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March 31, 2007
Week #13 (2007-03-31) in Review (FINAL)
The end of every quarter is a good time to reflect on the big picture, which is what I intend to do today.
Yes, the equity markets were mixed this week, but Colin Twiggs (www.incrediblecharts.com) opines that confidence is returning to the equity markets, which is in keeping with my observation on March 15 that something significant had occurred on March 14 in mid-session of the Far East markets.
At that point in the day (on March 14), all those markets were solidly negative, as had been the North American and European markets the day before. Suddenly as the earth rotated around the sun, surprise, surprise, all equity markets threw up green arrows. There was no news of any significance in the world at that time to cause such an event.
What I did report that day was that Humungous Bank & Broker had uniformly issued reports to say that they would be interested in buying the Sub-prime lenders (including the ones they were suing) because the problem was not that bad.
Oh, to be a fly on the wall before those reports were issued. Yes, the consistency and timing of the reports, in the face of very negative and incontrovertible evidence, led me to believe this was Wall Street and the Fed pulling one over on the market.
Why would they do that? Because they weren’t yet ready to let the market sink.
Markets can be led you know.
On that score, “Leisa” in a comment below posits her concerns for the US mortgage market. She makes an argument in her blog (March 29) that there is a bankruptcy risk to Mortgaged Back Securities, figuring that HB&B will line up their ducks to beat the bond-holders out of the available cash flow.
On March 30, in her commendable blog, she draws our attention to a San Francisco Fed report that fills in some blanks about mortgage, housing, consumption data, leading to her conclusion that the American consumer in the near future will be a different person than the one in our recent past. I very much agree, and I thank her from all of you for her contributions here.
In any event, Colin Twiggs says “Confidence Improving”. His report is included herewith. Although I might have used a different headline, I cannot argue with the fact that Humungous Bank & Broker is trying hard to save their bacon, which is inspiring confidence I guess. Except for the Semi-conductor SMH ETF, however, the Financials XLF was the worst performer for this quarter.
So HB&B is in there sucking and blowing.
The point I have consistently made since I started blogging almost three years ago is that markets are not free. Markets are driven by forces that are related to interest rates, economic activity, commodity and forex prices and by vested interests.
Randomness occurs in a vacuum. We don’t live or trade in a vacuum.
I have never met a successful veteran trader who suffered from credulity syndrome. In fact, the best of the lot are typically hard-ass skeptics. Rule number 1, 2, 10 and everything in between is, “We trade prices (not stories)”.
In other words, success comes to those who don’t care who is operating in a backroom to manipulate prices, just thankful they (whomever they are) do enough to create volatility.
A week ago, I opined, “There has been a very significant turn in equity markets that cannot be ignored.” I then quoted from my Daily Report of March 15 (8:23am ET) with the Dow 30 at 12,133.40, “I think there has been a reversal of capital flows – a bet on Bernanke – that started yesterday afternoon -- originating from the boardrooms of HB&B on Wall Street. Only in America can a distinct negative (ie, a collapsing mortgage financing system and failing housing market) be turned into such a positive. That’s the power of positive thinking -- a tribute to America. But it is also testimony that the US authorities are involved in this so-called free market up to their armpits.”
Unfortunately, or fortunately as the case may be, we live with organizations like central banks, and in the case of America with bankers called the Federal Reserve Bank. We also live with people like James Cramer who willingly admit as to how markets really work.
Interestingly, at the beginning of March, an old videotape of Cramer telling stories out of school hit the YouTube world, causing a reaction from vested interests at HB&B and their mainstream media friends. Mr. Cramer made a number of shallow apologies. The videotape was pulled from the Internet.
But, not to my surprise, the tape has popped up again, and will again when those vested interests pull this one down. While the subject matter clearly bothers some people, ie, manipulation in markets actually does exist and the authorities do nothing about it, I think those of the public who are most furious are the ones I accuse of living with credulity syndrome.
Here again is the “Cramer Confessional” tape: http://www.billcara.com/archives/2007/03/cramer_confessional_thur_mar_1.html
Global Market Summary
International Equities: Most international markets were soft this week, but except for maybe India, of those I follow, the losses were fairly modest.
U.S. Equities : The broad indices in the US dropped immediately on Friday after the US threatened China with tariffs on paper imports. With China now holding well over $1 trillion of US debt, that’s no way to talk to your banker. Still, the broad US market was down only about -1.0 pct on the week.
Dow 30 : This week, except for a couple hours Friday morning when the US threatened China with new import tariffs, the Dow 30 was moving along nicely. Not even higher oil prices and a threatened break-out of war involving Iran was stopping the Dow. Just goes to show how important China is today. Result: only 4 of the Dow 30 closed up this week.
U.S. Sector ETFs: Only one (XLE) of the ten US sector ETF’s was up this week, and barely so (+0.10 pct).
First segment: most influenced by global commodities, forex and capex spending
10: Energy (XLE): #1 (+0.10 pct); Traders are focusing on Iran
15: Basic Materials (XLB): #4 (-0.4 pct); Metals up; miners down?
20: Industrials (XLI): #9 (-2.3 pct); Fuel costs finally sank in
Second segment: most influenced by U.S. consumer spending and economic growth
25: Cons. Discretionary (XLY): #8 (-1.6 pct); Fuel costs and now tariffs
30: Cons. Staples (XLP): #5 (-0.5 pct); Booze (ABV and DEO) still winning
35: Healthcare (IYH): #6 (-0.7 pct); One mixed up week
Third segment: most influenced by U.S. interest rates and general economic health
40: Financial (XLF): #7 (-1.6 pct); HB&B had some big losses
45: Tech (SMH chips): #10 (-2.8 pct); From 10th to 10th— no bull
50: Telecom Service (IYZ): #2 (flat); Love those dividends
55: Utilities (XLU): #3 (-0.4 pct); Tough day Friday
Bonds: “The US Bond market dropped a bit as some bond traders took note of higher inflation data and others became concerned about upsetting America’s banker, the People’s Bank of China
Commodities: $CRB rallied +5.94 (+1.9 pct) thanks to inflation data, 15 Brit sailors, and Ethanol.
Oil & Gas: $WTIC futures gained +3.59 (+5.8 pct W/W) to 65.87, which is a gain of 6.70/bbl in just a little over a week.
Gold: The Precious Metals gained. $GOLD was up +11.70 (+1.8 pct) on the week.
Goldminers: The goldminers encountered tough sledding, down between -0.6 pct and -2.3 pct on the indexes. Looking good.
Forex: The $USD dropped -0.5 pct W/W and the Euro gained +0.6 pct, the Pound was up +0.3 pct and even the Yen lifted +0.2 pct. This is a volatile currency market.
Economics:
Economic calendar for next week.
Cara Stock Watch
As Colin Twiggs opines, the broad market is picking up confidence despite a smack-down week for the Dow.
Here are the Cara 100 gainers on Friday.
Interactive chart of the top 12 Watch List gainers
Here are the top Cara 100 losers for Friday.
Interactive chart of the top 12 Watch List losers (Interactive link)
Most of the biggest losers on Friday were foreign stocks.
Here are the stocks of the Cara 100 for Friday that hit 52-week intra-day highs.
Sector ETF Review
The tables I show are for ten Sector Index Funds (ETF’s) only.
As for this week’s prices, of the ten sector ETF’s I follow here, not a single one was down this week. In fact, the gains in all but SMH were truly impressive.
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 Billcara2.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 because the list of ETF’s growing incredibly fast.
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 the only sector ETF of my watchlist that gained on the week, and the gain was all of 6 cents (+0.10 pct) following a terrible morning on Friday that saw the XLE close down -1.37 pct on the day.
