Well, some of you must be because, apparently, there will be 110 of the S&P 500 components that next week will report an expected +10 pct to +11 pct Y/Y Earnings Growth Rate. That will be the lead cover story to get the People to hang in to what is a collapsing equity market.

‘Goldilocks Lives’ will be the headline. Read all about it.

The other lead stories will be that (i) commodity prices are falling, (ii) interest rates are falling, and (iii) Finance Ministers and Central Bankers of the economically most powerful nations will be gathering to fix what ails us.

A week ago I commented, “I have noticed (an) increasing numbers of stories about foreign profits for US companies. The news seems to me to be written by promoters, not reporters.” Well, nothing kills a good story in equity markets faster than collapsing stock prices, so we are close to the end of that particular storyline.

Oh, there will be the usual stories that the grass is greener in the emerging economies, which are now the engine behind the global economy, yada yada. But that sucking sound soon to be heard around the world will be air escaping from the BRIC Balloon.

A week ago I wrote, “On Friday, there was a lot of media hype that Small Caps were joining the rally. Yes, the Russell 2000 did gain +0.74 pct on the day, but LOST -0.44 pct W/W.” As markets break down, these positive stories disappear, one at a time.

Also, last week I stated, “Without Friday’s rally in US equity markets, the week would have been a loser.” Another week has rolled by, and this time it was a loser through and through. The losses have now mounted up where ten out of ten sectors were down this week, AND over the past two weeks, and 8 of 10 over four weeks.

Meanwhile, in the past four weeks, only the Metals have kept above water (save for a few life-preserver defensive stocks in the Consumer Staples sector (XLP)). That is not good for the Bulls. Long-time members of this community know that when the Metals (and in particular the Precious Metals) leave the floor, the last dance has been played. The party is over.

This week, equity markets all over the world collapsed. The only market that lost less than -2.0 pct was China, The Shanghai index dropped about -1.5 pct, which, although the best, is nothing to call home about, even if Mandarin or Cantonese has been a happy messenger lately. Friday was particularly bad for US-listed Chinese stocks, where the FXI dropped a shocking -6.2 pct on the day! Can’t wait for Shanghai to open on Monday!

The ugly details of this past week, however, can be summed up by the -10.1 pct dive in the Blackstone-managed India Fund (IFN), including a loss of -4.3 pct on Friday.

When you see the rocket-launched FXI and IFN get creamed an average of over -5 pct in a single day, especially a Friday, you want a front-row seat for the fireworks on Sunday night when those domestic markets open. Therein will lie the clue to next week’s trading everywhere.

A week ago, I opined,

“What I think is happening at this point is that the excitement and froth of Asia-Pacific markets is being super-imposed on the psyche of US traders much like, for example, the 2005 hype of real-estate markets in South Florida, California and Las Vegas were being pushed at investors and home-owners in other US markets, as in get in now in these lagging markets before you find you can never afford to. In the bigger picture, I don’t see how the gains in most of the Asia-Pacific markets are sustainable, just like I argued in the summer of 2005 that real estate in South Florida would soon weaken. These economies are growing at a rapid rate, but nowhere close to the growth rate of share prices, which has actually gone parabolic in many of these markets. When the selling starts in global equity markets, I believe it will start with the weaklings, and those happen to be US, Japan, UK and Europe. Actually, the crack will first show in Asia-Pacific markets (ex-Japan), but the serious selling will occur in what I refer to as the weaklings. Those are the markets saddled by potential earnings and credit market “issues.” I feel strongly about this, but I also know that the best tactic is to go with the flow, staying with rising prices until they start to pull-back.”

News alert to traders who haven’t yet clued in: Prices are no longer rising. They are falling quickly in the BRIC markets (the strongest economies), but the most significant capital losses, in the aggregate, have occurred in the US, Japan, UK and Europe (the economies in trouble because of the failings of HB&B). Sell Alerts were flashed across the board, and around the world.

As I say, when prices pull back, particularly to this extent, there is incontrovertible evidence the gnomes of Wall Street are selling.

Mom & Pop on Main Street no longer have much influence in capital markets, so they have not taken the lead in this sell-off. They don’t even comprehend what it is to swap or to switch today’s spot for futures. They just listen to their HB&B financial advisors, like good sheep.

