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May 5, 2007
Week #18 (2007-05-05) in Review (FINAL)
For America, I have opined that there is a shift in political winds that could have a major bearing on the future of the US Current Account and $USD. To take the safe road, which is, to a non-American trading blogger the only way, I’m going to say that it’s not my political views that warrant consideration, but those of people who play an important role in Washington, both Democrat and Republican.
This piece from LewRockwell.com dated April 30 from Paul Craig Roberts, who served in a previous Republican Administration, is sure to stir up the pot. In offering it, my objective is to keep the focus on the reasons for a falling $USD, and how traders can assess the change and reversal in trend as Washington changes and the $USD becomes once again the global reserve currency of choice.
You see; I am not a perpetual Gold Bull (or Dollar Bear) like Burton S. Blumert, publisher of LewRockwell.com, who is also a gold coin dealer. I am a trader who tries to retain a balanced perspective. As a natural bias, I do believe in Blumert’s “anti-state, anti-war, pro-market” libertarian stance. In a nutshell, that’s me. But, first and foremost, I am a trader.
And, over the years, when I see the US Administration, for legitimate reasons or not, taking the country to war, then I expect to see the pendulum to swing toward the beneficial interest of those who produce and invest in commodities and armaments, to the detriment of those who are motivated to build real wealth. Ultimately, these are the cycles that end in speculation and steps by central bankers and finance ministers to kill that speculation.
As an aside: To better understand my views on commodities and the ownership and use of land, you might turn to the work of US economist Henry George. I have many of his books in their original print form.
When I see wars about to come to an end, I look ahead to the next cycle, which I expect to be a period of building real wealth, not speculation with its fleeting prosperity as we recently witnessed in the real estate market and, I believe, are soon to see in the capital markets.
There is coming, I believe, in this transition, a final catharsis of emotions in America for the Bush Administration script (“The War on Terror”), which will lead to new conditions for a rebirth under a new Administration in January 2009, Republican or Democrat. Unfortunately, the new Administration, as I say, Republican or Democrat, will have to deal with deplorable economic and social conditions that have been and are being caused by the decisions of the current Administration, as well as, of course, the agitation of foreign warlords and terrorists.
It is this period of transition where capital flow, to and from countries and sectors and from areas of speculation to those where real wealth is being built, will be so intense that I believe the financial melt-up, which I forecasted early this year, will soon be followed by melt-down.
There are people in the boardrooms of HB&B today and in Washington who I suspect know where the highest probability of financial accident is likely to happen. Like you, I’m out of the loop.
But I do believe in the notion of Financial Armageddon as put forth by my friend Michael Panzner, partly on my own account, and partly because I know that Panzner approaches his daily work from the objective base of analysis, rather than synthesis. He has no axe to grind. He’s a long-time Wall Streeter who simply doesn’t like what he sees happening in the world today and, unlike most of his colleagues who fear the loss of their employment, he has no fear in speaking out.
There are some people you just want to sit down and chat with over a few beers and Michael and I have done that. Not being particularly inclined to marketing, there are other “personalities” I have such little regard for that I would hope never to meet them.
On April 2, with Dow=12,382 flashing on the screen, Michael Panzner did speak out on the Kudlow Show, put up against the views of Don Luskin. A long time ago we put the clown suit on both Kudlow and Luskin. But Luskin, besides being a comic, has few peers among the least competent on Wall Street as I see it. But don’t get me started. Spend your time watching this video and making up your own mind.
At the end of the day, it is up to each of us in the trading community to filter out the noise and the story-telling, and to listen to those independent and objective thinkers who put the needs of society (meaning yours and mine) ahead of the attraction of immediate personal gain (meaning theirs).
Panzner is a person I believe you ought to listen to. His message, this year, is a difficult one to stomach because the broad market averages are screaming out weekly records, while, far from view, the risks are not so obvious.
But the risks are there and credible analysts are telling you that.
A couple months ago, I decided to drop CNBC-TV. I found myself too often shaking my head at the clowns they put on stage, and saying, “Bank another CNBC retainer buddy. You put the definition of the word analyst to shame.”
Being retired, and blogging from home, my wife would say to me constantly, “Please stop complaining about these ('personalities’) you watch on TV. Your readers are interested in what you, not them, have to say.”
Ah, maybe that’s why a spouse is called the better half?
In any event, let’s get back to the capital market.
Friday this week saw the Dow 30 Industrials (+23 to 13,264.62 +1.09 pct W/W) set another record, albeit the percentage gain was small on Friday (+0.18 pct). Friday’s market action was a lot like many recent days, seemingly dependent on share buy-backs, increased dividends, rumors and deal talk.
The potential deals on Friday were mostly in the media sector, which is consistent with all that is happening in the exciting and fast-growing electronic part of the business. Reuters (RTRSY) and UK-based EMI confirmed that unnamed parties had approached carrying billions. Canada’s Thomson Corp (TOC) is believed to be one of them with $5 billion in hand and a desire to get out of book publishing. They want the electronic media assets, apparently.
Yahoo (YHOO) and Microsoft (MSFT) were said to be in smilar talks and Clear Channel (CCU) turned down a higher offer. Meanwhile, everybody in NYC is talking about how Rupert Murdoch’s News Corp (NWS), the world’s #3 media conglomerate, made an unsolicited $5 billion bid for Dow Jones & Co (DJ), which owns the Wall St. Journal, Barrons, MarketWatch.com, BigCharts.com, and on and on.
In other sectors, Weyerhauser (WY) lifted after reporting it is considering strategic options for its packaging and containerboard unit. It seems that all anybody has to do to get a short-term boost to their stock is to make an announcement or start a rumor. Why? Because speculators are not giving a second thought that all these deals are going to be done with debt, and the moment that interest rates hike past the tipping point, this equity market is doomed.
Money. Money. Money. Keep in mind the theme song of Trump’s Apprentice TV show because it’s new money that keeps this market rolling along. On Thursday, the Fed reported the M2 Money supply grew at an annualized rate of +8.2 pct, which is more than six times the annualized growth rate of the US economy (1Q07 GDP +1.3 pct).
Friday’s economic data was a mess. The US non-farm Jobs Report reported +88,000 new jobs, which is the smallest increase since Nov 2004, and a sizable pct of those came from government. The household survey even reported a loss of 468,000 jobs for last month, which would be the worst drop since the last Bear market ended.
But, meanwhile, CNBC’s talking noggins continue to proselytize. Goldilocks rules. We’re all children, right?
It’s tough, I admit for Joe, Joesy, Mom & Pop to not go along with the rising tide. But just remember, when HB&B decides to pull the plug, or gets in so deep they can’t avoid striking the iceberg, our ship goes down. Theirs will be protected by SRO rules, put options, short selling and delays in getting your orders to market.
I don’t care if you have a billion dollars in their bank, don’t for a second believe you are going to beat these people at their game. They have the place wired.
All you can do is step out of their casino, for a while, and take a deep breath of fresh air while you await the slaughtering of the speculators that is needed before the market can return to normal.
Just be sure to keep your own hands in your pockets and a stiff upper lip.
Global Market Summary
International Equities: Australia’s All Ordinaries and Singapore’s STI were up strongly this week, and have been, like the German Dax and Mexican Bolsa, very strong for the YTD.
U.S. Equities : The broad indices in the US all gained. The Russell small cap 2000, however, only gained +0.38 pct W/W because it was up +0.48 pct on Friday. A few positive earning stories, higher dividends, share buy-backs and take-over deals pushed the Dow up +1.1 pct, the S&P 500 up +0.8 pct and the Nasdaq Composite up +0.6 pct, which was moderately softer than the prior week, but strong nonetheless.
Dow 30 : The Dow 30 average lifted +1.10 pct to 13,264 (+143 points). The small caps are not doing as well because nobody is lending them the money to do the buy-backs and issue dividends that in total greatly exceeds free cash flow.
U.S. Sector ETFs: Nine of 10 US sector ETF’s were up this week, which was one that started to bring in the public from the sidelines, I believe.
First segment: most influenced by global commodities, forex and capex spending
10: Energy (XLE): #6 (+0.8 pct); Surprising strength with $WTIC -7 pct
15: Basic Materials (XLB): #9 (+0.2 pct); Miners came back strong on Fri
20: Industrials (XLI): #5 (+0.9 pct); Share buy-backs & dividends
Second segment: most influenced by U.S. consumer spending and economic growth
25: Cons. Discretionary (XLY): #8 (+0.2 pct); Friday made the week
30: Cons. Staples (XLP): #10 (-0.4 pct); Down again; not speculative enough
35: Healthcare (IYH): #4 (+0.9 pct); AET +3.5 pct led my group
Third segment: most influenced by U.S. interest rates and general economic health
40: Financial (XLF): #3 (+1.1 pct); MER +2.9 pct on buy-backs
45: Tech (SMH chips): #2 (+1.2 pct); #2 after two ws @#1, but see Fri.
50: Telecom Service (IYZ): #1 (+2.7 pct); VZ +7.3 pct is a joke, right?
55: Utilities (XLU): #7 (+0.7 pct); No comment
Bonds: The US Bond market recovered a fair bit with yields down -7 bp for the long bond.