Friday was a strange day, full of rumors about the political situation in the Straits of Hormuz being no problem, and the US corn planting leading to a glut of fuel this year… yada yada. I don’t know what to make of it except that if an hour’s trading on Friday morning had been removed from the XLE, it would have had a good week. And so too would the broad US market.
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 gained again this week, despite a sell-off on Friday morning. XOM and CVX gained +0.6 pct and +0.4 pct respectively W/W.
The biggest gains were the big oil companies in China, Brazil and Canada where CEO (+4.8 pct), PBR (+4.7 pct) and SU (+4.6 pct) were leaders.
Integrated Oil & Gas - Canada
Oil & Gas Exploration & Production -Canada
Sector 15 (basic materials: IYM, XLB, IGE and VAW)
The Basic Materials ETF (XLB) lost -0.44 pct W/W to close at 38.05. There was a small gain on Friday.
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 steels and metals were mixed, ie, mostly unremarkable.
Tenaris (TS) (+3.3 pct last week and +10.7 pct over two weeks) moved higher with the oil price – as I said two weeks ago (before the move) that it would. Tenaris supplies the oil drillers and pipelines with tube steel.
The goldminer stocks were also mixed, but Agnico-Eagle, Newmont and Goldcorp took sizeable losses on the week.
Sector 20 (industrial: IYJ, XLI, VIS, and IYT)
The Industrials and Transport sector ETF (XLI), aka capital goods producers, took a large hit of -2.26 pct W/W to close at 35.54.
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 |
Last week I wrote, “I am at a loss for words as to how the Transport share prices can rally when costs are rising so quickly. I still think the jury is out.” The jury has spoken: Fedex (FDX) was dumped with a -4.68 pct loss on the week. The big components of XLI (Capital Goods Makers plus Transportation) were hit across the board. The only one to escape was Caterpillar (CAT) which became a focus of the farmers/corn discussion.
Sector 25 (consumer discretionary: XLY, IYC and VCR)
The Consumer Discretionary sector ETF (XLY) was hit -1.63 pct W/W to close at 38.03.
I have been of the opinion that “XLY is going either sideways or down.”
With last week’s rally (+3.6 pct), I opined, “Mighty impressive, but I don’t think it will be long lasting. Weeks maybe, but I don’t think many months.”
I just feel strongly that there is a sector rotation going on here because the people that know are watching US consumption shrivel up. Some stocks can get pumped for a while, but eventually the sector will sag. What will hold it up for a while is a strong $USD, which makes for a lower US Current Account deficit as foreign purchases become cheaper.
In the big picture, however, that’s not a long-term trend I would place my confidence in.
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 |
After Ebay (EBAY) jumped +4.2 pct this week, it has been up +9.9 pct for the quarter. It’s also up +16.9 pct over the past two quarters.
But, Nike (NKE) took a breather this week, down -2.6 pct, although it is still up +8.8 pct for the quarter.
Most of the others in this sector also sold off on the week, including the worst, Toyota (TM), down -3.8 pct, which is a sign that the $USD dropped (as it did, closing 82.92, down -0.5 pct W/W). Toyota makes more money when the $USD is strong.
Sector 30 (consumer staples: XLP, VDC, RTH and IYK)
The Consumer Staples sector ETF (XLP) lost -0.52 pct W/W to close at $26.65. Not bad, but that’s what you’d expect when traders are nervous. They tend to look to the Consumer Staples for support.
I thought the US industrial-military complex components would have enjoyed better performance on the week, with the $USD down and all, but maybe the overriding factor was that huge budget increase approved by the House that now will get vetoed by the President.
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 guys ABV and DEO were still ringing up receipts from St Paddy’s Day. After a week ago when both were up +4.5 pct, this week DEO lifted +2.2 pct (clearing getting into my selling crosshairs) and ABV was up +1.6 pct.
Whole Foods Market (WFMI) had a big gain on Friday, but still lost on the week (-0.4 pct).
Procter & Gamble (PG) consolidated the prior week’s gain of +3.6 pct (based on broker upgrades), with a loss of -1.0 pct this week.
Walgreen (WAG) dropped -3.9 pct W/W. I didn’t see a reason.
Sector 35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)
The IYH healthcare ETF lost -0.74 pct W/W to close at 66.71, a loss of 50 cents.
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 |
The winners the prior week, which were the care providers UNH +6.4 pct and AET +4.7 pct, this week lost most of those gains. AET dropped -3.1 pct, while UNH lost -6.3 pct.
Amgen (AMGN -3.7 pct) and Novartis (NVS -4.4 pct) were also big losers this week. Novartis had to pull Zelnorm, an irritable bowel drug, which reduced its outlook. Amgen ran into similar issues with Aranesp, which apparently riskier than some doctors are prepared to accept.
Maybe this is a good time to be accumulating some of the AMGN and NVS?
Sector 40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)
The Financials ETF (XLF) dropped -1.57 pct W/W to close at 35.63. Next to semi-conductors (SMH), XLF is the worst over the past four weeks.
Confidence may be growing, but caution is still the operative word. Bull markets typically are not held back by XLF and SMH. In fact, I don’t think I have ever seen it. And when I put that together with the general, GE, which has been down -6.9 pct this quarter, and was a loser (-1.3 pct) again this week, I don’t see a Bull market forming here.
What I do see is what I have been saying all along – sector rotation, which is a way for the gnomes to drop their dogs into a sea of enthusiasm. But, that’s like a game of musical chairs because when the gnomes decide to unplug the electricity, everything stops and the unwary are left without a seat in the game.
This is a time to ratchet down personal debt, including brokerage account margin. As you do, of course, the big banks will suffer.
This cycle isn’t so much a typical inventory cycle (Kitchin Wave) as it is an inventory of money cycle. As permitted by the central banks, the commercial banks have created too much money, ie, too much debt, and now that debt service is becoming problematic, they feel it’s time to tighten up.
And when that inventory of money is reduced, I don’t know what’s there in the economy (unless it’s more war) to pick up the slack. I do know there is a very high correlation between declining money supply and falling equity prices, and during war those stock prices tend to rally.
Its afterwards that hurts the owners of capital. We call it inflation.
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 |
The financials had another tough week. Lehman Bros (LEH -4.7 pct), Merrill Lynch (MER -4.7 pct), Morgan Stanley (MS -2.9 pct), and Goldman Sachs (GS -2.5 pct) led the fall-out. What a difference a week makes.
Except for the prior week’s humungous gains, its been a tough Quarter for HBB – unless you were part of Bernanke’s calls to Friends & Family.
I got around to fixing CS in the table. Not being a Cara 100 company, I hadn’t noticed the ticker symbol had changed from CSR.
Now that I think of it, I like Credit Suisse. I think they got over a few issues with their purchase of a major US broker-dealer. And everybody knows they are number two in Switzerland and trying harder. Besides I really enjoy their research in the metals area, and by Ivy Zelman who this month blew everybody away with her excellent report on the problems with US housing and mortgages.
Lehman and Merrill Lynch have taken a beating this quarter, but I think there is more to come.
Sector 45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, MTK and SMH)
This week SMH dropped -2.82 pct to close at 33.39. Another ugly week.
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 |
Other than QCOM, which was recovering a bit (+0.2 pct) from the prior week losses, this was a tough week for the tech sector.
What else can I say? This sector is not the reason for trader confidence.
Sector 50 (telecom: IYZ, VOX and IXP)
The U.S. telco sector ETF (IYZ) was absolutely flat this week. AT&T (T), however, was one of four Dow stocks making a gain on the week. T lifted +1.4 pct.