Here we go again; the fleecing of the Middle Class. It happens every four or five years and it is never pretty. As HB&B is in tough this time around, desperate to save their own skin, it could get downright ugly.

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International Economics Review

The following is a very comprehensive report as to the economic situation around the world today. I hope you read it.

Econoday Weekly International Report

Next week’s US econ calendar is quiet. All is quiet on the western front... NOT!

US Economic Calendar for next week.

A week ago, I commented about the hype over US jobs data and retail sales data, “Where is the beef? You know, these spin artists can only stretch the truth so far. CNBC’s new line is “America is open for business,” but (ahem) who is buying?”

Yes, this week, just like happened in the summer of 2005 when at the peak of the real estate cycle they zealously promoted that market in their Crossing America road show, CNBC is up to their hijinks again.

The new road show is promoting the economic health of America, soon to come to your city. Their slogan “America is open for business” is code for “Goldilocks Lives... Don’t panic when HB&B dumps their stocks on the market, and prices collapse. Stay the course.”

It is time to get serious, and realize what is going on here.

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Relative Strength Index (RSI) analysis of the Cara 100 company stocks .

RSI > 70 (12 of 31)

RSI < 30 (6)

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Industry and Cara 100 “Impulse” Review

Applied weekly to major industry groups, the “impulse system”, based on the excellent work of Dr. Alex Elder, gives a sense of market internals. (I apologize for not having the time to take screenshots.)

“Jock” reports:

THIS WEEK saw  2 GREEN industries, and 7 RED, compared to last week’s 30 greens, 0 Reds – the largest negative weekly move of the year!
 
(insert weekly impulse chart)
 
Of the Cara 100 components, 25 are green (last week: 64) , 35 red - (last week: 12):
 
(insert Cara 100 tables)
 
The component stocks of the major indices, on a weekly basis,  were (green/red):
 
(insert table: index components green-red)
 
The DJIA, S&P500, and Russell2000 all turned from GREEN to RED; the NDX, Nasdaq Comp, and Wiltshire 4500 turned from GREEN to neutral.
 
The CRB commodity index stayed GREEN.  GOLD & SILVER stocks stayed GREEN.
 
The US dollar index moved from neutral to RED, and hit another multi-decade low.
 
The Hang Seng stayed GREEN while the Shanghai Composited turned neutral.  
 
Bottom line: This week’s was the largest negative turn of the year. Components of all indices turned sharply RED. Last week’s Russell 2000 was 13/1 green/red; this week’s ratio was 3/10 !
 
Most of the damage was done Friday, with all 31 major industry groups down, and closing near their daily lows.
 
NOTE: Alex Elder’s “impulse system” considers both the “inertia” in prices (where prices stand vs. their 26 wk. moving average) and their  “momentum” (the rate their 13wk. and 26wk. moving averages are converging or diverging).
 
When both indicators (EMA and MACD-H) tick up, the reading is “green”; when both decline, it’s “red”. Applied weekly to major industry groups, indices, and their components, a sense of market internals emerges.

Sorry Jock. I hope to have this new screenshot routine figured out next week.

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US Equity Markets Review

DJIA (interactive) chart

“Traders are taking note of a possible double top.” (WIR 39, Sept. 29)

At the close of this week, the DJIA index plunged Friday -2.64 pct, closing at 13522, which, week over week, is a loss of -571 points (-4.05 pct). I can’t recall a hit like that for many years.

A week earlier, I stated, “The media has been in a full-court press to try to hype this market higher... General Motors (GM) has had three weeks of huge gains (+5.04 pct +4.09 pct and 11.62 pct), including a gain of +6.63 pct on Friday alone. So, GM has had a huge impact on the Dow 30. The broad market indexes are now well above both the 50-day and 200-day Moving average technical lines of resistance. But, the Daily, Weekly and Monthly RSI-7 data continue to show the market is over-bought. With earnings season coming up, we have to watch the post-quarter trading for signs of a market sell-off. As we saw with JC Penny (JCP), Boeing (BA) and others, earnings disappointments and negative news of any kind are being met with major sell-off’s.”

So, we did see it coming.

I have pointed out for several weeks that “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.”

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NASDAQ Composite (interactive) chart

The Nasdaq Composite is stronger than the DJIA because it is not weighed down by Financials. But, this week the sell-off also hit the Tech stocks. The Nasdaq Composite dropped by -2.87 pct.

