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October 1, 2007
Week in Review #39 (2007-09-29)
On the confidence scale, traders are somewhere between concern that past indiscretions among mortgage loan syndicators and commercial bankers could weigh too heavily on credits markets, causing some financial institutions to fail, and, on the other side, optimism that growth in BRIC economies can replace the ills of the US, UK and Western Europe. The equity market can go either way at this point.
What is for sure is that the credit market problems that surfaced in June will take at least a year and require agreements between the major banks of the world to resolve. In the interim, despite the helping support of central bankers to provide additional liquidity, many financial institutions will fail and/or be taken over by stronger ones.
Muddling through the process, central bankers will try to ensure enough liquidity to help private equity companies to complete the deals they lined up and those that will become available under the present circumstances, and they want to help those financially strong corporations interested in taking on more debt to pay out higher dividends. These deals contribute to what people call the Wealth Effect.
‘Wealth effect’ is an expression that is akin to little more than taking money out of one pocket and putting it into another to induce them to do something they ought not to.
In being aware of the money and handling it, to paraphrase the dim-witted TV commercial of one of Canada’s biggest banks, “you are richer than you think you are”. I say it is dim-witted because it is an obvious attempt to get people who cannot afford to borrow to do so anyway in order to spend on things they may or may not need.
It’s kind of like saying to an alcoholic that it is ok to have a drink after five years absence of substance abuse. The drink may calm the person’s nerves for an hour, and destroy their psyche. In the context of commercial lending, does the bank really care as long as somebody is there to make the payments or collect the loan collateral in the event payments are not?
In other words, ‘wealth effect is part of the psychology of credit markets, a creation of the Sell-side. Just another challenge in the daily life of the Buy-side.
Now we are told that one of the largest and strongest banks of the world, UBS, is going to write off $3.41 billion in loans. I don’t know if that actually means the bank will be taking provisions for loan losses, which is a deduction from earnings and in effect sets the special loans department into action to try to collect on the collateral (meaning tough times for the bank’s customers) or whether it is actually a write-off meaning the bank has decided it cannot collect these debts, or sell them to others who will try to collect, which in effect lowers the shareholders’ capital in the bank.
Usually, when you see one or more of the major banks talking like this, it means they all will, and that means that all bank customers are going to get squeezed, and in the process end up having banks seize assets where loans are not being repaid as per earlier agreements. Typically these things happen in Bull markets. They happen once every 10 or 15 years and in my whole life, I haven’t seen it happen in a Bull market yet.
Credit squeezes by banks are bad for embattled home-owners too because high bid prices for homes are the result of the bidders being able to finance the purchase through available credit. When credit of a part of the market is squeezed, like for sub-prime borrowers, it is almost always the case that there is a squeeze on the borrowing practices of the typical prime rate borrowers as well. That is what is happening today.
So, what happens is that asset prices fall quickly when potential buyers cannot borrow enough to complete the deal. In 1990, my parents bought the country home and property of their next-door neighbor for $300,000 cash that until the credit squeeze a few months earlier held a $1.1 million mortgage against it. In a credit squeeze, cash is king.
For a couple years, I could see that cash would be king because I saw too many dumb TV commercials like, “You are richer than you think you are!” That was just a different slant than the years 1999-2000 when the discount brokers were running TV ads about truck drivers using their market winnings to buy Caribbean islands – one little old lady even bought a country!
Well, you know the rest of that story. The truck drivers and little old ladies were then roundly criticized for being stupid enough to day trade their stocks. The industry took no responsibility. While the pickings were good, they did take their bonuses.
Same thing today. Billions of dollars in bonuses are being paid by banks to bankers while new home-owners and real-estate investors are being criticized for the lying part of the banks’ “Liar Loan” problem.
You see the reason for my analogy to the banker giving a drink to an AA member? At the end of the day, we all must take responsibility and pay the piper. But, banks will continue to bonus bankers, and when there are subsequent losses from the business these bankers initiated, the shareholders will take the hit.
Moreover, if Banks A and B operated foolishly, Bank C will buy them out at fire-sale prices. The rich will get richer. In a horse race, I say always find the best horse and jockey – not the best story in the newspaper, but the principals with the superior trackrecords. That’s because, in life, what goes around will come around.
My son and new daughter-in-law were married on the weekend. It is a new life but for them to succeed in the future they must learn from the mistakes others have made in the past. Same thing applies to traders.
If you continue to act like traders who were losers in the past you too will be a loser in the future.
If you thought that watching a couple years of “You are richer than you think you are” TV commercials was interesting and informative, then you are a loser. If you thought that the Government of Canada, as an example, was doing the right thing in their TV commercials by telling young people to sign up for the fun and travel of the armed forces then you are a loser. The government stopped running those “fun” commercials when the nation’s young people started to come home in body bags.
There is a reality to life, and you are at risk if you choose to ignore it, and instead believe the stories of goldilocks and make-believe. Credulity syndrome is the term I use for losers. Too many people are afflicted.
When banks tighten, and central banks liquefy, as they are doing today, having cash is an important asset, but there is nothing so important as having gold and silver money at times like that. The more paper money that is printed, the more it is depreciated (because much of it is misspent/wasted), and the higher the value of gold and silver, and the bigger are the winners who hold it. The losers will continue to be those who borrow to spend unnecessarily – individuals, corporations and governments alike.
Losers in the markets will be traders who do not recognize that this is a bad time to be investing in companies that make or sell goods and services that are not essential to sustaining life, or on financial institutions that lend (since this is a time these companies are bent on collecting and having to write off bad debts).
I will sum up that this was a week in transition. People, like my son and daughter-in-law, were married with great hopes for their future, but also with the need to stay grounded by learning from the past mistakes of others. Traders who are new at this, let this be the first week of the rest of your life. Keep your dreams alive, but don’t ignore the lessons of the past.
For sure, Sell-side lenders and dream merchants are not going to tell you that. They are too busy trying to get theirs. That’s life.
International Economics Review
Econoday Weekly International Report
US Economic Calendar for next week
US Equity Markets Review
Traders are taking note of a possible double top.
On Friday, the DJIA lost -17 points (-0.12 pct) to close at 13895, up +75 points from the previous Friday’s 13820.
The broad market indexes are now well above both the 50-day and 200-day Moving average technical lines of resistance, and the volume is picking up, which means that traders are generally less cautious. The Daily RSI-7 data (see from Chris) shows the market is over-bought. This combo warrants close monitoring.
We have to watch the post-quarter trading for signs of a market sell-off. As I pointed out a week ago, selling into strength the stocks in your portfolio that have already had a Sell Alert and then a subsequent big run-up in price to a second Sell Alert is usually the right decision.
NASDAQ Composite (interactive) chart
On Friday, the Nasdaq Composite had a loss of -8 points (-0.30 pct) to close at 2701, which is a gain on the week of +30 points.
Table 13: International equities via an ETF perspective (ie, $USD)
| 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
Here is the Japanese (EWJ) equity market ETF Monthly, Weekly and Daily data charts:


U.K. equity market ETF
Here is the United Kingdom (EWU) equity market ETF Monthly, Weekly and Daily data charts:

EWU Daily data:

Canada’s equity market
Here is the Canadian (EWC) equity market ETF Monthly, Weekly and Daily data charts:


The US equity market Sector ETF Summary
The tables I show are for ten (GICS) Sector Index Funds (ETF’s) only, but they cover the full spectrum of the equity market.
This week it was a case of 4 sector ETFs up, 1 flat and 5 down. Basic Materials (XLB) was #1 again, but Energy (XLE) dropped from #2 to #9. Financials (XLF) dropped from #6 to #10.
Table 1: Cara ETF List is sorted by price performance Week over Week (W/W), i.e. 1W%N.
| 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, go to the AMEX.com web site, and click on ETF’s.
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)
Here’s the XLE Monthly, Weekly and Daily data charts:
XLE Monthly data:

XLE Weekly data:

XLE Daily data:

Energy (XLE) was the #9 performer this week, down -1.00 pct, closing at 74.94. A week ago, it was #2, up +4.08 pct. XLE was #1 performer for three weeks in a row before that, and I started to say I thought the price was over-bought.
China National Offshore Oil Co (CEO +7.50 pct) was the big winner again this week, as it was over the past 4 weeks (+42.13 pct). Smart traders will be watching for a Sell-alert to realize their gains, and move into cash (or into over-sold but recovering stocks).
For the past year (52-weeks), CEO is up +101.3 pct.
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)
Here’s the XLB Monthly, Weekly and Daily data charts:
XLB Monthly data:

