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June 17, 2007
Week in Review #24 (2007-06-17)
Since it is Father's Day, I won't spend much time on the computer to get this week's report out to you. It is a positive report, though, which somehow is befitting the day.
Global Market Summary
International Equities: A week ago, amid widespread concerns a new Bear phase had started, I wrote here, “Traders are concerned that a ‘sea change’ might be underway. That depends on your timeframe. I think global traders still have many weeks yet before walking the plank.” This week, at least, the int’l equity markets were strong. Shanghai, in fact, lifted +5.62 pct!
U.S. Equities : The broad US market indexes turned very strong led by the commodity-price sensitive market segment plus Utilities and Technology. The Consumers, Telcos and Financials lagged. Traders were aggressively buying stocks higher at the end of the week.
Dow 30 : The DJIA moved from 13424 back to 13639, close to the level it had been two weeks ago (13,668). A week ago there were 25 Dow components down. This week there were 22 up.
U.S. Sector ETFs: A week ago ten of 10 US sector ETF’s were down. This week only Cons. Staples (XLP) dropped, but only by two cents (-0.07 pct). It was almost like two weeks ago when 10 of 10 gained. Quite a see-saw, but rotation has clearly been favoring the Energy, Materials an Industrials segment.
First segment: most influenced by global commodities, forex and capex spending
10: Energy (XLE): #1 (+4.5 pct); Charge led by +5.8 pct higher $WTIC
15: Basic Materials (XLB): #5 (+1.7 pct); Copper was red hot metal
20: Industrials (XLI): #4 (+2.0 pct); Strong US industrial-military complex
Second segment: most influenced by U.S. consumer spending and economic growth
25: Cons. Discretionary (XLY): #6 (+1.2 pct); Whirlpool up; JCPenny down
30: Cons. Staples (XLP): #10 (-0.1 pct); Beer (ABV) & booze (DEO) held up
35: Healthcare (IYH): #7 (+0.9 pct); BristolMyers (BMY), Amgen (AMGN) up
Third segment: most influenced by U.S. interest rates and general economic health
40: Financial (XLF): #8 (+0.7 pct); Lehman (LEH) up +6.6 pct; GS quiet
45: Tech (SMH chips): #2 (+4.1 pct); Up +2.1 pct Fri, led by Intel INTC
50: Telecom Service (IYZ): #9 (+0.0 pct); T & VZ not helping again
55: Utilities (XLU): #3 (+3.0 pct); a recovery rally or dead cat bounce?
Bonds: US Bonds rallied Friday. Unfortunately, they were smashed again the rest of the week. Traders are now being told by spin doctors that falling bond prices do not have to stop equity prices rising. The only way that can happen is (i) economic growth kicks into high gear, aiding the Industrials, and (ii) commodity price-sensitive beneficiaries (Energy, Materials, Gold) rally faster than the interest rate-sensitive stocks (lending banks, bond-heavy insurance, and debt-laden utilities) fall. Such conditions are usually referred to as the speculative (and bull cycle closing) phase of the equity market.
Commodities: A week ago I wrote here, “$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.” This week, $CRB jumped +11.79 (+3.83 pct) to 319.30. Do you recall me saying there was no way that commodity prices dropped over 2.0 pct in a single day? That was a set up for a sling-shot rally to kick-start the summer buying.
Oil & Gas: A week ago, I noted that the media was screaming that Crude oil had dropped from 65.08 to 64.76. I wrote “No big deal”. This week, $WTIC jumped +3.78/bbl (+5.8 pct). I am now wondering if a new inflation reality will lift it to a 65-75 range, which would be consistent with the $USD that I believe is ready to fall.
Gold: A week ago, I wrote, “$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 --. Next week will be different.” Voila, $GOLD gained +4.83/oz and $XAU was up +4.0 pct.
Goldminers: I warned a week ago, “The $XAU hasn’t moved much over two weeks, but scared traders are agog over Friday.” This week, Tuesday at 1:30pm to be exact, there was a change in equity markets as the rally in Energy, Tech, Industrials and Materials began. Now you can call this a CAPEX inspiration, but I think it was the Paulson Pride thing. As long as it goes, traders will be able to ride the goldminers and the penny stocks higher.
Forex: The $USD did even less this week, but, once again, it did strengthen. This week, however, the Yen and the Canadian Dollar weakened (the Yen actually plunged), and the Euro and Pound strengthened. I think that next week we’ll see the $USD start to weaken and the Canadian Loonie join the Euro higher. I’m not so sure about the Pound.
International Economics Review
US Economic Calendar for next week
Econoday Weekly International Report
Econoday report on the US Consumer Price Index CPIEconoday report on US Producer Price Index PPI
Econoday report on US Industrial Production for May 2007
Econoday report on U of Michigan Consumer Sentiment index
Econoday report on Treasury Int’l Capital’s report of US international capital flow
Econoday report on 1Q07 net US int’l trade balance and capital flow
Econoday report on US retail sales for May 2007
Sector ETF Summary
The tables I show are for ten (GICS) Sector Index Funds (ETF’s) only.
Nine of the ten sector ETF’s I follow here were UP this week. Two weeks ago, all ten were up, but a week ago, all ten dropped and traders became scared that maybe a new Bear phase had started.
It is important to me that I repeat the following.
After a trashing a week ago, I wrote, “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…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 of 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… 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… 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.”
