The British Pound lost -2.09 pct W/W to close at 186.56. Maybe they are looking for tourists this Fall?
Weekly Japanese Yen Index:
Daily Japanese Yen Index:
The Japanese Yen managed to eke out another small gain of +0.16 pct against the USD though " despite the huge loss of -0.47 pct on Friday.
These are extremely volatile markets.
Weekly Canadian Dollar Index:
This week the Cdn Dollar lost -1.24 pct W/W to close Friday at 89.30. But on Friday alone, it dropped -0.88 pct on the day.
I attribute the latter to all those U.S. mutual funds dumping Cdn oil (and gold) stocks.
Next week it'll be tit for tat.
Daily Canadian Dollar Index:
International Equities:
International equity markets were mostly down on the week.
Canada, UK and Russia were off from 2 to 4 pct W/W. I sure didn't spot too many winners.
Table 13: International equities perspective
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Japanese equity market ETF: EWJ
The Japanese equity market ETF (EWJ, priced in USD), closed at 13.70, down -0.94 pct.
Here is the Japanese (EWJ) equity market ETF Monthly, Weekly, Daily and Hourly data charts:
U.K. equity market ETF: EWU
EWU (priced in USD) gained strongly +1.97 pct the week earlier, but this week it lost -2.97 pct W/W to close at 21.55.
Geez, even the Toronto Exchange gold index was down only -1.65 pct this week and traders were screaming. Things must be downright ugly in the City.
I'm starting to look at the sectors that had been flourishing, like the real estate developers, to see if they can hold their gains.
Here is the United Kingdom (EWU) equity market ETF Monthly, Weekly, Daily and Hourly data charts:
EWU Daily data:
Canadian equity market ETF: EWC
The EWC (Canada's equity market ETF that trades in the U.S. in USD) was crushed -4.04 pct in just four days. The Cdn ETF closed at 23.96.
So much for those bullet-proof Cdn oil sands stocks: IMO down -9.29 pct; Suncor down -7.91 pct; and EnCana down -6.09 pct in the past four trading days. Relatively speaking, the goldminers were angels.
A week ago I wrote: "EWC is up +0.60 pct this week to close at 24.97. The all-time record high is just pennies away. Can the oil market hang in?"
Apparently I nailed it.
The problem those who are long this sector/group have is that lower $WTIC crude oil prices will continue to hammer away at these stocks.
You've heard of the term "sweet spot"? This is the exact opposite. It's where the leverage of falling oil prices on corporate profits will work against the shareholders because the cost of extracting and processing heavy oil from tar sands is very high. Yes there is a gazillion barrels of the stuff, but the conditions are harsh and demanding of high oil prices.
If there is truth to the ‘Peak Oil' theory " and I suspect there is, especially when you look closely at the amount of high quality crude being discovered and extracted today " then oil prices ought to stay high.
The alternative fuels are desirable but in each case are more expensive than the Cdn oil sands product. Besides it will take years to make a dent in the market here because of lead times, capital costs and growing populations and their increasing demands for fuel.
So, while I cautioned for some time that momentum was slowing and that high prices could not be expected to be sustained, particularly in the face of a slowing economy in North America and Europe, I think trading Canada, trading oil and metal resources is all a matter of short-term timing. Long-term, I think it's a win to be there.
Natural resource riches, political stability, financial and managerial competence; the list goes on.
Here is the Canadian (EWC) equity market ETF Monthly, Weekly, Daily and Hourly data charts:
(Japan, Taiwan, Hong Kong, Singapore)
(U.K., Germany, France, Italy)
(Canada, Mexico, Brazil, Australia).
U.S. Equities:
A week ago I wrote: "This week, the high-beta stock indexes Nasdaq (+2.47 pct W/W) and the Russell 2000 small caps (+3.19 pct W/W) were up the most, which is what happens in a rally. The S&P 500 and Dow 30 gained +1.23 pct and +1.60 pct respectively to 1311.01 and 11464, while the Nasdaq Composite and Russell 2000 closed at 2193.16 and 721.56. These numbers don't look bearish, but let's see what September brings. Low volume persists, and the summer is almost over."