Traders are finding it difficult knowing where to turn.
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) wee having a good week until Friday. On Friday XLU dropped -1.0 pct, leaving a loss of -0.4 pct on the week, closing at 39.70.
Last week I wrote, “The problem is that I always believed (and still do) the inflation story, and I thought that interest rates would have moved much higher before now. It didn’t happen because (I believe) the Fed has pumped an incredible amount of liquidity into the system (to avoid a mortgage, banking and home-owner debt crisis) at the same time that HBB honed its skills at trading credit default swaps. Concern for risk went out the window, and so the interest-sensitive utilities and telcos just kept on moving like the Energizer Bunny. The charts are phenomenal. Until we see a yield on the 10-year US Treasury Note that exceeds 5 to 5.25 pct (vs this week’s 4.59 pct), it looks like clear sailing for XLU.”
On Friday, the yield on the 10-year US Treasury lifted by +1 basis point, whereas the other instruments were all flat. The yield is now 4.63 pct. Watch this number.
I suspect China holds the control. There is nothing stopping them from selling their holdings of 10-year for 2-year paper. In fact, this week the yield on the 2-year dropped -2 bp as somebody big was switching maturities, selling 10-year bonds and buying the 2-year. If that keeps on happening, the long-term bond inventories of the utility and telco companies will sink.
Here’s the XLU Monthly, Weekly, Daily and Hourly data charts:
XLU Monthly data:
XLU Weekly data:
XLU Daily data:
XLU Hourly data:
Bond & Interest Rate Review
US Treasury bonds dropped in price this week as the yields lifted +4, +4, and +2 basis points (bp) to 4.82 pct, 4.63 pct, and 4.51 pct respectively on the 30-year, 10-year, and 5-year paper.
And, the T-Bill yield lifted +3 bp from 4.85 pct to 4.88 this week.
Only the yields on the 2-year US Treasury Note dropped this week, falling -2 bp from 4.58 to 4.56 pct.
Two weeks ago I opined,
On its own, the recently released economic data points (eg, PPI and CPI) do not offer up any rationale for rapidly falling Treasury yields. Hence, if there is any recovery here in stock prices, I expect these yields to move back up – as they did a week ago.In other words, I do not yet believe that traders are betting on recession and deflation. Metals and precious metals prices lifted this week, and the inflation data that the US govt published on Thursday and Friday shows no let up in the inflation cycle.
Last week I wrote, “I’d say I got that right.” This week more of the same. In fact, the TIPS actually lifted in price +0.06 pct W/W as most other bonds dropped in price (and lifted in yields).
The TLT dropped -0.57 pct W/W to close at 88.28. Traders are paying more attention to inflation.
Interest rates and bond yields.
Interactive Daily data charts:
Interactive Hourly data charts:
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 4.88 | 4.88 | 4.85 | 4.98 |
| 6 Month | 4.83 | 4.83 | 4.86 | 4.88 |
| 2 Year | 4.56 | 4.56 | 4.58 | 4.62 |
| 3 Year | 4.51 | 4.52 | 4.51 | 4.54 |
| 5 Year | 4.51 | 4.51 | 4.49 | 4.50 |
| 10 Year | 4.63 | 4.62 | 4.59 | 4.55 |
| 30 Year | 4.82 | 4.82 | 4.78 | 4.66 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 3.57 | 3.54 | 3.48 | 3.47 |
| 2yr AAA | 3.56 | 3.54 | 3.50 | 3.55 |
| 2yr A | 3.59 | 3.57 | 3.67 | 3.55 |
| 5yr AAA | 3.60 | 3.56 | 3.55 | 3.57 |
| 5yr AA | 3.64 | 3.58 | 3.57 | 3.53 |
| 5yr A | 3.70 | 3.66 | 3.66 | 3.68 |
| 10yr AAA | 3.79 | 3.70 | 3.67 | 3.64 |
| 10yr AA | 3.80 | 3.68 | 3.63 | 3.63 |
| 10yr A | 4.09 | 4.00 | 3.97 | 3.94 |
| 20yr AAA | 4.17 | 4.18 | 4.13 | 4.06 |
| 20yr AA | 4.36 | 4.48 | 4.43 | 3.99 |
| 20yr A | 4.02 | 4.02 | 4.05 | 3.91 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 4.97 | 4.95 | 4.95 | 4.91 |
| 2yr A | 5.01 | 4.99 | 5.00 | 4.98 |
| 5yr AAA | 5.01 | 4.99 | 4.96 | 4.93 |
| 5yr AA | 5.12 | 5.11 | 5.08 | 5.02 |
| 5yr A | 5.14 | 5.12 | 5.10 | 5.04 |
| 10yr AAA | 5.31 | 5.29 | 5.22 | 5.14 |
| 10yr AA | 5.46 | 5.45 | 5.42 | 5.40 |
| 10yr A | 5.52 | 5.52 | 5.48 | 5.37 |
| 20yr AAA | 5.90 | 5.87 | 5.92 | 5.65 |
| 20yr AA | 5.92 | 5.81 | 5.89 | 5.73 |
| 20yr A | 6.04 | 6.01 | 6.06 | 5.79 |
Interactive Chart of Interest rates and bond yields.
Two weeks ago, I wrote, “Fannie (FNM) (-3.2 pct), Freddie (FRE) (-4.0 pct) and Countrywide Financial (CFC) (-3.2 pct W/W), along with the broad Financial sector (XLF) (-2.4 pct), all were hit hard as traders started to realize that the housing and mortgage market problems are greater than just in the Sub-prime area.”
Then last week, I wrote, “after Humungous Bank & Broker claimed that the Sub-prime market was not a serious problem for the US financial system, everything turned on a wooden nickel. Countrywide Financial (CFC) (+5.35 pct), Fannie (FNM) (+5.28 pct), and Freddie (FRE) (+4.79 pct), as well as XLF (+3.37 pct) all had solid recoveries. Apparently, America has nothing to worry about? We shall see.”
Aha, this week, Fannie dropped -3.6 pct, Freddie lost -4.6 pct and Countrywide Financial plunged -8.7 pct. So, the jury has voted, and apparently they didn’t believe the HB&B story that America’s mortgage and housing industries are A-OK.
US Bond Funds -- Interactive 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 -- Interactive 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 -- Interactive 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 -- Interactive 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:
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 |
Yes, it was in this space two weeks ago I opined, “I’m thinking that with CFC, FRE and FNM continuing their descent, the issue has more to do with accounting provisions for loan losses than with interest rates.” Yes, this week rates increased but the Big Three lenders rocketed up when Humungous Bank said, “No worry, mon. Be happy.”
Then, a week ago, despite humungous gains, I wrote, “I still worry, mon. I want to see those loan loss provisions.”
Apparently, so do most of you.
The problem here is that there is a difference in time horizon. Operations and bookkeeping take forever to roll, whereas the story spinmasters and market prices change as fast as you can blink. If you can just lose that credulity syndrome thing that too many people are afflicted with, then you will see that point.
In other words, when it takes years to cause the balloons to expand and start to burst, a magic solution doesn’t come overnight. Not even when the President, or the Treasury Secretary or the Fed Head or HB&B tell you not to worry, they have all under control.
When you have been around the block a few times, like me, you get to recognize the wooden nickels.
Consumer Finance -USA -- Interactive Weekly Data Charts
Consumer Finance -USA -- Interactive Daily Data Charts
Consumer Finance -USA -- Interactive Hourly Data Charts
It was just in this space a week ago when I told readers when they ought to have offed their Countrywide Financial. CFC just dropped -8.7 pct this week.
