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May 12, 2007
Week #19 (2007-05-12) in Review (FINAL)
Another scare this week, but by the close on Friday the market Bulls were having yet another “Viagra Moment” as one of my readers calls it.
Ah, but the moment was fleeting for traders in Europe, and Hong Kong & Singapore. Why even the venerable S&P 500 couldn’t get it up this week, and poor NASDAQ was down on all fours, dropping -10 points on a week the Dow gained +62.
So, I guess the Bull is in the Dow, which means it would be a good week to look at Table 14 to see from where the juice is coming.
There are times, you know, when the Gnomes position just a few stocks to push the herd, ie, to carry the broad market higher. And when those get tired, it pays to watch the ones getting ready in the bullpen.
Maybe some of those come in and maybe not. That’s really important, I feel, to how the game will be played out.
Global Market Summary
International Equities: South Korea’s KOSPI and Canada’s (whatever) were the leaders this week, up +2.3 pct and +1.7 pct respectively. Singapore’s STI dropped -1.1 pct and the Hang Seng of Hong Kong (nice ring tone) dropped -1.8 pct W/W.
U.S. Equities : The Dow jumped (+0.4 pct), but the rest were down. The Russell small cap 2000 and the NASDAQ Composite dropped -0.4 pct. The market was smashed on Thursday, but recovered on Friday and is looking better for next week. Very few stocks are showing leadership so far, but a rally with legs will be joined by others.
Dow 30 : The Dow 30 average +0.4 pct to 13,326. Lots of debt being run up for buying back shares and issuing higher than normal dividend increases. Bad grammar but you get the point. Even thrifty Wal-Mart has decided to boost the dividend by about +30 pct.
U.S. Sector ETFs: Seven of 10 US sector ETF’s were up this week, but had the gain on Friday been nothing, all seven would have been losers W/W to make it 10/10 loses. I love it when a day makes the week. I also love the natural sector rotation, as you can see below (3/2/4) (8/9/10) (7/1/5/6). Forget the SMH because that’s either first or last or nearby – so call it an average of 5.5 :-).
First segment: most influenced by global commodities, forex and capex spending
10: Energy (XLE): #3 (+0.9 pct); $WTIC +3.5 pct
15: Basic Materials (XLB): #2 (+1.0 pct); Miners returned strong on Fri
20: Industrials (XLI): #4 (+0.6 pct); Share buy-backs & dividends
Second segment: most influenced by U.S. consumer spending and economic growth
25: Cons. Discretionary (XLY): #8 (-0.5 pct); No tickee
30: Cons. Staples (XLP): #9 (-0.7 pct); No staples in this market
35: Healthcare (IYH): #10 (-0.9 pct); AMGN -11.7 pct says it all
Third segment: most influenced by U.S. interest rates and general economic health
40: Financial (XLF): #7 (+0.1 pct); Pretty calm, watching c.bankers
45: Tech (SMH chips): #1 (+1.2 pct); 100 pct of the week done Fri.
50: Telecom Service (IYZ): #5 (+0.6 pct); All of it Friday
55: Utilities (XLU): #6 (+0.3 pct); No comment
Bonds: The US Bond market dropped a bit with yields rising about +3.5 bp along the curve. The big news was the rush to cash on Thursday as 3-month T-Bills got suddenly popular, causing yields to drop -4 bp W/W. The inflation picture is gaining clarity.
Commodities: Crude oil was up sharply because of military conflict within Nigeria. The base and precious metals continued to get smashed until Friday.
Oil & Gas: $WTIC futures lifted +2.19/bbl (3.5 pct) to 64.12.
Gold: Metals and precious metals got hammered all week until the central bank story became old news, and US PPI hit the latest headlines. CPI to come on Tuesday.
Goldminers: The goldminers $XAU sank -1.5 pct this week, which was a tad less than the previous week’s gain. There was a gain of +1.6 pct on Friday, which shows how negative the rest of the week was.
Forex: The $USD lifted this week by +0.5 pct, and the Euro lost -0.5 pct. A two-week rally does not a trend make.
Economic calendar for next week.
I have been focused on Speculation, but Inflation is not going away either! On Friday, we learned the Y/Y rate for the overall US Producer Price Index (PPI) rose to up +3.2 pct in April from up +3.1 pct in March.
Next Tuesday morning, we learn how the US Consumer Price Index (CPI) is doing:
I believe that had Bernanke not turned on the printing presses to goose the US equity market last July, inflation could have been beaten. These charts show clearly (from late-tracking data) that inflation is on the rise, which is a scenario where interest rates are also likely to rise, or at least stay flat. The market Bulls are hoping (needing?) for rates to fall.
US Marketwatch
A solid close to the week.
DJIA chart
Colin Twiggs believes the Dow is accelerating in a Phase 2 up-trend caused by corporate earnings growth, not speculation.
This is an important difference of opinion. Yes, I have been impressed that earnings have sustained at a higher pace than I expected, but I also believe in the ‘animal spirits’ thesis. In fact, I really believe that part of the speculation is due to excess cash/debt and part due to increased dividends and the appearance of higher earnings via share buy-backs, which elevates the EPS.
NASDAQ Composite chart
Cara 100 Stockwatch
Here are the Cara 100 gainers on Friday.
Interactive chart of the top 12 Watch List gainers
Do you see how China has taken four of the top spots on Friday. But the Shanghai Composite was down -0.7 pct earlier in the day, so why were these Chinese stocks up so much? On a day (Friday) where US stocks were flying, how come the Chinese stocks were flying higher?
Isn’t that all about Monday?
And the Rockets Red Glare, the bombs bursting in air, Gave proof through the weekend, That Shanghai will be there (on Monday).
Think about why you (the Average Joe) always wondered why you were being led by a nose ring by the Gnomes and HB&B? Finally, along comes B-Car to show the Way.
Tao, Brother.
Here are the top Cara 100 losers for Friday.
There were only 13 losers on Friday, but note how the five big losers on a strong market day in NYC were all American ‘no tickee no laundry’ type companies: Kohl’s (KSS), Activision (ATVI), Target (TGT), Walgreen (WAG) and Nike (NKE). Then after TGP, there was Whole Foods Market (WFMI) and JC Penny (JCP).
That tells me the Gnomes and HB&B are starting to worry about the US consumer. On a big rally day, the money is flowing from US consumer discretionary spending and into China: CNOOC China Offshore (CEO), China Telecom (CHA), China Mobile (CHL), and PetroChina (PTR).
And when the US consumer no longer has a heartbeat, I can just see the Gnomes and HB&B waving to the rest of America from their perch at the Club Pegasus or maybe the Dragon Club, Madam Zung, or Zapata’s, following a round at the Sheshan International Golf Club in Shanghai.
Money imitates life… or something like that.
Interactive chart of the top 12 Watch List losers (Interactive link)
There were 6 stocks of the Cara 100 for Friday that hit 52-week intra-day highs and none found hitting lows.
There were on a really “hot” day in NYC, six of the Cara 100 that hit intra-day highs, including two from Canadian oilsands (ECA and IMO), a metal miner from Brazil (CVRD) that now owns a big part of Ontario Canada, and Deutsche Bank. …No I don’t need to say.
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
Lyondell Chemical (LYO) and Aetna (AET) are particularly strong. I need to see the RSI-7 on the Daily price series data drop below 70 before selling.
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
Whole Foods Market (WFMI) is very depressed lately. The Monthly-Weekly-Daily RSI-7 is 29.01/31.88/14.14. Clearly, if WFMI stays down for another week (pulling the Weekly RSI-7 down below 30) and then starts to move higher day by day (pushing the RSI-7 for the Daily above 30), that’s the time to Buy.
But Whole Foods Market is presently completing a take-over of Wild Oats Markets (OATS) that is being played by market arbitrageurs, which is impacting the WFMI price.
Wild Oats Markets Inc. (OATS), Whole Foods Market Inc. (WFMI)
Premium offered: $0.71 or 3.99%
Acquirer: WFMI
Target: OATS
Offer per share: $18.50 cash
Value of outstanding common equity: $545,750,000
Target share price: $17.79
Acquirer share price: $41.10
Expected closing: N/A
Annualized gain: N/A
Can you see when this deal was either announced or started being played by the front-runners (arbs and tippees), whichever came first (LOL)?
