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June 9, 2007
Week in Review #23 (2007-06-09)
This was one of those crazy weeks. I almost didn't get the WIR finished, and I have a Formula One race to watch now, so this is not much of a segue to a long report. Suffice it to say that many traders were taken for a ride to hell and back. Thank Henry Paulson and his friends at HB&B for that.
Global Market Summary
International Equities: The international markets were shaky. Traders are concerned that a ‘sea change’ might be underway. That depends on your time frame. I think global traders still have many weeks yet before walking the plank.
U.S. Equities : The broad US market indexes were split into a two-part week. Tuesday through Thursday was a nightmare for the Bulls. There was a strong recovery Friday that still couldn’t push the indexes into positive ground.
Dow 30 : The DJIA moved from 13,668 down to 13424. Aweek ago there were 25 components up. This week there were 25 down. But on Friday only MRK and DIS were down.
U.S. Sector ETFs: Ten of 10 US sector ETF’s were down this week. On Friday, 10 of 10 gained. Quite a mix-up as far as rotation goes
First segment: most influenced by global commodities, forex and capex spending
10: Energy (XLE): #4 (-0.7 pct); $WTIC headed lower
15: Basic Materials (XLB): #7 (-2.2 pct); Steel, metals and gold are down
20: Industrials (XLI): #5 (-1.6 pct); Mixed with some good happening here
Second segment: most influenced by U.S. consumer spending and economic growth
25: Cons. Discretionary (XLY): #9 (-2.4 pct); Mostly negative
30: Cons. Staples (XLP): #3 (-1.4 pct); WMT still a good story
35: Healthcare (IYH): #8 (-2.4 pct); Mostly soft
Third segment: most influenced by U.S. interest rates and general economic health
40: Financial (XLF): #6 (-2.2 pct); European banks fared poorly
45: Tech (SMH chips): #1 (-0.7 pct); Best of a bad lot
50: Telecom Service (IYZ): #2 (-1.2 pct); T & VZ not helping
55: Utilities (XLU): #10 (-5.6 pct); a disaster for Utility Bulls
Bonds: US Bonds were hurt again, but modestly so. The Talking Heads and media personalities yattered away all week about this lousy bond market. It wasn’t that bad.
Commodities: $CRB may have crashed in price this week thanks to an inside heist by HB&B, but the values are still there, and I believe the selling was overdone. $CRB dropped -2.04 pct on Friday to pull the week down -2.10 pct.
Oil & Gas: Crude oil dropped from 65.08 to 64.76. No big deal although the media will claim otherwise.
Gold: $GOLD was hammered -26.60 (-3.9 pct) and the goldminers index ($XAU) was down -4.9 pct. Mostly this happened in one day – Friday --. Nest week will be different.
Goldminers: The $XAU hasn’t moved much over two weeks, but scared traders are agog over Friday.
Forex: The $USD did little this week, but it did strengthen, along with the Yen, and the Euro and Pound weakened. Friday was a reversal of that.
International Economics Review
US Economic Calendar for next week.
Econoday Weekly International Report.
Econoday report on the US International Trade Balance.Econoday report on June 7 policy announcement of the Bank of England.
Econoday report on June 6 policy announcement by the European Central Bank.
Econoday report on June 5 on the US Non-Manufacturing ISM Survey.
Sector ETF Summary
The tables I show are for ten (GICS) Sector Index Funds (ETF’s) only.
Ten of the ten sector ETF’s I follow here were DOWN this week. A week ago, all ten were up, and I wrote, “It was a very strong week, largely on the strength of Wednesday afternoon’s rally following release of the FOMC Minutes of the May 9 meeting. We got back to a normal sector rotation this week.” What a difference a week makes.
But a trading week usually has five days. And along came Friday and all ten of my sector ETF’s were UP. So where are we?
Where we are is that some traders are saying, “We can’t time markets,” and that is a pile of rubbish. Would you rather just turn your capital over to the Sell-side, and let them have their way with you?
I suggest that people who talk silliness either do not yet understand capital markets or they don’t have a grip on themselves. For that reason, and thinking ahead fearing I would hear such talk, I decided to step up to the plate and, once again, try to use the market as a laboratory where I can teach and some people can learn.
On Friday morning, following three solidly down days, and with no signs of a reversal in sight, I wrote,
“Is there a sea change in capital markets underway today? Yes, but not in the way most people think when they look at red arrows popping up all over computer monitors. That is a temporary, and fleeting phenomenon, which will be shortly resolved by even higher prices of stocks and bonds… I am writing this today because I believe the equity and debt markets will soon recover this recent piece of nastiness that followed a crack in the Shanghai stock market to begin the week, just like what happened a couple months ago… I sat back and looked at what’s happened to put the stock market into the position it’s in today. In five weeks, yields on the US Treasury 30, 10, 5 and 2 year debt instruments (are up +27 basis points, +33bp, +38bp, and +38 bp). That shock to the US bond market is being attributed to inflation fears. But five weeks ago, the Commodity Index ($CRB) closed the week at 311.24, and yesterday it was 313.92, which is hardly earth-shattering. At the same time $GOLD has moved from 689.70 DOWN to 665.20. Crude Oil ($WTIC) has moved up from 61.93 to 66.93, but there has been an escalation of exogenous military and weather events that has aided that increase. Moreover, the US economic data has not recently registered any Richter Scale readings on the inflation front. So, there is nothing about inflation that I can see in the past five weeks to cause bond yields to rally and prices to fall to such an extent. In addition, following the significant breakdown in US stock prices yesterday, there was no panic in the Asia-Pacific markets, and Europe this morning is weak but not overly so at this point.”
And sure enough, later on Friday, traders started to get a grip. Crude oil dropped -3.24 pct, Gold dropped -2.24 pct and the Commodities Index dropped -2.04 pct IN A SINGLE DAY. And the US broad market moved up like it was being elevated by some Supreme Being.
Now I don’t want to get into religion or politics here, but when traders in a thoroughly agitated market see the four major market indexes of the US (NASDAQ, S&P500, DJIA and Russell 2000) move up +1.27 pct, +1.14 pct, +1.18 pct, and +1.21 pct in a day – how conveniently consistent – they figure the books are being cooked.
And they are, which is what I have been saying for years. Markets move when the Gnomes and HB&B want them to move, for reasons they have agreed to in quiet boardrooms and secure phones. There is no transparency in capital markets when the biggest players, including the Treasury Secretary and the Fed Chairman, are pulling the strings without disclosing their intent or their rationale.
Does this mean that We The People cannot use the capital markets to our advantage in protecting and building our wealth? Not at all. In fact, because we individually have so relatively little wealth, we do not have the problem that movers and shakers have. We can counter every move that large capital pools make. But, first we have to stop listening to their Talking Heads and stick to prices.
It is a simple theorem in markets that prices revert to the mean. So, when price motion becomes extreme in one direction or another, we can use tools like Relative Strength Index (RSI) and Moving Average Departure Analysis (my words for MACD) to tell us when the price cycles are reaching maximum amplitude, statistically speaking. All then we need to understand is that, because traders are statistically segmented along the risk scale from very conservative to high risk-taking, there are different cycles at work, which we can track by using monthly, weekly and daily price series in our numerical analysis.
And that is all I try to say. Market timing is, like my color blindness, a matter of degree. Like I happen to be the worst case of color blindness of well over 20,000 records in my local medical center, but can still see color (and hence can drive a car), you don’t have to be 100 pct accurate in your market timing to adequately manage your wealth. In fact, statistically speaking, you will never be 100 pct accurate. If you can be just 60 pct or 66 pct accurate and manage to keep your average losses smaller than your average gains, you will outperform (an educated guess) probably 95 pct to 98 pct of all professional capital managers.
Has nobody ever explained this to you or do you just not believe it? If it is the latter, I’ll give you proof. The fact is that capital markets are not rocket science. And even if you think so, how can you explain that in 1969 the first humans to walk on the moon were put there with computers that were 64k – not MB but just 64 kilobytes -- of CPU.
Isn’t it laughable that with 2 MB of dual-core CPU today, some people seem to think they cannot calculate the simplest of mathematics?
Pick good quality companies and buy their shares only at the cycle bottoms and sell only at the cycle tops; avoid debt, which often forces you to sell at a disadvantage; and trade within you emotional and financial resources and needs. It is that simple.
No amount of spin by Talking Heads, or manipulation by movers and shakers, or exogenous events like weather, should ever take you off your wealth management plan. As I say, from Tuesday to Thursday this past week was nothing but a blip on the radar screen. We had another one a couple months ago. Maybe we’ll have another one in a month or two.