Commodities: Crude oil crashed -4.53/bbl (-6.8 pct), but copper (+6.4 pct), platinum (+2.8 pct) and gold (+1.2 pct) were strong. Stronger than the bond market, which makes sense with the Fed pumping money like there’s no tomorrow, and the Energy Minister cutting off Strategic purchases. (I made up the last part.) I’m only guessing, but why else would $WTIC plummet and XLE rise faster than the S&P 500 this week?
Oil & Gas: $WTIC futures sank -6.82 pct W/W to 61.93 from 66.46. Did Iran hand over their nuke plans and scud missiles this week? Oh, maybe Hugo Chavez wants to help America as a way of converting the people to socialism? But I thought we had that with all those cash notes being dumped from helicopters. Oh, I see; that’s for Friends & Family.
Gold: A week earlier, I reported, “the Precious Metals dropped out of bed. $GOLD was down -14.00 (-2.0 pct W/W) to 681.80. $SILVER (-2.7 pct), $PLAT (-3.6 pct) and +PALL (-3.4 pct W/W) were worse…”. This week, $GOLD was up 7.90 (+1.2 pct) to 689.70, $SILVER (-0.3 pct, but up on Friday), $PLAT (+2.8 pct) and +PALL (+0.8 pct W/W). And $COPPER was up more than a penny -- +22.60 on the contracts (+6.4 pct), with stunning moves on Tues and Thurs.
Goldminers: The goldminers recovered with the $XAU gaining +1.53 pct, which was double the gain in the S&P 500 and beat the gain in the Dow 30 handily. But who’s counting anyway? Certainly not CNBC.
Forex: Despite a horrid Friday (-0.25 pct), the $USD lifted this week by +0.3, and the Euro lost -0.3 pct. The $USD fell from 83.30 to 81.49 in five weeks, but moved back this week to 81.75, and had been toying with 82 until the US Jobs Report showed govt holding the bag yet again. I wonder if the Dems can do a better job in reducing the size of govt? I doubt it. Isn’t that like going from D to D-?
Economic calendar for next week.
I ask you: when will the Fed stop talking about Inflation and address the issue, which is Speculation. Doesn’t it concern them that staid dishwasher maker (Cara 100) Whirlpool could rocket +29 pct in four weeks without even a single rumor or take-over bid? I mean talk about money and IOU’s sloshing around in a washing machine!
US Marketwatch
A solid close to the week.
DJIA chart
NASDAQ Composite chart
Cara 100 Stockwatch
Here are the Cara 100 gainers on Friday.
Interactive chart of the top 12 Watch List gainers
The Dow is trading just above the upper band of a 13200-13250 range. There is a very strong support for stocks of companies that are (i) high quality like the Cara 100, and (ii) involved in share buy-backs, increasing dividends, rumor and M&A, eg, YHOO.
Here are the top Cara 100 losers for Friday.
Interactive chart of the top 12 Watch List losers (Interactive link)
There were 14 stocks of the Cara 100 for Friday that hit 52-week intra-day highs and none found hitting lows.
Here are the stocks in the Cara 100 trading with the highest Daily RSI-7 sorted by (i) daily and (ii) monthly values.
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
Here are the stocks in the Cara 100 trading with RSI-7 Daily all <30
Sector ETF Summary
The tables I show are for ten (GICS) Sector Index Funds (ETF’s) only.
Nine of the ten sector ETF’s I follow here were up this week. On Friday there were seven up, but they were all fizzy.
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)
Individual Sector ETF Review
Sector 10 (energy: XLE, IYE, VDE, OIH, PBW and IXC)
This week, XLE gained +0.81 pct. In the prior six sessions XLE was up +3.5 pct as well. And yet, the price of Crude Oil on the NYMEX has crashed -6.82 pct this week.
Doesn’t this spell C-O-N-F-U-S-I-O-N or am I missing something? Or is it just another hedge fund in trouble and having to sell its oil contracts?
What is going on here? Hot money seems to be traveling at faster than the speed of light because nothing is making sense here. Is there a time warp?
Or could this be the Goldman Sach’s plan that Paulson promised the White House? Hmmm.
Here’s the XLE Monthly, Weekly and Daily data charts:
XLE Monthly data:
XLE Weekly data:
XLE Daily 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 |
EnCana (ECA +5.7 pct), StatOil (STO +3.2 pct) and China Offshore (CEO +2.9 pct) were the winners. From Canada, to Norway to China this week, nooobody seems ticked that West Texas Intermediate tanked -4.53/bbl.
Oil & Gas Exploration & Production -Canada
Sector 15 (basic materials: IYM, XLB, IGE and VAW)
The Basic Materials ETF (XLB) gained +0.15 pct W/W to close at 39.40. Those six cents were made by Friday’s gain of thirty cents, which is kinda what happens when copper and platinum and gold see the light.
Here’s the XLB Monthly, Weekly and Daily data charts:
XLB Monthly data:
XLB Weekly data:
XLB Daily 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 |
There were some big moves in the metal miners, steel makers and gold dehedgers this week. RIO, which is CVRD by ticker, popped +7.8 pct. RIO TINTO, which is RTP by ticker, popped 6.4 pct. Teck (TCK) popped 7.1 pct, BHP (also BHP) popped +5.5 pct and Mittal (MT) popped +6.7 pct.
In the middle of that pack was Barrick (+6.7 pct) because they finally decided to get their heads around a Gold Bull and coughed up about $600 million to buy back their prior forward sales. Now maybe the public will see what Barrick finally sees. To wit, a Gold Bull soon to be seen jumping over the moon.
Like Spiderman, it’s coming to your town.
Sector 20 (industrial: IYJ, XLI, VIS, and IYT)
Industrials (XLI), meaning the US military-industrial complex, was up +0.90 pct to 37.98 this week.
Just traders happy that the manufacturing sector in the US has moved to China and India and Ireland and … because nobody wants good paying jobs any more. Actually those traders might be happy with the added dividends and share buy-backs, which when you add it all up, might give more than a few people the cash to join me in Bahamas where a Buck Bahamian is always a Buck US, and nobody in the White House seems to be “as mad as hell and not going to take it any more”, like with China. Or maybe it’s the former Treasury Secretary enjoying the life of Riley in Lyford Cay who is telling his American friends, “Don’t Worry, Be Happy.”
Btw, I see the new Bahamian Attorney General (selected this weekend after the change of govt) is the official legal counsel in Bahamas to the US govt. Ah, Friends & Family. Makes me so happy! But, then I’m Canadian, eh!
Seriously, I’d like to see Boeing move their headquarters one more time. They could leave Chicago and be welcomed in Freeport on Grand Bahama Island. It’s only 499 nautical miles further than Chicago to Washington, and there wouldn’t be as many pay-offs or scandals. Besides, there’s a beautiful airport, a seaport bigger than Miami’s, the fishing is better, and the people, I’m sure, would rename Freeport to something like Dreamliner.
Here’s the XLI Monthly, Weekly and Daily data charts:
XLI Monthly data:
XLI Weekly data:
XLI Daily data:
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 |
3M (MMM) (or is that M&M) was up +3.3 pct, Honeywell (HON) +2.2 pct, Fedex (FDX) +2.1 pct (to $109.50) were the leaders of the General’s army. Electric (GE) was up just +0.8 pct, which must be a relief to the guys and gals at CNBC, and 316,000 employees. But alas, Electric is no longer a General, unless it’s a tin pot dictator’s army.
Colin Twiggs (www.incrediblecharts.com) opines that the lift in the Dow Transports, including Fedex and UPS, is confirming the Bull market. But he has also noted that FDX and UPS seem to be grounded lately.
Sector 25 (consumer discretionary: XLY, IYC and VCR)
The Consumer Discretionary sector ETF (XLY) gained +0.18 pct W/W to close at 39.50. But, that seven cent gain on the week was more than made up by Friday’s gain of +0.23 pct. Unfortunately, there was nothing in the econ news of Fri (see negative US Jobs Report) that warranted the push.
I wrote a week ago in this space, “If the US consumer is key to the direction of the global stock market, and I still believe that is the case, then trader be wary.” The Average Joe is not the least bit interested in the take-over deals or the share buy-backs and on and on, which push this market higher. But the personal income, savings and spending resources and habits are key to the long-term picture.
This is why I rail when I hear the Kudlow’s saying that because the stock market is rising it means everything is good for the Average Joe. No, it’s good for the Gnomes, who then use their currency to take over yet another corporation whereupon the Average Joe loses his job.
Here’s the XLY Monthly, Weekly and Daily data charts:
XLY Monthly data:
XLY Weekly data:
XLY Daily 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 |
In this sector, there were many losers this week.
If you like this sector, I find that reading the International Report from Econoday’s Anne Picker on the weekend gives insights into what consumers are doing in other geographic regions of the world. The major corporations in the consumer sectors are global players and they deal with the Average Joe and Durchschnittlicher Joe and Joe Medio and Средний Joe and 일반 조 and 般的乔 and Joe Moyen and 般のジョ and Gemiddelde Joe. In fact, they deal with a Joe by every name.
And then there is Whirlpool. Or is that Draaikolk, 渦,or Torbellino?