Here’s how I read the tea leaves. In the last week of January, the abrupt RSI change (lift) in WFMI but not OATS tell me that the Whole Foods Market insiders are talking about this deal and starting to make plans. Naturally (a pun, but not bad) they want their share price up because its their currency in the deal. Maybe they don’t sound so negative in talks with the Street. Maybe they do a little extra IR. Then they have to bring in lawyers and HB&B M&A people, and that leads to secretaries and pillow talk and all, which leads to the price of OATS starting to move up quickly (note the relative change in RSI at the end of January). That ticks off Whole Foods Market insiders because it will make the deal more expensive, but it lights a fire under them to push their acquisition team members (including advisors and consultants) to speed up a public announcement. The “tipped” traders, not wanting to have an SEC investigator pay them a visit, then start a rumor as an alibi should they need it. Sometimes those rumors even hit CNBC (gosh). Then the acquisitor (WFMI) announces the bid and the price of OATS starts looking like gold on a good TraderWizard day. Then the Daily RSI-7 for OATS leaps from an already elevated 80 to almost 100, while it drops from 70 to 50 for WFMI due to WFMI traders concerning themselves about dilution. But, not to worry, Whole Foods Market understand human nature as well (not bad, eh?) and they have the IR releases ready that this is going to be a merger of wholesome markets, just to appease the critics. That helps WFMI prices. Then the arbs got into it, with their cell phones, Blackberries and laptops heating up.
At the end of the day, the Average Joe doesn’t know what to think, and that’s why I say they ought to stay away from trading against professionals once a deal like this goes into play. Having been there and done that, I can say that virtually 100 pct of retail advisors may have the patter down nice but they don’t have more than a small clue to the reality of these deals. There is so much insider trading round M&A deals that in all fairness to public markets the SEC needs to introduce new rules.
There is a lot of gray (or is it grey) in securities law, but regarding M&A there needs to be the concept of DNA introduced. For example, look at the recent News Corp-Dow Jones fiasco. A young couple in Hong Kong have been charged for making mega millions in front-running that deal, allegedly having been tipped by the father, a banker who is best friends and a business partner of a DJ board member. So after word gets to the DJ board of the impending News Corp announcement, father lends son and daughter multi-millions with a direct transfer to their brokerage account. The circumstance takes on a twist, however, as the children are commodities traders and apparently only traded some $50,000 total on stocks of any ticker symbol, of which there are as many tickers as these people had invested dollars. That is, until a couple weeks before the deal was to go down when they bet those multi-millions, including more money than apparently these people had ever seen, on Red 8. And the pay-off was huge.
It was kinda like a leading US Presidential candidate (hint: in blue) who in a southern State, who, while knowing absolutely zip about commodities trading from her perch in her politician husband’s mansion (I’m not naming names here), made her virgin trade pay off about $100,000. Now she is called Queen of the Pits, or will be next year by the Reds.
Back to Hong Kong and DJ, as I see it, if these charges are defended, the subsequent imprisonment ought to be for life. Compared to what happened here to “my” Martha, who was dabbling with a $60,000 illicit gain, these people should get worse than life, and so ought the father and the DJ board member, both of whom will likely be left alone to do these kinds of things again because I gather somebody thinks they are VIPs.
Back to Whole Foods Market. Now is probably a good time to Buy (a one-third position). RSI-7 for Monthly-Weekly-Daily is 32.0/31.1/14.1. Another couple days where the Daily is down around 14 and the Weekly will drop below 30. Normally, I wouldn’t recommend this, and I’d wait until the Daily RSI-7 returned to 30, but this is a stock in play, and I think the arbs have pushed it down to the $40.00 low on Thursday ($40.97 close on Friday). This is not a “normal” situation.
Disclosure: no position in WFMI or OATS, but I occasionally visit the Whole Foods Market store in Oakville to meet a business associate. :-)
Sector ETF Summary
The tables I show are for ten (GICS) Sector Index Funds (ETF’s) only.
Seven of the ten sector ETF’s I follow here were up this week. On Friday all ten were up. But there was a lot of shuffling of deck chairs and stepping on ice on Friday. All seven of the ETF’s that gained on the week were underwater at the end of the day Thursday, and Friday saved them.
On Friday, for instance the chips (SMH) gained +1.23 pct on the day, leading to +1.23 pct on the week.
The big move, other than a few chip stocks on Friday, was into the commodity sensitive stocks and out of the consumer segment (discretionary, staples and healthcare).
And, not that it is a sector, into China. The American consumer is being abandoned.
But, I thought China depended on it!
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)
XLE gained +0.87 pct to close at 65.21, which is not surprising as the price of Crude Oil on the NYMEX lifted +3.5 pct.
I think the previous week’s plunge in Crude Oil (-6.8 pct) was initiated by the cancellation of Buy orders by the Administration which had reported they didn’t want to put too much upward pressure on gasoline prices going into Summer driving season. Why don’t these people publish their intent two or three weeks ahead and help the Average Joe get a handle on the market. No, they would rather deal behind the scenes, which of course helps Friends & Family and the patrons who put them into the White House. As time goes on, I think more of the world is gaining clarity on the issue of politics in America.
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 |
The big winners this week were also the international oil companies. The Canadians, EnCana (ECA +4.6 pct), Imperial Oil (IMO +2.9 pct) and Suncor (SU +1.1 pct) were very strong.
Norway’s StatOil (STO -9.2 pct) was hit hard. UBS downgraded from a Buy to Neutral on the basis of reduced production outlook.
Edited Press ReleaseSTOCKHOLM (Dow Jones)--Statoil said Friday that the Norwegian government is proposing that the North Sea's Gjoa field be developed in accordance with the plan for development and operation (PDO), at the Council of State Friday. The Norwegian parliament (Storting) will make a final decision before the summer.
Total Gjoa investments are estimated at NOK 27 billion in 2006 money. After Snohvit, this is the biggest project Statoil has under development.
Plans call for production of oil and gas from the field to start in 2010.
Statoil is development operator with Gaz de France as production operator.
Kjetel Digre, who heads the Gjoa project, said: "The development solution allows flexibility with regard to the possibility of new recoverable finds in the area.
"The Gjoa plans have already produced positive spin-offs. The development of the Hydro-operated Vega field can now be implemented in a profitable way. The development project and production planning is taking place in good collaboration with Hydro."
According to Mr Digre, it has been shown that the main part of Gjoa's power needs being met with onshore generation, can be profitable. Plans call for coordinated electricity generation from the Mongstad energy project (EVM). A combined heat and power (CHP) station at Mongstad, north of Bergen, will come into operation in 2010.
"This solution has been chosen based on accessibility and regularity requirements. With power from land, we will be able to remove up to five gas turbines which otherwise would generate platform electricity," he says. "Hence we avoid large carbon and nitrogen oxide emissions."
The electricity generation licence application is now being considered by the Norwegian Water Resources and Energy Directorate (NVE).
Gjoa will exploit available capacity in existing pipelines. Gas will be transported via the British Flags pipeline system to St Fergus in Scotland. Oil will be piped to the Troll II pipeline and on to Mongstad.
"Gjoa oil is of good quality and will be important for future supply of raw materials to the Mongstad refinery," Mr Digre notes.
Gjoa operations are being planned with logistical functions and a supply and helicopter base at Flors, north of Mongstad. The operations organisation of operator Gaz de France will be based in Stavanger.
(END) Dow Jones Newswires
Oil & Gas Exploration & Production -Canada
Sector 15 (basic materials: IYM, XLB, IGE and VAW)
The Basic Materials ETF (XLB) gained +1.04 pct W/W to close at 39.81, which was the #2 performer this week.
I still await a final melt-up in the metals and PM’s, but I am concerned that the M-W-D RSI-7 for XLB is 87.5 (highest ever)/78.5/59.0. The saving grace here is that the Weekly and especially the Daily RSI pulled back to a margin of comfort. I think another “high-risk Buy” was signaled Friday morning, which I’ll discuss in the Gold section of this report.
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 |
The winners were Rio Tinto (RTP +11.0 pct), since all of a sudden a merger between BHP and RTP seems a good thing in Wall Street. Why not, the world then moves closer to Gnome monopoly power.
Speaking of Gnomes, Peter Munk is one. He, a previously failed entrepreneur, built Barrick from scratch, and in the process took over a white shoes company called Placer Dome. Now Peter has the white shoes.
Last week I wrote, “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.”
It started on Friday, right after I warned everybody that there would be a c-section by the c.bankers earlier in the week, and “then we’d get down to reality”.
Gold, platinum, copper is real. Bernanke wouldn’t dare throw the stuff from helicopters.
Sector 20 (industrial: IYJ, XLI, VIS, and IYT)
Industrials (XLI), meaning the US military-industrial complex, was up +0.55 pct to 38.19 this week.
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 |
Colin Twiggs (www.incrediblecharts.com) likes the broad market here, but notes weakness in the Dow Transports, including Fedex and UPS. He opines that the DJTA could break either way here.
Sector 25 (consumer discretionary: XLY, IYC and VCR)
The Consumer Discretionary sector ETF (XLY) lost -0.41 pct W/W to close at 39.30.
