Friday may be long forgotten, but in my WIR on Sunday, I referred to “a level of concern”. What I am saying is that market technicians are taking note of the leadership of an increasingly smaller group of big cap stocks in America, plus robust speculation in the international markets, particularly in the Asia-Pacific region ex-Japan.

Having broken above the market’s upper trend channel, analysts like Colin Twiggs of Australia have opined “Accelerating up-trends make big gains but normally end with a sharp reversal, so it is important to protect profits. Reversal below the upper channel line would signal that the trend is weakening…”

Ah yes, another day another record. The Dow added another +80 points Friday to 13,556, and is now up 1446 points or 12.0 pct in just 2 months. Not that long ago, I recall pulling a number out of the hat like “chances are 9 in 10 the market will not exceed 11,500 this Bull market”.

That’s why it pays to remember history. When it comes to money, people are funny. Including me.

But here’s the deal: if you don’t restrict your trading to the accumulation of the shares of quality companies, purchased at cycle low prices, and reduce your risk by selling at least some when those prices reach cycle highs as determined by a disciplined technical approach, then sooner or later you will likely blow up your capital. Focus on risk before reward.

Last week there was a continuing price divergence in US markets. The Nasdaq and the Russell small caps lost ground on the week. The DJIA (aka the Dow 30) has actually been something like the Dow 10 that has shown leadership.

Last week’s laggards were the DJ Transports (-0.2 pct on Friday) and the Semiconductors ($SOX -0.1 pct on Friday). For the Transports, the softness was end-of-the-week profit-taking in the railroad industry, while for the semis, it was fie consecutive days of pull-back following four straight weeks of market leadership.

Private Equity-driven buy-outs and buy-out rumors have been the fuel to the market’s heat.

Today we learn that TPG and a Goldman Sach’s unit have agreed to pay $27.5 billion to buy out telco operator Alltel.

And GE will be receiving almost $12 billion from Private Equity of Saudi Arabia for the sale of its plastics division.

On Friday, Microsoft bought AQNT at a huge premium. There is some concern that the public fell behind some front-running institutions and individual miscreants in that deal. We’ll hear more. But the deal led to big gains in other online advertising or analytics firms VCLK, OMTR, VSCN and FMCN.

Money. Money. Money. It’s a Donald Trump tune I can’t get out of my head. Now casino operator TRMP shares lifted after word got into the market there are potential bidders.

The market beat goes on. Apparently, rumor-related short squeezes at Dillards (DDS +7 pct) and Salesforce.com (CRM +6.6 pct) also drove prices higher on Friday.

A stronger than expected consumer sentiment index from the Univ. of Michigan helped lift the Retailers ($RLX +1.7 pct). Good earnings fundamentals even played a part in the gains of KSS, JWN and INTU.

After a week of higher prices for gasoline and natural gas, Friday’s prices dropped more than -1 pct. Nothing, however, could stop Friday’s rally as the Energy sector still outperformed all others with a +1.6 pct gain.

Then on the weekend we learned what China is going to finally do with their $1 trillion $USD windfall on the backs of the American consumer (via goods priced cheaper than from other countries in the region due to linkage with that $USD). The best bet on the board is to invest $3 billion in Humungous Private Equity Corp (Blackstone today; who knows tomorrow).

Blackstone today just might become International Glorious Blackstone tomorrow.

It’s a crazy world.

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Economic calendar

Econoday weekly report.

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US Marketwatch

Another solid close to the week with the DJIA up +0.6 pct. It’s called window dressing.

DJIA chart

This past week, the Dow 30 were led by IBM on Friday (+2.54 pct), and GM (+6.8 pct), AA (+4.5 pct), DD (+3.9 pct), T (+3.8 pct), C (+3.6 pct), BA (+3.5 pct), MCD (+3.3 pct), VZ and PG (+3.0 pct). If you are going to continue holding these stocks, you might protect those gains by buying puts. Writing calls is not going to help at this point in a melt-up.

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A dozen NYSE DJIA stocks to watch.

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NASDAQ Composite chart

A dozen NASDAQ stocks to watch.

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International Equities Review

Here’s how the week opened for the Asia-Pacific markets.

Here’s how the week opened for the bourses of Europe.

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Forex Review

Here is the chart of the end of the week trading:

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Bonds & Yields Review

Last week, US Treasury bond yields gained +11, +13, +15, and +11 bp to 4.94 pct, 4.78 pct, 4.71 pct and 4.80 pct respectively on the 30-year, 10-year, 5-year and 2-year instruments.

The TLT lost -4.62 pct W/W to close at 86.93 from last week’s 88.19. That is a massacre for bond investors – and a reason I have continued to warn you not to be holding but to be folding, if you didn’t a long time ago.

TLT was at almost 92 at year-end 2006, so long bond investors (ie, those who hold to maturity) have taken a serious beating this past few months. Some hedgies must be in tough!