Well, this week, the high-beta stock indexes Nasdaq (-1.25 pct W/W) and the Russell 2000 small caps (-1.80 pct W/W) were down the most, which is what happens when markets correct. The S&P 500 and Dow 30 lost -0.92 pct and -0.63 pct respectively to 1298.92 and 11392 (a modest loss of 72 points), while the Nasdaq Composite and Russell 2000 closed at 2165.79 and 708.54.
No need to worry yet, but let's see what next weeks' inflation data brings.
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.
For the Dow 30 this week, there were 13 component stocks up and 17 down. After two of three very strong rally weeks, the equity market needed to kick it down a notch.
The only concern I could see is that the big winner this week was marginal player GM, which was up +9.49 pct W/W plus two defensive stalwarts, WMT (up +4.47 pct) and MCD (up +4.46 pct). The only other winners above a gain of +1.0 pct were CAT (+1.46 pct) and MRK (+1.26 pct).
But the loser board contained some really important stocks, like BA (down -2.80 pct), JNJ (-1.65 pct), C (-1.28 pct), XOM (-1.27 pct) and PG (-1.23 pct). I always look at the composition of the winners/losers list, and this week the ones you'd like to be leaders to the upside were leaders to the downside.
Table 14: Dow 30 List
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
You can do this table yourself by entering the following string into the Summaries window at www.investertech.com 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
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)
The current week's Value Line report was on McDonalds (MCD), which I commented on at the open. The capitalist cycle has a creative phase and a destructive phase. Unfortunately, the clown Ronald McDonald is spending his time doing charity work these days because he's elderly now, and his handlers are selling off pieces to raise cash so they can buy back shares and raise dividends.
I like the menu there when I'm in a time crunch. You can always count on it. Unfortunately I used to say the same thing about Holiday Inn, and IBM.
Nowadays there are the Google's and Yahoo's and Starbucks. Life moves on.
I was thinking about that this week: why would a company like Bally Total Fitness self-destruct if it weren't for management that just had to ‘get theirs'.
The essence of successful portfolio management will always be to pick good young companies with impressive, hungry management. And when they get old and tired, then shoot them. They are only stocks, not people.
If we would all agree to only shoot stocks and not people, we'd all be much better off.
Dow 30 list:
Alcoa [GICS 15, Dow 30]
(AA: Yahoo Finance file)
(AA: StockChart chart)
(AA: Investertech chart)
(AA: ADVFN Financial Data)
(AA: ADVFN Financial Data)
(AA: Value Line Report Jul. 21: next one is due Oct. 20)
Altria Group Inc [GICS 30, Dow 30]
(MO: Yahoo Finance file)
(MO: StockChart chart)
(MO: Investertech chart)
(MO: ADVFN Financial Data)
(MO: ADVFN Financial Data)
(MO: Value Line Report Aug. 4: next one is due Nov. 3)
American International Group [GICS 40, Dow 30]
(AIG: Yahoo Finance file)
(AIG: StockChart chart)
(AIG: Investertech chart)
(AIG: ADVFN Financial Data)
(AIG: ADVFN Financial Data)
(AIG: Value Line Report Aug. 25: next one is due Nov. 24)
American Express [GICS 40, Dow 30]