Two weeks ago, I wrote 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.”
Why then will media personalities like Kudlow whine and cry when the Average Joe can’t buy a home or a car or some of the necessities in life that drive the consumer segment of the market? Jobs today are being replaced by dreams, and, while they’re necessary, they don’t pay the bills.
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 |
The only things that moved up this week had to do with water. Ships and boats (CCL and BC) and dishwasher (WHL). Maybe the message there is that there is a flood tide coming to the market? Do you think?
JC Penny and Starbucks were looking for customers with cash in their pockets this week. JCP lost -4.5 pct and SBUX dropped -3.6 pct.
Sector 30 (consumer staples: XLP, VDC, RTH and IYK)
The Consumer Staples sector ETF (XLP) was down -0.73 pct W/W to close at $27.20.
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 |
Companhia de Bebidas Das Americas (AMBEV) (ABV) dropped -0.6 pct and BUD lost -0.7 pct, so is the consumer hard-pressed for a beer these days? (LOL)
Sector 35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)
The IYH healthcare ETF was down -0.94 pct W/W to close at 71.64. Friday was a good day.
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 +2.6 pct) was strong again, but Amgen (AMGN -11.7 pct) and Johnson & Johnson (JNJ -3.0 pct) were losers, among several others. Forbes.com pretty much told the story.
Sector 40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)
The Financials ETF (XLF) had a good Friday (+1.07 pct), which helped the week (+0.08 pct) close at 37.75.
I didn’t see much going on here one way or another.
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 |
Lehman Bros (LEH) dropped -2.5 pct W/W but it’s still been a strong 2 week and 4 week performance.
Sector 45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, MTK and SMH)
A week ago, I wrote, “the semi-conductors (SMH) gained +1.21 pct, but the gain on Friday was also +1.21 pct. Nothing like a high close to make all seem right.”
This week, the semi-conductors (SMH) gained +1.23 pct, but the gain on Friday was also +1.23 pct. Nothing like a high close to make all seem right.
Didn’t I see that somewhere before? I know I am totally color blind, but are my eyes playing tricks?
Anyway, that gain of +1.23 pct was enough to make SMH the #1 performer on the week.
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 |
Autodesk (ADSK +3.8 pct) and Intel (INTC +1.7 pct) were winners. For now. I see Autodesk has a significant class-action lawsuit against senior officers and directors related to options and back-dating and … Stay tuned.
Cisco (CSCO -4.6 pct) and Cognizant (-3.9 pct) were losers. I guess they couldn’t match the expectations set at whispernumber.com.
For example this coming week, Wal-Mart (WMT) is expected to report $0.68 (Consensus and Value Line), but the Whisper Number is $0.67. This is a good free service to register for.
Sector 50 (telecom: IYZ, VOX and IXP)
The U.S. telco sector ETF (IYZ) gained +0.55 pct W/W, which was from Friday’s gain of +1.01 pct.
Here’s the IYZ Monthly, Weekly and Daily data charts:
IYZ Monthly data:
IYZ Weekly data:
IYZ Daily data:
Verizon (VZ +1.7 pct) and AT&T (T +0.3 pct) were strong. However, look at Friday where VZ gained +1.4 pct and T rocketed +1.8 pct.
So the Telco’s of the Tao (or is that the Dow) showed the Way.
Sector 55 (utilities: IDU, XLU, and VPU)
The Utilities ETF (XLU) had a gain of +0.26 pct this week, after gaining +0.48 pct on Friday, to close at 42.20.
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 lost some ground this week with yields up +3 basis points (bp) and +4 bp across the Board – except for the 3-month T-Bill where yields dropped -4 bp as traders went to cash and T-Bills this week amidst the extreme volatility.
US Treasury bond yields gained +4, +3, +3, and +4 bp to 4.83 pct, 4.65 pct, 4.56 pct and 4.69 pct respectively on the 30-year, 10-year, 5-year and 2-year instruments.
The spread between the 2-year and 3-month Treasuries narrowed from -19 bp to flat in three weeks as the T-Bill yield dropped -4 bp this week to 4.69 this week, and the yield on the two-year bumped +4 bp.
The TLT lost -0.46 pct W/W to close at 88.19 from last week’s 88.60.
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.
If you want forecasts, last week in this space I wrote, “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, Crude Oil was up +2.19/bbl (+3.54 pct W/W) and after the c-section I warned about on Wed and Thurs, gold, silver, platinum, palladium and copper were up +0.8 pct, +1.3 pct, +1.3 pct, +1.4 pct and +1.1 pct respectively on Friday. I’d call that respectfully but a certain “crappy” rating service would not take it tongue-in-cheek.
Anyway, I set it up for you last week, in writing, “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 dropped from 111.84375 to 111.31250 W/W. The low was 111.18750.
As you can see from the chart below, trading was eratic. Yes, I’d say “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 | 4.69 | 4.70 | 4.73 | 4.86 |
| 6 Month | 4.67 | 4.72 | 4.79 | 4.86 |
| 2 Year | 4.69 | 4.66 | 4.65 | 4.70 |
| 3 Year | 4.60 | 4.57 | 4.57 | 4.63 |
| 5 Year | 4.56 | 4.53 | 4.53 | 4.63 |
| 10 Year | 4.65 | 4.62 | 4.62 | 4.71 |
| 30 Year | 4.83 | 4.80 | 4.79 | 4.89 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 3.64 | 3.65 | 3.69 | 3.58 |
| 2yr AAA | 3.55 | 3.56 | 3.56 | 3.58 |
| 2yr A | 3.63 | 3.65 | 3.63 | 3.58 |
| 5yr AAA | 3.58 | 3.59 | 3.61 | 3.60 |
| 5yr AA | 3.55 | 3.57 | 3.60 | 3.65 |
| 5yr A | 3.69 | 3.81 | 3.71 | 3.71 |
| 10yr AAA | 3.70 | 3.69 | 3.74 | 3.81 |
| 10yr AA | 3.67 | 3.68 | 3.71 | 3.79 |
| 10yr A | 3.97 | 3.96 | 4.01 | 4.02 |
| 20yr AAA | 4.31 | 4.30 | 4.40 | 4.14 |
| 20yr AA | 4.49 | 4.49 | 4.58 | 4.41 |
| 20yr A | 4.27 | 4.27 | 4.23 | 4.20 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 5.05 | 5.03 | 5.02 | 5.09 |
| 2yr A | 5.13 | 5.10 | 5.09 | 5.13 |
| 5yr AAA | 5.07 | 5.02 | 5.03 | 5.12 |
| 5yr AA | 5.14 | 5.10 | 5.10 | 5.20 |
| 5yr A | 5.17 | 5.14 | 5.13 | 5.23 |
| 10yr AAA | 5.44 | 5.37 | 5.26 | 5.44 |
| 10yr AA | 5.41 | 5.38 | 5.35 | 5.46 |
| 10yr A | 5.53 | 5.49 | 5.49 | 5.55 |
| 20yr AAA | 5.85 | 5.78 | 5.76 | 5.98 |
| 20yr AA | 5.76 | 5.74 | 5.74 | 5.87 |
| 20yr A | 5.99 | 5.91 | 5.90 | 6.11 |
Interactive Chart of Interest rates and bond yields.
A week ago I stated, “Countrywide (CFC), Fannie (FNM) and Freddie 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?”
This week, Countrywide Financial (CFC) (+8.1 pct W/W) and Fannie Mae (FNM +2.3 pct) were soaring. Don’t ask me why. Bond yields were up. Is that supposed to help? I really don’t get it.
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 haven’t kept up on the recent performance of house prices and foreclosures. Sorry. I’m too spent from trying to alert readers in the Summer of 2005 when I watched CNBC’s Bill Griffiths blowing smoke where the sun don’t shine. A “case study in the making” I called it at the time. “One for the ages” I said.
Do you think that was a forecast? (LOL)
Consumer Finance -USA -- Interactive Weekly Data Charts
Consumer Finance -USA -- Interactive Daily Data Charts
Commodities Review
The Commodities Index ($CRB) remained flat this week (-0.04 pct), closing at 311.13. $CRB is now sitting just below the 50-day MA (311.24) and 200-day MA (311.77) lines, and the 40-week Moving Average (almost equal to the 200-day MA, in fact I often use one for the other) (310.56). 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.
That’s not good for the Commodity Bulls who were hoping for more $USD weakness and higher commodity prices.
A higher $USD this week pushed down against the $CRB, but the rally in Crude Oil pushed up. So there was a stand-off.