This week, with the exception of a two-cent loss in Consumer Staples (XLP), all US equity sector ETF’s were up: XLE (Energy) jumped +4.5 pct; SMH (Semi-conductors) +4.1 pct; Utilities +3.0 pct; Industrials +2.0 pct; Materials +1.7 pct, Consumer Discretionary +1.2 pct…
I rest my case.
But, you do need to get onto the market’s wavelength. You have to feel the motion. That takes dedication and hours of intellectual work. If it was easy, everybody would stop the physical work and turn to trading for a living.
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)
A week ago, Crude Oil on the NYMEX (WTI) dropped -2.04 pct on Friday and -2.10 pct W/W, closing at 64.76/bbl, down. That got the rally started in XLE. Yes, a week ago, XLE had a terrific Friday (+2.89 pct). This week, XLE led all my sector ETF’s (+4.51 pct W/W) to close at 70.98.
What did I write a week ago in this space? “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 hold some credibility in order to hold the audience for the eventual sting.”
That sting is that a rally was needed to take $WTIC into the 65-75 range, so that Americans will get stuck buying gas at the pump at prices no lower than $2.50/gallon. The new established target seems to be $2.50-$3.50.
That is sad, and it’s all the plan of the Admin, Treasury and Fed to reflate prices so that you feel better, and that your debts don’t pull you under. If you sink, the taxes of the Admin will suffer. But this is a slippery slope that Bernanke and Paulson have taken the nation. Either way, the $USD is going lower, and if only central banks would stop selling gold (we can only presume it’s not naked shorting because they won’t give us an independent physical audit), then gold prices would soar. Crude oil would have a limit of course because it is a consumable, something used to sustain and grow the economy, which occasionally slows or weakens, and where alternative energy sources, cleaner ones even, are available at a price.
It is not likely that XLE can continue to lift at a +4.5 pct W/W pace. But, if it should just stay even, then I believe that gold will be the next to lift.
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
Petro Brazil rocketed north +10.9 pct W/W. I find that amazing. But the story is also Brazil. Embraer (ERJ), the major manufacturer of commercial aircraft, was up +8.2 pct this week. AmBev (ABV), the huge beer maker, was up +9.5 pct, also W/W.
Here is my Brazil stock monitor. Some of these price moves on Friday alone were stunning. Banco Bradesco up +4.2 pct. Gerdau Steel (GGB) up +2.9 pct, for example.
All the aforementioned companies are Cara 100. Yes, Brazil is quite a place – as I have been saying for three years.
Sector 15 (basic materials: IYM, XLB, IGE and VAW)
The Basic Materials ETF (XLB) gained +1.73 pct W/W to 41.10. On the previous Friday, it had gained +1.92 pct. So that’s a six-day gain of +3.7 pct.
In last week’s WIR I wrote, “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.”
I continue to hammer away at the same information because it is valuable. Maybe nobody taught you this stuff before?
This week, my favorites, GGB, RIO, TCK, BHP, and PKX, were up +8.2 pct, +5.7 pct, +8.5 pct, +3.8 pct, and +4.0 pct respectively, just like two weeks ago, and again last week.
But Nucor (NUE) dropped a second straight week (-5.4 pct W/W and -9.0 pct over two weeks). The stock was removed from Goldman’s Conviction Buy list.
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) gained +1.99 pct this week to close at 39.42, after being up +1.55 pct on the previous Friday.
Five of the top nine Dow 30 movers this week are the ones in this sector: CAT, HON, UTX, GE and MMM were up +3.3 pct, +2.6 pct, +2.5 pct, +2.1 pct and +2.0 pct W/W respectively. GE and MMM are still the laggards, but this group has been very strong this month.
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 |
Even Fedex (FDX) gained on the week (+1.8 pct).
Sector 25 (consumer discretionary: XLY, IYC and VCR)
The Consumer Discretionary sector ETF (XLY) gained +1.19 pct W/W to close at 39.83.
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, “Toyota Lexus (TM) was up +1.1 pct on Friday, 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.”
This week, the $USD lifted (+0.23 pct) and TM was up +0.80 pct. But, on Friday, the $USD dropped -0.31 pct and TM actually GAINED +1.40 pct on the day, so I was wrong on this one.
Then again Gold was down on Friday too, so I was only half wrong. Anyway, it is an interesting relationship. I keep hundreds of these little relationships in the back of my head, and when they start going offside, I try to look a little deeper.
Sector 30 (consumer staples: XLP, VDC, RTH and IYK)
The Consumer Staples sector ETF (XLP) was down -0.07 pct W/W to close at $27.49 – al because of Friday’s loss (-0.40 pct).
Wal-Mart (WMT) was down on the week, and Pepsi (PEP) sold off on Friday.
A week ago I wrote, “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.”
Well ABV was the big story this week, rocketing up +9.5 pct. So, Party On! This stock is up +52.22 pct YTD and we’re still in the first half. Nothing else in this sector – on my Watchlist – is up over +10 pct YTD.
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 up +0.89 W/W to close at 71.43. It helped that Friday’s gain was +0.61 pct, largely because BristolMyers (BMY +3.1 pct) and Amgen (DNA +1.4 pct) had a terrific Friday.
IYH has been up for seven consecutive Fridays. The drugmakers and healthcare providers must be happy seeing those legislators go home for the weekends.
How many times have I written that anyway?
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 |
Sector 40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)
The Financials ETF (XLF) gained +0.67 pct W/W to close at 37.45. Friday was a little soft.