Whirlpool (WHR) is a Cara 100 company, but can anybody tell me why the stock is up +28.9 pct in four weeks, including +4.5 pct this week? I figure Joe Medio and Средний Joe also want to know.
So what, I figure, that management agreed to re-start a relatively small stock buy-back program. A week ago, Whirlpool reported a -1 pct profit decline for 1Q07 and the housing industry is in the crapper.
No, something’s going on here that I can’t figure out.
One of the regular readers wrote to ask if this was a good time to short WHR, and I answered only because that person has personally volunteered so much to this website. I said, “Never short a stock unless you know (with confidence) why the price has risen.”
In fact, the only time to short a stock, in my view, is when the confidence of the market has noticeably turned bearish, and the stock in mind has been trading sideways at big volume for a time.
There were some winners here. Disney (DIS) was up +2.5 pct W/W. And you know Disney is a Cara 100, although sometimes I have to wonder why?
On Feb 16, Value Line had good things to say about Disney:
Disney stock is top-ranked for Timeliness. We think forays into new businesses will drive solid earnings gains out to 2009-2011. Accordingly, the equity also holds long-term appeal.
Moreover, Dow Jones reported this week:
The entertainment giant has been riding a strong recovery in its core television, theme park and movie businesses for several years now, but is expected to post at best modest growth for the latest quarter as it comes up against tough year-earlier comparisons. Cable networks remains Disney's steadiest performer.Earnings Outlook: Analysts surveyed by Thomson Financial expect fiscal-second-quarter earnings of 37 cents share, flat with a year earlier.
Revenue Outlook: Analysts expect $8.09 billion, up from $8.03 billion in the year-earlier quarter.
A misrepresentation here should be noted. The difficult comparison quarter is not until the quarter ending June. Also, Value Line is expecting 38 cents. So this is the kind of b.s. writing that ought to be stopped. Somebody, I am guessing, wrote that piece for DJ, so that if, as and when a 38 cents earnings comes in, the Average Joe (as well as a few fund managers) will be thinking, DIS beat the Street and a difficult Y/Y comparison as well. NOT!
But we’ll have to see.
Disney, this week, had a debut for Xtreme Digital, a social networking site for kids under 14. They want to get these consumers when they are young, so they can sell them stuff later.
Not much later. The next day, kids in New Jersey tuned to Disney TV to discover to their parent’s shock that ‘Handy Manny’ was not much of a cartoon, but was really ‘Randy Manny’, porn star.
A fiction writer can’t make up this stuff!
Disney [GICS 25, Dow 30, Cara 100]
(DIS: Yahoo Finance file)
(DIS: StockChart chart)
(DIS: ADVFN Financial Data)(DIS: Value Line Report Feb. 16: next one is due May 18)
The worm at Apple (AAPL) seems to be getting off the hook with respect to fraudulent back-dating of stock options. This really ticks me. When anybody back-dates a financial record for the purpose of gaining a personal benefit at the expense of others, you are committing fraud. Full stop. And when you state that your insiders have done the research and discovered it was only an innocent mistake, I say you are guilty of lying and covering up, and you all ought to be sent straight to prison.
Here’s a report from Dow Jones:
Government and corporate investigations of stock-option granting practices have accelerated, with many companies reporting regulatory or internal probes.
The Securities and Exchange Commission is currently investigating about 140 companies in its expanding probe with more charges expected in the coming weeks, The Wall Street Journal reported. On March 5, The Journal reported that the stock options scandal helped boost by 50% the number of companies filing their annual reports late.The Internal Revenue Service disclosed on Feb. 9 that companies can pay the taxes for rank-and-file workers hit by a 20% bump on backdated stock options, though it won't be available to executives and other insiders.
In response to these and other reports, many companies have begun examining their own stock-option granting practices to ensure backdating didn't occur.
In the past week, some companies cited in investigations or those that have engaged internal investigations have issued statements.
Below are some of their responses, as well as other developments:
Eclipsys Corp. (ECLP) on Wednesday said it plans to record $9 million in backdating charges going back to 2001. The company said $4.7 million of the charges will be applied between 2002 and 2006 with the balance, $4.3 million, applied to retained earnings as of Dec. 31, 2001.
Broadcom Corp. (BRCM), a provider of communications chips, is responding to grand jury subpoenas tied to a federal investigation into its past accounting for stock options. "The company has produced documents pursuant to grand jury subpoenas," Broadcom said in a regulatory filing Tuesday. "The U.S. Attorney's Office has begun to interview present and former company employees as part of its investigation." On April 27, Dow Jones Newswires reported Broadcom's troubles with stock-options backdating could be an issue for shareholders at the company's annual shareholder meeting. The chip maker said it toyed with the dates of options granted to executives between 1998 and 2003, resulting in restated financial results reflecting an extra $2.25 billion in extra stock-based compensation expenses. Two firms that advise shareholders on voting in corporate elections - Institutional Shareholder Services and Proxy Governance - are recommending investors withhold votes for several Broadcom directors for their roles in the backdating.
Atmel Corp. (ATML) said Monday its former chief executive George Perlegos and general counsel Mike Ross are primarily responsible for the semiconductor maker's problems related to backdated stock options.
Fuel Systems Solutions Inc. (FSYS) on Monday said its previously disclosed review of stock-option grants is proceeding, and the company was assigned an early May hearing date before a Nasdaq Listing Qualifications Panel to address the potential delisting of its common stock related to a delay in filing its 10-K.
The Management Network Group Inc. (TMNG) said April 27 that a special committee of its board completed a review into the company's historical stock option and restricted stock granting practices. According to a filing with the Securities and Exchange Commission, the committee found that 68% of options and restricted stock awards between Nov. 1, 1999, and Oct. 2, 2006, were misdated.
The following is a list of all the other companies that have commented on the stock option investigations, as prepared by Dow Jones:
Adobe Systems Inc. (ADBE)
Actel Corp. (ACTL)
Active Power Inc. (ACPW)
Activision Inc. (ATVI)
Affiliated Computer Services Inc. (ACS)
Affymetrix Inc. (AFFX)
Agile Software Corp. (AGIL)
Alkermes Inc. (ALKS)
Altera Corp. (ALTR)
American Technology Corp. (ATCO)
American Tower Corp. (AMT)
Amkor Technology Inc. (AMKR)
Analog Devices Inc. (ADI)
Apollo Group Inc. (APOL)
Apple Inc.'s (AAPL)
Applied Micro Circuits Corp. (AMCC)
Applied Signal Technology Inc. (APSG)
Aspen Technology Inc. (AZPN)
Asyst Technologies Inc. (ASYT)
ArthroCare Corp. (ARTC)
Autodesk Inc. (ADSK)
Back Yard Burgers Inc. (BYBI)
BEA Systems Inc. (BEAS)
Bed Bath & Beyond Inc. (BBBY)
Biomet Inc. (BMET)
Black Box Corp. (BBOX)
Blue Coat Systems Inc. (BCSI)
Boston Communications Group Inc. (BCGI)
Brocade Communications Systems Inc. (BRCD)
Brooks Automation Inc. (BRKS)
CA Inc. (CA)
Cablevision Systems Corp. (CVC)
Caremark Rx Inc. (CMX)
CEC Entertainment Inc. (CEC)
Ceradyne Inc. (CRDN)
Cheesecake Factory Inc. (CAKE)
Children's Place Retail Stores Inc. (PLCE)
Chordiant Software Inc. (CHRD)
Cirrus Logic Inc. (CRUS)
Citrix Systems Inc. (CTXS)
Clorox Co. (CLX)
CNet Networks Inc. (CNET)
Coherent Inc. (COHR)
Comverse Technology Inc. (CMVT)
Computer Sciences Corp. (CSC)
Copart Inc. (CPRT)
Corinthian Colleges Inc. (COCO)