I’m thinking that $WTIC will continue to lift because of Summer driving season, hurricane season, and a metals and precious metals rally to come because of buying from increasingly wealthy people in BRIC markets. But mostly, I think it will be a melt-up and blow-off rally before the US and European economies starts to slide, which would knock commodities down again.
It does get interesting.
Interactive Chart of Weekly CRB Commodities Index:
Interactive Chart of Daily CRB Commodities Index:
Oil:
After a week ago when $WTIC plunged -4.53/bbl (-6.82 pct W/W), this week $WTIC rallied +2.19/bbl (+3.54 pct W/W) to close at 64.12. There was a lot of trouble in oil-rich Nigeria. The People want “theirs”. They see that what the chairman of ExxonMobil takes home in a minute is more than they earn in a year and they turn to their guns and rockets as the equalizer.
As I say, traders are nervous here.
The $WTIC 50-Day Moving Average (from StockCharts) is now 62.95 and the 200-Day MA is 62.56. Hence the current price (64.12) is technically bullish. A week ago it had been bearish. It is now reaching the upper end 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:
Talk about nerves.
After $GOLD enjoyed a bump of +38.50 over four weeks, then two weeks ago dropped -14.00/oz to 681.80, followed by a +7.90 (+1,16 pct) recovery a week ago to 689.70, this week was the c-section I warned about. This week, $GOLD dropped -17.40 (-2.52 pct), closing Friday at 672.20. And Friday was a good day! On Friday, $GOLD regained +0.79 pct.
And that’s the segue into my calling a PM rally here. On Friday, $SILVER (+1.3 pct), $PLAT (+1.3 pct), $PAL (+1.4 pct) and $COPPER (+1.1 pct) all had impressive moves as the $USD dropped -0.2 pct on the day, thanks to a strong US Producer Price Index (PPI) number. Looking ahead to Tuesday, I expect a rising Y/Y CPI number too.
These things happen when central bankers print money four times faster than the economy is growing. When people can’t keep up to their costs at the end of the week/month, traders turn to PM.
For $GOLD, the 50-day MA is now at 671.62 and the more important 200-day MA is at 637.47. So a plunging $GOLD held at the 50-day MA, which is a bullish sign. And, like I opined two weeks ago (after the crash and before the subsequent rally), and again a week ago after a small recovery heading in Central Banker Week, I think it will stay that way for a month or two. Then I believe it will have a significant pull back, dropping below the 200-day MA.
But I don’t like to forecast because those holier-than-thou (objective) rating services say I’m bad at it. Maybe they just don’t understand the current lingo. Bad is good, right?
Bad, bad B-car! (LOL)
As if I care. I do this for fun.
As readers often ask how currency volatility affects the purchase and sale of gold in important markets like India and China, here is an article from Sunday’s (today) TheHinduBusinessLine.com sent to me by a reader from India. There is some good information here.
June Gold on NYMEX had a recovery at 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.
A week ago $SILVER lost just under -$0.05 (-0.33 pct) to close at 13.53. I wrote, “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.”
This week, $SILVER dropped -0.22 (-1.66 pct) to close down at 13.31, with a low of 13.02.
The 50-day MA is 13.47 and the 200-day MA at 12.85, so the current price at 13.31 is still only technically Bullish for the long-term. I am waiting for a break-out to the upside.
Do you think maybe Fleck knows (I think so), or should I go to CXOA’s guys like Luskin (NOT).
As I opined in the past two weeks, I think the short-term cycle for silver has pulled back to a buying range. A week ago Friday saw a gain of +0.15 pct in $SILVER, and this Friday’s gain was +1.26 pct.
If you look at the Weekly chart from www.StockCharts.com, the cycle lows and highs have been climbing the herd, which is what Bulls do. $9.48 low > $13.28 high > $10.46 low > $14.37 high > $12.10 low > $14.89 high > $12.49 low > moving toward the high (above $14.89 to keep those ‘animal spirits’ vigorous.
Luskin, in his most vivid dreams, would like to see a drop below $12.49 here. Luskin, btw, is the media personality I called a clown after he made a flat-out call on Oct 3, 2005 that gold was dead, and the $USD would become king, which means silver would get smashed. CXOA happens to like this guy I call a clown.
So check the Weekly charts for Oct 3 2005. Amaranth’s Brian Hunter could have used this guy to trade against. Check the $PALLADIUM. Check any of them.
Spot silver chart for the week
Interactive Chart of Weekly Silver EOD Continuous Contract Index:
Interactive Chart of Daily Silver EOD Continuous Contract Index:
Interactive chart of the Silver Bullion index.
Two weeks ago I wrote, “$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.”
A week ago, I wrote, “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.”
This week, $PLAT jumped +13.50 (+1.02 pct) to close at 1342.70. Many people like platinum more than gold. The 50-day MA is 1269.99 and the 200-day MA is 1198.29.
Btw, I was telling you that “Mr. Platinum” now has a second name, “Mr. Uranium”. That sounds good too. I wonder if he wants to be called “Mr. Moly”?
Jock and Jake might wish to comment. They came to Toronto, where they enjoyed his hospitality (I forgot to tell them to check out the 25-year old rum!), got to see a few deals in the making, and returned home with some photos of Mr. Platinum in his youth. Quite a good time was had by all.
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.
$PALL has been bullish since early October (290.88).
This week, $PALL dropped -7.99 (-2.11 pct) to close at 371.08. The 50-day MA is 365.62 and the 200-day MA is 340.36.
Btw, I use these MA’s as markers. RSI is another type of marker. They’re like the price indicators on the supermarket shelves. The GICS system I use is the department in the supermarket and the industry groups are the aisle numbers.
I learned as a kid that without markers, you get lost easy. Some people never figured that out. And too many of those kids were not taught to NEVER listen to strangers.
Trust me the market imitates life because the market is us.
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.
Two weeks ago, I wrote, “Base metals, which had been red hot (just a pun), cooled this week.” Then $COPPER rocketed up +22.60 (+6.40 pct) to close at 375.85.
Well this week $COPPER was downright frosty, until Friday. That’s what happens when traders play the c.banker game.
$COPPER dropped -15.45 (-4.11 pct W/W) to close at 360.40. On Friday, the contracts rallied +1.05 pct.
The 50-day MA is 330.26 and the 200-day MA is 317.62.
I hear China doesn’t need more copper. (NOT!)
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 |
This week $XAU lost -2.09 (-1.47 pct) to close at 139.76. The 50-day MA (138.84) and 200-day MA (138.18) are below the current price, which is still bullish.
And yes, I still await the Summer Rally. I think it may have started on Friday when $XAU gained +1.56 pct).
And btw, it’s kind of hard (impossible maybe?) for PM stocks to party hard when the rest of the room is collapsing. So, what I’m saying is that I still think the equities have some room to the upside here. The monetary authorities have produced these conditions and traders are just doing what traders do.
Maybe I shoulda been a “monetary authority” because what I was “forecasting” for the past two years was mostly common sense.
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 82.12, a gain of +0.45 pct W/W, despite weakness (-0.16 pct) on Friday.
The $USD 50-Day MA is now 82.66, and the 200-Day MA is 84.38, so the current price (82.12) is technically still quite bearish, but less so after two weeks of gains leading into c.banker announcements. Following that, however, the $USD dropped again.
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.
The M2 Money supply is growing at an astounding 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 borrow in order to hike dividends and buy back shares.
That’s the kind of thinking that’s in the White House these days, but “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 (which I wrote before last week’s PPI came out, or next week’s CPI), and the rest will send affected traders to the slaughterhouse (maybe starting September-October).
Then, sometime after the Fed Rate is dropped, I expect to see a renewed $USD, full of pep and vinegar, possibly starting around the year end.
Maybe I’m right, and maybe I’m wrong. (LOL Who really cares.)
Interactive Chart of Weekly U.S. Dollar Index:
Interactive Chart of Daily U.S. U.S. Dollar Index:
The Euro (priced in USD) had another tough weak, losing -0.51 pct W/W, after dropping -0.28 pct the week previously, closing Friday at 135.27. On Friday there was a gain of +0.33 pct.
The $XEU 50-Day MA is 134.14, and the 200-Day MA is 130.22, so the current price (135.27) 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 -0.62 pct W/W to close at 198.11.
The $XBP 50-Day MA is 197.14, and the 200-Day MA is 193.13, so the current price (198.11) is technically bullish.
Weekly British Pound Index:
Daily British Pound Index:
The Japanese Yen was almost motionless by the end of the week. Holidays maybe helped. This week $XJY gained +1bp (+0.01 pct), closing at 83.26.
The 50-Day MA is 84.43, and the 200-Day MA is 84.65, so the current price (83.26) 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.”
Maybe that unwinding process doesn’t start until late 3Q.