Nothing earth-shattering here.
Lehman Bros (LEH +6.6 pct) and Deutsche Bank (DB +4.0 pct) enjoyed a good week. DB on a dead cat bounce and LEH as part of a solid month. I haven’t kept up with the news.
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 a week ago Friday. This week, SMH gained +4.14 pct, including +2.11 pct on Friday.
I see that Goldman Sachs has upped their confidence in Intel (INTC +11.0 pct), and Micron (MU) was given a Strong Buy rating at Raymond James.
Aren’t you glad you played the Cara Accumulation Zone on MU, and back at the end of February on SNDK and INTC?
A week ago, I wrote, “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.” This week SNDK lifted +4.9 pct, including +3.2 pct on Friday after comments by Raymond James.
So the chips are moving away from the dip, which the equity rally sorely needs. And, when this sector flames out, I suspect the obese woman will be singing the market anthem.
After you hear a chorus of “We are the champions,” I trust you’ll head to the exit before the crowd. You’ll want to beat the traffic.
Here’s the SMH Monthly, Weekly and Daily data charts:
SMH Monthly data:
SMH Weekly data:
SMH Daily data:
Table 9: Senior technology equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
After India’s INFY jumped +4.7 pct a week ago Friday, this week it was up +7.2 pct. That’s a gain of +12 pct in six sessions.
Sector 50 (telecom: IYZ, VOX and IXP)
The U.S. telco sector ETF (IYZ) was almost flat this week. The ETF gained one cent on the week and was flat on Friday.
The biggest of the Big Bells, T (+0.05 pct W/W but -0.69 pct on Friday) and VZ (-0.19 pct W/W and -0.53 pct on Friday) held the group back again this week.
But as I have been saying, “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 striking gain of +2.95 pct on the week, to close at 40.44.
The prior six days, XLU had taken a huge loss, so it had been oversold. XLU is partly a dividend yield play that has been battered by the interest yield play in the bond market. Once bonds start to rally (even a relief rally), I believe the Utilities will benefit.
Here’s the XLU Monthly, Weekly and Daily data charts:
XLU Monthly data:
XLU Weekly data:
XLU Daily data:
The Dow Jones Utility stocks had a huge rally on Friday (+1.57 pct). All 15 were up sharply (except for TXU which is having the ribbons tied on the bow of $37.2 billion in debt financing needed to secure the buy-out by Humungous Private Equity). I take that as a sign that interest rates/yields are going to start heading south into the summer.
Bonds & Yields Review
The US Bond market dropped again this week. Broken record. Another one.
The Lehman 20-year+ bond ETF (TLT) dropped -0.36 pct W/W to 83.69. The 30-year US Treasury Bond ($USB) dropped -0.26 pct to close at 106.41.
But the big story was Friday as bond prices popped (and yields dropped). The $USB gained +0.50 pct on the day, and TLT jumped +0.69 pct. So we now have to watch this like a hawk.
A six-week rally here will lift equities, lift gold, and push down the $USD. If markets get very frothy this summer, look to the penny stock promoters to be on the phone or sending you faxes and e-mails. (LOL)
A week ago I wrote, “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.”
This week, the Treasury Yields (except for T-Bills) all lifted massively.
Depending on the data source (I use Yahoo Finance, which in turn uses ValuBond, which is quite different than Bloomberg, which is what professional traders use), the yields on the 30, 10, 5 and 2 year US Treasury paper at the close of the week were 5.23, 5.14, 5.06, and 5.00 pct respectively, which is up from 5.06, 4.95, 4.91 and 4.93 pct a week ago. That represents a gain in yields W/W of +17, +19, +15 and +7 basis points, which represents a continuing loss in bonds, and shift out of the long end into the short end, and T-Bills, which is what traders do when they are nervous.
And on Friday, as bonds rebounded (and yields dropped), there was a striking rally in the Dow Utilities, which happens to be a dividend yield play.
The short T-Bills moved down in yield -27 bp (which is shocking), from 4.64 to 4.37 pct, as capital came out of cash on Friday to chase stock prices higher, again at the close of this week.
Interest rates and bond yields.
Interactive Daily data charts:
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 4.37 | 4.47 | 4.60 | 4.59 |
| 6 Month | 4.64 | 4.70 | 4.70 | 4.63 |
| 2 Year | 5.00 | 5.07 | 4.97 | 4.71 |
| 3 Year | 5.03 | 5.11 | 4.99 | 4.63 |
| 5 Year | 5.06 | 5.14 | 5.02 | 4.61 |
| 10 Year | 5.14 | 5.21 | 5.09 | 4.69 |
| 30 Year | 5.23 | 5.28 | 5.19 | 4.86 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 3.77 | 3.81 | 3.72 | 3.64 |
| 2yr AAA | 3.74 | 3.76 | 3.68 | 3.56 |
| 2yr A | 3.78 | 3.82 | 3.67 | 3.63 |
| 5yr AAA | 3.90 | 3.92 | 3.84 | 3.60 |
| 5yr AA | 3.93 | 3.94 | 3.86 | 3.61 |
| 5yr A | 1.67 | 2.45 | 0.20 | 3.73 |
| 10yr AAA | 4.09 | 4.08 | 4.00 | 3.72 |
| 10yr AA | 4.12 | 4.12 | 4.09 | 3.70 |
| 10yr A | 4.36 | 4.35 | 4.28 | 4.00 |
| 20yr AAA | 4.71 | 4.72 | 4.65 | 4.29 |
| 20yr AA | 4.67 | 4.67 | 4.57 | 4.19 |
| 20yr A | 4.76 | 4.75 | 4.71 | 4.50 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 5.35 | 5.41 | 5.34 | 5.07 |
| 2yr A | 5.43 | 5.49 | 5.40 | 5.14 |
| 5yr AAA | 5.59 | 5.66 | 5.54 | 5.09 |
| 5yr AA | 5.67 | 5.73 | 5.63 | 5.17 |
| 5yr A | 5.71 | 5.78 | 5.68 | 5.22 |
| 10yr AAA | 5.83 | 5.96 | 5.81 | 5.54 |
| 10yr AA | 5.93 | 6.00 | 5.84 | 5.45 |
| 10yr A | 5.97 | 6.05 | 5.90 | 5.52 |
| 20yr AAA | 6.29 | 6.26 | 6.23 | 5.92 |
| 20yr AA | 6.14 | 6.20 | 6.12 | 5.83 |
| 20yr A | 6.43 | 6.40 | 6.37 | 6.06 |
Interactive Chart of Interest rates and bond yields.