And if you follow my traders Rule #1, which says if you ever feel uncomfortable with capital at risk, you close the position, you will avoid financial loss and heartache. You may miss the top 5 or 6 pct of a cycle – at tops and bottoms – but you will consistently outperform the large majority of people who call themselves wealth management experts.
So let’s see what the market ended up the week doing.
Table 1 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 had a terrific Friday (+2.89 pct), but still closed down a dollar (-0.70 pct W/W) at 67.92.
Crude Oil on the NYMEX (WTI) dropped even more, closing at 64.76/bbl, down -2.04 pct on Friday and -2.10 pct W/W.
So, when the Gnomes and HB&B wanted some market relief they pulled down the oil price on Friday. No big deal. They had their Talking Heads say that fighting in the Middle East and Nigeria appeared to be calmer, the weather somewhat better, fewer hurricanes likely to make landfall, shorter driving trips planned this Summer, bigger inventor builds than anticipated, yada, yada. It’s all nonsense folks. It’s just their perverted way of selling the deal.
I learned a long time ago that every con artist needs an element of truth in the pitch to gain some credibility in order to hold the audience for the eventual sting.
Perhaps America’s most trusted figure in the past century, Walter Cronkite, was asked by his CNBC host on the NYSE floor a couple years ago what advice he might have for broadcast journalists today. He replied, “Stick to the facts.” That was a warning to mass media that has been taken over by people with axes to grind.
“Just the Facts, ma’am” – Sargent Friday (Dragnet, 1950’s).
A week ago I wrote, “CEO +5.6 pct, PBR +4.9 pct, and SU +3.8 pct are indicative of the rush into international oil stocks.” This week, CEO jumped +8.8 pct (including +2.0 pct Friday), PBR lost -1.5 pct W/W but was up +2.7 pct on Friday, and SU dropped -1.4 pct, but gained +0.8 pct on Friday. ECA also gained +0.7 pct this week, after a rally Friday of +1.0 pct.
Mostly, other than China National Offshore Oil (CEO), not much is happening. There is a lot of political intrigue going on in Canada, with Exxon (XOM) and it’s 70 pct controlled Canadian sub Imperial Oil (IMO) in a fencing match with the federal government about how much the Canadian taxpayer ought to pay for those companies to build a major new pipeline. The govt has countered with the word that maybe other companies ought to step up to the plate.
This situation shows that no matter how many billions these companies earn in profits in a week or a month, and hundreds of millions of dollars they pay to retiring managers, their arrogance still drives them to pressure govt into taking from the taxpayers their hard-earned money to stuff more into the corporate coffers. The mind boggles.
In any event both XOM and IMO are Cara Global Best 100 companies. Traders cannot doubt their financial strength, consistency and operating metrics. If govt wants to continue to transfer the people’s capital to the wealthy Gnomes, that’s the People’s loss.
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 |
Oil & Gas Exploration & Production -Canada
Sector 15 (basic materials: IYM, XLB, IGE and VAW)
The Basic Materials ETF (XLB) dropped -2.2 pct W/W to 40.40, but gained +1.9 pct on Friday.
A week ago, I wrote about XLB, “This week gold moved up +2.34 pct and silver +5.69 pct. The big moves in the mid/large cap golds were AEM +11.7 pct, AUY +10.0 pct and GG +9.3 pct. The biggest movers were the steelers and base metals. GGB +14.2 pct, RIO +11.6 pct, TCK +10.4 pct, BHP +8.8 pct, PKX +8.7 pct, NUE +8.4 pct… well, you get the point.”
Let’s run the same numbers this week, to get an idea of the real damage. AEM -6.0 pct, AUY -6.9 pct, GG -2.7 pct, GGB -2.4 pct, RIO -5.5 pct, TCK +0.3 pct, BHP +3.4 pct, PKX +1.6 pct, and NUE -3.8 pct. Big disappointment, right? Not actually.
Over two weeks, the data reads: AEM +5.0 pct, AUY +2.4 pct, GG +6.4 pct, GGB +11.4 pct, RIO +5.4 pct, TCK +10.7 pct, BHP +12.5 pct, PKX +10.4 pct, and NUE +4.2 pct.
That is a pretty spectacular two-week move. In two years holding US govt bonds, you can’t earn that. My point however is that traders cannot focus on a three-day period like Tuesday-Thursday of this week. You have to average prices out. That’s precisely why we use RSI and MACD. It helps keep our sanity when interventionists are determined to pull our chain.
Now when market trends change from positive to negative or vice versa, the analysis of RSI and MACD and technical indicators helps us make that assessment. More than any other task, it’s Job One to stay on the right side of trend. That one step will help us make 60 pct to 66 pct or more of winning trades, and also help us to make our average winners bigger than our average losers.
So use the trend and cycle analysis of the price series, and buy only the shares of these good quality companies, and you will soon lose interest in what the Talking Heads and media personalities are frothing at the mouth about.
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 |
Sector 20 (industrial: IYJ, XLI, VIS, and IYT)
Industrials (XLI) dropped -1.60 pct this week but were up +2.64 pct a week ago. The XLI also lifted +1.55 pct on Friday to close the week at 38.65.
Yes, Fedex (FDX) dropped -1.70 pct, but over two weeks is up +3.3 pct. Yes, Brazil’s Embraer (ERJ) dropped 1.8 pct, but over two weeks is up +2.7 pct. Yes, Swiss ABB was down -2.3 pct, but over two weeks is up +2.0 pct.
And Caterpillar (CAT) is up +4.1 pct over two weeks, and Honeywell (HON) is up +2.5 pct over two weeks.
So there are stocks still on the move to higher ground here. In fact 8 of the 10 that I monitor are up, and only GE (-0.16 pct) and MMM (-1.4 pct) are down over two weeks, and not by enough to concern me than the US equity market is headed south, yet.
Soon, as I say, but in my opinion, not quite yet.
Actually, the US Military-Industrial complex is not the place to be looking for leadership in a new Bull market. Like the Oils, Metals and Gold, these are the laggards in the usual sector rotation. The Financials, Consumers and Techs are the usual leaders both down and back up. So far, on that front, the Utilities (part of the Financials) is the one showing me the most concern. But I’ll get to that analysis in a few minutes.
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 |
Sector 25 (consumer discretionary: XLY, IYC and VCR)
The Consumer Discretionary sector ETF (XLY) dropped -2.41 pct W/W to close at 39.36.
That was #9 performer (second worst), and Healthcare (another consumer segment) was #8 of 10. But Consumer Staples was #3.
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 |
A week ago, I wrote, “NKE (+4.1 pct) keeps running. And the upscale market keeps JC Penny (JCP) rolling (4.0 pct).” Well this week, NKE dropped -6.6 pct (down -2.8 pct over 2 weeks on a HB&B downgrade), and JCP was down -4.5 pct (-0.7 pct over 2 weeks).
Toyota Lexus (TM) was up +1.1 pct on Friday (on a HB&B upgrade), taking the stock to a gain of +1.2 pct over 1 week, +3.4 pct over 2 weeks, and +6.6 pct over 4 weeks. But, if you check, you’ll see the $USD was rallying over this time.
If, as and when you see the $USD dip again (and gold rise), you can guess that the wealthy are selling dollars and their Lexus in order to buy precious metals. Not always true, but it is a good pairs trade.
Sector 30 (consumer staples: XLP, VDC, RTH and IYK)
The Consumer Staples sector ETF (XLP) was down 1.40 pct W/W to close at $27.51.
Wal-Mart is still on a roll. A week ago I wrote, “WMT had quite a month on Friday (+3.9 pct), ending the week up +6.1 pct.”
This week WMT gained +1.23 pct to close at $50.08. Recall the many skeptics out there when WMT was in the Cara Accumulation Zone and the Talking Heads were bashing this company (and I just kept counterpunching back).
Yes, WMT has a long way back before shareholders are remotely happy, but now that half of Wall Street has issued a ratings improvements, the shares are walking north (up +7.4 pct over 2 weeks).
Companhia de Bebidas Das Americas (AMBEV) (ABV) lost -3.4 pct this week, but is still up +5.1 pct over 2 weeks, +11.7 pct over 4 weeks, and +39.0 pct YTD. Party time in Brazil was interrupted this week. We’ll have to keep an eye on it.
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 |
Sector 35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)
The IYH healthcare ETF was down -2.40 pct W/W to close at 70.80.
IYH has been up for six consecutive Fridays. The drugmakers and healthcare providers must be happy seeing those legislators go home for the weekends.