Semi-conductors (SMH) sold down a huge -5.49 pct a week earlier, and after a bit of a recovery then sold down -2.97 pct on Friday.

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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 US equity market.

This week it was a case of zero sector ETFs up,10 down. That's consistent with the DJIA, of which 3 components were up, 1 flat and 26 down. Friday swung the numbers from losses to serious losses.

Table 1: Cara ETF List is sorted by price performance Week over Week (W/W), i.e. 1W%N.

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
XLP	27.73	-0.37	-1.32%	-1.94%	-0.61%	0.25%	5.52%	0.51%	1.39%	8.96%
SMH	35.63	-1.09	-2.97%	-1.95%	-7.33%	-7.65%	6.14%	-11.85%	-1.08%	5.20%
IYH	70.41	-0.91	-1.28%	-2.63%	-2.72%	-0.45%	5.94%	0.06%	-0.87%	5.63%
XLB	42.10	-0.59	-1.38%	-2.86%	-1.89%	1.27%	21.64%	-2.55%	8.84%	28.12%
IYZ	32.75	-0.44	-1.33%	-3.25%	-4.18%	-3.25%	10.42%	-6.51%	2.15%	15.60%
XLE	74.45	-3.57	-4.58%	-3.52%	-0.79%	-1.65%	31.58%	0.13%	20.16%	34.34%
XLI	39.70	-1.24	-3.03%	-3.80%	-4.52%	-2.29%	12.69%	-4.31%	8.56%	15.31%
XLU	39.62	-1.02	-2.51%	-4.28%	-3.13%	-1.74%	7.60%	-3.72%	-3.95%	11.95%
XLY	36.00	-0.78	-2.12%	-5.21%	-5.19%	-2.96%	-6.54%	-9.93%	-7.95%	-1.32%
XLF	32.64	-0.95	-2.83%	-8.03%	-8.75%	-5.66%	-11.59%	-9.53%	-11.62%	-7.19%

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.

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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)

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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) dropped -3.52 pct W/W, including a smashing -4.58 pct on Friday. Yet, Crude Oil contracts were up +5.1 pct W/W.

No, I never saw $90 crude oil coming.

Yes, Exxon (XOM) dropped -3.1 pct on Friday, so where are the Talking Heads who were telling the audience this stock was going to zoom past $100. NOT!

Last week, I wrote the following:

I like the (Energy) sector based on current period corporate cash flow and earnings per share metrics, but believe it is over-bought here as many of the major companies are guiding lower for these metrics going forward. So, when these stocks drop in price at all, triggering Sell Alerts when Daily or Weekly RSI-7 values fall below 70 (depending on your time horizon, ie, short or intermediate), I am quick to take profits.

The operative word is “profits”, which are bound to happen when you buy in the Accumulation Zone (on Buy Alerts that are triggered when the Daily RSI-7 period value moves up above 30) and sell in the Distribution Zone with a Sell Alert.

I am often asked if I always Buy on a Buy Alert or Sell on a Sell Alert, and the answer is “It depends”. If I am trading a Fund, comprised on many component issues, I do. I also do if I am trading the stock that has few peers, like a Whole Foods Market (WFMI). But whenever the stock has several correlated peers, like say the Las Vegas casino operators, or the Big Oil companies or Large Cap Goldminers, for example, I will look – at least for a day or two -- to the weight of the technical evidence in that industry group.

I say this often; a technical indicator is just an indicator. It is an aid to decision making, not an absolute scientific method of trading. But the use of technical indicators provides a disciplined approach to trading, which is a far superior tactic than say reacting to news and stories.

Moreover, when you see technical indicators moving in one direction and the news and stories doing just the opposite, you should ask (more) questions and give the matter more thought. Your decision making improves – albeit your general level of skepticism elevates – when you begin to see through the veil of the so-called “news” and story info.

Whenever prices rise or fall, particularly when a trend or cycle reverses, there are reasons. You may not become aware of them for a long while, but your job is not to figure out the “why”, but only the “what” is happening in your portfolio.

When you are long, you want to be holding the stocks of what you believe to be quality companies or sector/industry Funds (like ETF’s) that are favored by the major drivers of market prices. When the trends and cycles of those prices start to reverse downward, you start to sell. This takes discipline, which the simple RSI technical indicator system provides.