Commodities Review
The Commodities Index ($CRB) gained this week +5.94 (+1.91 pct), closing at 316.88. As metals and precious metals lifted a bit; the big recovery was in the energy sector, mostly in Crude Oil ($WTIC up +5.8 pct).
Two weeks ago (with $CRB at 304.44) I opined, “There could be a rally in $CRB, but I continue to believe that the Weekly and Daily charts of the $CRB look awfully much like any rally would be headed off by a falling MA line at about 316.”
So, $CRB is now at 316.14, which is a gain of 11.7 (+3.84 pct) in two weeks (Bingo, Bill!).
All through the piece, I have been saying, “so 316 is getting close. I think Crude Oil ($WTIC) will have to go above 66 for $CRB to rally past 316.” Bingo there too.
Now that everybody is talking about commodities, the $CRB has to stay above the 200-day Moving Average (316.14) to keep me smiling.
My big bet, as you know, is not $CRB or Crude Oil ($WTIC), but $GOLD, $SILVER and $PLAT.
Interactive Chart of Weekly CRB Commodities Index:
Interactive Chart of Daily CRB Commodities Index:
Oil:
Two weeks ago, West Texas Intermediate Crude ($WTIC) pulled back after a string of wins. Last week, it zoomed higher again.
This week, $WTIC gained 3.59/bbl (+5.76 pct W/W) to close at 65.87, after hitting a high on Friday of 66.78.
The 50-Day Moving Average (from StockCharts) is now 59.47, while the 200-Day MA is 63.92. Hence the current price (65.87) is bullish.
The military-political confrontation in the Persian Gulf between Britain and Iran is becoming a matter of major concern. I don’t see how anybody knows how this matter is going to be decided, so I expect more volatility in the near term.
Interactive Chart of Weekly Crude Oil:
Interactive Chart of Daily Crude Oil:
Gold:
This week, $GOLD gained +11.70/oz (+1.78 pct W/W) to close at 669.00.
The 50-day MA is now at 660.13 and the more important 200-day MA is at 627.68. So $GOLD is bullish.
Except for Palladium, which had a small loss this week (but not on Friday), all the Precious Metals are on the rise.
Interactive Chart of Weekly Gold EOD Continuous Contract Index:
Interactive Chart of Daily Gold EOD Continuous Contract Index:
Interactive chart of recent trading for the Gold Bullion index.
This week, $SILVER gained $0.11 (+1.69 pct) to close at 13.45.
The 50-day MA is 13.52 (so the current price at 13.45 is still technically short-term negative) and the 200-day MA is 12.44 (so the case is clearly Bullish).
Interactive Chart of Weekly Silver EOD Continuous Contract Index:
Interactive Chart of Daily Silver EOD Continuous Contract Index:
Interactive chart of the Silver Bullion index.
$PLAT gained 6.80 (+1.11 pct) W/W to 1252.80.
The 50-Day MA for $PLAT is now 1213.65 and the 200-Day MA is 1184.88, so $PLAT is Bullish.
Interactive Chart of Weekly Platinum EOD Continuous Contract Index:
Interactive Chart of Daily Platinum EOD Continuous Contract Index:
Interactive chart of the Platinum metal index.
$PALL lost -1.94 (-0.54 pct) W/W to close at 357.31. I’d prefer to see all four of the PM complex move higher in sync, like they were on Friday.
The 50-day and 200-day Moving Averages for $PALL are 350.72 and 331.94 respectively, which is below the current price, which means palladium is technically bullish.
There has been a bullish pattern here since early October (290.88).
To me, the chart looks ready to break out on the upside after trading in a tightly controlled band for the past few weeks. The recent short-term cycle high of 359.72 or the long-term cycle high of 362.43 are close enough to be taken out any day now.
Interactive Chart of Weekly Palladium EOD Continuous Contract Index:
Interactive Chart of Daily Palladium EOD Continuous Contract Index:
Interactive chart of the Palladium metal index.
Base metals continue to be very strong.
$COPPER gained 7.70 (+2.51 pct) W/W to close at 314.60.
Two weeks ago, with $COPPER at 301.10, after making a major weekly move from 270.70, I opined, “this (bullish) trend might persist.” It has.
The 50-day MA for $COPPER is 274.58, and the 200-Day MA is 314.50.
Last week, I asked, “Can the current price (306.90) surpass the 200-day MA soon? Well, it’s only $8.35 away.” This week, the current price (314.60) is above the 200-day MA (314.59), even if it is only by a penny. So, technically speaking, $COPPER is now bullish.
Interactive Chart of Weekly Copper EOD Continuous Contract Index:
Interactive Chart of Daily Copper EOD Continuous Contract Index:
Interactive chart of 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 |
Base metal stocks (BHP and RTP) enjoyed a good week. The senior goldminers didn’t fare as well. Gold Fields (GFI +1.7 pct) and Meridian (MDG +1.6 pct) were ok but Agnico-Eagle (AEM -7.0 pct), Newmont (NEM -3.6 pct) and Goldcorp (GG -3.4 pct W/W) did not hold up.
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 AUY KGC BVN
Interactive 15-minute data
Interactive 60-minute data
Interactive Daily data
Interactive Weekly data
MDG LIHRY AEM BGO IAG EGO RGLD GOLD CDE GRS
Interactive 15-minute data
Interactive 60-minute data
Interactive Daily data
Interactive Weekly data
CBJ SSRI SIL NG KRY UXG GRZ TSE_HRG TSE_GUY TSE_AGI
Interactive 15-minute data
Interactive 60-minute data
Interactive Daily data
Interactive Weekly data
NXG GSS MNG DROOY MFN RNO RANGY MRB CLG
Interactive 15-minute data
Interactive 60-minute data
Interactive Daily data
Interactive Weekly data
Here are the key Silver miners and the SLV ETF:
SLV SIL CDE HL PAAS SSRI SLW MGN
Interactive 15-minute data
Interactive 60-minute data
Interactive Daily data
Interactive Weekly data
$XAU, GDX and (TSE’s) XGD were down this week, going -0.6 pct, -0.8 pct, and -2.3 pct, respectively. Friday was a mixed day again.
The $XAU index closed at 137.01. The 50d-MA (137.87) and 200d-MA (137.56) are now above the current price, which means that the PM stocks are now technically bearish. Two weeks ago, they were technically bearish, and then recovered last week. This week they were down again.
I think traders are buying the dips and hoping for a break to higher ground for the $GOLD.
Here are the Weekly and Daily Data charts of the indexes:
Interactive Chart of Weekly U.S. Goldminers Index:
Interactive Chart of Daily U.S. Goldminers Index:
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:
Interactive Chart of XGD Weekly data:
Interactive Chart of XGD Daily data:
Forex Review
The $USD closed at 82.92, a loss of -0.38 (-0.46 pct) W/W, almost half of which occurred on Friday.
The $USD 50-Day MA is now 84.09, and the 200-Day MA is 84.95, so the current price (82.92) is technically still quite bearish.
The following data requires your attention: M3 update as of the past week.
M3 is growing at an excessive rate in order to pay for a war and for govt deficits not matched by taxes. The expenditures budget approved by the US House this week exceeded a growth of +5 pct, but the President says he will not pass it.
Interactive Chart of Weekly U.S. Dollar Index:
Interactive Chart of Daily U.S. U.S. Dollar Index:
The Euro (priced in USD) had an increase on the week, gaining +0.57 pct W/W, closing at 133.66. Any higher, say above 135, and I expect a significant move higher in precious metals prices.