Weekly Japanese Yen Index:
Daily Japanese Yen Index:
Weekly Canadian Dollar Index:
Daily Canadian Dollar Index:
After seven weeks of powerful moves against the USD, the Canadian Dollar dropped -0.46 (-0.51 pct) close at 89.90.
The $CDW 50-Day MA is 87.47, and the 200-Day MA is 87.56, so the current price (89.90) is technically very bullish.
International Equities Review
Here’s how the week closed for the Asia-Pacific markets.
Here’s how the week closed for the bourses of Europe.
Two weeks ago, Colin Twiggs offered wise advice: “Don’t get caught up in the euphoria.” But as the market continues to lift, he seems to be shifting gears. If so, I’m with him. There seems to be too much liquidity and not enough reality awash these days.
Yes, as to the broad picture, I only needed to look at the Friday recovery to the previous day’s smash in NY, and the Cara 100 stocks that led the pack on the final session of the week – all from China and India, which tells me traders were being herded to a rally in Asia-Pacific markets on Monday.
This is a debt-related issue, and my advice is that one’s assets and liabilities must always be balanced in the worst case, which means, in that case, there is nothing left of equity. Wanting equity is why I chose to kill the liabilities. I don’t like debt, and moreover I know the world is awash in debt, seemingly oblivious to what lies ahead when asset prices sink.
Surprise. Those liabilities don’t shrink unless you pay them off. So don’t get caught up in somebody else’s euphoria unless you can afford to pay off those liabilities when the banker comes calling, telling you you’re not as rich as you once thought (which is the other side of the picture portrayed by Scotiabank TV commercials).
I still think that Japan’s Nikkei Dow will be the first to go south. The obvious trendline support is near 17300.
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 +0.76 pct W/W to close at 14.54.
The Nikkei 225 closed at 17,553.7, up +0.9 pct W/W. But on Friday it was down -1.03 pct in sympathy with the US markets plunge on Thursday. Ah, Monday ought to be strong, based on Friday’s recovery in the Tao (I mean the Dow) or the Way.
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) lost -1.06 pct W/W to 25.20, but there was a gain of +1.61 pct on Friday as it became certain that four or five hours later there would be a rally in NY.
On the week, the FTSE 100 dropped -0.6 pct to close at 6565.7. For the YTD, the Footsie is up +4.1 pct, compared to the French CAC +9.2 pct or the German XETRA DAX +13.4 pct.
In disgrace, a certain Prime Minister submitted his resignation.
I josh of course. Btw, the portrayal of PM Tony Blair and his wife in the Oscar-laden “The Queen” was remarkably interesting. A bit exaggerated I’d say, coming from Hollywood and all. But lots of entertainment nonetheless. Loved the movie. Compared to Borat, it was like night to day. I cannot fathom more polar opposites in the running for Oscars.
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 another sharp gain (+1.62 pct on the week) to close at 28.83. That’s a gain of over +10.0 pct in 29 trading sessions. The Beaver never had it so good.
Last week I wrote, “(Canadian equities) 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.”
The TSE or is it the TSX Composite (like who really cares!) closed Friday at 14,003.8, up +1.7 pct. On the YTD, Canada at +8.5 pct is ahead of the US (averaging about +6.3 pct taking S&P 500, NDQ and Dow together), but behind France (+9.2 pct).
But Canada always has that French thing going on, eh? Always one step behind the French, which is another way of saying that the French-Canadians have it better than the English, Italian, Polish, Ukrainian, Jamaican, and Chinese Canadians.
And if the bulk of the Canadian taxpayers don’t catch on yet, they ought to visit the Montreal south shore (Longueuil). Laid-back kinda place except for the Federal Buildings where the locals go to “get theirs” from the rest of Canada.
Ouch.
Here is the Canadian (EWC) equity market ETF Monthly, Weekly and Daily data charts:
U.S. Equities Review
This is a week where the Gnomes and the HB&B leadership had to come out of hiding.
On the week, the Nasdaq Composite and Russell 2000 small cap indexes dropped -0.39 pct and -0.40 pct respectively, while the S&P 500 was flat (+0.02 pct). But the high optic Dow 30 gained +0.46 pct, and when you look at Table 14 (below) you’ll see what’s really going on.
Alcoa (AA) up +6.7 pct because the management team has paid a visit to the Longueuil Federal Buildings to see how much cash they can pick up and how many billions in pension liabilities they can slash from the Alcan (AL) balance sheet.
These Pittsburgh folk learned a lot in the Stelco courtroom you know.
Then, in order, there was Hewlett-Packard (HPQ +3.3 pct), Honeywell (HON +3.0 pct) and IBM (IBM +2.9 pct), all former technology companies that were forced to change either to the service sector or make instruments for war, to show Americans the Way, and AIG (AIG +2.4 pct), stronger now that the Feds got the founder and rightful manager out of there, and Caterpillar (CAT +2.4 pct), as strong as Prof. Bernanke can make the metal miners because the CAT makes all their earthmoving equipment and gets paid in bullion.
Remove these six and the Dow would be showing the Way DOWn.
And look at the market cap of the week’s losers: JNJ, C, PG, WMT. There is a lot of weight there.
Twiggs has opined that the resistance levels that were cut through three weeks ago on the way up, now stand as firm technical support. He likes what he sees, and the Bulls like him too.
I’m still nervous for the Average Joe. Once the US stock market starts to roll over, there will be some serious losses taken, which means you have to watch the individual sectors and your own basket of stocks very carefully.
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:
The free research report from Value Line this week is on (Cara 100) Wal-Mart (WMT).
Wal-Mart
(WMT: Value Line Report May 11: next one is due Aug 10)
As I see it, this one is the most enigmatic of the whole Dow 30. It is the world giant of retailing with over 4,000 stores in the US and almost 3,000 international stores, employing 1.9 million people.
Despite massive size, its sales, earnings, dividends and book value grow in the double digits every year, and its Return On Shareholder Equity (ROE) is always in the range of 19.0 pct to 21.0 pct. However, despite that accomplishment, and a A++ financial strength rating, the high for the stock was reached in 1999 at $70.30 and that high level mark is constantly falling so that for the past two years the high was $52.20.
In 1999, the Book Value per share of WMT was under $6.00 and the stock hit $70. Today, the Book Value is over $16.00 and the share price is $47.78. In 1999, cash flow and earnings per share reached $1.81 and $1.28 respectively whereas today the comparisons are $4.70 and $3.17 (2007 est.). The average annual PE multiple then was a cycle high of 39, but today at a broad market cycle peak, it’s under 16.
Moreover, in 1999 the dividend was $0.19/share and this year it will be $0.828. So when traders like Jim Cramer say the stores look rather like the old Soviet GUM (Is he expecting Tiffany’s?), I say the financial performance is what seals the deal, and this Company is the 800-pound gorilla that consistently out-performs.
So why is the share price not reflecting performance?
Here’s a guess. I think the Company is now so huge, it has become vanilla or chocolate in a world gone crazy seeking chartreuse.
Optimists today do not want the merely great, they want explosive. Wal-Mart doesn’t cut it. The whiners, on the other hand, want a visible target for their activist politicking.
Aha, I see it. Wal-Mart has become the symbol of anti-capitalism, anti-globalism and any other anti-something. Hopefully, if true, that’s the only problem because these things pass. Remember Exxon, the world’s most hated corporation at one point. Every filling station picketed and so on.
So maybe there is hope for Wal-Mart after all. The Company is trying you know. Did you see that Wal-Mart directors are trying to get with the times by recently approving a huge increase in quarterly dividends? Shareholders this year will receive $0.828, up from $0.654 (+26.6 pct). In fact, that increase alone almost amounts to the 1999 total dividend.
Moreover, the outstanding shares now total about 4.1 billion, down -10 pct from 1999.
Alas, this is not to say I recommend buying WMT today. I love that long-base pattern on the chart going back to 2001, but the RSI-7 technical indicator for the Monthly-Weekly-Daily is presently 52.3/48.2/37.8 and the last time WMT dropped into my Accumulation Zone under 30-30-30 was in 3Q05.
It was in 2Q05 that I noted in this blog that WMT might be missing the gravy train. Maybe you recall? If not, here’s the blog.
Unlike some “guru’s” I know, and some people think, history does not treat me unkindly. Check what I was saying in that blog, and note the first comment. Who had it right?
Retail sales were flaming hot, and WMT was lagging Target (TGT). I was warning that traders seemed to be bailing on WMT and switching to TGT.
Do you want the truth? Can you handle the truth?
Target (TGT) is in blue. The chart shows the price performance comparison between TGT and WMT (in black) since the time I wrote that May 12 article.