Part of the reason that share prices in the Energy sector have been rising around the world is that Big Oil stocks in China and Brazil are on a tear. But, is that due to improving metrics across the globe or to the froth and enthusiasm of traders in China and Brazil chasing the stocks of favored sectors and industry groups, particularly the well-recognized names of the large caps?

I think a lot of what is going on today is that traders in the major economic markets (US, UK, Europe and Japan) see the cups overflowing in these other markets (ie, China and Brazil) and transfer that image onto the locally-based companies. If so, take heed because the economy in these leading G-7 markets is likely to slow in 2008 and may in some instances fall into recession, along with growing inflation. That combination will hurt the top and bottom line of the Big Oil companies that primarily operate in those domestic and regional economies.

This week in the Oil Patch, PetroBrazil (PBR +6.7 pct) and China National Offshore Oil (CEO +8.5 pct) were the big winners. Who else but? A week earlier, PBR was up +4.4 pct. There seems no end to the frivolity – until there is.

For the past year (52-weeks), PBR is up +99 pct and CEO is up +118 pct. The Canadians I follow (IMO, SU and ECA) are up between +42 pct and +56 pct. US Big Oil (XOM and CVX) gained between +38 pct and +43 pct. These stocks have had their run. Expecting more is to be a market pig, and we know that pigs get slaughtered when going to the market. So, be wary of becoming a pig.

As I said four weeks ago, and repeated the last three, “Smart traders will be watching for a Sell-Alert to realize their gains, and move into cash (or into over-sold but recovering stocks).“ This week, those Sell Alerts came in.

In any massive selling wave, even the stocks of the best quality companies get tossed. So bottom-picking is not advised. What until there is a bit of a recovery in these stocks before buying new positions. Use the Accumulation plus Buy Alert system (ie, Daily and/or Weekly RSI >30 depending on your time horizon) before you venture back in.

It could be a few months, maybe longer.

Btw, on Friday, as Crude Oil dropped -1.24 pct, wealthy oil trader Boone Pickens told his followers at CNBC that he thinks Wind is the next big thing. So, Boone apparently is an Energy guy and not an oil man. Hmmm, reminds me of Enron, which all of a sudden became an energy trader, not a gas producer.

I am always nervous when people with proven track records decide to switch horses -- like a well-known Canadian Fund manager who switched from uranium to moly. :-)

Table 2: Senior oil & gas equities

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
SU	104.22	-1.82	-1.72%	5.18%	9.06%	8.65%	41.01%	8.74%	30.42%	35.54%
IMO	49.17	-1.18	-2.34%	0.74%	1.28%	-1.93%	37.89%	-0.06%	27.52%	50.28%
ECA	65.15	-1.86	-2.78%	0.34%	4.06%	4.06%	43.69%	0.70%	22.28%	35.50%
CEO	178.50	-14.54	-7.53%	0.25%	8.81%	15.30%	89.35%	45.85%	107.24%	111.82%
TOT	79.14	-1.73	-2.14%	0.18%	1.60%	-2.82%	11.51%	-6.14%	9.01%	16.93%
XOM	92.14	-2.91	-3.06%	-1.43%	0.85%	-0.18%	24.33%	-0.16%	18.95%	32.14%
CVX	89.27	-3.15	-3.41%	-2.34%	-3.30%	-5.87%	25.79%	-4.01%	16.22%	36.00%
STO	32.88	-0.82	-2.43%	-2.78%	1.48%	-5.03%	27.99%	1.83%	19.13%	29.35%
PBR	80.71	-5.74	-6.64%	-4.01%	2.40%	10.41%	61.97%	14.91%	56.75%	86.87%

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Integrated Oil & Gas - Canada

Oil & Gas Exploration & Production -Canada

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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) lost -2.86 pct on the week to close at 42.10.

Two weeks ago, I set you up to take advantage of the drop in prices last week when I wrote:

The market is frothy. How I know this is that Brazil’s CVRD (RIO) has gained +11.4 pct in six sessions. Besides, two weeks ago I wrote, “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 in share prices must be realized or else they might be given back.

(Last week I added)What I was trying to do was set up your approach by keeping your finger close to the Sell Button, awaiting a Sell Alert. Then if, as and when it happens that Daily RSI-7 drops below 70 (intra-day basis if you have these systems), SELL. Lock in your gains. These gains in your portfolio will produce Buffett-type performance results for you. Is that not what you always dreamed about? So, why buy the stories of some other Dream Merchant? This is your portfolio, your life; so, manage it, live it.