The $XEU 50-Day MA is 131.35, and the 200-Day MA is 128.93, so the current price (133.66) is technically still quite bullish.
Interactive Chart of Weekly Euro Dollar Index, priced in USD:
Interactive Chart of Daily Euro Dollar Index, priced in USD:
The British Pound gained +0.34 pct W/W to close at 196.84, almost all of which happened on Friday.
The $XBP 50-Day MA is 195.57, and the 200-Day MA is 190.94, so the current price (196.84) is technically bullish.
Weekly British Pound Index:
Daily British Pound Index:
The Japanese Yen had a modest gain against the $USD this week (+0.17 pct), almost all of which happened Friday (+0.14 pct), closing at 84.90.
The 50-Day MA is 83.88, and the 200-Day MA is 85.04, so the current price (84.90) is now short-term bullish, but long-term minimally bearish.
Weekly Japanese Yen Index:
Daily Japanese Yen Index:
Weekly Canadian Dollar Index:
Daily Canadian Dollar Index:
The Canadian Dollar gained +0.59 pct W/W to close at 86.68, including a gain of +0.42 pct on Friday.
The $CDW 50-Day MA is 85.37, and the 200-Day MA is 87.59, so the current price (86.68) is short-term bullish and long-term bearish.
The recovery in the price of Oil certainly has helped the Canadian Loonie’s performance. But, a strong Loonie will hurt Cdn manufacturers and in-bound tour operators.
International Equities Review
Most of the international markets had a losing week, but except for India, the losses were minimal.
A week ago, the Indian ETF (IFN) rocketed +9.7 pct, but this week it dropped -6.8 pct, including a loss of -3.8 pct on Friday.
The Templeton Russia Fund was down -1.3 pct. The China FXI was down -0.5 pct W/W.
Asia-Pacific indices (Interactive link)
European indices (Interactive link)
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
Japan’s EWJ (which is a USD-denominated NYSE-traded ETF) lost -2.21 pct W/W to 14.57, which is now 2 cents below the 50-day MA, and well below the 200-day MA. The Nikkei 225 dropped from 17480 to 17288 (-1.1 pct).
Here is the Japanese (EWJ) equity market ETF Monthly, Weekly, Daily and Hourly data charts:
U.K. equity market ETF: EWU
The FTSE 100 of the UK dropped from 6339 to 6308 (-0.5 pct) while the EWU (UK market ETF trading in the US in USD) lost -0.29 pct to 24.07.
The current price of the EWU (24.07) is still well above the 50-day MA (23.58) and 200-day MA (22.68), so technical analysts will call that bullish.
Here is the United Kingdom (EWU) equity market ETF Monthly, Weekly, Daily and Hourly data charts:
EWU Daily data:
Canadian equity market ETF: EWC
EWC (priced in USD) had a modest gain of +0.23 pct W/W to close Friday at 26.15. But the prior week had been a phenomenal move.
The TSX Composite (13,165.50) was a small decline from the previous week (13,237.66).
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 Review
All broad indexes in the US stock market lost about -1.0 pct this week. The Nasdaq Composite and Russell 2000 small cap indexes both lost -1.1 pct, while the S&P 500 also lost -1.1 pct and the Dow 30 lost -1.0 pct W/W.
There were just four winning stocks in the Dow 30 this week, which seems awful, but there was a shock to the market on Friday morning that I think explains what happened. The US threatened China with tariffs on US imports of paper. China got mad. The Chinese hold over $1 trillion in US debt. It’s not wise to upset your banker. The yields on US Treasury debt increased about +4 basis points this week, and the worry now is what will happen to yields should the Chinese authorities sell US debt. That surely will raise the yields on the 10-year Treasury Notes to say +5 pct or higher, and that just might be enough to topple a fragile US mortgage industry.
Ultimately, both parties are in the same soup and will have to work things out.
Here is the Monthly data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.
Here is the Weekly data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.
Here is the Daily data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.
Here is the Hourly data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.
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.billcara2.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 Billcara2.com that I broke into groups of ten, which you can add technical indicators for as well. (list one) (list two) (list three)
Dow 30 comments:
The reports from Value Line this week are on the two big telephone companies of America, AT&T (T) and Verizon (VZ).
(T: Value Line Report Mar. 30: next one is due Jun. 29)
(VZ: Value Line Report Mar. 30: next one is due Jun. 29)
Obviously, conservative traders and those seeking income are liking these two stocks. Fundamentally, the earnings growth in T is superior to VZ, but the current yield for VZ is higher, so take your pick.
I’d be more enthusiastic, but I’m not conservative, and I’m not seeking dividend income from a US payer. Please don’t hold that against me.
Alcoa [GICS 15, Dow 30]
(AA: Yahoo Finance file)
(AA: StockChart chart)
(AA: Billcara2 chart)
(AA: ADVFN Financial Data)
(AA: Value Line Report Jan. 19: next one is due Apr. 20)
Altria Group Inc [GICS 30, Dow 30]
(MO: Yahoo Finance file)
(MO: StockChart chart)
(MO: Billcara2 chart)
(MO: ADVFN Financial Data)
(MO: Value Line Report Feb. 2: next one is due May. 4)
American International Group [GICS 40, Dow 30]
(AIG: Yahoo Finance file)
(AIG: StockChart chart)
(AIG: Billcara2 chart)
(AIG: ADVFN Financial Data)
(AIG: Value Line Report Feb. 23: next one is due May 25)
American Express [GICS 40, Dow 30]
(AXP: Yahoo Finance file)
(AXP: StockChart chart)
(AXP: Billcara2 chart)
(AXP: ADVFN Financial Data)
(AXP: Value Line Report Feb. 23: next one is due May 25)
AT&T [GICS 50, Dow 30]
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Billcara2 chart)
(T: ADVFN Financial Data)
(T: Value Line Report Mar. 30: next one is due Jun. 29)
Boeing Co [GICS 20, Dow 30. Cara 100]
(BA: Yahoo Finance file)
(BA: StockChart chart)
(BA: Billcara2 chart)
(BA: ADVFN Financial Data)
(BA: Value Line Report Mar. 23: next one is due Jun. 22)
Caterpillar [GICS 20, Dow 30]
(CAT: Yahoo Finance file)
(CAT: StockChart chart)
(CAT: Billcara2 chart)
(CAT: ADVFN Financial Data)
(CAT: Value Line Report Jan. 26: next one is due Apr. 27)
Citigroup [GICS 40, Dow 30, Cara 100]
(C: Yahoo Finance file)
(C: StockChart chart)
(C: Billcara2 chart)
(C: ADVFN Financial Data)
(C: Value Line Report Feb. 23: next one is due May 25)
Coca Cola [GICS 30, Dow 30]
(KO: Yahoo Finance file)
(KO: StockChart chart)
(KO: Billcara2 chart)
(KO: ADVFN Financial Data)
(KO: Value Line Report Feb. 2: next one is due May. 4)
Disney [GICS 25, Dow 30, Cara 100]
(DIS: Yahoo Finance file)
(DIS: StockChart chart)
(DIS: Billcara2 chart)
(DIS: ADVFN Financial Data)