Then in that article, I also gave you an “ALERT!” on the USD:CAD at 1.2708.
Do you want the truth there too? Can you handle the truth? Two years later, the USD to CAD is now 111.07. It crashed.
The $USD index fell from over 90 in May-05 to a low of 80.39 later that year, and after a rally has fallen again to 82 after hitting a low of 81.25 (at which point I started to tell you that the ebb tide was beginning to reverse in some parts of the world.
Note the first reader’s comment in that May 12-05 blog article. He actually believed the opposite of what I was opining. He gave his arguments. I call that “knowing the patter” but in his case, not much else.
In an earlier paragraph today, I wrote, “the last time WMT dropped into my Accumulation Zone under 30-30-30 was in 3Q05.” For proof, here is what I wrote in WIR#34 (Aug-27-05):
Consumer Discretionary Spending stocks (XLY) had another hit this week “as it is becoming more obvious that the Middle Class of North America and Europe is rapidly disappearing. The retail stores of the relatively rich and famous are doing well. But the retailers who serve the rest of us are quickly finding that Bill Cara knows of what he speaks when he has been saying for months now that WMT is proving that the majority of their customers have no tickee for laundry.”Just look at the nation’s (correct that, the world’s) biggest retailer to free-spending consumers. The stock is now down in the 45’s. If it keeps going south, why even GOOG, now the world’s biggest media company (at least for now), might soon have a comparable market cap.
Actually, if you happen to be a market Bull (I’m not, at least for now), then I think you ought to park the family jewels in a Wal-Mart parking lot. WMT is likely to rally here by maybe six to eight pct over a couple months.
Yes, I think WMT has been beaten into the mat, and will soon get up and back into the ring to assume it’s leadership role. Wal-Mart is, after all, the industry’s 800-pound gorilla.
Some people will call this forecasted move a dead cat bounce, or in this case a gorilla bounce. But, WMT ought to bounce. The only thing stopping it would be for crude oil prices to go over 70, and for Mr. Joe of the People’s Bank to decide now is an appropriate time to raise the value of the Yuan a second time.
Those hurdles would (1) make it harder for consumers to drive to Wal-Mart, and those that do would have fewer USD to spend, and (2) Wal-Mart purchasing managers would have to spend more of those USD to buy tee-shirts in China.
Oh, the auto lots may be busy for a while longer – the Big Three management have decided that even 2006 models ought to qualify for the second round of employee pricing. So now you have a double pump, which could be why credit rating agencies are now putting the auto bonds deeper into the bottom of the barrel.
So Ford management is trying to offload Lincolns to McDonalds’ workers, and then stiff them with an orphan as they later pull the plug on manufacturing Lincolns. Those burger flippers can’t catch a break.
A week ago I wrote that there will be car buyers “just as long as the manufacturers were giving them away. But will the public ever accept anything other than employee pricing in the future? I don’t think so, but then again maybe those manufacturing employees will be in places like China and India, and we’ll be told that we cannot expect to get the same deal on a car made by an employee who earns $5,000 a year!”
Then on the following Monday Aug 29-05, I wrote a blog entitled “The Cara investment philosophy” in which I confirmed WMT had entered the Accumulation zone.
Now, note (below) the historical prices from the time of my look at WMT in May-05, then again in late Aug-05 (when I said it had entered the AZ) and then following a Buy Alert after the Daily RSI-7 moved up through 30 (in early Sep-05 @44 and change) and in Nov-05 (after “WMT is likely to rally here by maybe six to eight pct over a couple months”) when it hit a high of $50.87, which was a gain of just over +10 pct in a couple months.
Not only did I go out on a limb in a manner I don’t see any Wall Streeter do today, but I explain my reasons, I give time frames, and most importantly I teach my readers how to do this stuff on their own.
So, let’s get some things straight. This blog is not about me being a guru. It’s not about somebody I don’t know and could care less about reporting that I’m something like the second worst forecaster of his list of 38 guru’s. It’s about me helping you by teaching you so you don’t need a so-called guru.
It’s about showing you the hard work you have to do to be a winner. And if you don’t want to actually love doing that hard work, then let somebody else do it. There is nothing wrong with that. Your time and other interests are very important, and there are ten of thousands of highly qualified, and successful, advisors out there. This blog helps you talk to them and start a two-way dialog, which will be essential to your success if that’s the choice of direction you make.
But, with respect to my comments regarding Wal-Mart above, please don’t say I phonied up an argument to counter criticism. This week, the only Value Line study was on Wal-Mart and I thought to myself, here’s one I have written about and called in the AZ. Maybe it’s a good case study, which is why I keep archives (and most Wall Streeters don’t want to).
And that’s why serious people want to come here to this blog.
No teacher, btw, has achieved perfection. I do what I can do. Enough said.
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 May 11: next one is due Aug 10)
Wrap up:
Sunday (today) is Mother’s Day. My wife, a mother of two will enjoy the company of her daughter, and me (as soon as I close this off. Man can I ramble when I have important things to do.)
My wife’s son is working today (he’s my son too, but its Mother’s Day). He’s running the Mississauga Marathon on behalf of his company, Novotel Hotel (Accor Group). When I asked if he had trained, other than for his job as head of sports marketing, he explained he was just doing the Children’s 2k. If you happen to be there, he’s the dolphin fish that the kids like. He wears that clown suit to all kinds of sports activities.
I told him that I thought, at 2k, the kids would beat him. He agreed.
Then again, he knows Father’s Day is coming up. And a wedding. He and Fiona are getting married Sept 29. He wants me there (LOL), so he’s really agreeable these days.
Happy Mother’s Day to all. Except to HB&B, who are mothers of a different kind. (LOL)
Have a great week. I know that wherever you are in the world, we are connected somehow. It’s a small Web.
Posted by Posted by Bill Cara on May 12, 2007 10:40:07 AM | Category: Cara Week in Review
Discourse
Hi Everyone,
Addressing QQQBall's comments of yesterday which were directed at me and were in part...
"Trading KRY for $.15 scalps is foolish; proverbial running in front of a steamroller collecting quarters...."a very flawed trading plan, particularly for a stock like KRY... There are opps everyday with much less rich for $.15/sh profit ....holding overnight on a scalp is asking for a big haircut..."
So with respect to Mr. QQQBall, let me explain why I am doing this. I believe the reward scenario of a permit receipt makes KRY interesting to myself and other. However, I am not willing to just sit in KRY waiting for the next VZ guy to mumble something and have the stock crash. What I do is, I try to hold it but not when I perceive dramatic risk. I bought at close of day after all the drop there was gonna be, at a time when I knew the bias was up. I sold the next day because I figured the rally would stall out, which it did. Fact is, I sold early due to the price barreling thru the 10 am turnaround time and a variety of factors. I underestimated the strength of the rally and didn't really hold on properly to watch it finalize, but I don't like missing out on profits.
What I'm saying is, my strategy is to hold KRY when possible, but never to lose money holding it, if possible. By the way, I don't have any right now...what are they gonna do, announce the permit on Sunday morning?...If they do, I'll buy you lunch.
Chris
Posted by: shark_attack ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
May 12, 2007 10:57 AM [link]
Here is an interesting article from The Economist titled "The New Gold".
Link: http://www.economist.com/finance/displaystory.cfm?story_id=9154250.
The article talks about Platinum (recently reached new highs), it's inelastic demand, and profiting mining companies.
Wanted to put it up for a discussion. If you do track Plat miners, please share your thoughts, your favorites.
Thank you,
Posted by: AZtock at
May 12, 2007 12:38 PM [link]
Happy Saturday, Bill. Congrats on hitting over 100 on the comment radar gun for the past two days In the vein of Dice-K or A-Rod maybe we should call you B-Car :) Keep up the great insight and thanks for providing a forum for the exchange of ideas and market news.
Re Platinum: Take a look at ANO. At 2.95 it's nearly tripled from the beginning of the year. I also like PAL for palladium.
Posted by: mogwai8myball at
May 12, 2007 1:01 PM [link]
- PLATINUM GROUP ELEMENTS - Producers & Explorers
- DYODD -
swc - stillwater mining - plat & plad - down from 16 to 13 last 2 weeks on earnings miss
- sgl.to - scandanavian mrls - 10.00 - ni, cu, & PGE's - sprott owns 11%
- ptm.to - platinum group metals - 4.55
- polymet mining - pom-v / PLM - A - 4.30 / 4.07 - PGE's
- nux-v - new pacific - 2.77 - PGE's
- mtc-v - metal corp - 1.43 - PGE's
- elr.to - eastern platinum - 2.60
- dm.to - duluth metals - PGE's 1.28
- DYODD -
Posted by: score22 at
May 12, 2007 1:23 PM [link]
For those of us without access to the Canadian markets, there's also North American Palladium Ltd. (PAL). The stock price jumped late this week on good earnings.