XLB Weekly data:

XLB Daily data:

XLB (Basic Materials) gained ++1.32 pct on the week to close at 42.12.
Base metal miners like Brazil’s CVRD (RIO) were strong. RIO jumped +11.43 pct this week, and +24.51 pct over two weeks. Yes, the fundamentals are improving, but those kind of gains must be realized or else they might be given back.
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)
Here’s the XLI Monthly, Weekly and Daily data charts:
XLI Monthly data:

XLI Weekly data:

XLI Daily data:

Table 4: 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 |
XLI (Industrials) gained +0.91 pct this week to close at 41.00.
Switzerland’s answer to General Electric is ABB, which was up +2.54 pct W/W and +10.21 pct over two weeks. That is a huge increase for a mature large cap company. Is global forex that good? Certainly I like the business this company does, and its management, financial strength, and operating metrics, but the stock is very expensive now.
Selling, however, is best done with the help of Sell-alerts.
Sector 25 (consumer discretionary: XLY, IYC and VCR)
Here’s the XLY Monthly, Weekly and Daily data charts:
XLY Monthly data:

XLY Weekly data:

XLY Daily data:

Consumer Discretionary (XLY) was another weak performer this week, losing -1.00 pct W/W to close at 36.73.
Nike (NKE) was strong (+2.44 pct W/W), whereas the losers were Whirlpool (WHR), Starbucks (SBUX) and JC Penny (JCP).
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 |
Sector 30 (consumer staples: XLP, VDC, RTH and IYK)
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 |
XLP (consumer staples stocks) were a relatively strong #2 performer, gaining +1.01 pct W/W to close at 27.94.
Whole Food Markets (WFMI), having cleared some legal issues related to a take-over, was up +8.73 pct W/W (+12.86 pct in two weeks).
Sector 35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)
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 |
IYH (healthcare) gained +0.08 pct W/W to close at 70.79, a gain of six cents. Yet, IYH was performing leader #4.
Aetna (AET +3.7 pct W/W) and United Health (UNH -3.0 pct) were going in opposite directions.
Sector 40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)
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 |
The Financial ETF (XLF) lost -1.16 pct W/W to close at 34.20. On Friday, the loss was -0.75 pct.
I would not touch Financials right now unless I wanted to become a millionaire starting out with two.
Sector 45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, MTK and SMH)
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 |
This week, SMH (semi-conductors) lost -0.73 pct to 38.30.
Sector 50 (telecom: IYZ, VOX and IXP)
Here’s the IYZ Monthly, Weekly and Daily data charts:
IYZ Monthly data:

IYZ Weekly data:

IYZ Daily data:

IYZ (telecommunications) was flat on the week.
Sector 55 (utilities: IDU, XLU, and VPU)
Here’s the XLU Monthly, Weekly and Daily data charts:
XLU Monthly data:

XLU Weekly data:

XLU Daily data:

This week, XLU (Utilities) lost -0.97 pct, to close at 39.3, but on Friday the loss was -1.24 pct.
Bonds & Yields Review
Table 10: US Treasury Yields
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 3.64 | 3.56 | 3.62 | 3.81 |
| 6 Month | 3.91 | 3.87 | 3.92 | 4.13 |
| 2 Year | 3.97 | 3.94 | 4.02 | 4.15 |
| 3 Year | 4.01 | 3.98 | 4.09 | 4.17 |
| 5 Year | 4.24 | 4.21 | 4.29 | 4.30 |
| 10 Year | 4.58 | 4.57 | 4.62 | 4.56 |
| 30 Year | 4.83 | 4.83 | 4.88 | 4.88 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 3.40 | 3.37 | 3.40 | 3.64 |
| 2yr AAA | 3.49 | 3.45 | 3.48 | 3.55 |
| 2yr A | 3.47 | 3.43 | 3.46 | 3.53 |
| 5yr AAA | 3.48 | 3.48 | 3.53 | 3.58 |
| 5yr AA | 3.49 | 3.52 | 3.54 | 3.67 |
| 5yr A | 3.70 | 3.70 | 3.75 | 3.81 |
| 10yr AAA | 3.77 | 3.78 | 3.78 | 4.44 |
| 10yr AA | 3.78 | 3.87 | 3.76 | 4.44 |
| 10yr A | 3.90 | 3.91 | 3.91 | 4.67 |
| 20yr AAA | 4.33 | 4.45 | 4.48 | 4.66 |
| 20yr AA | 4.73 | 4.85 | 4.98 | 4.71 |
| 20yr A | 4.33 | 4.46 | 4.76 | 4.73 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 4.81 | 4.79 | 4.85 | 4.90 |
| 2yr A | 4.89 | 4.86 | 5.08 | 4.92 |
| 5yr AAA | 5.06 | 5.03 | 5.10 | 5.06 |
| 5yr AA | 5.14 | 5.11 | 5.18 | 5.32 |
| 5yr A | 5.21 | 5.19 | 5.28 | 5.27 |
| 10yr AAA | 5.38 | 5.37 | 5.42 | 5.62 |
| 10yr AA | 5.79 | 5.77 | 5.84 | 5.75 |
| 10yr A | 5.78 | 5.79 | 5.89 | 5.80 |
| 20yr AAA | 5.96 | 5.97 | 6.03 | 6.18 |
| 20yr AA | 6.33 | 6.34 | 5.97 | 6.30 |
| 20yr A | 6.29 | 6.30 | 6.36 | 6.32 |
Within the US Treasury market, the yields dropped between -4 and -5 basis points, which gave a small lift to Bonds.
The yield for the 3-month T-Bills increased +2bp to 3.64 pct.
Here is the $USB 30-year Treasury Bond chart.
Interest rates and bond yields.


Interactive Daily data charts:


Interactive Chart of Interest rates and bond yields.
TLT gained +0.94 pct W/W to 88.72.
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 |
Freddie Mac (FRE -22 pct), Fannie Mae (FNM -3.05 pct) and Countrywide Financial (CFC -3.06 pct) were losers this week.
Traders are getting the message that the problems of the housing market and mortgage loan market in the US will take maybe a year or two to resolve.
Consumer Finance -USA -- Interactive Weekly Data Charts
Consumer Finance -USA -- Interactive Daily Data Charts
Commodities Review
$CRB index gained +0.16 pct W/W to close at 333.67. There has been a succession of five W/W gains.
The 50-day Moving Average is now at 316.40 and the 200-day MA is 310.99.
Interactive Chart of Weekly CRB Commodities Index:

Interactive Chart of Daily CRB Commodities Index:

Oil Review
The Crude Oil futures market ($WTIC in the US for Light Sweet Crude called West Texas Intermediate) gained +0.04/bbl (+0.05 pct W/W) to close at 81.66.
The 50d MA for $WTIC is 75.49 and the 200d MA is 66.18, so Oil is now well above both the 50d MA and 200d MA lines.
Here is the e-miNY Sept-07 Crude Oil chart.
Interactive Chart of Weekly Crude Oil:

Interactive Chart of Daily Crude Oil:

Gold & Precious Metals Review
This week, $GOLD rallied a further 11.10 (+1.50 pct W/W), and $SILVER rocketed another +0.30 (+2.20 pct). $GOLD is now at 750.00 (which is a long-term cycle high close), and the 50day MA is now 693.33 and the 200d MA is 667.81.
Remember my words from last week:
Onwards and upwards until it doesn’t. For clues to that watch to see if the Euro declines and the USD lifts. Watch to see a sell-off in the $XAU goldminers share index. It’s coming – I just don’t know when. Months ago, I opined it would top out at about 750 for this cycle, and then in the next cycle start to rally again to over $1000, after central banks start talking about a new General Agreement on Currencies, and China agrees to release the tight link to the USD. In the meantime, prices will be volatile. Further FOMC decisions to cut rates will boost gold.
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.
Spot silver chart for the week
This week, $SILVER gained +$0.30/oz (+2.20 pct) to close at 13.92.
The 50d MA is 12.76 and the 200d MA is 13.16.
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.
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.
This week, $PLAT gained +33.80/oz (+2.53 pct) to close at 1369.90. A week ago, $PLAT gained +32.30/oz (+2.48 pct).
The 50d MA is 1296.13 and the 200d MA is 1257.41.
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.
This week, $PALL gained +9.40 (+2.74 pct) to close at 351.95.
The 50d MA is 349.52 and the 200d MA is 356.60, so this is one metal that still has not broken out.
It could be an industry demand shift for the metal, something somebody wrote to me about recently. Comments welcome.
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.
This week, $COPPER gained +4.75 (+1.32 pct) to close at 364.00.
The 50d MA of $COPPER is 343.26 and the 200d MA is 320.32, so the current price (364.00) is now above both the 50d MA and 200d MA.
Table 12: Senior gold equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
This week, $XAU lost -2.80 (-1.53 pct) to close at 168.75.
The 50d MA is 148.89 and the 200d MA is 141.76.
I don’t think the public is even involved at this point. These stocks will go much higher, but watch the spec companies (ie, the explorers) and the ones like Western Goldfields that are ramping up new production.
Do not forget to take part profits after major run-ups, and to re-set stop losses.
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
Here is the chart of the week’s trading.
The $USD lost another bundle for the USD Bulls. $USD fell -0.82 (-1.05 pct) to close at 77.77.
This chart looks like a train track into the ocean. Nobody knows how far it can go down.
The following data is a simulation of the M3 as of the past week.
US M3 (estimated) continues to grow at an excessive rate, as it does in Europe. Central bankers are constantly diluting all fiat money at extreme rates. They have no option under the circumstances. The economy is relatively strong, but the credit markets are imploding.
The $USD will continue to fall as long as traders have little confidence in the highest level decision-makers of America, in government, the central bank, commercial banks and business corporations. Until the American consumer has a growing income with a piece of that to spend, there will be disappointments. Less individual taxable income means less personal tax and spending. Less spending means less corp tax and less taxable income. Without taxes, governments must print new money, which depreciates the value of the old money. When that happens, foreigners want to travel to vacation in the US, but they don’t want to hold securities that will repay them in lower valued USD.
Interactive Chart of Weekly U.S. Dollar Index:

Interactive Chart of Daily U.S. U.S. Dollar Index:

Interactive Chart of Weekly Euro Dollar Index, priced in USD:

Interactive Chart of Daily Euro Dollar Index, priced in USD:

The Euro ($XEU) gained +1.86 (+1.32 pct W/W) to close at 142.74, a new record.
Four weeks ago, at 136.39, I opined, “I still think we’ll see a 140 handle inside 60 days.” The past 28 days were not bad.
The Euro’s 50d MA is 137.60 and the 200d MA is 134.32.
Weekly British Pound Index:

Daily British Pound Index:

This week, the Pound gained +2.52 (+1.25 pct) to close at 204.59.
The 50d MA is 202.00 and the 200d MA is 198.61. The recent high was 203.51 (Sept.), and before that 206.40 (July).
Weekly Japanese Yen Index:
The Japanese Yen ($XJY) gained +0.45 (+0.52 pct W/W) to close at 87.16.
The 50d MA is 85.85 and the 200d MA is 83.91.

Daily Japanese Yen Index:

Weekly Canadian Dollar Index:

Daily Canadian Dollar Index:

This week, the Loonie gained +0.70 (+0.70 pct) to close at 100.74.
The 50d MA is 95.77 and the 200d MA is 90.50.
Parity will take some getting used to and adjustment.
International Equity Markets Review
Here is the latest session data for the exchanges of the Americas.
Here is the latest chart for the Brazilian Bovespa stock exchange in Sao Paulo.
Here is the latest session data for the Toronto Stock Exchange composite index.
Btw, I’ll be attending the Cambridge Gold Show in Toronto Oct 21-22. Apparently, Jock is coming up from St. Louis again. We’ll have to have a hospitality suite in my room at the InterContinental!
International Equity Markets Review
Europe>
Here is the latest session data for the bourses of Europe.
Asia-Pacific
Here is the latest session data for the Asia-Pacific stock exchanges.
Here is the latest chart for the Japanese Nikkei 225 index.
Here is the latest chart for the Singapore index .
Here is the latest chart for the Shanghai Composite index .
Here is the latest chart for the Hong Kong Heng Seng index .
Here is the latest chart for the India BSE 30 index .
Here is the latest chart for the Australian All Ordinaries index .
US Equity Markets Review
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
The Value Line reports last week were for AT&T (T) and Verizon (VZ).
Of the two companies, AT&T seems to be in the lead, with the fewest problems and best operating metrics. Total Return (TR), which represents price appreciation and dividends, is estimated by Value Line as much better for T than VZ.
If AT&T could move its Return on Equity up to the 18-20 pct level, then I would consider including the company in the Cara USA 100. But with long distance revenues plummeting due to free Skype and other cheap alternative carriers, I would have a tough time with that. The stock is one for traders whose primary objective is income. With high and growing dividends, where the dividend yield and price appreciation potential is pushed up on every major pull-back in its share price, T would be attractive to many of you. On extreme pull-backs, I would write put options to increase my income.
T is a stock where I believe you could get annual Total Returns of 15-18 pct with your eyes (mostly) closed. Not quite Buffett numbers, but close.
(T: Value Line Report Sep. 28: next one is due Dec. 28)
I have no understanding how Value Line can lower the T’s Technical rating on Friday from a highest rated “1” to a “2”, and then conclude: “These shares are timely. We like this high-quality stock for the long haul, too, and believe that it offers above-average total return potential to 2010-2012. Justin Hellman Sept. 28, 2007.”
(VZ: Value Line Report Sep. 28: next one is due Dec. 28)
I also have no understanding how Value Line can raise the VZ Technical rating a week ago from “3” to “2” and the Safety rating on Friday from a “2” to a highest rated “1”, and then conclude: “Investors need not rush in. This neutrally ranked issue’s 3- to 5-year appreciation potential is now well below that of the average stock under our review. Kenneth A. Nugent Sept. 28, 2007.”
Maybe the name should be Value & Line, or Hellman & Nugent, like in Martin & Lewis, Abbott & Costello or Greenspan & Poole?
Actually, I have a high regard for the Value Line service – most of the time. I continue to urge traders to print out these free Dow 30 reports every week and store them in a binder, with your notes. List all your portfolio stocks and your watchlist stocks that trade in similar patterns (due to similar market reactions to interest rates, economic factors, commodity prices and forex rates). Then when you think there may be a primary or intermediate trend reversal for any of these groups of stocks, go to your public library or to your personally subscribed Value Line, and read the latest data and analysis. This homework helps keep you focused.
As for Verizon, I have always thought the hype from the company surpasses the reality. Even the name seems to be in flight whereas with AT&T (American Telephone & Telegraph), how dull can the picture be. I prefer to think of it as Monotonous Money Machine, which puts a different light on things.
Also, the AT&T company reached its low point in 2004 as then-CEO Michael Armstrong made himself pretty for the TV song-and-dance he was putting on – too many times. I commented at the time – “What’s this man actually accomplished?” – and after he departed, the company’s fortunes started improving.
I wonder how many millions the man took home in unearned compensation? Yes, from company to company, you can spot the good CEO’s from the not-so-good.
My rule is, the bigger the corporation, the less I want to see the CEO on TV. Even if they’re out on a golf course or on a cruiseship in the Mediterranean, I’d like to think that out of sight means hard at work in the office. It’s just this thing I have when I see Talking Heads being interviewed by people like CNBC’s Joe Kernan, like why is the red light flashing on the end of this person’s nose?... clown alert, clown alert…