As I wrote two weeks 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.”
A week ago I added, “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.”
On Thursday, we got a short-term Buy Alert on Bonds, as the RSI-7 Daily popped up across the 30 line. It is now 39.3. Meanwhile the Weekly and Monthly RSI-7 data is 18.8 and 32.1. You know what that meant for gold.
Yes, I have written, “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.”
The Fed has nowhere to turn here.
I’m waiting for capital to flow out of T-Bills into Gold, should the Fed not drop rates. The spread between the Fed rate and the market rate for T-Bills is ridiculously large. I cannot see that continuing.
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 a week ago Friday (+1.43 pct), and this week was up +6.84 pct W/W to close at 68.75. That’s quite a big move in six sessions (+8.3 pct). Trading in Freddie (FRE) and Countrywide (CFC) was unremarkable.
Consumer Finance -USA -- Interactive Weekly Data Charts
Consumer Finance -USA -- Interactive Daily Data Charts
I am continuing to work on a Fixed Income component to this WIR, including an inexpensive premium report. There were three readers who helped me out quite a bit. Thank you.
I know that 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 expect to come up with a suitable Cara 100 for high income.
Commodities Review
A week ago, I wrote, “$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.”
I try to be blunt. I also try to be accurate. How’s this for Proof of Concept. This week, $CRB lifted +11.79 (+3.83 pct) to close at 319.30.
A week ago, I wrote, “$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!”
It’s true. As the rich and powerful see that trendlines are close to being violated, and that unsophisticated traders will step into the trap, they deliberately move the price into the trap, close it, and then reverse the trend. They call it “eliminating the weak hands”.
But, we are onto their tricks now, right?
I hope you stuck with your long positions in the energy, metals and precious metals, because this is where the action is. Rates actually need to go higher to counter the inflation problems, but the Admin, Treasury and Fed want you to think they can hold the line on rates, just as the inflation line is being “tamed”. This is so far ridiculous, if it was a case of stage acting, the hook should be given. To me, it’s like listening to Roseanne Barr trying to sing the national anthem. To be kind, it doesn’t resonate.
Rates will not collapse until equity prices collapse. Meanwhile the stage is set for rising commodity prices, and a weaker dollar that will be blamed on (who else!) China. End of story.
Interactive Chart of Weekly CRB Commodities Index:
Interactive Chart of Daily CRB Commodities Index:
Oil Review
The $WTIC price is now 68.54, up from 64.76 a week ago and 65.08 the week before that.
As I wrote a week ago, “The $WTIC hasn’t moved much over a couple weeks. But you wouldn’t know it from all the Talking Head shouting and screaming.” Now the West Texas Intermediate is rising, and if the XLE also rallies, you won’t hear too much screaming from Wall Street.
The $WTIC 50-Day Moving Average (from StockCharts) is now 64.82 and the 200-Day MA is 61.58. Hence the current price (68.54) is well over technical support, and possibly pulling up the trading range from 55-65 to 65-75.
Interactive Chart of Weekly Crude Oil:
Interactive Chart of Daily Crude Oil:
The e-miNY June-07 Crude Oil contracts were weak from Tuesday afternoon through Thursday noon, but closed strongly.
Gold & Precious Metals Review
A week ago I wrote, “$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.”
This week, $GOLD gained +4.83/oz (+0.74 pct W/W) to close at 655.13. The 50-day MA is 674.04 and the 200-day MA is 641.27, so the (i) the important 200-day MA technical support held, and (ii) the current price (655.13) is somewhere between short-term bearish and long-term bullish.
But, “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 gained +0.20/oz (+1.52 pct) this week to close at 13.24.
The 50-day MA is 13.48 and the 200-day MA at 12.99, so the current price at 13.24 is still between a bearish short-term and a bullish long-term picture.
Then again, “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.” You heard that from me when gold and silver were under siege the past two weeks.
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 1285.50, down -0.44 pct from 1291.20. Not much of a pct move.
The 50-day MA is 1304.37 and the 200-day MA is 1205.22, so the current 1285.50 price is marginally underwater re the 50-day MA. The $PLAT Bulls are hoping this line holds.
It has held now for three straight weeks, despite a lot of downward pressure on PM bullion. Now that gold and especially silver started to gain strength, we’ll have to watch the $PLAT.