Conversely, SWC dropped on an earnings disappointment.
Polymet looks like it's primarily a Copper and Nickel miner (with PMs tossed in). They are also still in the permitting stage and have plans for beginning production in 2009. Sounds like another mining company I vaguely recall ... let's see now ... what the name again?
That's the sum of my 20 minutes of research. I also read the Economist article.
Posted by: number2son at
May 12, 2007 2:06 PM [link]
Thank you for your responses on Platinum.
On somewhat different topic, here is a chart titled "Highest Paid CEO's for 2005":
It's posted on Swivel, a neat web site that allows users upload/share and visualize data.
You can find other interesting examples: e.g. Farm and Non-Farm income for farm-households plotted against Oil price and etc.
Thanks,
Posted by: AZtock at
May 12, 2007 2:38 PM [link]
To David who does the Worden RSI calculations:
I would like to find out what your personal criteria formula are for calculating daily, weekly, and monthly RSI's.
Could you either list them on Bill's site or if not, please email me at: bdtobias@yahoo.com
Thank you!!!
Posted by: bdtobias at
May 12, 2007 8:59 PM [link]
New York Hard Assets Investment Conference
Monday May 14, 2007
http://www.iiconf.com/pebble.asp?relid=57418
Many miners mentioned here are this conference and could be news worthy.
Posted by: onlineaces at
May 12, 2007 10:57 PM [link]
I think the reason PM's moved higher on Friday was due to the bullish crop report. I missed a buy on DBA by 7 cents on Friday. Well, another day. I am following Bill's call to buy WFMI. stk
Posted by: stktrader at
May 13, 2007 12:28 PM [link]
Bill I found an interesting relationship between relative inflation (PPI/CPI) and the behavior of Earnings-yield to Bond Yield(EY/BY).
When PPI is accelerating more rapdily than CPI(like tha last few years) P/E contracts and the EY/BY ratio favors bonds((ratio greater than 1)
See http://wrahal.blogspot.com/
Posted by: Will Rahal at
May 13, 2007 2:08 PM [link]
OT: Farmers.
"We" like to complain about the subsidies that the farmers get for growing the foods that we eat even when they are having a good growing season. But I for one have this comment. I live on two acres in So. Cal. and I grow 70 Canary Island Palm trees, several citrus, apple, pecan, peach and avocado trees. Last year I had several avocados that fell to the ground and lost the whole harvest to a weeks frost. The limes died off as well. I gave up on farming avocados as many have here due to "climate change". Not only is it hard to grow plants due to bugs and diseases, but one also has the added problem of selling your crop to the vultures in the market place. They want you to take all of the risk, spend your money on water, pesticides, fertilizer, labor and then get your crop at a handsome discount. Farmers have got to love how the tables have turned in the midwest; $4 corn, $8 Soybeans, etc.
Posted by: stktrader at
May 13, 2007 2:09 PM [link]
Weighing in on QQQBalls' comments: I agree with shark_attack's strategy, although everyone has his own trading style. I have been able to lower my basis on BMD by selling partial positions into strength, and adding on weakness. 0.15-0.30/share moves translate into 5-8% for this stock, and as long as I maintain a core holding, why not capitalize on the trading range. It's like playing the 6 and the 8 while waiting for the dice to come up 5...sometimes the bulk of your gains come while waiting. In any case, not necessarily appropriate for everyone. Seems to be working for Chris.
Posted by: 2nd_ave at
May 13, 2007 2:19 PM [link]
This weekend i have been on a test driving binge. And let me report for those who have not paid attention while passing dealerships in your local roads, their inventories are sky high! whether its porsche, ford, honda, vw. they are slashing prices and trying to move them desperately. One new infiniti dealer that just opened up seems to have so many cars on the lot there is nowhere to park for customers. i surely would not want to come into work everyday looking at all that unsold inventory. yikes! With gas prices looking to soar, i might start building a put option position on gm if it goes any higher.
http://tinyurl.com/2gbuwy
Posted by: NYUgrad at
May 13, 2007 2:26 PM [link]
My head is spinning with the macro picture. Can someone assist?
If inflation is apparent per ppi,cpi, ...and higher crop prices (dba)....then, won't the Fed be perceived as raising rates? Ergo, the dollar rises and PM falls?...or, is my logic irrelevant because the Fed needs to bail out the debtors...and/or...it is more important to consider the significance of clues such as Barrick buying its forward sales?
I put a lot of stock in Bill's forcast of the PM sector but I can not help but worry.
I'm long gold miners, and some gold.
Posted by: jasper at
May 13, 2007 4:29 PM [link]
Looking for some more clarification. Maybe my worrisome nature creates clouds?
Bill writes:
Two weeks ago, Colin Twiggs offered wise advice: “Don’t get caught up in the euphoria.” But as the market continues to lift, he seems to be shifting gears. If so, I’m with him. There seems to be too much liquidity and not enough reality awash these days.
Is it fair to interpret the outlooks as follows:
the market will continue to go up even for illogical reasons?
Earlier in the week I put on an aggressive hedge with MZZ. Friday, I moved up by stoploss order but now wondering if I should just get out. Nice to have these short etfs but personally always gotten a little haircut. Pattern: my short is timely employed when the mkt plunges. I feel smug and smart but when the mkt bounces I feel like a cash position would have been an easier defensive play.
Posted by: jasper at
May 13, 2007 4:38 PM [link]
RE:GRZ
Did anyone discuss ?
Issuer: Gold Reserve, Inc.
Offering: Gold Reserve, Inc. Common Stock Follow-On
Announced at Fidelity may 8.
Posted by: jasper at
May 13, 2007 4:47 PM [link]
Jasper,
If you check the records, the longer-term trend for gold is to rally when interest rates are rising. You are too much focused on the immediate reaction by traders to a rise in interest rates (or threat of same) that tends to strengthen the $USD a bit and at the same time knock down PM's.
But, look at the big picture for a proper strategy for gold. When inflation/speculation are lifting, causing interest rates to lift, that is the time that gold moves higher.
Gold will move higher faster than the rest of the broad equity market because those rising interest rates hurt business (which is debt-laden) more than gold (which is unencumbered).
I really enjoy the comments, but what concerns me is that readers might be expecting that all this ought to sink in over a short time. Let it mellow. Too many traders are deep into tactics before they understand strategies. Big mistake.
Take your time to look at the inputs that will impact strategies. When you have your strategy set, then get into tactics. When you get into tactics, don't expect to be 100 pct right, and don't put all your money on Red 8. Tactical decisions are different than strategies, but they too need a different set of inputs, and a different assessment before moving into action.
The operative words are "Take your time". Too many traders here are too willing to gift their capital to skillful, experienced traders. You seem to think there is an Easy button.
It drives me nuts when people comment, "I put a lot of stock ... but I'm worried". Learn to trade before you make statements like that.
Then you'll see that we are all worried. The minute we think we have the market nailed, it nails us.
Posted by: Bill Cara at
May 13, 2007 5:01 PM [link]
China/fxi
Bill....What is up with this volume???????HUGE!
This chart came up as part of a discussion from a service that I belong to.
Negatives: capitulation volume and negative divergence.
Positive: one discussant could have come from this board....he points out that GSachs is doing deals there too, ipos, they control the market
" If they want China to go up, they'll make it so until they can't any longer. GS is a powerful bunch. I too think that triangle breaks up and out in time."
Consensus: wait until the 50dma pullback
Posted by: jasper at
May 13, 2007 5:08 PM [link]
Bill,
I spent some time on the Qtrade website. It is a trader's/investor's delight. I loved all the tools and resouces that are provided and the commissions are competitive. You should be very proud of what you helped to create. Other brokers should be as accommodating. One sticking point for me is that I will get Active Trader status from BMO starting in July and if I switch my accounts to Qtrade I will have to trade for a full quarter to get the same commission structure. That will probably cost me two or three thousand extra dollars. I'll give Qtrade a call tomorrow and see if there is any flexibility. Thanks again for making me aware of Qtrade.
Fred
Posted by: lovesaves at
May 13, 2007 5:22 PM [link]
I was doing some reading regarding MelcoPBL (MPEL). One way to invest in Macau and MPEL is to buy shares of PBL in Australia. PBL is splitting into two parts, Gaming and Media. Both divisions appear at first glance to be high quality operations with bright futures. Does anyone in this community, who lives in Canada, have any experience investing in foreign markets other than through ADRs. I don't believe that my discount broker provides accessibility. Thanks in advance for your responses.