Contrast that with the picture of Johnson & Johnson CEO William Weldon or the previous CEO Ralph Larsen, or Boeing’s CEO James McNerney (but not previous CEO Harry Stonecipher), In Canada, there is Donald Lindsay of Teck-Cominco (TCK) and Dominic D'Alessandro of Manulife Financial (MFC), who I think are good ones.
The 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 Jul. 20: next one is due Oct. 19)
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 Aug. 3: next one is due Nov. 2)
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 Aug. 24: next one is due Nov. 23)
American Express [GICS 40, Dow 30]
(AXP: Yahoo Finance file)
(AXP: StockChart chart)
(AXP: Billcara2 chart)
(AXP: ADVFN Financial Data)
(AXP: Value Line Report Aug. 24: next one is due Nov. 23)
AT&T [GICS 50, Dow 30]
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Billcara2 chart)
(T: ADVFN Financial Data)
(T: Value Line Report Sep. 28: next one is due Dec. 28)
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 Sep. 21: next one is due Dec. 21)
Caterpillar [GICS 20, Dow 30]
(CAT: Yahoo Finance file)
(CAT: StockChart chart)
(CAT: Billcara2 chart)
(CAT: ADVFN Financial Data)
(CAT: Value Line Report Jul. 27: next one is due Oct. 26)
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 Aug. 24: next one is due Nov. 23)
Coca Cola [GICS 30, Dow 30]
(KO: Yahoo Finance file)
(KO: StockChart chart)
(KO: Billcara2 chart)
(KO: ADVFN Financial Data)
(KO: Value Line Report Aug. 3: next one is due Nov. 2)
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 Aug. 17: next one is due Nov. 16)
Dupont [GICS 15, Dow 30]
(DD: Yahoo Finance file)
(DD: StockChart chart)
(DD: Billcara2 chart)
(DD: ADVFN Financial Data)
(DD: Value Line Report Jul. 20: next one is due Oct. 19)
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 Sep. 14: next one is due Dec. 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 Jul. 13: next one is due Oct. 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 Aug. 31: next one is due Nov. 30)
Hewlett-Packard [GICS 45, Dow 30]
(HPQ: Yahoo Finance file)
(HPQ: StockChart chart)
(HPQ: Billcara2 chart)
(HPQ: ADVFN Financial Data)
(HPQ: Value Line Report Jul. 13: next one is due Oct. 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 Jul. 6: next one is due Oct. 6)
Honeywell [GICS 20, Dow 30]
(HON: Yahoo Finance file)
(HON: StockChart chart)
(HON: Billcara2 chart)
(HON: ADVFN Financial Data)
(HON: Value Line Report Jul. 27: next one is due Oct. 26)
IBM [GICS 45, Dow 30]
(IBM: Yahoo Finance file)
(IBM: StockChart chart)
(IBM: Billcara2 chart)
(IBM: ADVFN Financial Data)
(IBM: Value Line Report Jul. 13: next one is due Oct. 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 Jul. 13: next one is due Oct. 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 Aug. 31: next one is due Nov. 30)
JP Morgan [GICS 40, Dow 30]
(JPM: Yahoo Finance file)
(JPM: StockChart chart)
(JPM: Billcara2 chart)
(JPM: ADVFN Financial Data)
(JPM: Value Line Report Aug. 24: next one is due Nov. 23)
McDonalds [GICS 30, Dow 30]
(MCD: Yahoo Finance file)
(MCD: StockChart chart)
(MCD: Billcara2 chart)
(MCD: ADVFN Financial Data)
(MCD: Value Line Report Sep. 7: next one is due Dec. 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 Aug. 17: next one is due Nov. 16)
Merck [GICS 35, Dow 30]
(MRK: Yahoo Finance file)
(MRK: StockChart chart)
(MRK: Billcara2 chart)
(MRK: ADVFN Financial Data)
(MRK: Value Line Report Jul. 20: next one is due Oct. 19)
Microsoft [GICS 45, Dow 30]
(MSFT: Yahoo Finance file)
(MSFT: StockChart chart)
(MSFT: Billcara2 chart)
(MSFT: ADVFN Financial Data)
(MSFT: Value Line Report Aug. 24: next one is due Nov. 23)
Pfizer [GICS 35, Dow 30]
(PFE: Yahoo Finance file)
(PFE: StockChart chart)
(PFE: Billcara2 chart)
(PFE: ADVFN Financial Data)
(PFE: Value Line Report Jul. 20: next one is due Oct. 19)
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 Jul. 6: next one is due Oct. 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 Jul. 27: next one is due Oct. 26)
Verizon [GICS 50, Dow 30]
(VZ: Yahoo Finance file)
(VZ: StockChart chart)
(VZ: Billcara2 chart)
(VZ: ADVFN Financial Data)
(VZ: Value Line Report Sep. 28: next one is due Dec. 28)
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 Aug 10: next one is due Nov 9)
Wrap up:
I had to cut down this WIR, so that I can keep a record intact, but also keep working on my other stuff.
So many projects. So little time. But, at the end of the day, I will get done whatever I have the most fun doing. And, that will keep us connected.
Posted by Posted by Bill Cara on October 1, 2007 11:08:02 AM | Category: Cara Week in Review






