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 |
A week ago, I wrote, “The story remains GlaxoSmithKline (GSK) and Amgen (AMGN).” Yes, even this week AMGN (+0.8 pct) and GSK (+0.6 pct) were gainers in a losing sector, and Biomet (BMET), an old favorite until Humungous Private Equity Corp decided to whet its appetite, was up +3.6 pct.
The story for me this week was catching Genentech (DNA) in a free-fall as I decided to include the company in the Cara Global Best 100 on Friday. I did that at 2:15pm ET Friday, not at the cycle bottom at the close of Thursday, but close nonetheless. I have now missed almost two years of Bear phase for DNA. No professional buyer of Genentech stock going back to May 2005 is in at a lower price.
If you check the metrics and financial strength of this company, you will see a shining performance. The Cara 100 lists are not my attempt to time the market. These are just watchlists. However, I know that too many of you misconstrue my intentions, so I must be careful not to add a new corporate selection when it is in a Distribution Zone.
Even at the end of the day on Friday, the RSI-7 for DNA is 34.7 / 31.7 / 44.9, which takes me back to 2H2002 since seeing RSI so low. That is another reason I was happy to put Genentech into the Cara 100 on Friday.
Sector 40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)
The Financials ETF (XLF) dropped -2.16 pct to close at 37.20. Three big European banks were hammered: Deutsch Bank (DB) -5.7 pct; Credit Suisse (CS) -5.7 pct; and UBS (UBS) -5.4 pct. Merrill Lynch (MER) dropped -4.8 pct W/W. On my monitor, only Morgan Stanley (MS) was up on the week (+1.2 pct), thanks to a Friday gain of +2.8 pct.
YTD, other than the “G-Team’s” Goldman Sachs (GS) (+12.1 pct), most of the Financials that I refer to as HB&B (Humungous Bank & Broker) are not performing well. Evenly weighted, my list of ten, most heavily capitalized, top-quality US, UK and European components of HB&B are up on average just +1.84 pct YTD, and the year is almost half over. That is another sign of a toppy market. Should the average of these big banks and brokers go negative over the most recent six-month period; that would be a time to move your portfolio to the sidelines.
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 |
Sector 45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, MTK and SMH)
The Semiconductors (SMH) gained +2.89 pct on Friday! That pushed the SMH to a loss of just -0.70 pct W/W to close at 36.72.
On the week, SanDisk (SNDK) fared well, up +4.0 pct W/W including a gain of +3.0 pct on Friday. That’s a gain of +5.3 pct over 2 weeks.
India’s INFY jumped +4.7 pct on Friday to almost break even on the week (-0.14 pct).
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 |
Sector 50 (telecom: IYZ, VOX and IXP)
The U.S. telco sector ETF (IYZ) lost -1.24 pct W/W to close at 34.11. The gain on Friday was huge (+2.64 pct).
The biggest of the Big Bells, T (-0.7 pct W/W but +1.9 pct on Friday) and VZ (+0.1 pct W/W but +1.1 pct on Friday) did not lead the way again this week.
This Telco sector story is still all “about M&A within a relatively few companies, many of which you and I would consider to be dogs but which Humungous Private Equity Corp wants to control for a while.”
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 loss of -0.41 pct on the previous Friday. This week, the loss was -5.60 pct W/W, to close at 39.28, so the loss over six days has been Humungous (LOL).
Didn’t I tell you that when the rocket was pointed north, I noted “A very few are pulling up the rest. Caveat emptor.”
Here’s the XLU Monthly, Weekly and Daily data charts:
XLU Monthly data:
XLU Weekly data:
XLU Daily data:
I am just showing this chart for a reason. Williams Companies (WB) plunged -5.6 pct W/W.
Two weeks ago I wrote, “Did you see how M&A story-laden WMB was trying to hold the fort while the Gnomes were dumping piles of the other stuff. You need to stick to quality companies. Very very few in this group. And if you are there for the dividend yield, think also about the concept “Total Return”. Getting whacked doesn’t do much for your TR.”
Then a week ago I added, “This week WMB gained +3.4 pct. For some reason it has a PE close to 60. Williams Companies, last time I looked, was not into rocket science.”
Bonds & Yields Review
The US Bond market dropped again this week. Broken record. Another one.
But for all the screaming, the bond market actually moved very little this week. There was in fact a small rally on Friday, and bond traders are asking if that is the reversal they have been looking for.
Why would they be looking for a reversal? To sell into strength! Rates and yields are not coming down until the equity market Bull has been transformed into a Bear.
Yields on the 30, 10, 5 and 2 year US Treasury paper at the close of the week were 5.06, 4.95, 4.91 and 4.93 pct respectively. That represents a small gain in yields W/W of +2, +2, +1 and -2 basis points, which represents a small loss in bonds, and a shift out of the long end into the short end, which is what traders do when they are nervous.
The short T-Bills moved up in yield from 4.62 to 4.64 pct as capital came out of cash on Friday to chase stock prices higher.
The TLT continues to get hammered, dropping a further -1.87 pct W/W to close at 83.99. A week ago, the loss was -1.13 pct.
TLT was at almost 92 at year-end 2006, so long bond investors (ie, those who hold to maturity) have taken a serious beating this past few months. Some hedgies must be in tough!
I keep writing that same paragraph every week now. And a week ago I wrote, “It can get worse. But, I do admit, the charts are getting close to the Accumulation Zone.” What I mean by that is that there may be a small rally in bonds then another pull back and then the big opportunity as rates hit a waterfall as equity prices collapse to start a new Bear phase.
Then (and only then), for a period of time until equities can find a bottom and get their act together, it will pay to be in bonds and not stocks. After the stocks cycle through their bottom, however, it will then pay to revert to equities.
If you have been thinking about switching from growth-oriented common stocks to high income equities like business trusts, REITS, and the like, it’s always a good time to do that when interest rates, and the broad market equities, are starting to fall.
In fact, I think there are some terrific high income instruments (stocks, bonds, trusts, etc) that make good sense today, and I am working up a list.
Interest rates and bond yields.
Interactive Daily data charts:
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 4.64 | 4.66 | 4.66 | 4.71 |
| 6 Month | 4.72 | 4.75 | 4.75 | 4.78 |
| 2 Year | 4.93 | 4.97 | 4.86 | 4.65 |
| 3 Year | 4.91 | 4.95 | 4.82 | 4.58 |
| 5 Year | 4.91 | 4.95 | 4.80 | 4.52 |
| 10 Year | 4.95 | 4.97 | 4.85 | 4.61 |
| 30 Year | 5.06 | 5.06 | 4.98 | 4.76 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 3.73 | 3.74 | 3.66 | 3.63 |
| 2yr AAA | 3.65 | 3.66 | 3.63 | 3.56 |
| 2yr A | 3.68 | 3.68 | 3.67 | 3.61 |
| 5yr AAA | 3.77 | 3.75 | 3.70 | 3.58 |
| 5yr AA | 3.80 | 3.78 | 3.72 | 3.60 |
| 5yr A | 3.79 | 3.78 | 3.74 | 3.71 |
| 10yr AAA | 3.93 | 3.90 | 3.84 | 3.71 |
| 10yr AA | 3.98 | 3.94 | 3.83 | 3.71 |
| 10yr A | 4.20 | 4.17 | 4.11 | 3.99 |
| 20yr AAA | 4.56 | 4.53 | 4.42 | 4.39 |
| 20yr AA | 4.50 | 4.47 | 4.31 | 4.57 |
| 20yr A | 4.58 | 4.45 | 4.30 | 4.29 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 5.30 | 5.34 | 5.23 | 5.01 |
| 2yr A | 5.36 | 5.39 | 5.31 | 5.09 |
| 5yr AAA | 5.42 | 5.45 | 5.33 | 5.03 |
| 5yr AA | 5.51 | 5.54 | 5.37 | 5.09 |
| 5yr A | 5.56 | 5.58 | 5.43 | 5.13 |
| 10yr AAA | 5.71 | 5.72 | 5.67 | 5.35 |
| 10yr AA | 5.71 | 5.72 | 5.59 | 5.34 |
| 10yr A | 5.77 | 5.78 | 5.68 | 5.47 |
| 20yr AAA | 6.03 | 6.03 | 5.95 | 5.74 |
| 20yr AA | 6.00 | 5.98 | 5.93 | 5.71 |
| 20yr A | 6.17 | 6.17 | 6.09 | 5.88 |
Interactive Chart of Interest rates and bond yields.