As you know, “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.” No change there.
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 had been a little soft, but regained some color this week.
This week, $PALL gained +1.34 (+0.36 pct W/W) to close at 370.84. The 50-day MA is 373.44 and the 200-day MA is 345.18.
The 50-day MA support did not hold recently. As you know, “Based on my PM group analysis, I still anticipate prices ahead, but I have to be cautious at this point.” I feel a bit better this week because of the action of silver, copper, and the Euro.
As you know, “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.
A week ago, $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.”
This week, $COPPER rebounded, up +13.25 (+4.07 pct) to close at 339.00.
The 50-day MA for $COPPER is 348.51 and the 200-day MA is 315.85, so there is long-term technical support at this level, although the short-term MA represents technical resistance. Prices over the past month have been quite volatile, and continue so.
Interactive Chart of Weekly Copper EOD Continuous Contract Index:
Interactive Chart of Daily Copper EOD Continuous Contract Index:
Interactive chart of the Copper metal index.
Table 12: Senior gold equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
A week ago, I wrote, “$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.”
Voila. A David Copperfield trick. This week, $XAU lifted +5.38 (+3.97 pct W/W) to close at 140.77.
The 50-day MA (139.86) and 200-day MA (137.37) are now both below the current price, which is again bullish for goldminer stocks.
A week ago this indicator was bearish, so I wrote, “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.”
I was going to say, “case closed”, but the case is never closed, and market prices often don’t go where you expect. You’d like to think it is just the crowd pushing and pulling those prices, but alas the major influences over buyers and sellers are parties that have often quite different motivations.
Let’s keep it simple. Gold production is falling. Inflation, though possibly mild, is growing constantly. Fiat money is growing much more rapidly than real (enonomic) wealth, ie, where effective rates of return are obtained based on the risk involved. Unless central banks sell their gold holdings, the price is going higher.
Why make it more complicated than that?
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.
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 82.85, a gain of 19 cents (+0.23 pct W/W).
The $USD 50-Day MA is now 82.16, and the 200-Day MA is 84.05, so the current price (82.85) is technically even more bullish again 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 in order to keep the $USD on a roll up the mountain? I don’t think so, (and) I feel we shall get an answer this Summer.
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.
Interactive Chart of Weekly U.S. Dollar Index:
Interactive Chart of Daily U.S. U.S. Dollar Index:
The Euro (priced in USD) had a winning week actually. $XEU gained +0.17 pct W/W, closing Friday at 133.83. There was a strong gain (+0.55 pct) on Friday.
The $XEU 50-Day MA is 135.00, and the 200-Day MA is 131.01, so the current price (133.83) is short-term bearish, although still long-term bullish. I think there will be some short-term bullishness ahead.
Interactive Chart of Weekly Euro Dollar Index, priced in USD:
Interactive Chart of Daily Euro Dollar Index, priced in USD:
The British Pound gained +0.99 (+0.50 pct W/W) to close at 197.56.
The $XBP 50-Day MA is 198.48, and the 200-Day MA is 194.26, so the current price (197.56) is still between the 50-day and 200-day MA lines.
Weekly British Pound Index:
Daily British Pound Index:
The Japanese Yen $XJY lost big time this week. It has been doing a lot of that recently. This week it lost -1.42 pct W/W, closing at 81.01, so the Yen Carry Trade appears to still be alive and well. Strange isn’t it that whenever the US Treasury bonds need a lift, the answer seems to come from Japan?
Do you think maybe the Treasury and the Fed are borrowing cheap Yen and investing in America? Isn’t that a way to offload some of America’s imported inflation (from China) to what is still the world’s second strongest economy?
As you know, “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 83.03, and the 200-Day MA is 84.15, so the current price (81.01) is remarkably bearish.
Weekly Japanese Yen Index:
Daily Japanese Yen Index:
Weekly Canadian Dollar Index:
Daily Canadian Dollar Index:
The Canadian Dollar $CDW took a loss of -0.57 (-0.60 pct W/W) to close down at 93.70.
There had been many consecutive weeks of mostly large gains against the $USD, which put Canadian in-bound tourism on the brink (the parking lots in Niagara Falls casinos are near empty) and the domestic manufacturing is being pulled back by US head offices.
The $CDW 50-Day MA is 90.96, and the 200-Day MA is 88.04, so the current price (93.70) is still a “hot”.
International Equities Review
Because of the relative size of the bond and forex markets compared to equities, and the liquidity today in the ETF’s, I have come to think that policy makers and monetary authorities are now using the ETF marketplace as an instrument. That, my friends, is the last development we want to see in our capital markets.
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 three pennies (-0.20 pct W/W) to close at 14.64.
The Nikkei 225 actually gained from 17779.09 to 17971.49. The Yen lost -1.42 pct. A week ago, I wrote, “You figure it out.” Actually I now think it is the result of the ubiquitous computer algorithm trading that is going on today.
In a perfect world, where game theory might have relevance, these algo traders are not likely to lose. Then along comes a financial house or hedge fund that fails, and there is no liquidity in the instruments that computers are trading. When the credit ring breaks down, and one bank-broker-dealer (HB&B unit) cannot pay another, strange things happen. Things start unraveling.
This week, media reports stated that Merrill Lynch had to sell off humungous assets of Bear Stearns. Not knowing more than a headline, it would be irresponsible for me to get into that one. But, I think it is the kind of info all of you need to be watching – much like the BMO-Optionable story.