Costco Wholesale Corp. (COST)
Crown Castle International Corp. (CCI)
CVS/Caremark Corp. (CVS)
Cyberonics Inc. (CYBX)
Dean Foods Co. (DF)
Delta Petroleum Corp. (DPTR)
Digital River Inc. (DRIV)
Ditech Networks Inc. (DITC)
Dot Hill Systems Corp. (HILL)
DRS Technologies Inc. (DRS)
Dycom Industries Inc. (DY)
Electronic Arts Inc. (ERTS)
Electronic Clearing House Inc. (ECHO)
Electronics For Imaging Inc. (EFII)
Embarcadero Technologies Inc. (EMBT)
Emcore Corp. (EMKR)
Endocare Inc. (ENDO)
Equinix Inc. (EQIX)
Epix Pharmaceuticals Inc. (EPIX)
EPlus Inc. (PLUS)
Extreme Networks Inc. (EXTR)
F5 Networks Inc. (FFIV)
Family Dollar Stores Inc. (FDO)
First American Corp. (FAF)
Forrester Research Inc. (FORR)
Fossil Inc. (FOSL)
Foundry Networks Inc. (FDRY)
Fresenius Medical Care AG KGAA (FMS)
Gap Inc. (GPS)
Gensym Corp. (GNSM)
Getty Images Inc.'s (GYI)
Glenayre Technologies Inc. (GEMS)
Greater Bay Bancorp (GBBK)
Green Mountain Capital Inc. (GMOC)
Hansen Natural Corp. (HANS)
HCC Insurance Holdings Inc. (HCC)
Home Depot Inc. (HD)
Hudson Highland Group Inc. (HHGP)
IBasis Inc. (IBAS)
Insight Enterprises Inc. (NSIT)
Integrated Silicon Solution Inc. (ISSI)
Internap Network Services Corp. (INAP)
Interpublic Group of Cos. (IPG)
Interwoven Inc. (IWOV)
Intuit Inc. (INTU)
Jabil Circuit Inc. (JBL)
Juniper Systems Inc. (JNPR)
Jupitermedia Corp. (JUPM)
J2 Global Communications Inc. (JCOM)
KB Home Inc. (KBH)
Keane Inc. (KEA)
Keithley Instruments Inc. (KEI)
King Pharmaceuticals Inc. (KG)
KLA-Tencor Corp. (KLAC)
Knobias Inc. (KNBS)
Kopin Corp. (KOPN)
KOS Pharmaceuticals Inc. (KOSP)
Krispy Kreme Doughnuts Inc. (KKD)
K-V Pharmaceutical Co. (KVA)
Landry's Restaurants Inc. (LNY)
Linear Technology Corp. (LLTC)
L-3 Communications Holdings Inc. (LLL)
Macrovision Corp. (MVSN)
Management Network Group Inc. (TMNG)
Marvell Technology Group Ltd. (MRVL)
Mattel Inc. (MAT)
Maxim Integrated Products Inc. (MXIM)
McAfee Inc. (MFE)
MDC Partners Inc. (MDCA)
Meade Instruments Corp. (MEAD)
Medarex Inc. (MEDX)
Mercury Interactive Corp. (MERQ)
Michaels Stores Inc. (MIK)
Microislet Inc. (MII)
Mills Corp. (MLS)
Mips Technologies Inc. (MIPS)
Microtune Inc. (TUNE)
Molex Inc. (MOLX)
Monster Worldwide Inc. (MNST)
M-Systems Flash Disk Pioneers Ltd. (FLSH)
Nabi Biopharmaceuticals Inc. (NABI)
Nabors Industries Ltd. (NBR)
Network Appliance Inc. (NTAP)
Newpak Resources Inc. (NR)
Novell Inc. (NOVL)
Novellus Systems Inc. (NVLS)
Nvidia Corp. (NVDA)
Nyfix Inc. (NYFX)
O.I. Corp. (OICO)
Openwave Systems Inc. (OPWV)
Oracle Corp. (ORCL)
Orbital Sciences Corp. (ORB)
PacificNet Inc. (PACT)
Palm Inc. (PALM)
Par Pharmaceutical Cos. (PRX)
Pediatrix Medical Group Inc. (PDX)
Peet's Coffee and Tea Inc. (PEET)
Petroleum Development Corp. (PETD)
PMC-Sierra Inc. (PMCS)
Pool Corp. (POOL)
Power Integrations Inc. (POWI)
Progress Software Corp. (PRGS)
Quest Software Inc. (QSFT)
Qwest Communications International Inc. (Q)
QuickLogic Corp. (QUIK)
Rackable Systems Inc. (RACK)
Radio One Inc. (ROIA)
Rambus Inc. (RMBS)
Redback Networks Inc. (RBAK)
ReGen Biologics Inc. (RGBI)
Research In Motion Ltd. (RIMM)
Royal Gold Inc. (RGLD)
RSA Security Inc. (RSAS)
SafeNet Inc. (SFNT)
Sanmina-SCI Corp. (SANM)
Sapient Corp. (SAPE)
ScanSource Inc. (SCSC)
Selectica Inc. (SLTC)
Semtech Corp. (SMTC)
Sepracor Inc. (SEPR)
Sharper Image Corp. (SHRP)
Shaw Group Inc. (SGR)
Sigma Designs Inc. (SIGM)
Silicon Image Inc. (SIMG)
Silicon Storage Technology Inc. (SSTI)
SPX Corp. (SPW)
Sonic Solutions (SNIC)
Sonus Networks Inc. (SONS)
SPSS Inc. (SPSS)
Stolt-Nielsen S.A. (SNSA)
Sun-Times Media Group Inc. (SVN)
Superior Industries International Inc. (SUP)
Sycamore Networks Inc. (SCMR)
Take-Two Interactive Software Inc. (TTWO)
Tetra Tech Inc. (TTEK)
Thoratec Corp. (THOR)
THQ Inc. (THQI)
Thomas Group Inc. (TGIS)
Transaction Systems Architects Inc. (TSAI)
Trident Microsystems Inc. (TRID)
Triquint Semiconductor Inc. (TQNT)
TurboChef Technologies Inc. (OVEN)
Tyco International Ltd. (TYC)
Ulticom Inc. (ULCM)
UnitedHealth Group Inc. (UNH)
UTStarcom Inc. (UTSI)
Valeant Pharmaceuticals International (VRX)
Verint Systems Inc. (VRNT)
VeriSign Inc. (VRSN)
Vitesse Semiconductor Corp. (VTSS)
Voxware Inc. (VOXW)
Walt Disney Co. (DIS)
Waste Connections Inc. (WCN)
Western Digital Corp. (WDC)
Westwood One Inc. (WON)
Wet Seal Inc. (WTSLA)
Wind River Systems Inc. (WIND)
Wireless Facilities Inc. (WFII)
Witness Systems Inc. (WITS)
Xilinx Inc. (XLNX)
Zarlink Semiconductor Inc. (ZL)
Zoran Corp. (ZRAN)
Ah, the new mores of America.
Somehow, I think I live a different kind of life.
Sector 30 (consumer staples: XLP, VDC, RTH and IYK)
The Consumer Staples sector ETF (XLP) was down 10 cents (-0.36 pct W/W) to close at $27.40. Friday was flat.
But, don’t let the flat market fool you. There was lots of volatility here again this week, with Companhia de Bebidas Das Americas (AMBEV) (ABV) up +4.0 pct and Whole Foods Market (WFMI) down -4.8 pct.
Here's the XLP Monthly, Weekly and Daily data charts:
XLP Monthly data:
XLP Weekly data:
XLP Daily data:
Table 6: Senior consumer staples equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Two weeks ago Coca-Cola was a leader (+4.4 pct) as the sell-side blasted out the storyline that ‘$USD makes foreign profits, which are repatriated, which looks good at home’, Then a week ago, traders digested things and KO dropped -0.1 pct. This week, Coca-Cola was flowing again (+2.2 pct). And you guessed it, the $USD gained +0.31 pct, which put unhappy faces to all these story tellers.
Yes, every con artist needs some truth to a story, and, yes, a weak $USD helps companies that produce products in foreign countries that have a strong currency, yada yada. But if and when you see these stories pumping a stock that day or week, then run to the hills before the other shoe drops. It’s called pump and dump and, yes, it happens all the time to blue chip companies like Coca Cola too.
The big loser was Whole Foods Market (WFMI -4.8 pct W/W). A week ago, WFMI was the big winner (+3.5 pct W/W). At the end of the day, for two weeks nothing much has happened.
Sector 35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)
The IYH healthcare ETF was up +0.91 pct W/W to close at 72.32. Friday was a good day.
The M-W-D RSI-7 is too rich for me.
Here’s the IYH Monthly, Weekly and Daily data charts:
IYH Monthly data:
IYH Weekly data:
IYH Daily 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 |
Aetna (AET +3.5 pct), Bristol-Myers (BMY +2.9 pct) and Pfizer (PFE +1.8) were strong on the week.
Sector 40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)
The Financials ETF (XLF) had a good week (+1.13 pct W/W) to close at 37.72. It’s been a few weeks, actually.
This week showed some way up and others way down. Merrill Lynch (MER +2.9 pct) and UBS (UBS -2.8 pct) were at the extreme end.
Here’s the XLF Monthly, Weekly and Daily data charts:
XLF Monthly data:
XLF Weekly data:
XLF Daily 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 |
Two weeks ago, Merrill Lynch (MER) rocketed +6.7 pct, whereas a week ago it was down -2.1 pct. This week MER was up +2.9 pct. The shareholders have spoken: they like the share buy-back.
I wonder if the Old Bull himself advises clients to buy high and sell low?
I’m still waiting for the Financials to peak. Is this the month? Sooner or later, as they say…
Sector 45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, MTK and SMH)
This week the semi-conductors (SMH) gained +1.21 pct to close at 37.52, but the gain on Friday was also +1.21 pct. Nothing like a high close to make all seem right.
A week earlier, SMH gained +2.32 pct and the week before that it was up +5.11 pct. If the market keeps coming back, it will soon get back to where SMH has its head above water after 52 weeks.
Here’s the SMH Monthly, Weekly and Daily data charts:
SMH Monthly data:
SMH Weekly data:
SMH Daily 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 |
After Intel had made a neat two-week gain of +13.2 pct, it was down -1.3 pct a week ago, and I wrote, “That’s called consolidation”. This week INTC gained just +0.14 pct W/W (supported by a Friday gain of +0.74 pct), so it’s still consolidating.
Cisco (CSCO +3.3 pct) was the leader this week.