(DIS: Value Line Report Feb. 16: next one is due May 18)
Dupont [GICS 15, Dow 30]
(DD: Yahoo Finance file)
(DD: StockChart chart)
(DD: Billcara2 chart)
(DD: ADVFN Financial Data)
(DD: Value Line Report Jan. 19: next one is due Apr. 20)
ExxonMobil [GICS 10, Dow 30, Cara 100]
(XOM: Yahoo Finance file)
(XOM: StockChart chart)
(XOM: Billcara2 chart)
(XOM: ADVFN Financial Data)
(XOM: Value Line Report Mar. 16: next one is due Jun. 15)
General Electric [GICS 20, Dow 30, Cara 100]
(GE: Yahoo Finance file)
(GE: StockChart chart)
(GE: Billcara2 chart)
(GE: ADVFN Financial Data)
(GE: Value Line Report Jan. 12: next one is due Apr. 13)
General Motors [GICS 25, Dow 30]
(GM: Yahoo Finance file)
(GM: StockChart chart)
(GM: Billcara2 chart)
(GM: ADVFN Financial Data)
(GM: Value Line Report Mar. 2: next one is due Jun. 1)
Hewlett-Packard [GICS 45, Dow 30]
(HPQ: Yahoo Finance file)
(HPQ: StockChart chart)
(HPQ: Billcara2 chart)
(HPQ: ADVFN Financial Data)
(HPQ: Value Line Report Jan. 12: next one is due Apr. 13)
Home Depot [GICS 25, Dow 30]
(HD: Yahoo Finance file)
(HD: StockChart chart)
(HD: Billcara2 chart)
(HD: ADVFN Financial Data)
(HD: Value Line Report Jan. 5: next one is due Apr. 6)
Honeywell [GICS 20, Dow 30]
(HON: Yahoo Finance file)
(HON: StockChart chart)
(HON: Billcara2 chart)
(HON: ADVFN Financial Data)
(HON: Value Line Report Jan. 26: next one is due Apr. 27)
IBM [GICS 45, Dow 30]
(IBM: Yahoo Finance file)
(IBM: StockChart chart)
(IBM: Billcara2 chart)
(IBM: ADVFN Financial Data)
(IBM: Value Line Report Jan. 12: next one is due Apr. 13)
Intel [GICS 45, Dow 30, Cara 100]
(INTC: Yahoo Finance file)
(INTC: StockChart chart)
(INTC: Billcara2 chart)
(INTC: ADVFN Financial Data)
(INTC: Value Line Report Jan. 12: next one is due Apr. 13)
Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Yahoo Finance file)
(JNJ: StockChart chart)
(JNJ: Billcara2 chart)
(JNJ: ADVFN Financial Data)
(JNJ: Value Line Report Mar. 2: next one is due Jun. 1)
JP Morgan [GICS 40, Dow 30]
(JPM: Yahoo Finance file)
(JPM: StockChart chart)
(JPM: Billcara2 chart)
(JPM: ADVFN Financial Data)
(JPM: Value Line Report Feb. 23: next one is due May 25)
McDonalds [GICS 30, Dow 30]
(MCD: Yahoo Finance file)
(MCD: StockChart chart)
(MCD: Billcara2 chart)
(MCD: ADVFN Financial Data)
(MCD: Value Line Report Mar. 9: next one is due Jun. 8)
3M Company [GICS 20, Dow 30, Cara 250 June 25-06]
(MMM: Yahoo Finance file)
(MMM: StockChart chart)
(MMM: Billcara2 chart)
(MMM: ADVFN Financial Data)
(MMM: Value Line Report Feb. 16: next one is due May 18)
Merck [GICS 35, Dow 30]
(MRK: Yahoo Finance file)
(MRK: StockChart chart)
(MRK: Billcara2 chart)
(MRK: ADVFN Financial Data)
(MRK: Value Line Report Jan. 19: next one is due Apr. 20)
Microsoft [GICS 45, Dow 30]
(MSFT: Yahoo Finance file)
(MSFT: StockChart chart)
(MSFT: Billcara2 chart)
(MSFT: ADVFN Financial Data)
(MSFT: Value Line Report Feb. 23: next one is due May 25)
Pfizer [GICS 35, Dow 30]
(PFE: Yahoo Finance file)
(PFE: StockChart chart)
(PFE: Billcara2 chart)
(PFE: ADVFN Financial Data)
(PFE: Value Line Report Jan. 19: next one is due Apr. 20)
Procter & Gamble Co. [GICS 30, Dow 30, Cara 100]
(PG: Yahoo Finance file)
(PG: StockChart chart)
(PG: Billcara2 chart)
(PG: ADVFN Financial Data)
(PG: Value Line Report Jan. 5: next one is due Apr. 6)
United Technologies [GICS 20, Dow 30, Cara 100]
(UTX: Yahoo Finance file)
(UTX: StockChart chart)
(UTX: Billcara2 chart)
(UTX: ADVFN Financial Data)
(UTX: Value Line Report Jan. 26: next one is due Apr. 27)
Verizon [GICS 50, Dow 30]
(VZ: Yahoo Finance file)
(VZ: StockChart chart)
(VZ: Billcara2 chart)
(VZ: ADVFN Financial Data)
(VZ: Value Line Report Mar. 30: next one is due Jun. 29)
Wal-Mart [GICS 30, Dow 30, Cara 100]
(WMT: Yahoo Finance file)
(WMT: StockChart chart)
(WMT: Billcara2 chart)
(WMT: ADVFN Financial Data)
(WMT: Value Line Report Feb. 9: next one is due May 11)
Wrap up:
I am definitely feeling better. My coughing stopped on Monday or Tuesday, just a couple days after I started purging my body of toxins. That Flor-Essence herbal tea really does work.
After a tough quarter, now I feel I can get back to a “normal” retirement (LOL).
But I won’t push myself. I had planned to be at the Natural Resources Conference at Paradise Island Bahamas this week, but my doctor suggested I refrain from flying until I am certain I have fully recovered.
I had also planned to spend more time this week on the big picture, but didn’t quite make it. As I worked through the material, I see too many price series running up against the important Moving Average lines. Prices can swing either way here, which makes me reluctant to strut my usual stuff.
I am still thinking that the Bulls think they have balls, although I have noticed that increasingly more of them are looking like a soccer line defending a free kick (placing their hands you know where).
Yes, I think we are still in line for a precious metal melt-up (and $USD crash) this next quarter, but, alas, it hasn’t started by now, which I had hoped for. Maybe, psychologically, I’m just looking to cash out asap. Who knows?
Finally, the charts at Investertech.com and BilCara2.com will soon be missing intra-day price series, unfortunately. But that’s inflation, and the oligopoly practices of exchanges that are intent on driving their share prices to the moon. They so badly want to “get theirs” that the cost of purchasing this data has become prohibitive.
It’s a shame because the owners of capital who make these trades ought to be the owners of the data too. What right do those Exchange Heads have to pay themselves a gazillion dollars in compensation on the backs of the public who could easily find cost-effective alternatives if it were not for the fact HB&B controls the market.
Maybe in time I’ll come up with a solution, but not while I’m taking things easy. Bahama Bill. The Big Easy. hahaha.
Posted by Posted by Bill Cara on March 31, 2007 08:58:09 AM | Category: Cara Week in Review
Discourse
I too look forward to Twigg's free reports emailed twice a week.
I think Twiggs could have chosen a better headline than "Confidence Improving" though. He apparently thought it (short term) bullish that the Dow respected 100EMA support.
But, as he's been pointing out for weeks, Money Flow is falling which he views as Bearish, a negative divergence during the rally, and this warrants "CAUTION", as he says, not "CONFIDENCE"!
I've been trying to gather as many technical analysts' opinions on this rally, and there seems more skepticism than belief it will continue.
Last week I had a count of 9 to 5 Bearish on the rally. And even the Bulls aren't necessarily Bullish beyond a short time frame!
So, I retain CONFIDENCE in my short positions, especially on emerging mkts stocks!