Here is the Japanese (EWJ) equity market ETF Monthly, Weekly and Daily data charts:
China’s equity market
The Shanghai Composite index had a big run-up on Tuesday, and then drifted sideways the balance of the week.
India’s equity market
The Bombay BSE 30 Sensex index opened the week sharply, and gained about +100 points on the week, but there were sharp selling periods at the end of the sessions on Mon, Wed and Friday.
Brazil’s equity market
The Sao Paulo Bovespa index became a moonshot right from the Wed morning opening. This all started after 1:30pm ET in NYC on Tuesday (after the Bovespa had closed), and the players really did a number here for the final three days of the week.
U.K. equity market
The FTSE gained from 6505.10 to 6732.40. The Pound even gained +0.50 pct. The action on the London Exchange started Wed morning, and really took off after it became apparent that NY would open strongly.
Actually, it is the same string-pullers on these puppets, so I don’t know why people question the consistent moves.
The EWU (UK market ETF trading in the US in USD) gained +0.57 pct to close at 25.59.
Here is the United Kingdom (EWU) equity market ETF Monthly, Weekly and Daily data charts:
EWU Daily data:
Canada’s equity market
The Toronto index rallied hard from 13798.50 to 14137.41. The Loonie lost -0.60 pct.
The Canadian ETF that trades in the US as EWC (priced in USD) gained +3.14 pct, which more than made up for the prior week’s loss of -2.66 pct on the week, to close this week at 30.58.
Here is the Canadian (EWC) equity market ETF Monthly, Weekly and Daily data charts:
US Equity Markets Review
The broad US market indexes turned very strong this week, led by the commodity-price sensitive market segment plus Utilities and Technology. The Consumers, Telcos and Financials lagged. Traders were aggressively buying stocks higher at the end of the week.
The DJIA moved from 13424 back to 13639 (+1.60 pct W/W), close to the level it had been two weeks ago (13,668). A week ago there were 25 Dow components down. This week there were 22 up. A week ago also, ten of 10 US sector ETF’s were down, but this week only Consumer Staples (XLP) dropped (and only by two cents or -0.07 pct).
The market was almost like two weeks ago when 10 of 10 sectors and 25 of the 30 Dow stocks gained, followed by a terrible week (three days actually).
Quite a see-saw, but rotation has clearly been favoring the Energy, Materials an Industrials segment.
The NASDAQ Composite was up +2.07 pct W/W, led by Intel (INTC), following strong reports from broker-dealers like Goldman Sacs and Raymond James.
As you know, I anticipated this rally, but the bellcows (Treasury bonds and gold) are still not running hard to the upside, so I think the market has a long way to go in this summer rally.
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 Report(s) this past Friday
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 Jun. 15: next one is due Sep. 14)
Chart analysis of XOM:
My indicators gave me a Sell alert for XOM just under $84 in early June. But then the Crude Oil price ($WTIC) broke out of its 55-65 range to the upside, for various reasons, and the various energy sector groups (integrated, producer, oil services, etc) gave a very high-risk Buy.The major long-term oriented accounts use market strength like this (presently $85.94) to sell into. Short-term traders will play the odds for a matter of days and possibly weeks.
Fundamental analysis of XOM:
With a Return on Equity (35.4 pct), EBITDA Margin (18.6 pct), 5-year Annual Growth Rates for Revenue and Income of +17.3 pct and +33.7 pct respectively, consistent dividend growth, and top-ranked (A++) financial strength, Exxon Mobil represents a core holding for many accounts.
Perspective on the stock:
The constant lift in XOM share prices for the past generation has been slowed only by the US recession of 2001-2. Obviously that could happen again. If it does, and the stock comes off, I would at the cycle bottom write put options and take in income to supplement the dividend (now annualized at $1.40 or +1.63 pct dividend yield). On upside spiking days like this past Friday, I would sell calls and/or buy puts depending on my assessment of whether the price might possibly rise-sidetrack or fall back.With the recent upgrades to Wall St earnings estimates for XOM, I think the stock will likely be well supported at present levels, but I also agree with the Value Line analyst projection of 3 to 5 year Annual Total Return projections of +1 pct to +6 pct. If you subtract the present dividend yield (+1.63 pct), that doesn’t leave much on the table to shoot for. Meanwhile the risks of a broad market pull-back are significant within the next year, and the Value Line analyst has projected lower earnings for 2008 Y/Y, in fact lower than either 2007 or 2006, so capital protection comes first and foremost.
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 Jun. 15: next one is due Sep. 14)
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:
I continue to make changes to the websites/blog. In fact there are serious decisions I still have to make.
Someone commented yesterday that my latest photo has to go because I look as worried as a father whose daughter has just informed him she is dating a biker guy. Well Jimmy wouldn’t be a bad choice, actually (LOL).
Actually, my sinuses have never cleared up after the pneumonia left. And the move from one ISP to another and then to another, and starting new projects (when I really didn’t have the time), all took their toll.
Bottom line, the photo is about how I feel. I’m a pretty transparent person, as you know. When I’m feeling in better spirits, that photo will be replaced.
Besides, I hardly think anybody comes here to look at that photo.
Today is Father’s Day. My son and daughter will be arriving soon. The only thing I’m expecting my daughter to say is how much she likes the new computer system I bought her this week.
You see it’s a bribe. I want to get her involved in the websites/blog so that I can offload some work before heading to Bahamas.
The flip side of that coin is that she’ll have to visit me often.
