Better still, how long will it take Humungous Bank & Broker (HB&B) to admit that the United States is mired in stagflation.

The yield on the 10-year US Treasury instrument has fallen in a month from 4.34 pct to just 4.00 pct. In mid-week, the yield on the 2-year Treasury was under 3.00 pct. Can the US recession be far off, as the bond market indicates, or have bond traders just mispriced inflation risk, or both?

One look at the inflation-indexes bond (TIPS), which is up with a bullet since the end of June, shows that traders are, in fact, betting on inflation, with the TIPS outperforming the important 20-year+ Treasury Bond index (TLT). But, one look at the Daily and Weekly price charts for the TLT Bonds also shows a rocket move from the end of June.

Two things happened at that point. First I noted in July that the US retailer stocks (RTH) absolutely hit the wall -- not one or two, but almost the whole group. Second, the first word was coming out about certain hedge funds losing billions in the credit markets as buyers were balking at the lack of marked-to-market asset collateral behind these Structured Investment Vehicles (SIV’s).

My take on it, in retrospect, is that HB&B insiders saw the writing on the wall, spelling tight credit and Recession to come, and they started to bail out ahead of the clients who were left on their own for a couple weeks to try to figure out what was happening. They bailed on their own stocks first as the $XBD, $BKS and XLF Weekly charts clearly show. It was the end of second week of July to be specific. Since then the whole complexion of the market changed.

After the July near-panic sell-off, HB&B spent from mid-August through September painting lipstick on pigs, ie, the mortgage companies and housing stocks and even the shares of their own group that they told us were on the way to recovery. But by mid-October, we discovered HB&B had changed their tune and these pigs had been on their way to market, ie, to the slaughter house.

When you see what happened to the mortgage companies this week (CFC -21 pct, FNM -25 pct and FRE -37 pct W/W), and that’s after being smashed from mid-October, you have to think that some of the comments that came from HB&B earlier in the summer in support of these housing and mortgage companies were outright criminal. HB&B had to have known it was going to be a massacre once the SIV buyers were able to peek beneath the covers.

The market trend has now changed, and trading has become volatile. We on the Buy-side are now day traders, like HB&B, because that’s what happens during trend junctures.

But, think about this, it is really the bigger picture we need to focus on. We now know that the three biggest mortgage companies in the world, Countrywide, Fannie and Freddie are down in price YTD -77 pct, -46 pct and -61 pct, and we can assume that nobody knows if any of the three are actually solvent. Yet, there on Friday in the US, HB&B was cranking up the market for a year-end rally. Wow!

Like it or not, traders have to go with the flow. Short-term, it now appears that most of the international markets are ready to carry through with an HB&B-inspired year-end rally.

If it were just the US markets, on the basis of the foregoing I might hesitate and suggest the rally will be narrowly focused, but almost all the equity markets seem ready to follow. In this WIR, I added 16 more international market charts from stockCharts.com for you to be able to see how the big picture changed on Friday, and probably next week.

Now, what could possibly happen to drive these market indexes higher through into the 1Q08? It could be that Crude Oil prices could come down sharply, with the Bulls jumping on the lower cost = greater corporate earnings story line. But, then the Bears would growl back that rapidly falling oil prices could only mean that the economy is going into recession and that corporate earnings will hit the wall, perhaps slowing, perhaps falling.

So I think the focus will remain on the interest rates and the $USD price. Right now both are falling, which indicates a recession on the horizon, but should the $USD continue to fall, oil prices will not come off, and will probably continue lifting, inviting more price inflation, which will soon impact wage inflation because too many people are being financially squeezed at this point.

So, I conclude the US authorities have no option but to support the $USD now, which they can do by not dropping the Fed rate further, and by taking steps to squelch speculative trading, which they can do by raising margin requirements at the broker-dealers and on the commodity exchanges. For that to work, though, the other G-7 authorities, at least, would have to comply. If not, more hot money will run into those markets, further driving up their currencies, and depressing the $USD. So this is a complex situation.

Time buys nothing for these central bankers because the asset-backed securities in the credit markets are having to be marked to market, which is often to zero, and these holders, mostly HB&B and major pension funds, will have to write them down, possibly as I say to zero. But, whether the hit is taken now or in a couple months doesn’t mean much because traders are always early on these things, and, when uncomfortable, they will sell. Basically it was the start of October when traders started taking action by selling holdings they were most uncomfortable with, which were the Financials, Consumer Discretionary, Technology, Industrials and Telecom. In November, the Energy and Utilities started to look shaky. So far, only the Consumer Staples sector has held up.

So, after the July-August sell-off, then a recovery wave to lower high levels, followed by the October-November sell-off to lower lows, it appears the market is now ready for another recovery rally, probably to lower high levels again. This Bear market rally, then, in my opinion, will just help HB&B and their premier accounts get off more paper. Those of the rest of us who are in denial, and cannot also sell into this strength, will ultimately take the biggest hit.

Although I cannot give you a specific date, I have seen in similar situations in years past where the Bulls would try to muddle through by what I refer to as The Rolling Bear, which is simply individual sector, group and individual stock rotation, over and over without taking the whole market down until the gnomes have offed their positions.

