Ah, let’s wait to hear (I mean really hear) what Bernanke has to say to Congress today.

Fedex (FDX) lifted +3.7 pct and the US railroads chugged along rapidly (+3.7 pct). Even the truckers were up +2.2 pct.

After Deere (DE) reported a huge profit increase (corn farmers love the Ethanol nonsense going on today and are buying new equipment) and the other tractor makers AG and CNH also set new highs along with DE.

Speaking of food, Archer Daniels Midland (ADM) will be offering $1 billion in debt in order to buy back $400 million in shares. Why do firms do this at cycle tops? I think they do it because they have pre-arranged with today’s sellers to be tomorrow’s buyers. If I’m right, that’s manipulation. Humungous Bank & Broker likes the business of course because they will be doing future stock placements (at the lower prices).

On a politically “hot” day yesterday, when (Cara 100) Applied Materials (AMAT) beat estimates and guided higher, the tech group blossomed. The semiconductors (SOX) were up +1.6 pct, but the leaders doubled that: like AMAT, ACLS, ASML, VSEA, and BRKS, and the packagers/testers IMOS, AMKR, and SPIL. The chip foundries (TSM, UMC and CHRT) were up over +3 pct.

So, it appears that the semiconductors may be the bellwethers here. We’ll have to watch them for the next week or so.

China-based Internet king Baidu.com (BIDU) reported that 4Q earnings jumped to $15.8 million, up from $3.2 million for the same quarter a year ago. Has anybody looked at the PE of this over-hyped deal?

Dell (DELL) appointed Solectron (SLR) CEO Michael Cannon as the company’s new president of global operations.

EnCana (ECA) reported 4Q earnings of $663 million ($0.82 cents a share), down from $2.37 billion ($2.71 a share) for the same quarter a year earlier. Sales of $4.32 billion were down 8 pct from the prior year's $4.7 billion. Consensus earnings of $0.85 cents a share and revenue were not met, But the dividend was doubled to $0.20 so the stock held up.

Btw, reading about Morgan Stanley’s $10 billion erroneous trade made me think about the industry problem with "fails", ie, the amount (in numbers and dollars) of trades that fail to clear each day because of errors or defaults. I think the industry has a problem that the public is unaware of.

In this particular trade, almost $1 billion was executed against a client’s account before the process was halted. I’m wondering if the client, the firm, the counterparties or the Exchange found the error. The Exchange is taking the credit.

I recall a client of mine who called to ask why my assistant had sold his entire account. Being busy at other matters, I had two licensed assistants. I called in the person in question who proceeded to tell me that she distinctly heard the client say “Sell it all!” So I replied to this relatively new staff person that, in the interest of transparency and full disclosure, I had installed a voice recording system throughout the company. Then I sent her off with a back office manager to listen to the tape. An hour later, the offender returned with a sorrowful face and admitted she had erred. After we restored the positions, that one cost me some serious coin, although it was a drop in the ocean compared to the $10 billion mistake caused by Morgan Stanley.

Interactive links

Econoday economic calendar

Asia-Pacific indices

Lots of green arrows today here, and the gains were huge in Shanghai, Singapore, India, etc.

European indices

So far this morning the European bourses are not so hot. Traders are looking ahead at some econ data of concern to come from the US today.

$USD Index

U.S. Treasury Bond Mar. contract

NYMEX Oil Mar. contract

March Crude Oil has backed off a bit to $58.00.

Gold spot chart

We’re back on the Yellow Brick Road this morning. Spot gold at $690-691 is at a small resistance level on its way to 2Q06 highs of almost $720 (when $GOLD futures topped the cycle at $730.40). Traders have taken note of the Double Top Break-out on Feb 9 on the Point & Figure charts.

Silver spot chart

Spot silver is just touching $14, up from $13.50 in three days. Check the one year and multi-year charts to see that silver is at the upper resistance level at $14-15. A break-out here will send silver back to the glory days of 1980.

Platinum spot chart

Spot platinum is holding close to $1209. Although, platinum has yet to spike to the upside like it did in November, I think the metal had a break-out at the start of the month. We may be soon testing high ground in the $1300-1400 range. Check the one-year and multi-year chart to see the obvious resistance levels.

Palladium spot chart

Spot palladium has dipped a couple dollars in the past couple hours, but the one-year or multi-year chart shows the metal at a current $340 is trying to break through resistance at $345-350 in order to take on the 2Q06 levels that almost reached $400.

$CRB Index

The 6-month chart shows that mid-January was a cycle bottom for $CRB, which at $302 is still well under the November cycle high of $320.