Adbobe (ADBE -3.6 pct) and Cognizant (CTSH -7.4 pct) were the losers.
On Wed, Cognizant said 1Q revenues and earnings are robust, and then also guided higher.
Then the stock tanked after management said they were going to be more prudent in their hiring practices. Go figure.
Could the market be nervous here, as in ‘sell in May and go to Bahamas?’
Sector 50 (telecom: IYZ, VOX and IXP)
The U.S. telco sector ETF (IYZ) had a big recovery from the loss of -1.02 pct a week earlier. This week, IYZ gained +2.66 pct W/W, which is what happens when Verizon (VZ) is the #1 stock in the Dow 30 W/W.
A week ago I reported that, “T is the Dow Industrial 30’s #2 performer over 52-weeks”. Then there was a loss after traders saw that CEO Whitacre was going to retire with a package valued at about a sixth of a billion dollars. Whitacre, I said, has pulled a power play, believing as he must that AT&T is his fiefdom.
Not to put too sharp a point on this subject, but when shareholders have wide ownership of a company like AT&T, they have no control. Management has all the control.
But when there is a mega company that is controlled by more than 50 pct of voting shares held by a single family and that family hires an independent professional manager as CEO, in your wildest dreams could you conceive that family would compensate the manager like Mr. Whitacre has taken from his company’s shareholders?
As a point in support of my argument, just look to the Bancroft family that presently is receiving overtures from Rupert Murdoch (News Corp NWS) to buy their Dow Jones (DJ) company. The Bancroft’s pay their CEO about a million or less per year, figuring that’s all the man needs. And do you think Murdoch would ever pay an independent CEO a retirement package worth $160 million? Let’s get real.
Btw, this weekend, I see the SEC and the NT State Attorney General are investigating suspicious looking trading in the DJ stock and options shortly before news came to the rest of us that News Corp was going to bid $5 billion for DJ. Both companies have been served subpoenas.
Seems to be par for the course in today’s America.
Here’s the IYZ Monthly, Weekly and Daily data charts:
IYZ Monthly data:
IYZ Weekly data:
IYZ Daily data:
Sector 55 (utilities: IDU, XLU, and VPU)
The Utilities ETF (XLU) had a gain of +0.67 pct this week after losing –0.19 pct on Friday, to close at 42.09.
A stronger bond market helped.
Here’s the XLU Monthly, Weekly and Daily data charts:
XLU Monthly data:
XLU Weekly data:
XLU Daily data:
Bond & Interest Rate Review
The US Bond market recovered a fair bit this week with yields down -7 bp for the long bond.
US Treasury bond yields dropped -7, -5, and -4 basis points (bp) to 4.79 pct, 4.62 pct, and 4.53 pct respectively on the 30-year, 10-year, and 5-year instruments. The 2-year paper was dropped a bit, as the yield increased +2 bp from 4.63 to 4.65.
The spread between the 2-year and 3-month Treasuries narrowed from -19 bp to -8 bp in two weeks as the T-Bill yield dropped -3 bp this week (and -6 bp a week ago) from 4.82 pct to 4.73 this week, and the yield on the two-year bumped by that +2 bp.
The TLT gained +0.88 pct W/W, which is a lot, to close up to 88.60 from last week’s 87.83.
But TLT was at almost 92 at year-end 2006, so long bond investors (ie, those who hold to maturity) have taken a beating this past few months.
Is this about to change? I don’t think so. Not yet. I think that with Crude Oil falling out of bed this week (-4.53/bbl or -6.82 pct), bond holders were happy to add some more inventory. But, this coming week may see a reversal of that oil price, and a continuation in the rising metals and precious metals price trends, which would pull down the bonds.
In fact, I don’t think bonds are going to rally until the stock market starts to slide, which will cause HB&B to assert so much pressure on the Fed, that Bernanke only then will start to cut the funds rate. By then there will be money flowing from stocks to bonds and the yields on the bonds will drop, I feel.
When that starts to happen, I can only throw a dart into the board to pick a date. What I can say is that I think bond traders are pretty nervous here.
This week, the June-07 T-Bond rallied from about 111.10 to a high of 111.9375, closing very high at 111.84375. As you can see from the chart below, trading was eratic. Trading on the bond desk at HB&B or hedge funds must be quite a challenge these days.
Interest rates and bond yields.
Interactive Daily data charts:
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 4.73 | 4.73 | 4.76 | 4.88 |
| 6 Month | 4.79 | 4.79 | 4.80 | 4.84 |
| 2 Year | 4.65 | 4.67 | 4.63 | 4.57 |
| 3 Year | 4.57 | 4.60 | 4.57 | 4.52 |
| 5 Year | 4.53 | 4.57 | 4.57 | 4.52 |
| 10 Year | 4.62 | 4.65 | 4.67 | 4.63 |
| 30 Year | 4.79 | 4.82 | 4.86 | 4.82 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 3.69 | 3.65 | 3.67 | 3.52 |
| 2yr AAA | 3.56 | 3.58 | 3.61 | 3.55 |
| 2yr A | 3.63 | 3.61 | 3.66 | 3.54 |
| 5yr AAA | 3.61 | 3.58 | 3.61 | 3.54 |
| 5yr AA | 3.60 | 3.61 | 3.64 | 3.57 |
| 5yr A | 3.71 | 3.70 | 3.72 | 3.67 |
| 10yr AAA | 3.74 | 3.72 | 3.74 | 3.76 |
| 10yr AA | 3.71 | 3.70 | 3.73 | 3.73 |
| 10yr A | 4.01 | 4.00 | 4.02 | 4.01 |
| 20yr AAA | 4.40 | 4.34 | 4.14 | 4.13 |
| 20yr AA | 4.58 | 4.52 | 4.43 | 4.41 |
| 20yr A | 4.23 | 4.16 | 4.24 | 3.99 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 5.02 | 5.05 | 5.02 | 4.98 |
| 2yr A | 5.09 | 5.12 | 5.06 | 5.02 |
| 5yr AAA | 5.03 | 5.07 | 5.07 | 5.01 |
| 5yr AA | 5.10 | 5.14 | 5.14 | 5.11 |
| 5yr A | 5.13 | 5.17 | 5.17 | 5.14 |
| 10yr AAA | 5.26 | 5.29 | 5.43 | 5.43 |
| 10yr AA | 5.35 | 5.40 | 5.45 | 5.44 |
| 10yr A | 5.49 | 5.53 | 5.56 | 5.52 |
| 20yr AAA | 5.76 | 5.79 | 5.83 | 5.92 |
| 20yr AA | 5.74 | 5.78 | 5.83 | 5.80 |
| 20yr A | 5.90 | 5.93 | 5.96 | 6.06 |
Interactive Chart of Interest rates and bond yields.
Fannie (FNM) (+3.7 pct), Freddie (+1.2 pct) and Countrywide Financial (CFC) (-1.3 pct W/W) don’t interest me at all. Too many players who know too much about those businesses. Hard to trade against HB&B as well as those other well informed pro’s.
I mean, who (other than insiders) would have forecasted HB&B buying up sub-prime lenders a month ago?
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:
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 |
I put a link on the side bar to www.thehousingbubbleblog.com, which offers insights as to what is happening across America with respect to housing and mortgages. I say this cancer will spread for several years, not resolve itself in a few weeks. The big losers here are the bondholders who bought this securitized bundle of Liar Loans.
I regret to say that the problem will never go away if the taxpayer gets stuck with the bill.
Consumer Finance -USA -- Interactive Weekly Data Charts
Consumer Finance -USA -- Interactive Daily Data Charts
Commodities Review
The Commodities Index ($CRB) dropped this week -0.94 pct, closing at 311.24. That move was largely energy related.
$CRB (311.94) is now sitting between the 50-day MA (311.68) and 200-day MA (312.57) lines.
A higher $USD this week and helped push down the $CRB.
Interactive Chart of Weekly CRB Commodities Index:
Interactive Chart of Daily CRB Commodities Index:
Oil:
This week, $WTIC plunged -4.53/bbl (-6.82 pct W/W) to close at 61.93, after a week earlier trading up +3.67 pct. Traders are nervous here.
The $WTIC 50-Day Moving Average (from StockCharts) is now 62.81, while the 200-Day MA is 62.84. Hence the current price (61.93) is technically bearish. It is also close to the middle of a 55-65 range.
Interactive Chart of Weekly Crude Oil:
Interactive Chart of Daily Crude Oil:
The e-miNY June-07 Crude Oil contracts were very weak all week.
Gold:
First, $GOLD enjoyed a bump of +38.50 over four weeks, then a week ago dropped -14.00/oz to close at 681.80. This week, $GOLD lifted +7.90 (+1.16 pct), closing Friday at 689.70.
The 50-day MA is now at 671.65 and the more important 200-day MA is at 636.05. So $GOLD at 689.70 is still very bullish. And, like I opined a week ago (after the crash and before the subsequent rally) I think it will stay that way for a month or two. Then I believe it will have a significant pull back.