(AXP: Yahoo Finance file)
(AXP: StockChart chart)
(AXP: Investertech chart)
(AXP: ADVFN Financial Data)(AXP: ADVFN Financial Data)
(AXP: Value Line Report Aug. 25: next one is due Nov. 24)
AT&T [GICS 50, Dow 30]
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Investertech chart)
(T: ADVFN Financial Data)
(T: ADVFN Financial Data)
(T: Value Line Report Jun. 30: next one is due Sep. 29)
Boeing Co [GICS 20, Dow 30]
(BA: Yahoo Finance file)
(BA: StockChart chart)
(BA: Investertech chart)
(BA: ADVFN Financial Data)(BA: ADVFN Financial Data)
(BA: Value Line Report Jun. 23: next one is due Sep. 22)
Caterpillar [GICS 20, Dow 30]
(CAT: Yahoo Finance file)
(CAT: StockChart chart)
(CAT: Investertech chart)
(CAT: ADVFN Financial Data)(CAT: ADVFN Financial Data)
(CAT: Value Line Report Jul. 28: next one is due Oct. 27)
Citigroup [GICS 40, Dow 30, Cara 100]
(C: Yahoo Finance file)
(C: StockChart chart)
(C: Investertech chart)
(C: ADVFN Financial Data)(C: ADVFN Financial Data)
(C: Value Line Report Aug. 25: next one is due Nov. 24)
Coca Cola [GICS 30, Dow 30]
(KO: Yahoo Finance file)
(KO: StockChart chart)
(KO: Investertech chart)
(KO: ADVFN Financial Data)
(KO: ADVFN Financial Data)
(KO: Value Line Report Aug. 4: next one is due Nov. 3)
Disney [GICS 25, Dow 30, Cara 100]
(DIS: Yahoo Finance file)
(DIS: StockChart chart)
(DIS: Investertech chart)
(DIS: ADVFN Financial Data)(DIS: ADVFN Financial Data)
(DIS: Value Line Report May 19: next one is due Aug. 18)
Dupont [GICS 15, Dow 30]
(DD: Yahoo Finance file)
(DD: StockChart chart)
(DD: Investertech chart)
(DD: ADVFN Financial Data)(DD: ADVFN Financial Data)
(DD: Value Line Report Jul. 21: next one is due Oct. 20)
ExxonMobil [GICS 10, Dow 30, Cara 100]
(XOM: Yahoo Finance file)
(XOM: StockChart chart)
(XOM: Investertech chart)
(XOM: ADVFN Financial Data)
(XOM: ADVFN Financial Data)
(XOM: Value Line Report Jun. 16: next one is due Sep. 15)
General Electric [GICS 20, Dow 30, Cara 100]
(GE: Yahoo Finance file)
(GE: StockChart chart)
(GE: Investertech chart)
(GE: ADVFN Financial Data)(GE: ADVFN Financial Data)
(GE: Value Line Report Jul. 14: next one is due Oct. 13)
General Motors [GICS 25, Dow 30]
(GM: Yahoo Finance file)
(GM: StockChart chart)
(GM: Investertech chart)
(GM: ADVFN Financial Data)(GM: ADVFN Financial Data)
(GM: Value Line Report Sep. 1: next one is due Dec. 1)
Hewlett-Packard [GICS 45, Dow 30]
(HPQ: Yahoo Finance file)
(HPQ: StockChart chart)
(HPQ: Investertech chart)
(HPQ: ADVFN Financial Data)(HPQ: ADVFN Financial Data)
(HPQ: Value Line Report Jul. 14: next one is due Oct. 13)
Home Depot [GICS 25, Dow 30]
(HD: Yahoo Finance file)
(HD: StockChart chart)
(HD: Investertech chart)
(HD: ADVFN Financial Data) (HD: ADVFN Financial Data)
(HD: Value Line Report Jul. 7: next one is due Oct. 6)
Honeywell [GICS 20, Dow 30]
(HON: Yahoo Finance file)
(HON: StockChart chart)
(HON: Investertech chart)
(HON: ADVFN Financial Data)(HON: ADVFN Financial Data)
(HON: Value Line Report Jul. 28: next one is due Oct. 27)
IBM [GICS 45, Dow 30]
(IBM: Yahoo Finance file)
(IBM: StockChart chart)
(IBM: Investertech chart)
(IBM: ADVFN Financial Data)(IBM: ADVFN Financial Data)
(IBM: Value Line Report Jul. 14: next one is due Oct. 13)
Intel [GICS 45, Dow 30, Cara 100]
(INTC: Yahoo Finance file)
(INTC: StockChart chart)
(INTC: Investertech chart)