I remember well how when she was just 12 and in primary school, I took her to the casino on Paradise Island – a few times actually – when I as working/living in both Nassau and Toronto. She studied the gambling enough to return home to prepare a Math and Science Fair project on the probabilities of winning at cards and dice. She was 11 years plus three months old and she was already studying standard deviations to where her project markers (all professors) told her she knew it and could explain it as well as their college students. After many competitions, locally, by district and later by region, she won first prize in primary school mathematics across 19 school boards, representing hundreds of schools in the Toronto region.
The point is I have always been proud of her. She is quite capable to do all she wants. I am not the least bit concerned.
And my son is getting married this September, so our gift is their honeymoon package. Like my daughter, my son has always made his father proud.
Fathers, have a good one. To all, 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 17, 2007 11:59:49 AM | Category: Cara Week in Review
Discourse
Speaking of relationships we keep in the back of our minds, one that I have is the tendency for the POG to see its largest %age moves at the end of each cycle. Whether or not the relationship holds for intermediate points in a (secular) bull cycle is not as clear, but I see no reason for the psychology to be much different then. So if we in fact pierce 698 this summer, then I think we advance to 730 in short order (albeit not in a straight line). And if we pierce 730, odds are it goes much higher, at least briefly. A gold price between 750 and 800 would strengthen my conviction for >1000 by 2009/10, but also make it close to impossible not to try timing an intermediate top (ie, I think it would be difficult not to try selling my LT positions into it). So my thoughts are (1) to maintain short-term positions to help "play" the move (relieve the selling pressure) and (2) if/when the POG approaches 750 to begin hedging my LT positions by selling calls (perhaps by laddering into increasingly higher strike prices). Any other ideas welcome...
Posted by: 2nd_ave ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
June 17, 2007 3:35 PM [link]
And best wishes to all the Dads...it was about a year ago that I began visiting this blog on a daily basis, and I thank everyone who has contributed.
My two older ones arrived in Munich this morning after taking the night train from Paris as part of a school-sponsored trip to sites from WWII...and the 5 year-old is having a great time having the run of the house...
Posted by: 2nd_ave at
June 17, 2007 3:51 PM [link]
ridgon, i noticed you asked about leisa last friday...will take the liberty of posting an excerpt from her blog:
"Sorry for such parse posting of late. I experienced a relapse in my condition, so last week went downhill fast. Brain power and energy were seriously compromised. I still have not read the Henry C K Liu article. So much for "feeling like myself again"! Well, it did last a day.
Luckily the drugs (prednisone) and antibiotic number 2 kicked in, and I could attend a wedding last evening. So before the prednisone, I couldn't breath and couldn't sleep. With prednisone, I can breath but cannot sleep. I'm trying to contain my sleep-deprived crankiness to those who love me most.
Today, I'm making an old fashioned chocolate cake for a Father's Day (FIL) dinner event. It's a bit of a production. I saw it on Cooks Illustrated. I may not be remembered for much when I die, but I will be remembered for the desserts that I've made--honor enough for me.
For all of you fathers, my best to you in your special day. I hope someone made you a special dessert."
Posted by: 2nd_ave at
June 17, 2007 3:57 PM [link]
2nd_ave, I had no idea, thanks.
All this money stuff pales in contrast to what is really important.
I choose to believe that Leisa will be with us for many years to come.
I continue to value her clever insight and willingness to do her homework.
I am look forward to meeting her at one of Bill's gatherings in the Bahamas, but not having to fight through the others who feel the same way.
We have some notes to compare on the Ribero del Duero wines of Spain.
If you read this, L, fight hard.
We need you.
Posted by: Rigdon at
June 17, 2007 6:54 PM [link]
rigdon,
I'm not sure what Leisa has, but I don't think it's life-threatening...sounds like some kind of pulmonary infection related to/exacerbated by a bad case of seasonal allergies...
Posted by: 2nd_ave at
June 17, 2007 7:42 PM [link]
ALOHA !!
2nd_ave ... Prednisone is a steroid also used to treat intestinal diseases like Ulcerative Colitis and Crohns. Although there are a lot of such diseases that are not life threatening they are long term acute illnesses that suck the life out of you gradually. I know by experience ... I had Ulcerative Colitis for five years when I was 27 years old. I made it back 100% and then some but now I suffer from the fatal disease known as OFS ... OLD FART SYNDROME !!! YIKES ... there is no cure and its inoperable ... STAND BACK EVERYONE !!! Let me be-e-e ...
All my best to Leisa for a full recovery from whatever illness she has. Same goes to you Bill ... If I recall my doctors back then told me to avoid "stress"! WHAT? That's like saying "avoid breathing" if you live in Newport Beach, California! Just grocery shopping was stressful! I am doing my best to avoid stress now living in Hawaii, some 20 plus years later! Its doable here ...
Your historical monetary lesson for today from Ezra Pound(1885-1972)from "The ABC Of Economics" (1939)
.
"A handful of people, who lived on little and did not run into debit brought to, and preserved in America, a rather high, severe culture, and a civic sense nourished by the traditions of English legal liberty, that is, by a centuries-long conquest in which the traditions of North European tribes and Roman Law converge."
"The employers naturally tried to get the work done for the least possible price. The working men, in self-defence, asked for the suffrage. The people won the war against the Bank of the U.S. between 1830 and 1840 but, with the new waves of European work hands, the quality of the electorate declined, and demagogy undertook to corrupt it. The Press misled, or distracted, the people from the nature of the economic problem.