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Commodities Review

$CRB Index

Open Futures Contracts

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The Commodities Index ($CRB) looks Good to Go.

$CRB gained +2.04 (+0.66 pct) to close at 313.17. $CRB is now above the 50-day MA (311.52) and 200-day MA (310.85) lines, so that’s where the technical support lies.

These down-sloping trend lines are technical resistance, and it appears on the chart that $CRB respects the support (during the Bull phase) and the resistance (for the Bear phase) points.

The $CRB trend lines appear to be reversing course, with the 50-Day MA crossing up through the 200-Day MA. That’s good for the Commodity Bulls who have been hoping for higher commodity prices and some renewed $USD weakness.

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Oil Review

Last week $WTIC rallied some more +1.86/bbl (+2.90 pct W/W) to close at 65.98.

That’s over +4.00/bbl and the People are getting restless. But, I note one story after another on Financial Entertainment TV that says it’s no big deal for Americans to go from $3 to $4 gas. Pardon me, but what world are these people living in?

The $WTIC 50-Day Moving Average (from StockCharts) is now 63.32 and the 200-Day MA is 62.31. Hence the current price (65.98) is a snorting bull. Two weeks ago it had been bearish. It is now above the 55-65 range. Are we ready to go 65-75? I don’t know.

Interactive Chart of Weekly Crude Oil:

Interactive Chart of Daily Crude Oil:

The e-miNY June-07 Crude Oil contracts.

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Gold & Precious Metals Review

Last week, $GOLD was hammered down again -10.30 (-1.53 pct) to 662.00. It seemed to have found a friend in the 200-day MA, but this morning is weak again.

For $GOLD, the 50-day MA is now at 673.37 and the more important 200-day MA is at 638.01. So while a plunging $GOLD dropped through the 50-day MA, which is a bearish sign, there is hope yet.

Spot gold chart for the week

June Gold on NYMEX had a recovery at the end of the week. But through Sunday and early this morning, the precious metals for the most part, including gold, does not look too good.

I'm hanging in though.

Here is the continuing story from India's Hindu Times on gold.

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Last week, $SILVER dropped -0.30 (-2.27 pct) to close down at 13.00. That’s a loss of 0.55 in two weeks. Ouch,

The 50-day MA is 13.48 and the 200-day MA at 12.88, so the current price at 13.00 is only technically Bullish for the long-term.

Spot silver chart for the week

More weakness over the weekend.

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Last week, $PLAT lost the prior week’s gain, dropping -15.00 (-1.12 pct) to close at 1327.70. The 50-day MA is 1282.53 and the 200-day MA is 1200.77.

Spot platinum chart for the week

More weakness over the weekend.

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$PALL has been bullish since early October (290.88).

Last week, $PALL dropped -2.92 (-0.79 pct) to close at 368.16. The 50-day MA is 366.93 and the 200-day MA is 341.67.

Spot palladium chart for the week

This morning the chart (9:10am) shows some strength.

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Precious Metals Stocks Review

Last week $XAU lost -3.01 (-2.15 pct) to close at 136.75. The 50-day MA (139.29) and 200-day MA (138.05) are now above the current price, which is bearish any way you look at it. But I think there is a turn coming.

Ahh yes, I still await the Summer Rally. I mistakenly thought I saw it starting a week ago Friday when $XAU gained +1.56 pct. But then came Tuesday, and another smash on Wednesday.

But miners are hard rock people, you now. No weak-willed c.banker is going to convince them their $USD are more valuable.

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:

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The U.S. goldminer share trust ETF trades under the ticker symbol GDX.

The Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF trades under the ticker symbol TSE:XGD.

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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:

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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 Daily data
Interactive Weekly data

MDG LIHRY AEM BGO IAG EGO RGLD GOLD CDE GRS
Interactive Daily data
Interactive Weekly data

CBJ SSRI SIL NG KRY UXG GRZ TSE_HRG TSE_GUY TSE_AGI
Interactive Daily data
Interactive Weekly data

KRY continues to strengthen on high volume and on down days for the rest of the goldminer group.

NXG GSS MNG DROOY MFN RNO RANGY MRB CLG
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 Daily data
Interactive Weekly data

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This data is supplied every day by the kind folks at KNOBIAS, Inc. The KNOBIAS database manager Danny Hughes is taking some time off I gather. We’re all pulling for you Danny.

Here are the previous session’s Cara 100 gainers

Interactive chart of the top 12 Watch List gainers

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Here are the previous session’s Cara 100 losers

Interactive chart of the top 12 Watch List losers (Interactive link)

Here are the Cara 100 stocks that hit 52-week intra-day highs or lows in the previous session

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Here, from “Chris”, are the interactive charts of up to a dozen stocks with (unsmoothed) RSI-7 above 70 and below 30, from “Chris”:

RSI-7 > 70 (12 of 22)

RSI-7 < 30 (6)

There are now 6 Cara 100 Company stocks that are below 30 on the Daily RSI-7 versus 22 above 70, using data from “Chris” – which he takes from BillCara2.com, which is not smoothed like David’s data, which he takes from Worden.