(INTC: ADVFN Financial Data)
(INTC: ADVFN Financial Data)
(INTC: Value Line Report Jul. 14: next one is due Oct. 13)
Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Yahoo Finance file)
(JNJ: StockChart chart)
(JNJ: Investertech chart)
(JNJ: ADVFN Financial Data)
(JNJ: ADVFN Financial Data)
(JNJ: Value Line Report Sep. 1: next one is due Dec. 1)
JP Morgan [GICS 40, Dow 30]
(JPM: Yahoo Finance file)
(JPM: StockChart chart)
(JPM: Investertech chart)
(JPM: ADVFN Financial Data)
(JPM: ADVFN Financial Data)
(JPM: Value Line Report Aug. 25: next one is due Nov. 24)
McDonalds [GICS 30, Dow 30]
(MCD: Yahoo Finance file)
(MCD: StockChart chart)
(MCD: Investertech chart)
(MCD: ADVFN Financial Data)
(MCD: ADVFN Financial Data)
(MCD: Value Line Report Sep. 8: next one is due Dec. 8)
3M Company [GICS 20, Dow 30, Cara 250 June 25-06]
(MMM: Yahoo Finance file)
(MMM: StockChart chart)
(MMM: Investertech chart)
(MMM: ADVFN Financial Data)
(MMM: ADVFN Financial Data)
(MMM: Value Line Report May 19: next one is due Aug. 18)
Merck [GICS 35, Dow 30]
(MRK: Yahoo Finance file)
(MRK: StockChart chart)
(MRK: Investertech chart)
(MRK: ADVFN Financial Data)
(MRK: ADVFN Financial Data)
(MRK: Value Line Report Jul. 21: next one is due Oct. 20)
Microsoft [GICS 45, Dow 30]
(MSFT: Yahoo Finance file)
(MSFT: StockChart chart)
(MSFT: Investertech chart)
(MSFT: ADVFN Financial Data)
(MSFT: ADVFN Financial Data)
(MSFT: Value Line Report Aug. 25: next one is due Nov. 24) >
Pfizer [GICS 35, Dow 30]
(PFE: Yahoo Finance file)
(PFE: StockChart chart)
(PFE: Investertech chart)
(PFE: ADVFN Financial Data)
(PFE: ADVFN Financial Data)
(PFE: Value Line Report Jul. 21: next one is due Oct. 20)
Procter & Gamble Co. [GICS 30, Dow 30, Cara 100]
(PG: Yahoo Finance file)
(PG: StockChart chart)
(PG: Investertech chart)
(PG: ADVFN Financial Data)
(PG: ADVFN Financial Data)
(PG: Value Line Report)
United Technologies [GICS 20, Dow 30, Cara 100]
(UTX: Yahoo Finance file)
(UTX: StockChart chart)
(UTX: Investertech chart)
(UTX: ADVFN Financial Data)
(UTX: ADVFN Financial Data)
(UTX: Value Line Report Jul. 28: next one is due Oct. 27)
Verizon [GICS 50, Dow 30]
(VZ: Yahoo Finance file)
(VZ: StockChart chart)
(VZ: Investertech chart)
(VZ: ADVFN Financial Data)
(VZ: ADVFN Financial Data)
(VZ: Value Line Report Jun. 30: next one is due Sep. 29)
Wal-Mart [GICS 30, Dow 30, Cara 100]
(WMT: Yahoo Finance file)
(WMT: StockChart chart)
(WMT: Investertech chart)
(WMT: ADVFN Financial Data)
(WMT: ADVFN Financial Data)
(WMT: Value Line Report Aug. 11: next one is due Nov. 10)
Wrap up:
I didn't work too hard this weekend. Answered a lot of mail. Watched the boats on the lake. Thought about Bahamas. Thought about life.
Posted by Posted by Bill Cara on September 9, 2006 09:25:01 AM | Category: Cara Week in Review
Discourse
some excerpts and further reading on the CRMPG:
Posted by: sergio ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
September 9, 2006 5:05 PM [link]
Bill, goodluck on your surgery and I hope that you make a speedy recovery.
Posted by: massagewala at
September 9, 2006 5:17 PM [link]
Re: http://www.toyota.com/fjcruiser/index.html?s_van=GM_TN_FJ_INDEX got to love this new toyota
I don't drive a Toyota and I have never owned one but I did find the marketing of this new product unique and effective.