As I wrote a week ago in this space,
“I suspect there will be a return of the Bond Bulls this year. The Relative Strength Index RSI-7 on the Monthly data series is getting down close to 30 (and the yields are over 70). This is the time when it pays to consider switching to bonds as an asset class that might outperform equities.My thinking is that Bonds have a bit more work on the downside. The downside, however, is limited because yields can rise only so high in the US before America shuts down. … we are in kind of a transitioning phase where bonds will become more attractive than stocks for a while. After stocks start to fall, the Fed will drop the interest rates and bonds will start to rally. But the momentum of falling stock prices will linger, and that is the time it will pay to be out of stocks and into bonds.”
Then at the bottom of the long cycle for stock prices, it will be an appropriate time to switch back from bonds and into equities.
Traders who don’t review all these charts every week cannot get a feel for the price motion. You will have an even more difficult time to make such decisions.
For sure some CNBC talking head is not going to tell you what to do.
Now, if you go to the Weekly data charts below, you will see that for four weeks, US Bonds have been hammered. The Fed is in a pickle in that they have to tighten up because they fear the metals and oil (and gold of course) might soar. But they can’t tighten too much. So first they have to hammer the metals, gold and oil (to knock the $CRB on its head), which somehow convinces dim-witted traders that inflation is under control and that rates can come down anytime soon.
Where this argument is disingenuous of course is that the Fed has no interest whatsoever in knocking down rates – unless and until the equity market tanks.
So, the gold players have been watching, watching, watching… and waiting to pounce. The moment those bond prices rebound (and yields come down), traders’ fingers will be all over the Gold buy button as well as the Bonds buy button.
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 |
Fannie (FNM) got goosed on Friday (+1.43 pct), but was still down a bit on the week (-0.03 pct). Freddie (FRE) on the other hand, was dumped on Friday (-1.19 pct) and was down sharply this week (-3.67 pct).
Consumer Finance -USA -- Interactive Weekly Data Charts
Consumer Finance -USA -- Interactive Daily Data Charts
I will be starting a Fixed Income component to this WIR, including an inexpensive premium report. Many of you are not day traders, or even stock traders. You have most of your investable assets in real estate and marketable fixed-income securities, so I hope to come up with a suitable Cara 100 for high income.
Commodities Review
$CRB closed at 307.51, down -2.10 pct on the week, following a drop Friday of -2.04 pct.
Now, if you believe the value of global commodities fell more than two pct in about seven hours, please tune out. There is not much more I can say to you.
Traders know there is a difference between price and value. Right now, for instance, traders around the world are watching central bankers print money at excessive rates (several multiples of the global economic growth rate), which devalues fiat money and increases the value of hard money (ie, gold and silver, which are storehouses of value).
But this week, the price of $GOLD was dropped by 26.60 and $SILVER by 0.70 per oz. Does anybody think that the value of precious metals dropped that much (-3.9 pct and -5.1 pct respectively) in a week? I hope not.
Not to put too fine a point on it, but does anybody really believe that the value of these precious metals dropped -3.24 pct and -2.24 pct respectively in a single day, Friday?
Why Friday? So you can sit and twist all weekend. The Treasury Secretary and Fed Chairman would like you to return to capital markets on Monday with an attitude adjustment, whereby you are transformed from Gold Bull to USD Bull.
Some people actually put their trust and faith in the Treasury Secretary and Fed Chairman. I don’t know why, but they do.
What govt does year after year is take the wealth from those who have it and transfer it to those who don’t. On the pass-through they are sure to clip a few points for Friends & Family. As long as the process causes minimal damage, We The People can accept that. It’s called slippage, and we hope that some of it does good for needy social groups.
It’s where we watch HB&B still earn billions during Humungous Bear markets, and where Humungous Private Equity Corp rips off assets from legitimate shareholders and debenture holders, by a so-called re-organization process where even more debt is added to the mix and the weakling companies are paraded on market square as something new and different, that causes us angst.
Did you see how Stelco’s new manager, parachuted in – Bammed into the job as it were – now says that the newco is up for sale, despite the fact the Debenture holders still have not been paid – which should be a criminal act in itself – and the prime iron ore and land assets have been sold, which is another cruel joke on the ex-shareholders, and the unfunded pension liability – yes, the one that BAM cried big tears over in front of their judge (I mean their lawyer) – is still unfunded.
If ever there was a case study in the engineering of a corporate fraud this was it. But I digress. I just happened to be talking about rip-off’s, and the differences between price (which can be manipulated) and value (which changes ever so slowly) and... BAM, I kind of lost my mind for a moment. I must be getting tired.
$CRB (at 307.51) is now below the 50-day MA (312.76) and 200-day MA (308.69) lines, so that what was formerly technical price support is now technical price resistance.
But, trust me, the values of commodities did not drop over two percent on Friday. The price was put there by HB&B and Central Bankers who are grinding us with their axes.
That happened just at the time I started saying, “The $CRB trend lines appear to be reversing course, with the 50-Day MA crossing up through the 200-Day MA. That’s good for the Commodity Bulls who have been hoping for higher commodity prices and some renewed $USD weakness.“ Look at the technical indicators on the charts and ask yourself if that looks like it is free of intervention. NOT!
Interactive Chart of Weekly CRB Commodities Index:
Interactive Chart of Daily CRB Commodities Index:
Oil Review
The $WTIC price is now 64.76. A week earlier it was 65.08. The $WTIC hasn’t moved much over a couple weeks. But you wouldn’t know it from all the Talking Head shouting and screaming.
The $WTIC 50-Day Moving Average (from StockCharts) is now 64.64 and the 200-Day MA is 61.67. Hence the current price (64.76) is still sitting atop technical support.
I guess traders are hoping for a good Driving Season and a few Gulf of Mexico hurricanes. Jeez, all they have to do is wait for Humungous Oil & Gas (HOG) to shut down another refinery or the Admin to start buying as much oil as possible to replenish the so-called Strategic Petroleum Reserves before George and Dick leave the White House.
I’m just waiting for that story to appear in the next 12 to 15 months – to wit: “War On Terror Requires Much More Oil for Strategic Reserves”. I can see it all now on Fox DJ & Co -- aka HBB (Humungous Big Brother), which are the initials I use to the media giants from the bankers (HB&B).
At some point, We The People of the World have to decide whether or not We are going to tear down Humungous Everything. I once thought that globalization might be a net benefit to global society. But those Thousand Points of Light turned out to be the rear end of an F-18 and I could see how people in once friendly nations didn’t care too much for the pointy end. I watched as CNBC rolled out their global format for GE-NBC, and how HB&B started buying all the banks (and stock exchanges) in Japan and China and wherever they could.
And I thought, “Is this truly what the customer wants?” No sirree, this is about putting more control over the many into the hands of the few. HB&B, Gnomes, Communist Party Central Committee Members, Russian Oligarchs, Middle East Warlords, what difference does it make?
The next fight, you know, is where those people attempt to take control of the People’s Web – you know, the one where many-to-many communications gives power to the People – much like the Founding Fathers wanted for America almost a quarter millennium ago.
Ah, so much for Democracy and Town Halls, and Freedom of Speech. I really had to chuckle at the recent comment of an American reader who wrote that if he ripped it like me, he would fast be on his way to Gitmo, following hard on an IRS audit (or is that followed by an IRS auditor with..?).
Enough for the musings. Somehow oil and steel and gold gets me going. Like food and shelter and camaraderie, these are the necessities of life. Money isn’t, and I’ll tell you why. The more you have of it, the higher are the prices of goods and services you need to pay for. If you go into the world’s hinterlands, relatively unsophisticated places where the people don’t know a dollar from a donut, and prefer a donkey, mule or ninny to a Mercedes, you can see happiness on the faces of children and content in the eyes of their parents. Laughter comes easy. Skepticism hardly exists.
Now the next chart (the Weekly data series) is the one everybody has to watch carefully. If the price happens to break below the 40-week MA (approx the same as the 200-day MA since there are 5 days in a trading week), then the oil market will likely be headed down the Bear path. The implications of that are that the global economy would be receding -- a recession at least in the US. Recessions create less demand for oil, which reduces price.
Interactive Chart of Weekly Crude Oil:
Interactive Chart of Daily Crude Oil:
The e-miNY June-07 Crude Oil contracts were weak from Tuesday afternoon through Thursday noon, but closed strongly.
Gold & Precious Metals Review
$GOLD was hammered a further -26.60 this week to 650.30, but “I really do not see a primary trend reversal in the gold Bull market.“
$GOLD dropped -3.93 pct W/W, including a loss on Friday of -2.24 pct. The 50-day MA is 675.63 and the 200-day MA is 640.34, so the current price is now somewhere between short-term bearish and long-term bullish.