Btw, as I have been writing, all charts from all sources I use have been formally permissioned.

After the Website/blog gets a make-over that will be made clear in the presentation.

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Here, from “David”, are the stocks in the Cara 100 trading with the highest Daily RSI-7 sorted by (i) daily and (ii) monthly values, for the previous session.

Here are the stocks in the Cara 100 trading with highest RSI-7 with Monthly-Weekly-Daily all either >70 or <30

Here are the stocks in the Cara 100 trading with RSI-7 Daily all >70 or all <30.

The most extreme stock, in the Accumulation Zone (but not yet with a Buy Alert) is WFMI. When the Daily RSI-7 crosses back above 30, that’s a Buy Alert, which then makes me look for a rising MACD and Stochastic, probably with cross-overs between the shorter-term and longer-term lines.

Right now RSI-7 for the Daily is 25.96.

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In Focus

Microsoft agreed to pay $6 billion to acquire aQuantive, which helps strengthen its position against Google and Yahoo in the on-line advertising space.

General Electric (GE) sold its plastics division for almost $12 billion to Saudi Basic Industries.

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Wall Street upgrades

CFC was downgraded to Market Perform by Friedman Billings.

Wall Street recent downgrades

There are various sources for up/down grades by broker-dealers. One is at Briefing.com. Traders ought to check everyday for ratings changes. That website updates in the morning.

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Community Chat

I have been working too hard to make the changes I need to these reports. Too many mistakes. Soon, though, I will have the support systems in place, and I’ll get back to normal.

One person cannot do all this without making errors.

The final touches to the new website are being done. All I need is to have my pro photographer take a head shot and to do some editing for the static pages that will link via the top menu.

ISI Publications, who will publish my book, have agreed to edit, administrate, manage, and represent wherever I feel it is needed for the websites (this one plus TraderWizard.com and BillCara2.com). So you shall get to meet Sarah Barham and Carole Bonnett in due course.

My long-time Steve Kohalmi, who was introduced to me over 25 years ago by Ian Notley, is developing and managing all technology. Steve built all the Ian Notley systems (while quietly serving the Gnomes from offices around the world, Ian is the acknowledged #1 market technician in the world). Steve built those Trend & Cycle systems for Notley at Dominion Securities (which pulled me into the business) and again for Notley/me for Canaccord and later when Notley struck out on his own. Fourteen years after helping me get Canaccord Eastern Canada off the ground, Steve, I and consultants Steve chose, created the Qtrade electronic brokerage platform that is now rated number one in Canada.

This weekend, with 50 volunteers, we kicked off the start of the Cara Micro-cap 100 Company project. Within a couple weeks we will add another 50 volunteers so that each of the 100 companies we decide to monitor and report on will be well covered. Team Micro is being headed up by Karl Leutenegger, a former marketing manager for North and South America for a world-famous Swiss product I'm sure all of us love to eat. You'll get to know him, but visiting may be a problem because he's located in a nice beach city in northern Brazil, retired, like me, from business.

Another long-time friend (almost 20 years), Peter Simmons of Atlanta is going to volunteer to head up the Survey Saturday feature. Peter has a PhD in Statistics from U of Illinois who was teaching at Ohio State when Jack Welch hired him to work in a senior capacity at General Electric HQ. At one point, Peter worked on a strategy team with current GE CEO Jeff Immelt. As an independent consultant when I first met him, Peter was telling me last evening that he recalls talking on a pay phone from somewhere in the deep south to a Canadian government agency manager who wanted to financially back my idea for something new called “the Web” except that the man couldn’t get his head around the business plan I had put forward. “I don’t see why anybody would advertise on the Internet” he told Peter.

My wife has always said that I am 15 years ahead of the rest of the world. She thought I was nuts when I once wrote in my monthly column in Canadian Doctor, which was received by all physicians and surgeons in Canada, that doctor’s offices would one day have computers replacing typewriters, which, like the buggy whip, would disappear.

Live moves on, doesn’t it. I have always said that we need to pick a spot five years down the road and devise a roadmap to get there. For me, not fearing the future, it was always 15, but I no longer have the luxury.

Have a great day.

ps, one more point: My mailbox dropped about 100 incoming letters on Sunday morning before I caught on that 32,000 letters will do that. With 600-700 letters arriving daily, including copies of the Comments, I hardly have a chance to archive them properly nevertheless read them all anymore. Bear with me until I get an assistant who will help the admin.

I am clearly not accustomed to such popularity. I thank you anyway because without it I may have sung Brightman-Bocelli's "Time To Say Goodbye". Now I feel I'm just getting started.

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