I have not seen or heard anything on this vehicle however I was shocked to see the video clip when hitting the link. Instead of bombarding anyone and everyone Toyota chose to stay quiet and let the webvertisement do most of the work.
Posted by: leewar at
September 9, 2006 8:39 PM [link]
Great stuff on the assanine comp package and the joke that wallstreet is some times
Re: "Free" market?
As you know, the global markets have been regulated to some degree since the Great Depression.
http://en.wikipedia.org/wiki/Bretton_Woods_system
"The collapse of the Bretton Woods system is a subject of intense debate. There are a variety of theories as to why it did so, ranging from budget deficit problems, to the Vietnam War, to marginal tax rates. The fundamental point of agreement is that the U.S. ran an increasing balance of trade deficit, and that, in the end, it could not establish credibility on reining this deficit in."
What seems to have emerged in place of the defunct Bretton Woods system is the present system, which involves what you call the Plunge Protection Team. (As a long-term holder of US equities and bonds, I for one am not entirely averse to their activities!)
If you accept that the United States is the dominant world power economically and militarily (at least until China assumes that position sometime in the next 20 years or less), then you must accept that the PPT, HB&B, obscenely overcompensated corporate insiders, corrupt politicians, et al. are running the show.
Once this understanding is in place, you are in a better position to determine how best to profit from the system as a trader or investor, given that you are NOT playing on a level playing field or in a "free" market.
It IS a game, it has rules (which may change, and are NOT decided by a vote of all the players), it involves a degree of skill and luck, it has winners and losers. If you live in relative comfort, with a roof over your head and food on your table and a computer on your desk, you may count yourself a winner.
"Social equity" is a noble goal, but it may not be attainable in a world dominated by religious fanaticism, limited resources, rising populations, and the fear and greed that underlie the human condition. We have a long way to go to reach a sustainable, equitable distribution of the planet's wealth.
Posted by: babycondor at
September 10, 2006 11:44 AM [link]
ALOHA !!
babycondor posted:
"If you accept that the United States is the dominant world power economically and militarily (at least until China assumes that position sometime in the next 20 years or less), then you must accept that the PPT, HB&B, obscenely overcompensated corporate insiders, corrupt politicians, et al. are running the show."
Long live the King and God save the bloody Queen ...
If you accept this then you accept that there is no US Constiution or Bill Of Rights ... You accept that it is okay for corporations and fat cat government elitists who are the puppets of the "deregulation" cartels to send our kids to Vietnam, Iraq or Iran or any where they choose just as if we are all serfs again serving the King and Queen Of England. You also accept that our Founding Fathers had no business fighting for our freedoms from the very constraints such an "acceptance" allows! For if you believe these people that are now tightening the noose on our freedoms and our bank accounts will somehow stop and become ever so charitable and caring and reinstate free markets on their own then you are the type that Adolf Hitler counted on to "blitzkreig" the World in the late 30's ... Mein Furher is alive and well in Washington DC. For this is the dark side of the human condition being played out right before our eyes. So far not one person has come forward from either of the two party aristocracy(Rep or Dem)to challenge the elite. A mild mannered Rep. Ron Paul perhaps, but really none ... not even the ever so "free speech" media. Not even Oprah !!!
So after gutting and stealing our Social Security and Medicare, raping and pilaging our benefits and pensions Enron style, selling off all the peoples gold, grabbing all the people's land(eminant domain) and taxing us to death via taxation without representation(inflation)and obscounding what little scaps of wealth we now possess we are suppose to accept this and be "grateful"! If that is where we are then God save us and we need a new BOSTON TEA PARTY ... right NOW !!! What a total slap in the face to the people who have fought and died so bravely starting with our Founding Fathers ... WHAT A SLAP IN THE FACE ...
I for one do not "accept" this ...
babycondor posted:
It IS a game, it has rules (which may change, and are NOT decided by a vote of all the players), it involves a degree of skill and luck, it has winners and losers.