And if a few of these stocks happen to rally a further +5 pct or +10 pct, forget it. Realized gains are crucial to long-term performance. Unrealized gains often turn into realized losses, which is the sole reason why the huge majority of traders (ie, about 80 pct) do not keep up to market average performance.

The performance tables I use happen to come from data from Investertech.com that is often incorrect, so it pays to double check the data. For example there are two 2:1 share splits in the RIO stock that are unaccounted for. The 52-week gain for RIO is not +50 pct, but really +200 pct, and that compares favorably to Rio Tinto’s (RTP) gain of +86 pct and BHP Billiton’s (BHP) gain of +113 pct. These three, along with the Zug Metal Men Xstrata (XTA.L and XTA.S) that trades on London and Swiss markets, are the mega-cap gorillas of mining. Their share prices reflect the increase in corporate financial strength and performance metrics, but the question now is, for how much longer will metal prices boom, and share prices zoom, before they hit doom!

Long-time members of this community know I have ridden the metals Bull for a couple years, and you may even be surprised that in the past couple weeks I started talking about a metals commodity price bubble that would sometime come to an end. To repeat, what I am doing here, just as I did for the Energy sector, is to say these stocks are in the Distribution Zone, and will soon trigger Sell Alerts. It will pay handsome returns to stay close to the Sell Button.

There were many Sell Alerts this week. After the return of my Windows system, I shall publish the daily tables sent to me by David. In a couple weeks, you will see how much capital would have been saved merely by hitting the Sell button at the appropriate time.

Trading involves just two steps: strategy (in finding quality for your portfolio) and tactics (in determining when to buy and sell the prices). The rest is noise.

Table 3: Senior metals and steel equities:

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
NUE	59.13	-1.10	-1.83%	5.19%	1.88%	-0.62%	8.50%	-3.27%	-11.26%	8.10%
MT	77.63	-1.80	-2.27%	-0.99%	-0.47%	2.00%	90.27%	17.60%	45.37%	93.11%
AA	37.44	-0.94	-2.45%	-1.81%	-3.48%	0.11%	27.65%	-16.09%	9.06%	36.00%
BHP	82.64	-3.03	-3.54%	-2.49%	3.92%	13.94%	112.61%	22.36%	67.80%	96.25%
TS	51.11	-1.03	-1.98%	-3.96%	-4.22%	-1.43%	5.34%	1.13%	8.03%	35.53%
GGB	28.30	-1.55	-5.19%	-5.67%	-0.28%	13.20%	72.35%	1.07%	40.10%	92.78%
RIO	33.26	-2.23	-6.28%	-7.41%	-0.89%	9.23%	15.41%	-35.80%	-19.04%	36.09%
TCK	48.25	-0.82	-1.67%	-8.29%	-4.38%	0.48%	-30.32%	-2.80%	-36.50%	-31.22%
RTP	341.14	-13.36	-3.77%	-8.39%	-2.13%	3.82%	67.14%	9.89%	38.62%	62.91%
PKX	159.35	-11.31	-6.63%	-14.44%	-15.77%	-12.45%	100.62%	9.49%	60.41%	136.07%

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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:

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
GE	40.04	-0.75	-1.84%	-2.41%	-4.14%	-2.93%	5.45%	-1.65%	14.40%	13.49%
ERJ	47.94	-1.43	-2.90%	-2.54%	0.02%	8.83%	17.56%	-1.68%	0.23%	12.64%
ABB	27.14	-1.02	-3.62%	-2.62%	0.63%	6.10%	52.30%	10.37%	46.94%	91.80%
BA	93.90	-3.04	-3.14%	-2.89%	-8.17%	-8.47%	5.30%	-8.37%	0.98%	13.94%
FDX	103.32	-1.99	-1.89%	-3.90%	-2.58%	-0.75%	-5.88%	-11.84%	-3.71%	-10.37%
UTX	76.00	-1.43	-1.85%	-5.38%	-5.99%	-4.32%	21.00%	-1.53%	13.06%	16.92%
HON	58.32	-2.37	-3.91%	-5.49%	-2.51%	-0.63%	29.31%	-4.36%	18.87%	40.26%
MMM	86.62	-8.11	-8.56%	-8.02%	-9.63%	-5.52%	10.68%	-4.99%	11.65%	13.38%
CAT	73.57	-4.09	-5.27%	-8.38%	-8.42%	-5.87%	20.29%	-15.42%	7.21%	6.59%

XLI (Industrials) lost -3.80 pct this week to close at 39.70.