I still believe that this Summer the 698.00 cycle high on the Weekly data is the next to go, and after that the 730.40 cycle high of May 2006 will be next.
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.
$SILVER lost -5.09 pct this week to close at 13.04. A week ago it gained +5.69 pct. So over two weeks it is slightly ahead (13.04 to 12.92).
The 50-day MA is 13.51 and the 200-day MA at 12.96, so the current price at 13.04 is back between a bearish short-term and a bullish long-term picture.
I still think the 14.22 previous cycle high price of the Daily data series will be taken out, but maybe not in June, and then the Feb cycle high of 14.885 is next, probably July-August.
First, there has to be a new bottom formed here by traders. If the 200-day MA is taken out, then this is a new ball game, and that would mean deflation is on the way. Your precious metals will not be your worst fear should that occur.
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.
$PLAT futures are now at 1291.20, down -0.63 pct W/W from 1299.40. Not much of a pct move.
The 50-day MA is 1300.21 and the 200-day MA is 1203.83, so the current 1291.20 price is marginally underwater re the 50-day MA. The $PLAT Bulls are hoping this line holds.
It has held now for two straight weeks, despite a lot of downward pressure on PM bullion.
I think the 1354.20 cycle high price for Platinum that was set in early May will be taken out before August. The PM Bull is still running, I believe.
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). It was a little soft this week.
This week, $PALL lost -1.70 pct to close at 369.50. The 50-day MA is 372.21 and the 200-day MA is 344.67.
The 50-day MA support that had appeared to be holding did not. Based on my PM group analysis, I still anticipate higher prices ahead, but I have to be cautious at this point.
How much higher is an interesting discussion, but not too important.
For interest sake, I think the 390.45 cycle high of April will be taken out, maybe not in June, but in July. Possibly the 410.89 cycle high of May 2006 will be surpassed in August. Yes, I continue to believe the PM Bull is running.
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.
$COPPER stumbled -14.75 (-4.33 pct W/W) to close at 325.75. Isn’t it interesting that when copper prices rally, the bandwagon points to the Far East, and when the prices pull back, the bandwagon empties and people start saying that China has its fill of copper.
Maybe these people ought to go there and decide whether or not the country is bounding in physical growth, which is consuming vast quantities of copper, just like America after WWII.
The 50-day MA for $COPPER is 347.26 and the 200-day MA is 316.10, so there is long-term technical support at this level, although the short-term MA is now representing technical resistance. Prices over the past month have been quite volatile.
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, $XAU gained +6.62 (+4.87 pct). This week, $XAU dropped -7.03 (-4.94 pct), to close at 135.39, which is a decline of just 0.41 over two weeks. There is no need to panic.
The 50-day MA (140.06) and 200-day MA (137.59) are now both above the current price, which is bearish for goldminer stocks. Do you hold a belief that the broad market can continue higher here, while goldminers would miss the boat? I don’t.
If gold goes south, the rest of the equity and commodities market goes with it.
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. Yes, just like GDX on the AMEX, you can trade XGD on Toronto. But why bother trading on the Toronto Exchange unless you are Canadian. The brainiacs who run the TSX changed the XGD to include shares of goldminers that don’t trade on their exchange. So why did they not just do a deal with AMEX and be done with it?
These people at the Exchange just love their committees and their travel. They shuffle paper, won’t help the shareholders who get their assets stolen from under them, or respectable work of that kind. It’s just hurry up and wait til the next vacation.
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 82.66, a gain of +0.34 (+0.42 pct W/W).
The $USD 50-Day MA is now 82.17, and the 200-Day MA is 84.10, so the current price (82.66) is technically even more bullish this week. The question is, can the $USD ride with the Paulson Pride army, or will economic fundamentals pull them down.
In other words, as Central Banks around the world raise rates, can the US fail to do the same? If the Treasury Secretary and Fed Head want to keep the $USD on a roll (up the mountain), don't they have to raise rates too?
I feel we shall get an answer this Summer. I believe the answer will come in the form of higher commodity prices every time the $USD is not lifted to keep it in line with international currencies.
Looking at the chart this week, you can see the price was falling until early in the morning (about 8:00am London UK time I think, when the Fed desk was opening there for business), and then it rocketed up, and that’s when the metals and precious metals started falling.
This is a price tug-of-war. There is no change of fundamentals going on here.
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.
Did you note that when Paulson stepped up to plate as Treasury Secretary in June 2006, the annual rate of change of M3 was between 8 pct and 9 pct, whereas this year to date it is 10 pct to 12.5 pct?
And, on Feb 1 2006, when Prof. Bernanke took control of the Fed (that is until Paulson arrived at Treasury and his man subsequently became head trader at the FOMC), the annual rate of change was between 7 pct and 8 pct, and he soon cut off reporting important M3 calculations to the public.
So when these two move into a position of financial of the United States, the money supply is growing at between 6 pct and 8 pct and now it's growing at 10 pct to 12.5 pct. And bankers create money by issuing debt. So, here folks, are two people who are at least in part responsible for the debt balloon.
And when your financial assets fall, your wealth will fall because your debts to the bankers will not fall. This is the Wealth Effect in reverse.
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 losing week, going down -0.58 pct W/W, closing Friday at 133.60. Just like the prior week, most of the loss happened on Friday.
The $XEU 50-Day MA is 135.02, and the 200-Day MA is 130.88, so the current price (133.60) did not hold onto technical support of the 50-day MA. The current price is now short-term bearish, although still long-term 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 -1.62 (-0.82 pct W/W) to close at 196.57.
The $XBP 50-Day MA is 198.47, and the 200-Day MA is 194.05, so the current price (196.57) is right between the 50-day and 200-day MA lines, and weakening.
Weekly British Pound Index:
Daily British Pound Index:
The Japanese Yen $XJY gained +0.26 (+0.32 pct W/W, closing at 82.18, which makes me think the Yen Carry Trade might be coming unwound and affecting equity prices. The fact there was a serious loss on Friday (-0.52 pct) and the US equity markets skyrocketed, is reinforcement for the belief that Japanese loans converted to foreign currency is the driving factor behind this extended equity market rally.
I continue to believe that Yen weakness “underlies my concern for the Japanese equity market” and that the Nikkei Dow is going to crater at some point, and when those Japanese loans get cut off and the BoJ steps back in to support the Nikkei, that will be the death knell of many of the other global markets that have been cranked up via the expansion of debt.
The Yen 50-Day MA is 83.33, and the 200-Day MA is 84.26, so the current price (82.18) is still bearish, but less so.
Weekly Japanese Yen Index:
Daily Japanese Yen Index:
Weekly Canadian Dollar Index:
Daily Canadian Dollar Index:
The Canadian Dollar $CDW had a small gain after many consecutive weeks of large gains against the $USD. This week the $CDW closed up +0.08 pct at 94.27.
The $CDW 50-Day MA is 90.21, and the 200-Day MA is 87.94, so the current price (94.27) is still a “white hot” Dollar.
International Equities Review
I added to my doubts about the credibility of these US-traded Country ETF’s. The prices do not seem to be consistent with the country domestic exchange equity indexes. But I won’t get into it now because time is short.
Asia-Pacific indices (Interactive link)
Here’s how the week closed for the Asia-Pacific markets.
European indices (Interactive link)
Here’s how the week closed for the bourses of Europe.
Americas indices (Interactive link)
Here’s how the week closed for the Americas markets.
Table 13: International equities perspective
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Japanese equity market ETF: EWJ
Japan’s EWJ (which is a USD-denominated NYSE-traded ETF) lost a penny (-0.07 pct W/W) to close at 14.67.
The Nikkei 225 dropped from 17,958.88 to 17779.09. The Yen gained +0.32 pct. You figure it out.
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 -2.30 pct to close at 25.02.
The FTSE dropped from 6570.50 to 6505.10. The Pound lost -0.82 pct.
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) lost -2.66 pct on the week to close at 29.65. The Toronto index declined from 14119.37 to 13798.50. The Loonie gained +0.08 pct.
Here is the Canadian (EWC) equity market ETF Monthly, Weekly and Daily data charts:
US Equity Markets Review
The broad US market indexes had a split week. Monday did nothing but Tuesday through Thursday was a smash up. Then Friday was a Humungous partial recovery. The NASDAQ lifted +1.27 pct Friday, and the S&P500, DJIA and Russell 2000 small caps were up +1.14 pct, +1.18 pct and +1.21 pct, respectively. That end of the week recovery helped the indexes lose only (a lot actually) -1.54 pct, -1.87 pct, -1.79 pct, and -2.13 pct respectively.