He just described a Vegas casino where the patrons gladly surrender their hard earned pay in exchange for mirth and entertainment. So now the markets have gone Vegas ... What happens on Wall Street stays on Wall Street ... We are now suppose to turn over our future to "casino capitalism" ... spin the roulette and hope we end up with a roof over our heads!!! YEAH BABY !! TEN ON RED !!!! Goodbye 401k! Easy come easy go BABY ... LET IT RIDE !!! BOY DO I FEEL LUCKY !!
Anyone who accepts this is accepting the rule of the "King" ... Welcome back KING GEORGE !!!
Posted by: kaimu at
September 10, 2006 12:50 PM [link]
If you don't accept that this is the situation, how can you have any hope of changing it? I am not defending it, I am saying this is how it is.
The gambling metaphor is apt; however, I would use blackjack instead of roulette for the comparison. It is possible to beat the house at blackjack using various systems. It takes study and effort, but it can be done. And obviously, an intelligent player does not bet his entire fortune, but only plays with money he can afford to lose.
Posted by: babycondor at
September 10, 2006 1:10 PM [link]
sergio,
That is a very good summary of the CRMPG if you don't have time to read the link Bill posted.
I think the pressence of a PPT is warranted and in reality helpful/protective for the little investor IF it were applied in emergency situations only to prevent total crashes. The potential abuses in maintaining this stability are obvious, (political motivations, insider trading).
Third party intervention for the benefit of increasing investor confidence will do exactly the opposite. Short interest in the markets that serve as a counter balance will significantly decline due to the fact that this policy will cause profitable indicators/positions to un-naturally reverse. The decision by Bernake and Bush to hide M3 from the public gives the powers that be further ammunition to execute these 'policies'. In the end, this will creat another bubble that will be far worse than what it should have been.
In regards to the fall of Bretton Woods, IMO this is one of the more significant events to effect Americans that most do not know about. LBJs insistence on pursuing both the Vietnam war and a budget busting social agenda along with France's persistence on getting gold for their dollars changed the way the US dollar is valued and world trade forever.
Posted by: rick s at
September 10, 2006 1:51 PM [link]
ALOHA !!
babycondor posted:
"It takes study and effort, but it can be done. And obviously, an intelligent player does not bet his entire fortune, but only plays with money he can afford to lose."
How can you study something that is a secret, where decisions of major economic importance are made behind closed doors by elite banks? Who studied REFCO and ENRON? Who studies the CPI and jobs data and the elimination of M3 and rolling over nickel shorts indefinetly or deep storage? Who studies GM share price rallies in the face of bankruptcy? Examples are daily and endless.
On top of that the vast majority of people with their financial future in the markets are those who have no time or inclination to "study" anything more than "Desperate Housewives" or "American Idol" ... They just throw their retirement 401k and pensions to the wind and let the very banks and funds that own the casino play with their chips. Trading stock certificates back and forth under the table like cheap hustlers. Like when the Oppenheimer Funds were pressured to "loan" their shares to JP Morgan earlier this year. How do you plan to "study" what JP Morgan plans to do with those "loaned" shares?
I fully disagree and in fact I see the manipulation and control of "free markets" as a long list of violations of laws and freedoms that serve only the elite powers. The list is getting longer not shorter by the day. These people are funded and conduct attacks on our freedoms 24/7. They too study ... they have much more time and resources to study ways in which they can tranfer our wealth to them than we can play "their game" ... Remember it is "their game".
I suggest anyone wanting to study ways to "win", to beat the casino, has no better odds of winning in the long run than a card-counting casino gambler at Ceasars Palace!
Posted by: kaimu at
September 10, 2006 2:11 PM [link]
My former boss, Larry Roberts, of DARPA, Internet, and Telenet fame, was a card counter who ALWAYS won in the casinos. It CAN be done.
Plus, people, we can't expect to remake the world, but only to act intelligently within it, and perhaps tilt the odds back in the direction of diligent small investors.
That will have to be good enough ...
Its a shame that people like Alan M make so much at a company that losses money/market share every yr. He personally will earn after taxes/expenses more than Ford the company!
Every CEO should have a max cap salary of $100k and the rest of their pay package directly tied to the earnings growth and other metrics that make sense.
But hey, if i was offered that type of package i wouldnt object either.