Except for $SILVER, all the Precious Metals were up this week. A week ago, I wrote in this space, “But (despite the -14.00 drop in gold that week), $GOLD, $SILVER and $PALL popped a bit on Friday – at least enough for me to say I think the ECB selling is over for a while.” I think so. The $USD has firmed a bit this week, so the pressure is off the Europeans to support the USD, which they were doing with gold sales.
June Gold on NYMEX had a nice close to the end of the week.
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 lost just under -$0.05 (-0.33 pct) to close at 13.53. I still believe that most of the pull-back (-$0.57 over three weeks) has been a matter of profit taking because the previous three weeks had really been hot for silver.
The 50-day MA is 13.57 and the 200-day MA at 12.79, so the current price at 13.53 is only technically Bullish for the long-term.
As I opined a week ago, I think the short-term cycle for silver has pulled back to a buying range. Friday, in fact saw a gain of +0.15 pct in $SILVER.
Spot silver chart for the week
Interactive Chart of Weekly Silver EOD Continuous Contract Index:
Interactive Chart of Daily Silver EOD Continuous Contract Index:
Interactive chart of the Silver Bullion index.
A week ago I wrote, “$PLAT dropped -$48.20 (-3.59 pct) to close at 1293.00. It closed the week of March 10 at 1208.00, so its still a long way higher. The 50-Day MA for $PLAT is now 1252.57 and the 200-Day MA is 1194.34, so $PLAT is still solidly Bullish despite this week’s profit taking.” In other words, I didn’t blink.
This week, $PLAT jumped +36.20 (+2.80 pct) to close at 1329.20. There was a huge bump on Friday, but the rest of the week was ok as well.
Spot platinum chart for the week
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.
A week ago $PALL closed at $376.12, down -$13.38 (-3.44 pct W/W), but I wrote, “palladium is still technically quite bullish, and has been since early October (290.88).”
This week, $PALL lifted +2.95 (+0.78 pct) to close at 379.07. The 50-day MA is 363.90 and the 200-day MA is 338.93.
Spot palladium chart for the week
Interactive Chart of Weekly Palladium EOD Continuous Contract Index:
Interactive Chart of Daily Palladium EOD Continuous Contract Index:
Interactive chart of the Palladium metal index.
Base metals, which had been red hot (just a pun), cooled this week.
A week ago, I wrote, “$COPPER lost -8.85 (-2.44 pct) W/W to close at 353.25, taking away the prior week’s gain. The 50-day MA for $COPPER is 311.92, and the 200-Day MA is 317.01. So, at 353.25, $COPPER is still bullish, and not going down like some experts were forecasting. This move, like uranium, has a lot to do with producers keeping supply off the market for a while, as I opined earlier. Certain players are squeezing the shorts.”
This week, $COPPER rocketed up +22.60 on the contracts (6.40 pct) to close at 375.85. There were huge moves on Tuesday and Thursday. New high soon? Where are those “experts” who were saying that copper was dull and headed much lower?
The 50-day MA is 321.80 and the 200-day MA is 317.06.
Interactive Chart of Weekly Copper EOD Continuous Contract Index:
Interactive Chart of Daily Copper EOD Continuous Contract Index:
Interactive chart of the Copper metal index.
Table 12: Senior gold equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
A week ago, I wrote in this space, “$XAU, GDX and (TSE’s) XGD were all down sharply this week, -2.75 pct, -2.72 pct and -3.58 pct, respectively. Not to worry. These profit-taking traders now have some more ammunition to use.”
I also wrote, “Most of the seniors and juniors were down again this week. I’m still not crying over a little profit-taking – especially since I thought it was over on Friday. If you go to the $XAU Weekly chart (Philly gold and silver miners), you will see what technical analysts refer to as a long base pattern going back to the start of 2006. I see that as a very powerful pattern awaiting a break-out to the upside. To get us into that trend, I believe $GOLD will have to surpass 730, at least. I expect that to happen within 30 to 45 days.”
I added, “these are images I get from the Cara Crystal Ball. Btw, it’s a stunningly beautiful day here, which reminds me I have to finish up (this WIR).”
This week $XAU gained +1.53 pct to close at 141.85. The 50-day MA (138.90) and 200-day MA (138.10) are below the current price, which is bullish.
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
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
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 and Daily data charts:
GDX Weekly data:
GDX Daily 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 81.75, a gain of +0.31 pct) W/W, despite weakness on Friday.
The $USD 50-Day MA is now 82.83, and the 200-Day MA is 84.48, so the current price (81.49) is technically still quite bearish.
Here is the chart of the end of the week trading:
The following data requires your attention: M3 update as of the past week.
M3 continues to grow at an excessive rate.
On Thursday, the Fed reported the M2 Money supply grew at an annualized rate of +8.2 pct, which is more than six times the annualized growth rate of the US economy (1Q07 GDP +1.3 pct).
This money is being printed (i) to pay for a war and for govt deficits not matched by taxes, (ii) to keep private equity and corporations sufficiently well funded to manage takeovers as big as $100 billion, and (iii) to permit corporations, who can’t do it from operating free cash flow, to hike dividends and buy back shares.
The first point is driving the inflation cycle and the next two are driving speculation in the equity markets, now that this capital is no longer going into real estate at such a wild clip as we saw in the past three years. Some of that speculation will stick in the form of higher than necessary inflation, and the rest will send affected traders to the slaughterhouse.
Interactive Chart of Weekly U.S. Dollar Index:
Interactive Chart of Daily U.S. U.S. Dollar Index:
After last week-end’s long-term cycle high, the Euro (priced in USD) had a tough weak, losing -0.28 pct W/W, closing at 135.96.
The $XEU 50-Day MA is 133.80, and the 200-Day MA is 129.99, so the current price (135.96) is technically very bullish.
Interactive Chart of Weekly Euro Dollar Index, priced in USD:
Interactive Chart of Daily Euro Dollar Index, priced in USD:
The British Pound lost -0.12 pct W/W to close at 199.35.
The $XBP 50-Day MA is 196.90, and the 200-Day MA is 192.77, so the current price (199.35) is technically quite bullish.
Weekly British Pound Index:
Daily British Pound Index:
The Japanese Yen had yet another pull back against the $USD following the loss of a week ago when the $XJY was down -0.76 pct against the USD. This week $XJY dropped -0.37, closing at 83.25.
The 50-Day MA is 84.49, and the 200-Day MA is 84.71, so the current price (83.25) is bearish.
I continue to say, this is a function, I think, of the Japanese Administration and central bank trying to help domestic exporters.
But, I also think that it could be that the carry trade will be coming to a close soon as the BoJ may start to raise rates. Something to consider as the end of the carry trade will mean a big negative for global stock prices, I think.
Weekly Japanese Yen Index:
Daily Japanese Yen Index:
Weekly Canadian Dollar Index:
Daily Canadian Dollar Index:
The Canadian Dollar gained +0.73 (+0.81 pct W/W) to close at 90.36, which is now seven weeks of powerful moves against the USD.
The $CDW 50-Day MA is 87.02, and the 200-Day MA is 87.50, so the current price (90.36) is technically very bullish.
Those of you who were watching BNN (ROBTV) two months ago will recall economists from HB&B Canada forecasting a weaker Canadian dollar. I think traders need to stick to the charts.
International Equities Review
Many of the international markets had a holiday week.
I’ll let you look at charts to figure it out. Time is getting short for me. I have places to go, people to see on this beautiful day.
Here’s how the week closed for the Asia-Pacific markets.
Here’s how the week closed for the bourses of Europe.
A week earlier, Colin Twiggs of Australia offered this wise advice: “Don’t get caught up in the euphoria.”
However, the market continues to lift.
Regarding Australia, I see that the Reserve Bank (RBA) kept its rate stable at 6.25 pct, which gives the Fed a chance to catch up, without further stressing the dollar.
But, I like this chart. Can you tell which country was printing all the world’s money since 4Q00? Well 9/11 certainly hurt, but just maybe had the Fed not gone to a 1.0 pct funds rate, HB&B would not have backed up the truck and we wouldn’t be in the fix were in.
I mean really, without Liar Loans and loans to border crashers and foreigners, and private equity, which served to drive housing prices to the moon Alice, the US would not be in the pickle it is. And maybe the Average Joe & Joesy wouldn’t be so hesitant today to stay in the market after it starts to crater like the value of their home in too many markets. Once bitten; twice shy.
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) gained +0.28 pct W/W to close at 14.43.
Here is the Japanese (EWJ) equity market ETF Monthly, Weekly and Daily data charts:
U.K. equity market ETF: EWU
The EWU (UK market ETF trading in the US in USD) gained a lot, rising +2.45 pct W/W to 25.47, with much of that gain coming on Friday.
Here is the United Kingdom (EWU) equity market ETF Monthly, Weekly and Daily data charts:
EWU Daily data:
Canadian equity market ETF: EWC
EWC (priced in USD) had a sharp gain (+1.76 pct on the week) to close at 28.37. That’s a gain of about +8.3 pct in 24 sessions, and may be due for a pull-back.
But the index keeps rising and I’m still calling for a rise in oil, metals and precious metals, which ought to help keeping it on the rise. The TSX Composite hit another new all-time record this week.