But, combined with the prior week, the indexes have not moved much. The NASDAQ is up from 2557 to 2573, the S&P 500 is down from 1515.73 to 1507.67 and the Dow 30 down from 13507 to 13424. These are not earth-shattering moves.
Dow 30 : The DJIA dropped from 13668 a week ago to 13424. A week ago there were 25 of 30 Dow Industrials up; this week it was 25 down for the week. On Friday, it was just two down (MRK -0.20 pct and DIS -0.06 pct), so the recovery rally was widespread, and across all sectors.
It appears that the broad market is now headed higher, but like you I understand that anything can happen here. Surprisingly, the goldminer stocks and the US Treasury yields are my bell cows.
A dozen NYSE DJIA stocks to watch.
NASDAQ Composite (interactive) chart
A dozen NASDAQ stocks to watch.
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)
Value Line Dow 30 Report(s) published on Friday
McDonalds [GICS 30, Dow 30]
(MCD: Value Line Report Jun. 8: next one is due Sep. 7)
Chart analysis of MCD:
A Sell alert was issued for short-term traders at the end of the 3rd week of May after the Daily RSI-7 dropped below 70, following a long period where M-W-D RSI-7 > 70. The Weekly RSI-7 is now at 73.4 and may also drop below 70 in the next month, giving an intermediate-term Sell. As the Monthly RSI-7 is at 91.9, MCD is well over-bought and vulnerable to a substantial sell-off that long-term oriented traders ought to recognize.
The bottom line is that the Big Mac is not Henry Paulson. If the US equity market is going to be lifted from here, that is a job for Paulson and side-kick Bernanke. The Double Arches can only carry you so far.
Dow 30 Company links
Alcoa [GICS 15, Dow 30]
(AA: Yahoo Finance file)
(AA: StockChart chart)
(AA: Billcara2 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: Billcara2 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: Billcara2 chart)
(AIG: ADVFN Financial Data)
(AIG: Value Line Report May 25: next one is due Aug. 24)
American Express [GICS 40, Dow 30]
(AXP: Yahoo Finance file)
(AXP: StockChart chart)
(AXP: Billcara2 chart)
(AXP: ADVFN Financial Data)
(AXP: Value Line Report May 25: next one is due Aug. 24)
AT&T [GICS 50, Dow 30]
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Billcara2 chart)
(T: ADVFN Financial Data)
(T: Value Line Report Mar. 30: next one is due Jun. 29)
Boeing Co [GICS 20, Dow 30. Cara 100]
(BA: Yahoo Finance file)
(BA: StockChart chart)
(BA: Billcara2 chart)
(BA: ADVFN Financial Data)
(BA: Value Line Report Mar. 23: next one is due Jun. 22)
Caterpillar [GICS 20, Dow 30]
(CAT: Yahoo Finance file)
(CAT: StockChart chart)
(CAT: Billcara2 chart)
(CAT: ADVFN Financial Data)
(CAT: Value Line Report Jan. 26: next one is due Apr. 27)
Citigroup [GICS 40, Dow 30, Cara 100]
(C: Yahoo Finance file)
(C: StockChart chart)
(C: Billcara2 chart)
(C: ADVFN Financial Data)
(C: Value Line Report May 25: next one is due Aug. 24)
Coca Cola [GICS 30, Dow 30]
(KO: Yahoo Finance file)
(KO: StockChart chart)
(KO: Billcara2 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: Billcara2 chart)
(DIS: ADVFN Financial Data)
(DIS: Value Line Report May 18: next one is due Aug. 17)
Dupont [GICS 15, Dow 30]
(DD: Yahoo Finance file)
(DD: StockChart chart)
(DD: Billcara2 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: Billcara2 chart)
(XOM: ADVFN Financial Data)
(XOM: Value Line Report Mar. 16: next one is due Jun. 15)
General Electric [GICS 20, Dow 30, Cara 100]
(GE: Yahoo Finance file)
(GE: StockChart chart)
(GE: Billcara2 chart)
(GE: ADVFN Financial Data)
(GE: Value Line Report Apr. 13: next one is due Jul. 13)
General Motors [GICS 25, Dow 30]
(GM: Yahoo Finance file)
(GM: StockChart chart)
(GM: Billcara2 chart)
(GM: ADVFN Financial Data)
(GM: Value Line Report Jun. 1: next one is due Aug. 31)
Hewlett-Packard [GICS 45, Dow 30]
(HPQ: Yahoo Finance file)
(HPQ: StockChart chart)
(HPQ: Billcara2 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: Billcara2 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: Billcara2 chart)
(HON: ADVFN Financial Data)
(HON: Value Line Report Jan. 26: next one is due Apr. 27)
IBM [GICS 45, Dow 30]
(IBM: Yahoo Finance file)
(IBM: StockChart chart)
(IBM: Billcara2 chart)
(IBM: ADVFN Financial Data)
(IBM: Value Line Report Apr. 13: next one is due Jul. 13)
Intel [GICS 45, Dow 30, Cara 100]
(INTC: Yahoo Finance file)
(INTC: StockChart chart)
(INTC: Billcara2 chart)
(INTC: ADVFN Financial Data)
(INTC: Value Line Report Apr. 13: next one is due Jul. 13)
Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Yahoo Finance file)
(JNJ: StockChart chart)
(JNJ: Billcara2 chart)
(JNJ: ADVFN Financial Data)
(JNJ: Value Line Report Jun. 1: next one is due Aug. 31)
JP Morgan [GICS 40, Dow 30]
(JPM: Yahoo Finance file)
(JPM: StockChart chart)
(JPM: Billcara2 chart)
(JPM: ADVFN Financial Data)
(JPM: Value Line Report May 25: next one is due Aug. 24)
McDonalds [GICS 30, Dow 30]
(MCD: Yahoo Finance file)
(MCD: StockChart chart)
(MCD: Billcara2 chart)
(MCD: ADVFN Financial Data)
(MCD: Value Line Report Jun. 8: next one is due Sep. 7)
3M Company [GICS 20, Dow 30, Cara US 100 June 25-06]
(MMM: Yahoo Finance file)
(MMM: StockChart chart)
(MMM: Billcara2 chart)
(MMM: ADVFN Financial Data)
(MMM: Value Line Report May 18: next one is due Aug. 17)
Merck [GICS 35, Dow 30]
(MRK: Yahoo Finance file)
(MRK: StockChart chart)
(MRK: Billcara2 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: Billcara2 chart)
(MSFT: ADVFN Financial Data)
(MSFT: Value Line Report May 25: next one is due Aug. 24)
Pfizer [GICS 35, Dow 30]
(PFE: Yahoo Finance file)
(PFE: StockChart chart)
(PFE: Billcara2 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: Billcara2 chart)
(UTX: ADVFN Financial Data)
(UTX: Value Line Report Jan. 26: next one is due Apr. 27)
Verizon [GICS 50, Dow 30]
(VZ: Yahoo Finance file)
(VZ: StockChart chart)
(VZ: Billcara2 chart)
(VZ: ADVFN Financial Data)
(VZ: Value Line Report Mar. 30: next one is due Jun. 29)
Wal-Mart [GICS 30, Dow 30, Cara 100]
(WMT: Yahoo Finance file)
(WMT: StockChart chart)
(WMT: Billcara2 chart)
(WMT: ADVFN Financial Data)
(WMT: Value Line Report May 11: next one is due Aug 10)
Wrap up:
This was such a crazy week in the market that many of my other plans got diverted. The website changes will have to come next week.
For now the most important task is to preserve capital. Regardless of your time horizon (ie, average holding period for your portfolio positions), we now must focus on whether or not there is a sea change happening in capital markets.
The question is, have traders decided to change their net capital flows into or out of stocks, bonds, currencies, or commodities? Could the break-down in the prior period momentum in markets (which had been up for stocks, down for bonds) be happening today so that a new trend is beginning?
If so, is the new phase one of short-term (ie, under 1 month), intermediate-term (under say 4 to 6 months) or long-term (greater than one year) duration? Following a period of rising prices, are we possibly looking at a 3 or 4 pct pull-back, one of 8 to 12 pct, or “the big one” of greater than 20 pct in the broad indexes?
After a significant pull-back from Tuesday through Thursday this week, I opted to write in the Friday morning report that it was likely a short-term pull-back, and that the reversal could even start that day. Well, as we saw, Friday’s action was extremely positive, especially in the afternoon, with gains exceeding +1 pct across the board.