"But the monopolies, the sanctions, the restrictions imposed by the guilds were, at least, monopolies of producers. The various monopolies which culminate in the monopoly of money itself, key to all other monopolies, were, and are monopolies of exploiters."
What changes, really ... WHAT CHANGES? We still live in the "monopolies of the exploiters"!
Posted by: kaimu at
June 17, 2007 8:48 PM [link]
Dear friends,
Thanks for your kind words. I have a very curable problem--I think that the bacteria thought that my sinuses were the Bahamas and have settled in for a heck of a vacation! I actually pulled a Bill Cara....meaning I waited far too @##~^%$#@ long to go to the doctor which exacerbated the condition.
Posted by: Leisa at
June 17, 2007 9:32 PM [link]
Unlike the encyclopedic report of Bill's, mine is more like the Cliff Notes of Cliff Notes. But it is up, with the 'call' for increased volatility with 24 ETFs among those trading at least a million shares a day showing the NR7 (narrowest range of 7 days) pattern.
Happy Fathers' Day!
Ron
elvispoc,
Hedging future gold assets is a common practice among miners. Western Goldfields recently completed a financing using hedged gold assets.
http://tinyurl.com/ytvwlw
Also, I have a question for Bill or anyone else who has the capacity to answer.
With the large inflation we are seeing with food, and with it likely to continue, I am inclined to think that the more expensive food products at Whole Foods will actually seem less expensive to t he average consumer than before.
It seems like a $1.00 markup over a Wal-Mart price will have less of an impact if the item costs $20 as opposed to $10 (just speculating for the sake of an example). Is this the right way to think about it, and if so, that makes the more expensive organic Whole Foods seem like a better buy for the future, right?
This is my 7th time trying to post this, hopefully it works!
Posted by: chas at
June 17, 2007 10:05 PM [link]
Also I went to a Whole Foods this weekend to see if it was really all it was cracked up to be. I really thought they had an excellent setup and some really good products. Plus I made my own honey roasted peanut butter and it is delicious. I'm definitely going back for more when I run out.
Posted by: chas at
June 17, 2007 10:06 PM [link]
WGI.To has hedged 60% of its annual production for the first 6.5 years at around $800/oz. It currently trades 10-20% premium to NAV. Based on NAV GAM.To seems to more valuabe as it currently trades at -44% discount ( refer to Bill's note based on BMO report few days ago). Does it mean GAM.TO is a good buy at this price??
Posted by: Pierre at
June 17, 2007 11:08 PM [link]
ron paul - march interview
http://misstrade.wordpress.com/
Posted by: score22 at
June 17, 2007 11:13 PM [link]
The wonders of Dubai (including what is probably the world's first underwater cosmetic surgery clinic) have now made it to the Travel pages of the SF Chronicle:
Posted by: 2nd_ave at
June 17, 2007 11:40 PM [link]
Bill - Here's a headline that catches the eye.
"Housewives Outmaneuver UBS, Deutsche Bank Trading Yen (Update4)
By Kosuke Goto
June 18 (Bloomberg) -- Japanese businessmen, housewives and pensioners betting against the yen in their spare time are wrecking the forecasts of the world's biggest currency traders. ..."
Posted by: spot at
June 18, 2007 7:26 AM [link]
Ugh, got bit by the blocked comment bug, now need to re-type :( In my case seems to have thought I was logged in, then changed its mind.
2nd_ave, another approach for playing a melt-up might be to take your profits then buy in with some long dated calls. That way if prices crash, you just lose the premium, but if they melt-up further, you can ride along. Of course you'd still need to time your exit on calls.
Regarding FXY investment. I'm trying to wrap my head around how the yen will react in the event of a Nikkei crash that Bill is expecting to lead world markets lower.
On the one hand I see money leaving Japan as international investors pull out, or Japanese investors diversify. This would seem to lower demand for yen and drop the price.
Alternatively, investors might flee to bonds for safety, increasing demand and prices, but lowering yields thus further encouraging the carry trade and keeping downward pressure on the yen.
Is there any reliable correlation between stock market performance and currency? Doesn't seem to as CDN$/TSX move in same direction, but yen/nikkei and US$/Dow move in opposite directions.
Any thoughts on what might happen with the yen if Bills scenario plays out?
Posted by: proudPapa at
June 18, 2007 11:45 AM [link]
2nd_ave,
They have some good pics up of it on their website, if you haven't already seen. I got in at 2 bucks on thursday, right on time, it looks like. But we will see what the summer holds.
Posted by: chas at
June 18, 2007 1:53 PM [link]
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I was startled to read the following from the book "Gold - the Once and Future Money" by Nathan Lewis (p. 111-112):
"It is still possible today to get a gold loan. It is a preferred method of finance for gold-mining companies. The borrower borrows gold, not dollars, and repays the loan in gold. THe interest rate on such gold loans...averaging about 1.5%...the discount rate on gold also shows up in the valuation of gold mining companies, which, unique among metal miners, tend to be valued based on their reserves with a discount rate below 5%."
(1) Who is the lender on such loans? (2) How common are they, really? (3) How do I spot this on a miner's balance sheet? (4) Why wouldn't every miner take advantage of this as both a hedge risk and arbitrage, if bullish on POG?
Thanks in advance to all who comment.
Posted by: elvispoc![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
June 17, 2007 1:14 PM [link]