Here is the Canadian (EWC) equity market ETF Monthly, Weekly and Daily data charts:
U.S. Equities Review
All broad indexes in the US stock market gained again this week, although the gains were not much compared to the commodity-producers, like metals and precious metals.
On the week, the Nasdaq Composite and Russell 2000 small cap indexes gained +0.58 pct and +0.38 pct respectively, while the S&P 500 and the Dow 30 gained +0.77 pct and +1.10 pct on the week. Obviously the big caps on the Dow are pulling the market up.
This week it was Verizon’s turn as VZ rocketed +7.3 pct in a week. I believe that is called Speculation.
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.
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:
If you didn’t already, you might wish to review the reports from Value Line, which this week are on two companies: Altria (MO) and Coca-Cola (KO).
I have already made some comments about Coca Cola. I’m not going to add more at this point because my time is running short.
Altria
(MO: Value Line Report May. 4: next one is due Aug. 3)
Coca-Cola
(KO: Value Line Report May. 4: next one is due Aug. 3)
Alcoa [GICS 15, Dow 30]
(AA: Yahoo Finance file)
(AA: StockChart chart)
(AA: ADVFN Financial Data)
(AA: Value Line Report Apr. 20: next one is due Jul. 20)
Altria Group Inc [GICS 30, Dow 30]
(MO: Yahoo Finance file)
(MO: StockChart chart)
(MO: ADVFN Financial Data)
(MO: Value Line Report May. 4: next one is due Aug. 3)
American International Group [GICS 40, Dow 30]
(AIG: Yahoo Finance file)
(AIG: StockChart 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: 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: 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: 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: 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: 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: ADVFN Financial Data)
(KO: Value Line Report May. 4: next one is due Aug. 3)
Disney [GICS 25, Dow 30, Cara 100]
(DIS: Yahoo Finance file)
(DIS: StockChart 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: ADVFN Financial Data)(DD: Value Line Report Apr. 20: next one is due Jul. 20)
ExxonMobil [GICS 10, Dow 30, Cara 100]
(XOM: Yahoo Finance file)
(XOM: StockChart 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: ADVFN Financial Data)(GE: Value Line Report Apr. 13: next one is due Jul. 13)
General Motors [GICS 25, Dow 30]
(GM: Yahoo Finance file)
(GM: StockChart 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: ADVFN Financial Data)(HPQ: Value Line Report Apr. 13: next one is due Jul. 13)
Home Depot [GICS 25, Dow 30]
(HD: Yahoo Finance file)
(HD: StockChart chart)
(HD: ADVFN Financial Data)(HD: Value Line Report Apr. 6: next one is due Jul. 6)
Honeywell [GICS 20, Dow 30]
(HON: Yahoo Finance file)
(HON: StockChart 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: ADVFN Financial Data)(IBM: Value Line Report Apr. 13: next one is due Jul. 13)
Intel [GICS 45, Dow 30, Cara 100]
(INTC: Yahoo Finance file)
(INTC: StockChart chart)
(INTC: ADVFN Financial Data)
(INTC: Value Line Report Apr. 13: next one is due Jul. 13)
Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Yahoo Finance file)
(JNJ: StockChart 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: 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: 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: 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: ADVFN Financial Data)
(MRK: Value Line Report Apr. 20: next one is due Jul. 20)
Microsoft [GICS 45, Dow 30]
(MSFT: Yahoo Finance file)
(MSFT: StockChart 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: ADVFN Financial Data)
(PFE: Value Line Report Apr. 20: next one is due Jul. 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 Apr. 6: next one is due Jul. 6)
United Technologies [GICS 20, Dow 30, Cara 100]
(UTX: Yahoo Finance file)
(UTX: StockChart 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: 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: ADVFN Financial Data)
(WMT: Value Line Report Feb. 9: next one is due May 11)
Wrap up:
In the INITIAL WIR (re-printed above), I pointed out that Michael Panzner had acquitted himself well on the Kudlow show this week. I suppose Panzner then quoted me, and his Kudlow show opponent Donald Luskin responded.
Now Panzner has responded in kind to Luskin. It’s all too funny.
Actually, as I recall, Larry Kudlow seemed to enjoy that show, as did I.
Now that Luskin has fired back about “the clown suit” stuff, and apparently he likes to review history, let’s revisit why I called the guy a clown.
It all started with a condition. Luskin, on Kudlow’s show a couple year’s ago, on Oct 3, 2005, gave a flat-out statement that Gold was going to the dogs. “Sell” today, he said, because gold would be down sharply $30 or $40 dollars in a month, from $464.20. Luskin said gold was dead. He said he was an expert and hence knew of what he spoke. That was, as I say, Oct 3, 2005.
I immediately took the opposite view. I believed gold was soon going to rally, and that Luskin was doing the audience a disservice. So I put up a Luskin Count-down Clock on the side-bar of my website, and said if that guy was as wrong as I believed time would soon show, that I would call him a clown. If he was right, I would call myself a clown. I mean fair is fair when bloggers and media “personalities” throw dollars around like twenty wooden nickels, right?
On Oct 21, a reader (blogger Mover Mike) asked me if Luskin was calling for advice because I was, that day, calling the cycle bottom of the gold market at $464.10 (near futures), and an opportunity to buy a number of gold stocks I showed on my monitor. Note the write-up I did on Kinross (NYSE:KGC TSX:K US$6.55), calling it a Buy.
I archive everything on this site, not to prove I’m always right (because we all know that’s not true), but in order to set up case studies. If, for example, I am going to call somebody out, I’m going to apologize if I’m wrong. And my readers know this and know that I have apologized.
So, with Luskin, gold (at $464.10 on Oct 21) and Kinross (at $6.55), here’s what happened. First, go back to the Gold Monitor screen-shot from the Oct 21-05 article and compare all those prices to what followed. And let Luskin know who’s the expert and who’s the clown.
Gold historical prices (using GLD, which has 1/10th of an ounce of gold per share):
Kinross historical prices:
I take my work seriously. It’s also the basis of my writing and my opinions. I happen to like Michael Panzner because I know he does the same. As I say, there is a difference between analysis and synthesis.
As to Luskin, when it comes to golf, maybe I’m the clown. But, with Panzner’s headline today (May 6), I think he’s got it right: “Luskin's Conspiracy to Make You Poor and Stupid”. Panzner presents a good case. In October 2005, so did I.
I like Don Luskin. He makes me laugh. In a way he’s like Don Rickles. Past his time, but he still makes you hurt when you laugh. As entertainers on TV, they both excel.
As for the regime change in The Bahamas, the Standard & Poor's sovereign rating group is fully supportive. Business as usual, in fact probably a little faster than usual.
I don’t know about you, but just getting through this Week In Review has become an exercise in persistence. I do it because I love it, and I know the hard work pays off.
I have been busy trying to automate as much as possible. Productivity counts. There has to be a system for everything. Everything has to be logical or I start to feel uncomfortable.
You know where I picked that up? As a child. My Dad was an electrician. He believed that if you turn a light on at the entrance to a room that there should be a switch on the wall at the other end so that you turned the light off if you exited that way. Saves electricity. So we had double switches on every wall. It bothers me today to leave a light on if the room is unoccupied.
Another lesson I learned from an Aunt. When visiting as a youngster one weekend, I saw that nobody was leaving the dinner table and they were all looking at me. I had a plate half full of food, and theirs were empty, and so they waited, without saying anything. Until my Aunt told one of my cousins that I just didn’t understand the concept of waste. My wife will tell you that, psychologically, that incident made such an impression that I cannot leave food on my plate.
Those childhood lessons have stayed with me for 50 or more years. There are systems and logic and the right way to do things. So when I start something I finish it. I understand why I am doing it.
To this day I have never taken a pamphlet that somebody in the street handed to me. I’ll even let it drop after hitting my chest. Why? Because logic tells me I’d never ask for that pamphlet.
So you see why I became such an independent and objective person. It’s second nature to march to my own drummer, to figure out for myself how things work. And if I am curious enough, I will spend forever doing that rather than having somebody explain it to me.
I learned early that you ought to try to do for others what you hope they will do for you, but not to expect it. Most people are too busy trying to seize the day, taking from people, because they never figured out that what goes around comes around. They never learned the importance of logic, and systems, like me.
So, in closing, I think you’ll find that over the next several months and longer, this website and blog will improve, and that the book “Lessons of the Trader Wizard” will be published, and I’ll be spending more time figuring out how to catch the big ones off the Berry Islands.
In The Bahamas of course.
Have a great week. I know that wherever you are in the world, we are connected somehow.
Posted by Posted by Bill Cara on May 5, 2007 11:22:14 AM | Category: Cara's Bull Board
Discourse
Bill,
1) Your wife is probably right.
2) The technical situation in the USD is currently positioned for some upside (that if the area of recent lows hold) If true that will probably take almost all assets in the other direction. The logic is very simple: let's balance the markets a little bit so we bring more uncertainty and that will allow the game to continue later…
Hey Bill
Thought you might get a chuckle out of this Bloomberg
article. Apparently Lehman Bros are working on a
HAL 9000 Trading 'Puter LOL
"Open the pod bay doors Hal...and...uh...did you place
that trade on BMD yet? ..Hal? ..Hal?"