Isn’t it amazing how Talking Heads can jump on and off bandwagons so quickly? As I say, the market is a game that plays people. If you listen to Talking Heads, rather than work your own plan, you are the one who will be played.
My barber accurately sums up the market. He keeps the Financial TV program on during the day as entertainment for the customers, so he watches and listens all day every day, with no axe to grind. He says, “When the market goes up, they (the Talking Heads) say Buy! And when it comes down, they say Sell! So, what good are these people?”
True story. And he has a good point.
When financial products and trading services were sold for commissions, the registered representative earned those commissions, client by client. But twenty-five years ago or a little more, the big banks decided to go into brokerage, and they wanted their representatives called financial advisors. That was just the start of the intellectual dishonesty that put the relationship that had existed between financial services (ie, the sell-side) and the owners and managers of capital (ie, the buy-side) on a slippery slope.
Today, everybody is a player (ie, principal) – from all types of financial services companies to lawyers, accountants, professors, media personalities, chat room jockeys and spam artists, computer software and services merchants, and even buy-side vendors (called money managers) who seek media attention to hopefully drive Assets Under Management their way, directly as opposed to selling through agents.
Twenty-five or 30 years ago and more, the buy-side had to deal with someone (man or woman) known as the “Customer’s Man”. If the brokerage service wasn’t acceptable, we went to someone else. Today, we can’t turn around without getting pitched.
Anything goes these days. And what do we have to show for it?
I’ll tell you – because it concerns me. Nobody can be objective these days because, heaven forbid, the advice might be negative, and “negative” doesn’t sell. The market is set up for people to buy. The market is marketing.
The thing is that nobody knows what the most powerful capital pools (I call them Gnomes) are going to do next. And what’s to stop the Gnomes from setting up the market by tipping one of those media personalities or Talking Heads four times in five as part of a sting so that the fifth time around the public gets played like a fool.
So, if it’s not just pure incompetence, it is dishonesty we face. That makes things tough.
There is an answer; I wrote about in this space in the last WIR.
A week ago (May 27), I wrote, “There is no question that the market is going higher. On Friday this week, seventeen of the Cara Global Best 100 companies had share prices that set intra-day 52-week highs. Good traders accept that and go with it. That doesn’t mean to say they believe the rally is a sustainable trend. It just means we have a trending market where elevated risks must be dealt with.In a rising market, we do that by moving up the stops and, after extreme moves, buying puts and writing calls, to hedge against portfolio losses. If our stock is called away at extreme prices on the upside, we should not be concerned to go to cash. There is nothing wrong with holding cash for relatively short periods, say one to two years. Very seldom over 40 years have I experienced periods in the market where cash would constitute the major portfolio holding for longer than one year.
On the other hand, in a falling market, after extreme moves, we buy calls and write puts. If stock is put to us at extreme prices on the downside, we will enjoy the comfort of knowing that our cost base is lower than that of 99 pct or more of active traders.
At the end of the day, if we stick with long positions in the shares of quality companies, adding to these share positions when the prices cycle through the bottom of a bear phase, we will enjoy a solid portfolio growth.
And when we speculate about the activities of central bankers, gnomes and politicians, what we are doing is assessing risk to our wealth preservation and growth plans. (Nothing more.)
There are people out there who would belittle this approach. Ignore them. They happen to be selling something. They might be saying, “Look at me, I have a nice website or the products and services I offer are better than others.”
That is all noise, which if you let it distract you from the task at hand, you will likely fail at that task unless you happen to be lucky. Luck however is not a plan.
You see, a week ago (June 3), I was concerned that most of you would possibly get trapped. On Monday June 4, the US equity market sidetracked, but on Tuesday stumbled, leading to another stumble on Wednesday and a third one on Thursday. I wrote on Wednesday morning and again on Thursday that I wanted to stand back and assess the bigger picture. I added on Friday morning the unequivocal assessment that there was likely to be a recovery, which happened during the day.
At week’s end, as you have seen, I still believe that to be the case. But I also believe we will be hit with a Bear market, in the not too distant future.
Now, standing on train tracks, or catching falling knives, or whatever, might be entertaining (and I try to do that of course), but it is not why I write this blog. I am not a guru; I am not a media personality. I am not a clown. I am just trying to use my ability and the financial markets as a laboratory to help build a community of caring persons who will share their knowledge and expertise to help the next guy or gal.
I know that if we work together, the community can lift up every one of us, and we will learn to take care of our own wealth, and not have it taken from us. That does not mean to say we have to do our own trading, for many of us cannot, but we must be able to manage the process.
Those are my values and I hope they are yours.
Man did I prattle on this week. I hope I wasn’t too foolish sounding. And I hope I didn’t make too many typos. This WIR is going straight up to the satellite without any count-down checks. Sorry.
If you see typos, please comment. I'll read the comments during TV commercials of the F-1 race, and make the wing adjustment. sorry, I'll wing the addjustment, or something like that.
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 June 9, 2007 12:12:26 PM | Category: Cara Week in Review
Discourse
ALOHA !!
Bill ... Excellent WIR and I like your take on real world values not SQUAK BOX values! So many people want to be super rich so they can put Oprah's home phone number in their Palm Pilot! I find Oprah tends to support the "sell side" of HB&B with a smattering of guiltatude for the poor. I did once catch an Oprah show about "DEBT" where a couple families were struggling to get out of debt. Yet not a single word was mentioned about the US monetary system and how that corrupt system perpetuates a debt ridden world. Would Oprah ever do a show on the US Federal Reserve and the falling value of the US Dollar? Surely even she must be asking herself from time-to-time ... "Why can't I ever buy anything for a penny any more?"
Bill I like what you said about wealth ... It is a sad state of affairs where a SURVIVOR winner gets $1mil only to find the IRS waiting in the wings to reduce your winnings to $500k only to realize that $500K won't even buy a studio apartment in many major US cities! The fact that you make a lot of money does not mean you live well any more nor does it make you a great deal happier in the long run. I believe $1mil SURVIVOR winners and lottery winners identify more with a "gauntlet run" than a bed of roses! Constantly running the gauntlet where the governments and every person they meet wants a piece of their "pie"! I can't even imagine what Bill Gates life must be like ... In may ways due to the corrupt fiat monetary system we are all contestants in "SURVIVOR" ... just trying to make it to the "end"! This is the hallmark of a fiat monetary system where the vast majority never feel like they can get ahead even if they make a highly salary than their parents did!! This is the "hidden tax" every politician puts onto the American people when they print money to spend on entitlements ... I guarantee you all the US government spends "our" money on is "welfare" ... 100% welfare!! It does not matter if it is an old lady on food stamps or Lockheed ... its all "welfare"! BIG GOVERNMENT and BIG BANK control has to go ...
On the subject of commodities ... I believe the only way commodities will crash is if we have a drastic reduction in population. The "squeeze" is on and will stay on. Like the M3 chart, a chart of World Population is identical! Commodity prices will fluctuate but I do not see them crashing because World Population puts an incredible demand on supply and fiat currency(M3) puts highly inflationary pressures on mining profits. The mining industry is behind the eight ball on supply. Either there has to be a severe crash on the demand side or a severe increase in spot prices. The HB&B with their "futures market" manipulation tool will always attempt to keep commodity prices down to help their US government accomplices and corporate "end users" like GE and GM. Even if they have to change "rules" once in awhile in the middle of the game! Much like what is now going on with nickel on the LME ... It is a CATCH 22 of the grandest scale and HB&B wants to eat its cake and everybody elses cake too!!
Posted by: kaimu ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
June 10, 2007 3:34 PM [link]
Bill/Others,
I seem to recall that Bill opined recently that when we no longer hear of mergers ( I presume on Mondays) as usual, then we can expect HB&B to pull the rug on this market. I can't remember (or find) the exact text, but it occured to me that on June 4th (last Monday) there really were no major mergers announced. Then we had the sell off Tuesday thru Thursday. On Friday, the market was almost still and then at precisely the time an announcement was made on the possible merger of US Steel, the market surged over 158 points! Did anyone else make the same observation? Also, this market seemed to bounce on every major index at the 50 day moving average. If we breach that line, I think the market will turn down much further. It should be interesting to see if there is any pre-market major merger announcements come Monday morning.