Fred
Posted by: lovesaves at
May 13, 2007 5:35 PM [link]
Bill
Anyone who critizes you is the pathetic one. If they don't like what you say why do they waste their time reading you, and who cares what they say. Haven't they anything better to do in their lives.
Is it possible for you to voice your own opinions, not with the intent of giving advice to anyone, on holding Nem which seems to have one piece of bad news after another or is this a set up to get you out and then later have the stock move higher?
Assuming one were to exit Newmont, would you put the proceeds in another major (which one) or go to the juniors (which ones) or not add to any gold stock positions? I know these are all guesses.
Rodney
Posted by: Rodney at
May 13, 2007 5:38 PM [link]
Bill,
Thanks for the explanation about impact of rising interest rates on price of gold. Really helps to connect some dots. For others here's a performance chart of gold, ten yr yield, and u.s. dollar.
http://tinyurl.com/34um2v
Yes. I look for the Easy button...but I've been accused of making things too complicated...so I try to make it simple. Can I join the club of the perpetually perplexed?
Posted by: jasper at
May 13, 2007 5:59 PM [link]
Rodney, I don't think somebody writing a rating service is being critical. My only point with respect to CXOA is that there is a representation of there being some science to their ratings when we all know they are as biased as I and you.
Hey, I'm biased against Amazon for the many years of missing their hyped guidance, and for the spyware that infiltrated my system when I loaded their Alexa, causing my system to grind to a halt at a time I was totally focused on work routines, and needed a fast system. But, hey, I admit that. Amazon is undeniably a success, and I'd say most of my readers cringe when I say anything nasty. But that is me. I am not in a sales mode. I've been blogging free for three years because I enjoy the freedom of expressing myself how and when I feel like it.
As to goldminers, at this point I'd be prepared to take more risk with the juniors that are going to go into production soon, or are already starting new production.
Posted by: Bill Cara at
May 13, 2007 6:05 PM [link]
Jasper, you are already a winner in my books. It only took me about 20 years to calm down and get into a mind-set of letting the market come to me.
These things are easier said (and written) than done.
Who is the worry-wart Wall Streeter with the name that starts with Z, and who was a regular on Rukeyser? (I'm losing brain cells faster than hair). I met him him one year at the Blanchard hard money conference in New Orleans. Anyway, I learned from him how to worry in a positive sense. There is nothing wrong with being perpetually perplexed as long as the mind-set doesn't make you do stupid things.
Posted by: Bill Cara at
May 13, 2007 6:12 PM [link]
What is out there to save the "institutional" debtors who have no intention of re-paying the principal any time soon? INFLATION! Tell the big lie and service the debt any way you can so that any repayment in the future is done with discounted dollars. How else can we explain these debt-driven M&A's done at such enormous premiums over market prices. A billion here, a billion there..... before you know it you are spending serious money! Hopefully, history will prevail, and hard assets such as AU will be the place to be when this debt binge all unwinds.
Posted by: TerryC at
May 13, 2007 6:28 PM [link]
Bill,
Are you thinking of Marty Zweig? My first investing lessons came from reading Zweig's, "Winning on Wall Street", Peter Lynch's "One Up on Wall Street" and Jack Schwager's, "Market Wizards". As I recall, they were all worried!
Fred
Posted by: lovesaves at
May 13, 2007 6:38 PM [link]
On that FXI, Jasper, I was watching that chart too. On the basis of the divergences, I was ready to call it a triple top and take some puts against it... Probably would've been a record for getting stopped out of a trade.
On the $XAU/$USD, etc correlation, there's not that much of one. When it decides to correlate, it correlates.
OTOH, you wanna look in a mirror?
http://stockcharts.com/charts/performance/perf.html?$USD,$XJY
Posted by: ZackAttack at
May 13, 2007 6:41 PM [link]
ZackAttack
I really liked your "mirror". Just read James Grant in Forbes and he makes a case for buying the Japanese Yen ETF. As I recall, he thinks it could appreciate circa 18% or so if the dollar continues to tumble. It certainly is cheap vs previous levels at this point.
"Blue Horse Shoe Loves Anacot Steel."
http://www.imdb.com/title/tt0094291/quotes
One of my favourite movies... watched it again this weekend.
Bill, thanks for the comments on WFMI. I have been trying to catch this knife for awhile.
Another press release that may impact the stock about Organic milk seen flooding the market.
http://biz.yahoo.com/rb/070513/organicmilk_sales.html?.v=2
Dean Foods (DF) seems to be taking a hit and trying to find a bottom. (sitting around its 52-week low)
Any comments on Dean Foods?
"We're all just one trade away from humility. "
Adding the Euro to your mirror Zack Attack actually shows how the yen has kept the dollar index from going lower.
If the yen strengthens and breaks out, the carry trade will start to unwind and equities go south. Crossing 110 would do it. The key is when? September-October? BOJ bears watching.
Posted by: Seamus at
May 13, 2007 8:17 PM [link]
Looking at WFMI leaps Jan 09 as a way to play any thoughts.
Go Sens Go
Posted by: trader at
May 13, 2007 8:22 PM [link]
Acording to some: A huge bull market is iminent.
The spark? CHINA of course. It may be what Richard Russell was looking for as an escuse to become a BULL...
____________http://www.marketwatch.com/news/story/huge-influx-chinese-capital-could/story.aspx?guid=%7BC58901E3%2D19F0%2D4A32%2D86D3%2D7FC9E0CAE034%7D___________________________
So Russell is now a raging bull. Could be an exciting summer for global markets. I love this playing field...new opportunities every day...
Posted by: 2nd_ave at
May 13, 2007 10:12 PM [link]
Re: China
I guess we'll find out this week the effect of China's banks being able to invest in foreign stocks, but i'm pondering just a few things. The FXI was up on huge volume Friday, but i thought the purpose of allowing Chinese banks to invest overseas was to cool off their frothy markets. Again it could just be a temporary move, or a blowoff, but I'll be interested to see how it unfolds.
Also if you believe in free markets you're prolly not a fan of Goldman $achs. But just a few days ago they put a big caution sign on the China market. The cynic in me says it was just an attempt to create a short squeeze, but something's got to give.
Posted by: mogwai8myball at
May 13, 2007 10:47 PM [link]
hi,
it's my first post here. i have been following bill for the last few weeks and decided to join. i have found his blog very educative so far and it's an immensely valuable free service.
i am somewhat naive in stocks trading and still learning and educating myself.
how can some one take a position through options, (say puts) on the chinese market for the future?
Posted by: bobby at
May 14, 2007 1:31 AM [link]
bobby,
you could buy/write options on an ETF that follows the chinese market, such as EWH, or FXI
Posted by: chas at
May 14, 2007 1:55 AM [link]
Mr. Cara, thank you for another fantastic week in review. What struck me most was your comment that what you do is not forcast equity movements but teach your readers to do the same. I really appreciate that as I am always learning from your blog. I'm certainly glad your health is returning.
I say a prayer for you several times a week. You have touched me that deeply.
I'm posting a rare post because of NYUGrad's comment on automobile inventory.
At the north end of Las Vegas at the Las Vegas Motor Speedway Ford has literally thousands of brand new Mustangs parked. I estimate it to be about 3000 of them. Row after row after row of brand new Mustangs. This is right across Interstate 15 from a large automotive auction business. The speedway parking lot is HUGE and the Mustangs only occupy a small portion of it. They are right at the entrace where all can see. They have been there for at least two months.
Apparantly Ford has a lot of Mustangs that aren't selling and needing somewhere to park them.
Posted by: JVS3 at
May 14, 2007 4:46 AM [link]
"The minute we think we have the market nailed, it nails us."
Very well put Bill, I couldn't agree more. Patience is definitely an asset in trading, as I'm learning (weekly now versus daily, which is a start).
Posted by: Eric at
May 14, 2007 4:59 AM [link]
I found the following article in Bloomberg today helped me better understand the macro picture in the US:
Foreign Cash Swamps Emerging Markets, Clouds Outlook
http://www.bloomberg.com/apps/news?pid=20601109&sid=amUerB.PRIzU&refer=news
Posted by: RobBoss at
May 14, 2007 6:56 AM [link]
On the Chinese banks being allowed to buy foreign equities, I read a research piece over the weekend that felt Hong Kong would be the primary beneficiary.
EWH traded something like 20x its average daily call volume on Friday. The volume was actually concentrated in the May 17s, June 18s. Textbook breakout here... this is one I'm watching today.
Posted by: ZackAttack at
May 14, 2007 8:39 AM [link]
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FT has food for thought this morning.
http://www.ft.com/cms/s/b53db3aa-0026-11dc-8c98-000b5df10621.html
Have a nice day.
Thank you.
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May 12, 2007 10:44 AM [link]