ABB ($27.87 +3.3 pct) was the winner on my monitor. Here is what I wrote last week:

A week ago I wrote, “Two months ago (Aug 16), ABB hit an intra-day cycle low of $20.42. (Today’s price represents) a move of +36.5 pct, which is an extreme one for a company with a market cap of over $63 Billion. (But) when you see a stock with M-W-D RSI-7 (smoothed) levels of 80.5/76.9/83.2, then you ought to have fairly tight stops.

ABB dropped over -3.00 pct on Friday. On the week, GE dropped -2.4 pct, but that was nothing like other Dow Industrials, CAT -8.4 pct, MMM -8.0 pct and HON -5.4 pct.

South Korea’s steelmaking giany PKX dropped -14.4 pct W/W, so there is clearly some froth being removed there. And Big Miners Rio Tinto (RTP -8.4 pct) and CVRD (RIO -7.4 pct) were also hammered.

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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:

Two weeks ago, I wrote:

(When) XLY zoomed a week ago by +3.4 pct W/W, I stated,

”I attribute much of the strength to the hype this week that America can reflate its way out of problems, that a 110,000 jobs number is “a winner for Goldilocks”, and other “greatest stories never told”. All of it nonsense. A week ago, the big losers were Whirlpool (WHR), Starbucks (SBUX) and JC Penny (JCP). This week, pump, pump, pump… WHR was up 5.8 pct, SBUX +2.4 pct and JCP marvelous darling at +8.4 pct W/W. Simply put, the markets have failed as an effective pricing mechanism. Mr. Market has allowed the b.s. artists of Financial Entertainment TV to take control. Discover Financial Services told us this week that the US consumer is feeling yummy and well-heeled, and Mr. Market then waved the green flag. That was quite a run on Tuesday and Wednesday morning. Next we’ll hear of the inventory problems and the write-offs and the drivers will be red-flagged.”

Imagine to my shock and horror (NOT and NOT!) that Whirlpool (WHR -5.32 pct) and JC Penny (JCP -9.34 pct) collapsed this week, red-flagged along with Brunswick Corp (BC -7.64 pct). And, do you really believe it when a Talking Head explains pull-backs like that as merely “consolidating gains”? More likely, I say, your chain is being yanked.

No, Consumer Discretionary is not going higher because the American consumer has insufficient money or access to credit.

XLY dropped -5.21 pct W/W to close at 36.00. It’s a pretty ugly picture and I pointed it out at the end of July. When you happen to see growing theft at gas stations and $5 purchases, you know people have no money.

The stocks that got hammered this week in this sector were JC Penny (JCP) -11.1 pct, Brunswick Corp (BC) -10.6 pct and Ebay (EBAY) -8.0 pct.

Table 5: Senior consumer discretionary equities

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
NKE	63.33	0.07	0.11%	0.29%	4.94%	10.60%	29.69%	5.85%	18.42%	41.68%
SBUX	26.10	-0.56	-2.10%	-0.91%	-2.76%	-4.99%	-25.96%	-5.81%	-15.20%	-30.92%
WHR	86.14	-2.28	-2.58%	-3.51%	-8.64%	-6.58%	1.75%	-26.16%	-3.95%	-1.68%
DIS	33.81	-0.97	-2.79%	-4.68%	-4.68%	-2.28%	-1.14%	-1.91%	-3.18%	7.03%
TM	106.40	-2.58	-2.37%	-5.53%	-9.58%	-7.53%	-21.36%	-13.99%	-14.31%	-7.33%
CCL	47.25	-0.99	-2.05%	-5.93%	-6.99%	-3.98%	-7.26%	-0.34%	1.50%	-1.58%
EBAY	36.72	-1.38	-3.62%	-7.97%	-5.24%	-5.85%	21.71%	9.61%	10.64%	20.47%
BC	20.00	-0.60	-2.91%	-10.55%	-17.39%	-10.59%	-37.34%	-39.02%	-34.17%	-38.42%
JCP	55.35	-1.56	-2.74%	-11.14%	-19.44%	-16.74%	-29.09%	-27.74%	-31.47%	-25.59%