Posted by: onlineaces at
June 10, 2007 3:38 PM [link]
Some thoughts on energy:
Comparing YTD 2007 to 2006, the value of petroleum and coal product shipments is down 8.7%.
http://www.census.gov/indicator/www/m3/
[At the link on the left, select the format of your choice for "preliminary highlights". Select pdf. On page 2 of the pdf you will see a table of manufacturer's shipments broken out by industry group. On the right it gives the NSA numbers and YTD comparisons YoY]
This ties in with a Reuters report:
LONDON, June 4 (Reuters) - "Oil firms have booked space on tankers to store up to 19 million barrels of crude in the U.S. Gulf amid refinery outages and a lack of onshore storage capacity, shipping industry sources said on Monday."
"There are a number of factors playing into this but in the main we have onshore storage capacity issues and the contango in U.S. crude markets is able to pay nicely for it," one source said, referring to higher forward prices in the futures market. Firms were paying $50,000 to $60,000 a day to store the oil"
"In addition, crude imports have been rising rapidly since March and there has been a greater crude flow from Canada into the US mid-West, which has caused a large crude build and squeezed onshore storage capacity," said London Analysts, Simpson, Spence & Young’s Claire Grierson."
In Ireland inflation was reported everywhere:
"Annual Irish Consumer Price Inflation was 5.0% in May; Excluding mortgage interest, the rate was 2.6% - Service inflation was 9.1%"
Posted by: JIM at
June 10, 2007 3:42 PM [link]
Anyone know of a leveraged play on the rising dollar....is there a fund that functions like an ultralong? UUP is a rising dollar etf. Thinking of having a hedge for pm.
While holding pm's, the fact is that the usd is poised to break a very long term downtrend. In the short term, I presume that this would really hurt pm though over the longer term not necessarily.
Another great WIR. Bill really helps us to see the big picture, namely rotation and the invisible hands behind the curtain. Hope that I can learn to put into action his wisdom Income producing vehicles sound very interesting.
Posted by: jasper at
June 10, 2007 8:34 PM [link]
Thank you, Bill.
regards,
Joey
Posted by: joey at
June 10, 2007 9:56 PM [link]
moin from germany
nucor just warned big!
Nucor Corp. sees Q2 net of $1.05-$1.15 vs. $1.42 view
Second quarter earnings have been significantly impacted by lower shipments from Nucor's bar mill group. The rapid increase in scrap prices in the first quarter resulted in hedge buying during that quarter by our customers ahead of anticipated increases in steel products pricing. This hedge buying by our customers produced a record for first quarter shipments from our bar mill group. In addition to the first quarter hedge buying driven by volatility in scrap pricing, bar market demand in the second quarter has been marginally reduced by softness in the automotive and residential construction segments. This softness reduced demand for our SBQ bar and rebar products. We expect second quarter bar shipments to decline approximately 17% from the first quarter shipments. However, bar shipments for the first six months of 2007 are down only 5% from the record level of shipments in the first half of 2006. As underlying demand for bar products remains strong, we expect second half of 2007 bar shipments to be more in line with the year-to- date pace than the second quarter rate.
Dear Bill
Great WIR. I read a lot of that stuff to my loved one who works the furnace at HB and B, and for her, this stuff is a complete eye opener. In fact, the VAST majority of hbb employees have UTTERLY no idea how the world of finance actually works. NO idea.
Ballgame over for Peru Copper. I had the notion that a takeover would happen even as the other one failed last week, so I was a buyer last week. Unfortunately, I was a seller last week as well.
I am personally offended by the last episode of The Sopranos. It was a blatant and transparant attempt to NOT resolve the plot. My mom and i sat there just looking at each other when it was over. Literally, the worst Soprano's episode ever.
One more thing...My trading related dreams have been very prescient, and for some reason, I have been dreaming about much higher interest rates, for whatever that's worth.
Chris
Posted by: shark_attack at
June 11, 2007 9:21 AM [link]
I tried posting a tinyurl chart..but got blocked...fwiw..
rysbx....200% strong dollar fund to answer my own question....may be a little late to take a hedge, not the safest entry.
$usd channel range: circa 81 to 84.25; now in the middle at 82.66...friday's close
chris or others...do you think that the dollar is going to break out...with other countries raising interest rates is not the expectation that we will follow or does Paulson plan to keep rates as is with manipulation of perception? Volatility is likely but will be contained by the higher end of the chnannel?
Posted by: jasper at
June 11, 2007 9:39 AM [link]
Chris-
CUP takeover interesting on a few levels - Chinese buyer, Producer of refined product buying raw material supplier, Continuation of trend of top base metal juniors being bought out, etc.
Posted by: sper0032 at
June 11, 2007 10:00 AM [link]
Sper, I agree.
More and more I think it will be the Chinese who will mine Las Cristinas, the rights to which they will buy for a song after that intention is announced.
Posted by: shark_attack at
June 11, 2007 10:20 AM [link]
Bill mentioned china oil companies moving ahead. I think this may explain why it has been curious that china etfs have held up, lately.
Below is from etftrends.com
China's stock market has been volatile, but the gateways to the Chinese markets, via exchange traded funds (ETFs), have somehow held up. All 3 of the Chinese-focused ETFs owe their latest success to the large Chinese oil companies; Trang Ho of Investor's Business Daily reports these ETFs are all heavily weighted in the oil companies. It hasn't hurt that the Chinese government is planning to discuss how to stabilize its volatile stock market. And with rising inflation, money is moving from Chinese bonds into equities.
Posted by: jasper at
June 11, 2007 10:52 AM [link]
Sharkattack. The Chinese are waiting in the wings to unleash a massive foray into many markets including mining. They will be sitting quitely until after the Olympics as they do not want to upset anyone.
Bill I hope you enjoyed watching the F1 yesterday. I was at the race and it was very exciting. There were flags flying from dozens of nations held by thousands of fans. I just read this morning that at the Dodgers game yesterday security forced demanded the Canadian flag be removed during the game. Oh Dear, have Americans gone mad.
Posted by: Horatio at
June 11, 2007 11:14 AM [link]
Great WIR. A little learning, a laugh or two (I'm still chuckling over the HOG acronym) and plenty to think about.
Re Interest rates:
It turns out my sister is in an ARM on her Florida condo. She had been thinking about, and I was urging her, to get it locked in to a fixed rate. Her condo fees are up, her mortgage payments are up and of course her salary isn't moving. Luckily, her equity is pretty large and she won't end up underwater even if condo prices fall even more. She's got about 150K to go.
We also discussed stretching it out a bit longer to reduce her monthly payments. She's a little squeezed in day to day cash flow. In an inflationary, higher interest rate period, carrying the balance a little longer isn't a bad thing, I would think. Of course, if deflation occurs it's not so good.
I'm just afraid for her should a large interest rate increase occur while she is in the ARM. It doesn't seem like interest rates and inflation are due to drop anytime soon, and locking in a low fixed rate now seems a good thing to do.
Is my logic sound?
Regards, all,
Mike
NYC
Posted by: MikeNYC at
June 11, 2007 5:42 PM [link]
Horatio,
What's done in the name of 'security' often is not what your average everyday American would think reasonable. Try to differentiate. We are in the grips of men who daily act to reinforce control over us in every way. Sometimes I think it's just authority used to condition us to respond to future authority, if you get my meaning. That said, I guess I'd like to know what the policy in the stadium was on banners, flags, etc. in general. It IS sort of a little bit different event than an F1 race. Were I in the stadium watching a baseball game where someone brought in a flag, I wouldn't want the flag in front of me while trying to see, nor would I want something falling on my head from above me. Even just a flag.
Regards,
Mike
NYC
Posted by: MikeNYC at
June 11, 2007 5:51 PM [link]
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Hi Bill,
It's always nice to come back on Sunday's and catch up on the WIR, I like when the discussion includes much "prattling on" on top of purely technical info. The commentary is usually my favorite part as I am a big picture kind of guy.
The company I work for in Oakville was just taken over by an American company and some of the senior trainers got a paycut of up to $9.00 immediately without any forewarning so you can imagine the tension around the place. I took the wknd off in Owen Sound.
Around the campfire everyone seemed to know everything about the economy and state of the markets when the conversation turned that way. Sayings such as "the Canadian dollar touched 96 cents US last week, I should buy some American dollars", "so I heard you are going to start 'flipping' houses now", "theres plenty of oil 'caches', and once we have the technology, the price will drop", "Bush controls the oil price", etc. on and on ... I chose to keep my lips sealed, not because I know it all, but because of my understanding of the situations, largely from your explanations on this blog. (i'll admit my understanding is still limited, but at least i will acknowledge that there is much more to capital markets than meets the eye).
Ok have a great week everybody.
Posted by: Eric![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
June 10, 2007 2:54 PM [link]