Posted by: NYUgrad at
September 10, 2006 9:31 PM [link]
I think they had to give Mulally a big bonus because everyone at ford knows those stock options are going to be worthless.
I have to say, I think in context of whats happened to gold and silver since tuesday (and with gold and silver breaking down overnight), the goldminer move of the last few weeks is looking like a big fakeout. Personally its what I want to see. If goldman sachs wants to offer us gold at 550, the HUI at 250 and scare everyone out of precious metals, bring it on.
All-
I submitted some ideas/opinions over the past week or so about the evident danger in the present gold market when major influencers such as $WTIC and $USD get "in gear" against it. This is what has happened on this move, I believe, and was the reason for my admonition when taking leave that there was a "Move coming." My chart-work, especially divergences, showed that $WTIC was reaching a cycle high and was weakening to move decisively lower and that $USD was nearing a ST bottom. That meant (to me at least) that gold was about to fall out of bed due to the "gearing effect" of these two moving in concert against it.
Because spot was left under 610 (see my note of Friday morning) for HK on Friday afternoon NY close, stops were hit this morning in HK as that market sees the technical chart damage and is more heavily influenced by that. Again, my belief only. We now have a major selloff below 600 that is searching for support.
If you look at the charts for gold, $WTIC and $USD you can envision: 1) nearby support for gold from LT moving averages, 2)cycle lows for $WTIC probable, and 3) cycle highs for $USD probable-- all in the next few days (Mon.-Wed.).
So if I were in the prediction game I'd say the "gearing effect" is set to end. That is not to say that gold can't move lower but if it does it will be w/o these highly correlated influencers. That would be highly unusual, but these seem to be "highly unusual" times in the markets. The break here is already very significant. A break of the LT moving average would be extremely bearish news. Like g034 I try not to give trading advice and I'm not giving it here.
Anyway, I thought I'd set this out for criticism/derision as to how I was using my charts. A lot of people think chart work is "backward looking" and a lot of hokum. So be it. It has kept me out of a lot of trouble as it represents decisions that traders have made in a timeframe that I can study. So it works for me. g034 has shared some Fib numbers and I think those are good as well. His views on the bullish fundamental case is mine also. However the technical damage being done here is significant and worrisome. So my LT bullish view as always is a "strong opinion, weakly held". I remain ready to switch views if presented enough evidence.
Posted by: MarkM at
September 11, 2006 6:10 AM [link]
Last night was my first read of WK#36 and my head hurt when I finished and decided to call it a low note end to Sunday.
As sleep began to wash over me I opined:
* He (Bill) didn't say his Dow predictions had changed.
* Didn't say GOLD won't reach the goals stated in the past.
* Confirmed confusion would reign in the paper market.
* How hands had changed to knees making it easier to fall.
* Finding buying/selling opportunities now required diligence.
*
Was I dreaming all this? So I reread the report again this morning and it's trying hard to follow my dream or is it?
Posted by: C.Note at
September 11, 2006 6:19 AM [link]
Malevolent Financial Governance
____________________
Sadly, UK Politics and Judiciary are now among the world's most corrupt.
WWW.ExLloydsNames.com have on archive a schedule of corrupt Blairite Judges, also corrupt
Cons. Politicians, who have been bribed by Lloyd's of London - given special-terms for "re-insurance" after the event, at the expense of UNLIMITED-Investor-victims of Lloyd's $12 Billion Audit Fraud - this is embezzlement!
NOT ONE Judge or Politician was impoverished by Lloyd's
- other UNLIMITED-Investors were not so lucky . . . 22,000 families impoverished & about 55 suicides - this is $12 Billion State-Sponsored Fraud! - the greatest since the South-Sea-Bubble.
.......................
Posted by: riccardo104 at
September 11, 2006 9:38 AM [link]
Thank you to "John" (who is an industry professional) for the Reading List and, of course, to Bill.
Posted by: duey at
September 11, 2006 11:49 PM [link]
http://www.toyota.com/fjcruiser/index.html?s_van=GM_TN_FJ_INDEX got to love this new toyota
Posted by: Bullring![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
September 9, 2006 10:35 AM [link]