Open Futures Contracts

Goldminer stock watch

I removed Newmont (NEM) from the Cara 100 on account of the insider sales and departures of the Chairman and President. I think Barrick is a better value, but it still has such a significant hedge book that I will not reinsert ABX in the Cara 100. I have Gold Fields (GFI) and Silver Wheaton (SLW).

If I was asked to select another large or mid sized gold producer I like it would probably be Kinross (KGC/K). Under the new CEO, things seem to be going very well operations and acquisitions wise. Besides, the rampant insider sales that plagues this group and once hurt this company doesn’t exist here.

I continually get asked about Yamana and Agnico-Eagle because readers know I like them both, but the issue here is that their market cap per reserve oz of gold is too high for both. And neither have the reserve potential (ie, possible mine life expansion upside) that Kinross has. Both are thus likely to be acquisitors, which means that traders will likely hold back the share price. We saw that this week with Agnico-Eagle (AEM), which made what I think was a good deal in acquiring Cumberland Gold (CLG), but whose shares then dipped.

In any case, the best values, as I see it, are in the high-risk juniors at this point. As precious metal and (recovering) copper prices go higher, there are a group of stocks here that still have good leverage. I’ll look for stories at the March 4-7 Prospector & Developers convention.

In Focus

The shake-out in the subprime mortgage and consumer loan industry continues, and will worsen I expect. The Wall Street Journal has a graphic in a major article today that shows that the cost of “default” insurance on riskier mortgage bonds has risen by a considerable factor since November.

I like the term “Dud Loans”. These are those terrible Mortgage Backed Securities that Wall Street stuffed into the investment accounts of Mom & Pop. A year or more ago, I wrote about this problem before it became a problem. When markets reverse course, and heavy credit is involved, a not-so-pretty picture soon pops into view. Then people say things like: “I never saw that coming.” But they had been ignoring the writing on the wall.

Actually they were ignoring my blog. A list of citations is well over 100 long.

Here are the Cara 100 RSI-7 values, sorted by highest and lowest, first by Daily values and then by Monthly, prepared by “David”. We are in the process of changing in and out a total of six stocks, which will show in tomorrow’s list.

Interactive link to Tuesday unsmoothed Daily RSI-7 >70 in Cara 100 (12 of 25). These links include the changes to the Cara 100. Later today I will update the file linked to the top nav bar for Cara 100.

Interactive link to Tuesday unsmoothed Daily RSI-7 <30 in Cara 100 (1)

When 25 pct of the Cara 100 have a Daily RSI-7 above 70, you ought to be thinking that the market is over-bought. That’s an ok situation if the broad market has cycled through a long-term bottom phase, but each time it happens when the long cycle gets “long in the tooth” as they say, and when Money Flow indicators are diverging from rising prices, that’s the time to seek answers.

As I see it, the answers have little to nothing to do with falling interest rates or commodity prices, or with rising momentum in corporate earnings growth. And when the hype on financial TV gets so extreme (as Maria Bartirmo was actually giggling yesterday as she spoke of consecutive days of record highs), I have to turn it off.

Yesterday’s portfolio movers from the Cara Watch List:

Here are the top gainers from yesterday from the Cara 100.

Interactive charts of the top 12 Watch List gainers

Here are the top losers from yesterday from the Cara 100.

Interactive charts of the Watch List losers

Note there were only 11 losers (GRZ and HD don’t count). Note also that PBR (Petro Brazil) followed by four Canadian stocks (MFC, SU, TCK and CCJ) were the top five losers, followed by LYO and then Bahamas stock TGP. Americans yesterday were all caught up in the Bush press conference and the Bernanke testimony and PR spin associated with both.

Have you recently seen a US market drop say 50 or 100 points on the Dow 30 when these VIP's are front and center in the media? I simply ask the question (because I don’t know the answer), “Does the Fed and Treasury pump the stock and bond market when the President, Treasury Secretary and Fed Head are doing public speaking?”

If so, isn’t that market manipulation, and wouldn’t that be a criminal act? My point is not to point an accusatory finger, but merely to state that the public has the right to know when the Fed and Treasury are intervening in public markets.

We spend our time analyzing the most ridiculous and irrelevant of economic data, and yet when crucially important data ought to be made prominent, we are kept like mushrooms in the dark. When does this nonsense stop? When Eliot Spitzer gains the White House?

There were eleven 12-month highs and zero new lows in the Cara 100 yesterday. It was a great day for the Bulls.

I am going to re-run the Colin Twiggs’ charts here. Colin does very good analytical work at IncredibleCharts.com, and I am fully supportive. The annual cost is quite modest.

Enjoy your day. BTW, my maple-glazed Atlantic salmon was to die for. And we enjoyed a terrific bottle of low-cost champagne (actually a sparkling white since it was not French), but I cannot tell you the name of it because the supply is very low in the stores. A tiny hint is that it is a European product.