Posted by: Bob ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
March 31, 2007 11:37 AM [link]
Thanks for the tables, Bill. I like the format.
Thought I would outline the case for placing a few chips on the sub-prime "pass line."
1. Initial reactions are usually over-reactions. As with the Asian Financial Crisis in 1997 and the S&L Crisis in the 80s, it pays to buy into the sell-off.
2. Even if things get worse, it takes time for that scenario to unwind. Even without manipulation, it always takes longer than you think for things to reach their "logical" conclusion. If I've learned correctly from Bill, it will happen either when it's allowed to happen, or when it can no longer be prevented.
3. Large short positions. Provide a floor to prices, and act as catalysts for strong upside moves.
4. Contrarian saftey net. There's been too much sub-prime negativity in the news, and I have to assume too much selling.
5. As Bill points out, HB&B have been buying. There is vested interest in a) delaying foreclosures, b)maximizing the upside from portfolios bought at a discount, and c) maximizing the value of warrants (I don't think for a minute any warrants issued will expire worthless).
Long LEND and FMT for a trade.
Posted by: 2nd_ave at
March 31, 2007 12:26 PM [link]
Hi there. Anyone have any good Crystallex trading stories they'd like to share? I have a couple good ones.
Skip
Posted by: shark_attack at
March 31, 2007 2:43 PM [link]
Regarding Sub-prime--My sense is that sub-prime will parallel that of the homebuilders, though it will cut a much broader and deeper swath. Meaning, folks will think that they've dropped too much and that buying now will be a safe, contrarian move. Then, once the blood starts to show up on the balance sheet/income statement (and it hasn't yet), folks will reassess and there will be another wave of OMG!!!! selling. [2nd_ave--I'm not lecturing, you are a much savier investor than I. But I'm just providing a counterpoint to your post].
(I'll concede that what follows does address your very apt comment that these things take time to unfold and that you are just entering for a trade). Keep the following in mind--
(A) the loan loss reserves have not yet been funded to the extent that they ultimately require. Why? Because if you look at the disclosures in the filings of some of these lenders, you will see that their loan loss reserves are based on past history. Past history has been abnormally low for all banks--1/3 of past reserves during the last economic downturn. This loan loss curve will move upward and it will surpass the 1.5% ceiling I'm quite sure. Why? Because past loan loss ratios had none of this mortgage exotica. But, I would add that I would be pleased to be wrong.
(B) These lenders have corresponding REITS or have retained the loans on their balance sheets. Either way, we've not begun to see the additional funding required to fulfill the requirements MBS (mortgage backed securitization). This funding will be required to (1) fund the incurred loan losses; (2) provide for the scheduled interest and/or principal required for delinquent loans; (3) provide required collateral support to the MBS's eroded by loan losses. So there's going to be some people knocking at the door with their tin cups a' clankin' (the bond insurer for example) who will need to satisfy the requirements of the bond underwriting to include restoring the credit enhancement if the target cannot be maintained due to losses.
Pretty soon you have lots of tin cups clanking and the organization is unable to meet underlying capital requirements for indebtedness and loans start to get called and bad things happen like what happened to New Century.
We are at the tip of the iceberg, and I really believe that the exposures here go far and beyond (due to the complexity) of what the homebuilders were wrangling with.
If you look at the Fallon agreement, one of the things that they did was take as collateral against their 13% loan (1) the proceeds from the Federal Tax refund and (2)the dividends payable on the REIT which have to be deposited into a special account. I don't pretend to understand it all, but I do know this--if you take the time to look at the agreements there's alot more there than ever makes it into the press.
Leisa,
Thank you for sharing all you have learned these past few weeks. Your writing is well-organized and I can't disagree with your assessment of the big picture. I initiated a trade Friday afternoon based on what I've learned about market psychology, and will exit if/when it pays off, or hits my stops. I have at least a little conviction it will pay off, whereas I have none about market direction in general right now. So you could say it's partly out of boredom. Other than LEND/FMT and some KRY I picked up on Friday, my portfolio is now in cash.
Posted by: 2nd_ave at
March 31, 2007 7:10 PM [link]
And thanks, Bill for providing a link to Leisa's blog.
Posted by: 2nd_ave at
March 31, 2007 7:15 PM [link]
I just happened to come across these relevant comments about market psychology from vixandmore:
[In terms of context, I consider fundamental analysis, technical analysis and market sentiment analysis to be the three primary legs of the investment stool. I believe it is a common pattern for relative newcomers to the investing world to begin with a fundamental analysis perspective, start wondering why individual stock don’t move ‘like they should,’ then add some technical analysis tools. Often it takes awhile to get the hang of TA; once they do, most investors get blindsided when thee entire forest moves abruptly while they are focusing on an individual tree or two. This is often the catalyst that leads to a more in-depth examination of market sentiment indicators.
Sentiment as a Contrarian Indicator
With that out of the way, where should you start with investor sentiment? First, keep in mind that much of market sentiment is a contrarian tool. One of my favorite quotes comes from John Bender in Jack Schwager’s Stock Market Wizards, “It’s not the current opinion on the stock that matters, but rather the potential change in the opinion that matters.” When your great aunt, housekeeper and taxi driver all start telling you how much money they are making in the stock market, who is left to buy and drive prices up further? On the other hand, if most of the people you know confess to having recently lost over half of their money in the market and swear about “never investing in stocks again,” then the markets have probably just about run out of sellers.]
The complete blog entry (the link was provided by Barry Ritholtz): http://vixandmore.blogspot.com/2007/03/sentiment-primer-long.html
Posted by: 2nd_ave at
March 31, 2007 7:30 PM [link]
Just a few observations of current conditions.
-new SEC margin rules coming on-line soon
http://www.fimatpreferred.com/cf/Portmargin.cfm
I have a feeling sheep will be led to the slaughter with their new found purchasing power.
-earnings season starting; results expected to be worse than prior quarter.
-Republican administration imposes trade sanctions on China. Does this mean the Hank Paulson trips did not bear fruit? Previous treasury secretaries, Rubin & Snow were against any trade sanctions. What gives?
-Crude up;
-Iran situation is getting worse;
None of the above make me want to go head first in equities. Rallies will be manufactured but distribution always occurs on the way down so buyer beware. This is not the time to buy and hold.
Posted by: cb at
April 1, 2007 4:15 AM [link]
Bill, and community,
What are your opinions on an investment into the Euro within the next 1-2 months with a trade time frame of about 3-7 months?
I have been watching the exchange rate fall, and fall, and I see nothing but further falling in the near future. The fed could raise rates, and save the dollar but kill the housing and lending industry. Or they could lower rates and save the industry at the cost of the dollar.
What are your responses?
Posted by: Quentusrex at
April 1, 2007 4:17 AM [link]
Quentusrex,
Aren't you really asking if others can help you catch lightning in a bottle?
In the past 11 months, there has been 9 very significant moves up and down in the $USD. So maybe "within the next 1-2 months" the $USD has bottomed at say 81.50 from its current level at just under 83, in which case you would be best positioned to BUY the $USD at that point, or maybe it reverses its present downward course and hits a short-term cycle high of 84-84.40, in which case you are probably best positioned to then SELL or go SHORT the $USD.
And once you have determined what is your best position to profit from a short-term move in the $USD (or alternatively the Euro), you ought to expect anywhere from 2 to 5 major currency swings in the following 3 to 7 months, based on the past year's experience.
The $USD has been falling from Nov-05 at a cycle high of about 92.50. How low it will go in the long-term cycle is likely to be decided by monetary policy differences between the US and the ECB, BoE, BoJ and PBoC. There are other factors involved such as (i) the inflation push caused by excessive money printing/debt incurred in the past five years, (ii) the level of war spending, and (iii) the level of global and regional economic activity.