Posted by: Chevy ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
May 5, 2007 9:05 PM [link]
Hello everyone,
A philosophical Q...What is the timeframe in which a "trader" has the best opportunity to make money? It's not the "long term", that's too long. The notion that short term events are more "knowable" than longer ones is a seductive one...Is it true?
I seem to lose money whenever I tighten my timeframe too much, and have had my best results "swing trading". The result is that it's hard to make money on a frequent consistent basis. It's too hard looking at all the different setups that could yield good day trades, most of the time. Any comments/suggestions?
Sounds like I need that Lehman computer Chevy was talking about.
Chris
Posted by: shark_attack at
May 6, 2007 8:49 AM [link]
This is not really an answer to Chris's question, but I picked up the most delightful book called, Psychology of the Stock Market by G. C. Selden. It is a slender volume--paperback, 4.5" x 6" and just chock full of interesting stuff. Oh....it was written in 1912. It has a slender price, too of $8.95 (USD).
One of the things that Selden notes, and I wholly agree with, is that short term prices are generally governed by emotions and long term prices are governed by fundamentals. I think that explains well the asynchronous price v. fundamental action that we currently see.
Chris, have you checked out Charles Kirk? There are times when he is not even invested. Bill and many others have said, and I believe it, that patience is one of the most critical virtues--one that I'm lacking. I'll say that the tuition cost at "The School of Hasty Investing" is a steep one. I now stalk stocks like Elmer Fudd stalks Bugs Bunny (hopefully with a little more competence, but with no less persistence).
Bill:
Interesting tidbit within the latest Bob Chapman (The International Forecaster) piece posted on GoldSeek.com today: it refers to Goldman covering 50% of its short gold positions just prior to underwriting Lihir Gold's (LIHRY)$1.2 Billion issue proceeds of which are to be used to cover its (Lihir's)hedged short.
Is this as egregious an abuse of insider info as it appears?
Posted by: RobBoss at
May 6, 2007 10:05 AM [link]
Follow on to previous post...
Or (and?) simply the HB&B's reaction to the relatively ease of the 'free' market's absorption of the CB's selling of 90 tons of gold in the last couple of weeks...i.e. capitulation?
Posted by: RobBoss at
May 6, 2007 10:32 AM [link]
Leisa,
I hate it that Kirk is only 35-36 years old and so successful. He IS the boy wonder. The only other blog that I read. Of course, I did pay the $50. I thought that one would be able to use his stock screen though. Not just see his work in regards to the screens. StockCharts membership gives me what I need in that regard though.
Posted by: stktrader at
May 6, 2007 12:37 PM [link]
Bill:
"I don’t know about you, but just getting through this Week In Review has become an exercise in persistence. I do it because I love it..."
And I read it because I love it. Thanks for this rich offering.
I'm off now to the garden and the birds - many migrants passing through - and, later this aft., if the wind dies down here in Huron County, to hunt for trout.
Regards,
Joey
Posted by: joey at
May 6, 2007 12:55 PM [link]
Patience is the one virtue that almost no one who watches the market on a daily basis can sustain. If I had simply waited for the right opportunities last year (ie, traded just a few times), my portfolio balance would be much higher and my aggravation level would have been much lower. So I've been playing mental tricks to refrain from making any trades for a few days, and it's not been easy. Although the inactivity has saved me from a couple of bad trades, which should make it easier with time.
Posted by: 2nd_ave at
May 6, 2007 1:14 PM [link]
After watching the market every hour for two years I find that I have developed patience. As Bill has said, there is always opportunity. I used to want to chase rallies and I had difficulty selling my holdings. Mistakes are great opportunities to learn about yourself and the market.
Now I wait patiently for my opportunities. Bill's RSI approach helps a great deal in this respect. If the RSI on at least the daily and weekly is not 30 or less I will pass on the opportunity to buy unless there is a powerful overriding reason to go for it. When the stock gets overbought I now have the discipline to sell and not second-guess myself. One key for me is to be content with the profit you took and not dwell on the profit you could have had.
It sounds strange but I am happy for any decent profit that I can get in this market because I recognize how quickly it can turn.
Posted by: moab at
May 6, 2007 1:46 PM [link]
Bill's RSI approach is one of the single best pieces of investment wisdom that I've seen anywhere. I have a hodge podge of things that I use. I have MetaStock end of day. I particularly like the stocks by sector--
I also renewed by Stockcharts.com membership after going without it for a while. What I like about that is I can create rather large watch lists (unfortunately Fidelity has a limit of 50 stocks per list)--that are generally sector specific. I can quickly look through their daily performance on a relative basis and I can quickly review charts in these watch lists.
When I find a sector I like, I also go to Yahoo and enter in the tickers and print out the key statistics. I then go to a quite place a highlight the things that I find interesting.
I've found that my success rate has gone up greatly through my (1) identifying the right sector; (2) doing LOTS of homework (chart review, fundamentals, I rarely look at analyst ratings); (3) finding the 5-6 stocks that I like and then waiting for a good entry point. If I don't find one, I'll move on.
The nice thing about familiarizing yourself with lots of different stocks/companies, is that if you see headline news, you can capitalize on those precipitous declines--so long as it is a stock that you understand and would buy on fundamentals. Not everything on sale is worth buying.
"Money. Money. Money. Keep in mind the theme song of Trump’s Apprentice TV show because it’s new money that keeps this market rolling along. On Thursday, the Fed reported the M2 Money supply grew at an annualized rate of +8.2 pct, which is more than six times the annualized growth rate of the US economy (1Q07 GDP +1.3 pct)."
LMFAO....
Somehow I also find it so much more enjoyable to watch the new highs in the Dow made each day by keeping the Trump theme song that Bill has pointed out singing in my ears.
But despite all this "money, money, money" I still see many of the mortgage lenders, homebuilders, and other real estate related sectors of the market stagnating.
We have talked about the concept of the "rolling bear" before on this site, but I think that we are already there in real estate. The one sub-sector that is still clearly in a bull cycle is the REIT sector. Cheap money and looser lending has enabled REITs in all subsectors to lever up and support larger and larger amounts of mortgage debt. As a result many of the REITS are yielding below 3% where risk-free treasuries are yielding higher at 4 or 5%.
If and when the government cuts off the easy money spigot and lenders begin to tighten standards in commercial as well, we could see the malaise spread from residential real estate to commercial. Best way to play it? Take a look at the Dow Jones Real Estate Etf and either Put Options on that OR the double inverse ProShares ETF (symbol: SRS).
How far are we away from the commercial real estate implosion? Many months if not years I expect. The same lending mechanics that are fueling the Leveraged Buyout craze right now are the same standards that have permitted the REITs to continuously leverage up over the past five years.
Makes for exciting times. And as Bill as pointed out again and again......don't get too worried......we are only talking DOLLARS here.
Best regards,
Soulek1
Posted by: Soulek1 at
May 6, 2007 3:51 PM [link]
http://www.contraryinvestor.com:80/mo.htm
Note the annualized growth in MZM chart (last chart at bottom of page).
Posted by: JB at
May 6, 2007 5:21 PM [link]
"and the Energy Minister cutting off Strategic purchases. (I made up the last part.) I’m only guessing, but why else would $WTIC plummet and XLE rise faster than the S&P 500 this week?"
Bill, that's exactly what they said last week.
"On Thursday, the department rejected bids for the purchase of up to 4 million barrels of crude as too high, and said it will suspend all purchases of oil for the reserve until at least after the summer driving season."
http://www.forbes.com/feeds/ap/2007/05/03/ap3683429.html
You certainly have a crystal ball!
Posted by: JIM at
May 6, 2007 6:07 PM [link]
Looking for some value, though not the quintessential exercise in patience, I took positions in India and Japan/etfs in both. Japan's fundamentals may not be as good India's,nor their chart but thought that some support had been reached.
http://tinyurl.com/2dffhu
Posted by: jasper at
May 7, 2007 12:10 AM [link]
RE: Energy Minister cutting off Strategic purchases. (I made up the last part.) I’m only guessing, but why else would $WTIC plummet and XLE rise faster than the S&P 500 this week?"
Why would XLE rise while $WTIC was sinking ? Fundas dont jive here.
Posted by: marginnayan at
May 7, 2007 2:38 AM [link]
Wow...are the week in reviews choc-a-block full of information...i only wish i could write as comprehensively !!!
Luskin's comments and style on the video exhibit a couple of very interesting communications traits. His choice of words and gestures are meant to illicit emotional response and not dispassionate review. He is throwing verbal jabs at his opponent while puffing himself up with smiles and sneers into the camera. Not unlike a clown, he uses human communication at a very intuitive level to get an idea across. He is a perfect entertainer for the Kudlow show.
There is nothing wrong with being a TV clown analyst. It's just another form of video humor.
Posted by: ableape at
May 8, 2007 7:22 PM [link]
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Bill,
Thank you for all that you do and, especially, for the straightforward articulation of your views as given in today's post.
I have learned much from you and the 'disciples' gathered about your site. I am still learning and extremely grateful to have come in contact with a reliable fount from someone who really pays attention. That is so rare in this universe of pretending humanity . . . .
Again, thank you.
Howard Jones
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at
May 5, 2007 1:49 PM [link]