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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

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
KO	58.76	-0.60	-1.01%	1.66%	1.19%	3.91%	20.96%	9.42%	13.55%	30.84%
MO	70.50	-0.39	-0.55%	0.63%	1.35%	2.86%	8.60%	-0.18%	1.59%	17.15%
DEO	90.30	-1.52	-1.66%	0.41%	-0.15%	4.12%	13.54%	6.52%	8.51%	25.09%
PG	70.80	-0.10	-0.14%	-1.26%	-0.04%	2.03%	9.70%	12.76%	11.27%	13.28%
PEP	70.40	-1.48	-2.06%	-1.92%	-4.53%	-1.46%	12.24%	7.53%	6.62%	12.07%
WAG	37.85	-0.52	-1.36%	-2.50%	-3.69%	-16.65%	-17.84%	-16.21%	-17.63%	-13.68%
BUD	51.31	-1.28	-2.43%	-2.95%	-0.56%	1.46%	4.25%	2.35%	-1.52%	6.90%
ABV	75.94	-4.07	-5.09%	-3.80%	-5.84%	4.80%	54.66%	0.13%	28.39%	66.90%
WMT	44.98	-0.91	-1.98%	-4.42%	-0.86%	1.70%	-5.40%	-7.81%	-6.95%	-7.24%
WFMI	47.25	-0.81	-1.69%	-8.25%	-11.18%	4.93%	3.89%	17.89%	4.42%	-26.97%

XLP (consumer staples stocks) lost just -1.94 pct W/W, closing at 27.73. That loss happens to be the best performance of the ten sectors. As I wrote previously, the stocks in this "defensive" sector have had a rather impressive run in the past month.

Wal-Mart (WMT) dropped -4.4 pct and Whole Foods (WFMI) -8.3 pct was also a loser, while Coca Cola (KO +1.7 pct) was still a beneficiary of the foreign profits and falling $USD story line.

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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

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
BMET	45.99	0.06	0.13%	0.24%	0.31%	0.48%	10.90%	1.05%	8.47%	41.68%
AET	52.85	-1.00	-1.86%	-0.55%	-1.82%	0.97%	23.25%	4.84%	17.37%	32.42%
BMY	29.32	-0.26	-0.88%	-1.51%	-2.56%	1.10%	11.14%	-8.46%	3.17%	18.95%
NVS	52.59	-0.70	-1.31%	-1.74%	-3.15%	-4.56%	-9.55%	-3.22%	-8.08%	-12.48%
JNJ	64.23	-0.67	-1.03%	-2.59%	-3.05%	-1.37%	-3.27%	2.95%	-1.09%	-5.60%
GSK	50.76	-0.50	-0.98%	-2.80%	-6.12%	-6.40%	-5.67%	-4.17%	-14.11%	-9.29%
DNA	75.00	1.53	2.08%	-2.91%	-4.19%	-5.52%	-8.31%	-0.23%	-8.95%	-10.66%
AMGN	55.95	-0.76	-1.34%	-3.82%	-1.57%	0.96%	-18.20%	0.68%	-10.22%	-23.42%
UNH	47.45	-0.65	-1.35%	-4.51%	-0.52%	-4.93%	-9.74%	-8.56%	-8.84%	-6.32%
PFE	24.07	-0.47	-1.92%	-4.71%	-5.90%	-2.11%	-8.44%	-3.68%	-11.08%	-13.04%

IYH (healthcare) lost -2.63 pct this week to close at 70.41.

The losers included Pfizer (PFE) -4.7 pct and United Health (UNH) -4.5 pct.

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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

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
HBC	93.90	-2.89	-2.99%	-3.07%	-4.87%	1.45%	1.00%	0.25%	1.54%	-0.86%
JPM	45.02	-0.88	-1.92%	-3.84%	-5.38%	-4.48%	-6.34%	-7.40%	-13.57%	-3.95%
CS	65.80	-2.00	-2.95%	-4.47%	-5.47%	-0.89%	-6.15%	-8.56%	-11.49%	10.70%
UBS	54.52	-1.69	-3.01%	-4.85%	-5.59%	0.87%	-11.19%	-8.31%	-12.33%	-12.16