At the start of the year, I made a prediction that the $USD would fall in 100 days from about 85 to about 82, and that gold would move up from about 606 to about 750. One move in that time frame fell short with gold hitting almost 690 (before falling back to 640). Then I opined that gold was on its way north again (with the $USD falling once again), and that move has just started.
Will I be right that, inside the next 30-40 days, gold will move to 750 and the $USD to 82 or lower? I don't know. But if these things happen, I will then probably be looking to sell the gold and buy the $USD (and sell the Euro), and my time horizon would be a couple months only. That's the way markets have been working.
Without a General Agreement on Currencies by the G-20 central bankers and finance ministers, the hot money of the world is being traded back and forth with increasing volatility. Forex markets have become today's video game for too many traders who think of themselves as players. International business owners and managers are having an increasingly difficult time doing their job when currencies are trading with extremes like this.
The first step to a solution of currency stabilization is to have China repeg its currency to a global basket, or to let it float freely. Since these events are not likely in the next two or three years, then the currency markets are likely to remain looking like a video game, and conservative traders will be at risk with a buy-and-hold strategy.
I hope this gives you a sense of how I'd trade the $USD/Euro.
Posted by: Bill Cara at
April 1, 2007 6:42 AM [link]
2nd_ave--I certainly wasn't trying to be a nay sayer about your position, and you were very careful to explain that it was just a trade. But I'm a handwringer!
Is the IMF following thru on their previous suggestion that they’ll sell 400 tons of gold? That’s as much gold as there is in GLD! I'm to trying to make sense of gold prices last week, esp. on Thursday.
Came across this article on Bloomberg:
IMF Should Sell Some Gold to Cover Losses, Panel Says (Update2)
By William McQuillen
Jan. 31 (Bloomberg) -- The International Monetary Fund should sell some gold to cover losses, said an advisory panel that includes former Federal Reserve Chairman Alan Greenspan and European Central Bank President Jean-Claude Trichet.
The Washington-based IMF could sell 400 metric tons of gold, valued at about $6.6 billion, and invest the proceeds in interest-bearing assets, the panel said in a report released today. Sales should be handled in a way that avoids ``disturbances'' in the gold market, a press release said.
Gold sales are part of a package of measures intended to reduce the IMF's dependence on the interest it earns from loans to member nations. The fund projects a loss of about $102 million this fiscal year after countries including Brazil and Argentina repaid loans early.
``If adopted, the measures would set the fund's finances on a sustainable basis, and ensure a solid foundation for the fund's important role in the international community,'' panel chairman Andrew Crockett, president of JPMorgan Chase International, said in a statement.
The IMF would earn about $195 million a year by selling a portion of its total holdings of 3,217 metric tons and investing the proceeds, the report says.
Gold futures for April delivery rose $6.80, or 1.1 percent, to $657 an ounce at 1:06 p.m. on the Comex division of the New York Mercantile Exchange. Prices earlier reached $660.70 an ounce. Before today, gold was up 14 percent in the past year.
Little Immediate Impact
The contemplated volume of gold sales is ``huge, but it's going to be sold piecemeal over years,'' said Michael Guido, director of hedge-fund marketing at Societe Generale SA in New York. ``It's not going to have an immediate impact on prices.''
IMF Managing Director Rodrigo de Rato, who appointed the eight-member advisory panel, has already started discussing the recommendations with the fund's executive board, according to the press release. Formal proposals will be submitted in coming months, it said.
Gold sales would require the approval of member countries including the U.S., which has a veto over IMF decisions. A Treasury Department spokesman couldn't immediately be reached for comment.
The IMF has sold gold before. The most recent sales took place between 1976 and 1980, when the fund unloaded 50 million ounces following an international agreement to reduce the role of the metal in the global monetary system.
The panel also recommended investing some of the money contributed by member nations, known as ``quotas,'' broadening existing investments, and charging members for advisory services.
Global Watchdog
Founded at the end of World War II to promote global economic stability, the IMF keeps a watch on the currency, trade and economic policies of its 185 members and makes nonbinding recommendations for improvement.
The fund also provides low-cost loans to countries in financial need on the condition that borrowers undertake economic policy changes such as adjusting their balance of payments or reducing inflation.
The other members of the committee are Mohamed El-Erian, chief executive of Harvard Management Co.; South African Reserve Bank Governor Tito Mboweni; Bank of Mexico Governor Guillermo Ortiz; Hamad Al-Sayari, governor of the Saudi Arabian Monetary Agency; and Zhou Xiaochuan, governor of the People's Bank of China.
Posted by: onlineaces at
April 1, 2007 2:04 PM [link]
The new SEC expanded margin regulations go into effect Monday. Increased leverage for a new short term bullish move?
Posted by: tremendous11 at
April 1, 2007 3:53 PM [link]
ALOHA !!
IMF ... should stand for "International Monetary Fraud"!
First off the IMF does not own any gold. What gold they "store" was donated by members. Last I looked the IMF is not self-sustainable and was losing over $22mil per year. So here we have yet another bureaucratic bank that cannot stand on its own two feet and needs OPM(Other People's Money)to survive! I say we eliminate the IMF ... dead weight is just that! One less international welfare case!
For the IMF to sell US gold there would have to be a Congressional vote to approve the sell. Throughout history the USA has always abstained from any sales.
When will the citizens of the USA and the World stop bailing out these fraudulent and corrupt banks run by the elite? I guarantee you that if we eliminated the IMF not one persons life would be effected except for those running the bank! Without an IMF Third World countries could still get loans and probably at more favorable rates, perhaps with much less "fine print"! The IMF seems to be adept at enslaving Thirld World countries in massive debt in exchange for the raw resources and cheap labor all the while making the ruling elite of such countries quite wealthy! Once again the people at the bottom work the hardest and suffer the most...
Here is a link for more IMF info ...
Link: http://en.wikipedia.org/wiki/IMF
The bottom line is what business does the IMF have selling OPG(Other People's Gold)to make ends meet? If they can't survive on their own then they don't deserve to survive at all. Let the IMF get their own loans! With financials in the red showing no profit I doubt they could qualify ...
Posted by: kaimu at
April 1, 2007 5:59 PM [link]
Reference the role the IMF plays:
An informative, eye opening read--CONFESSIONS OF AN ECONOMIC HITMAN by John Perkins.
As previously posted 2 weeks go, it’s an insider’s true story of his career working as an American economic consultant and how his economic forecasts, along with the IMF and government agencies like USAID and others, indebted foreign countries to the benefit of American companies and the U.S.
You’ll recognize some of the players in today’s world.
Posted by: Seamus at
April 1, 2007 6:56 PM [link]
Bill says,
"Yes, I think we are still in line for a precious metal melt-up (and $USD crash) this next quarter, but, alas, it hasn’t started by now, which I had hoped for. Maybe, psychologically, I’m just looking to cash out asap. Who knows?"
Bill has been so informative and correct that I may be erring in hanging on too much into what he says and in so doing read in more than what is being said.
The cash out part got my attention. My sense is that PM has certainly moved upward but it's not a sure thing that this will continue and that a full position in cash may be the harbor of security. Is this Bill's "psychological" position? Anyone?
Posted by: jasper at
April 1, 2007 10:57 PM [link]
Kaimu, and others -
Thinking of IMF, a question occurred. If IMF rules forbid national currencies from being fixed to the price of gold, why does IMF hold gold? Why do Central Banks hold gold? -- other than maintaining the power to intervene in the gold market ...
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