I don’t like to say this, lightly at least, but The Rolling Bear scenario needs the complicity of all the major proprietary trading desks at HB&B. What I am referring to in concept is a series of HB&B broad promotions followed by selective Bear raids intended to bilk the public in those stocks or groups. How this is done is simple: After the promo has been working for a month or so, load up on long put options at high prices and write short puts at lower prices. Then, at the anointed time, at say 3 pm, sell the stock, group or sector to kick off the public panic. With sector and industry ETF’s today, that is really easy.

Do I think this happens? I know it happens, and I’ll give you an example. But first let me say that it typically happens when HB&B and central bankers get squeezed, as they are today.

In the business of banking, there is one rule above all that matters: protect the firm’s capital at all costs... before the interests of individual officers and directors, before friends and family and certainly before clients’ interests.

Millions of registrants and former registrants in the securities industry have had it drilled into them, from Day 1 on the job, the rule of Know Your Client, which is to say, never let the client screw you. When times get tough -- I mean really tough -- what do you think desperate people in the financial services industry do? Well, we know what they do at the best of times. The regulators publish records of investigations and prosecutions. But, I’m talking about when the whole industry is in tough... You can only imagine the back-room deals.

In 1981-82, I travelled to and from my country home 75 miles from Toronto in an old Budd railroad car that made one trip into Union station and one trip back, daily. Our dayliner served perhaps 30 commuting senior traders, money managers, HB&B executives, securities lawyers, etc. On the way in we would read our papers and prepare for the day. The trip home was our bar car, where we always had a designated buyer of the beer, and we stood together jammed on the train’s rear platform talking shop. I learned a lot that way.

I learned, for example, before any of my firm’s officers and directors who I spoke to the next day, that we, Canada’s biggest broker-dealer, had closed a deal to buy one of the other largest firm’s on the Street. I’ll leave it at that, but you get the picture.

One evening, a couple of the fellows on the train told us they had been in conference calls that day with industry leaders out of New York and Boston where money was being lined up to paint the market the next morning with size bids. This involved multiple financial institutions. Let’s call it a planned Bull raid.

This was mid-August 1982 when the Bear market in the US had dragged on longer than Canada’s, which had been over in June. US trading volumes had been pathetic, the Dow was under 800, the clients didn’t care to put in a bid, and brokerage houses were shriveling to nothing.

Then suddenly, the next day after I was told this HB&B intervention would happen, all hell broke loose. The tape showed huge blocks one after the other in the most important stocks. Volumes more than doubled. And that, my friends, was how the Death of the Bear was engineered by market insiders, the supposedly lily-white HB&B crowd, the ones who preach transparency, but are anything but transparent.

Yes, these are the same people who tell you we have a level playing field, and have set the rules to penalize anybody (but them) who do wash trades or organize syndicates for the buying and selling of securities with the intention of manipulating prices.

This stuff has gone on for years, but as long as the Sell-side controls the capital markets by their playing all sides of a trade, it will always go on. They control the liquidity. They control the trade.

What really ticks me is that the leaders of HB&B and their people who run central banks actually believe that the capital market system can only function properly if they run it, and run it that way. The faulty premise is that we need debt, and that they have the exclusive right to provide it.

However, it is my assertion that with the principles of “full, true and plain disclosure” and “best price discovery” at work helping us, these people cannot beat the very simple and objective Relative Strength Index and Moving Average Departure Analysis technical indicator systems I offer you. I believe that this approach, combined with holding long positions, when indicated, in only the highest quality companies in the marketplace, gives us the edge.

That’s what we are fighting for, isn’t it? To keep our risk to a minimum?

Well HB&B have a job to do too. Their job is to create securities that pass the risk from them and their clients to us. Most independent traders simply don’t understand that fact.

But HB&B has been legislated with the exclusive authority to be our asset safekeeper, our advisor, our broker and our salesperson. We are now talking layers of conflict of interest. So, one way or another, HB&B does get to pass the risk from their clients and themselves to us. It is up to us, then, to remain independent and objective so we can reject their moves, ignore their speeches, and simply stick to the common sense business of buying quality at low prices and selling it at high prices.

Now and then, which happens to be now, the Sell-side has gotten into trouble. It seems that without schemes like their Plunge Protection Teams (PPT), Dark Pools, off-balance sheet transactions and transactions back-dating, these people still cannot make the money they feel entitled to, so they have to turn for help to the governments and the central bankers who have control of the People’s money.

This is all too much really.

From general observation, I suspect that the People now are catching onto the reasons why it is harder getting to the end of the month without being a dollar short, or why their portfolios are not getting ahead, so I am going to wrap this up by saying that I can see light at the end of the tunnel. The financial system as we know it is unwinding, and in the process I believe that major financial institutions will fail and prices will become massively bearish, or inflated to meaningless levels.

Today the number two of the Swiss National Bank, the central bank, responsible for the monetary policy of Switzerland and issuing the Swiss franc banknotes, said that the credit crunch in the US will generate much more damage next year and the situation appears to be extremely fragile. Philipp Hildebrand opined that the second wave of the crisis in the credit markets is beginning to surface now and this one will be more disrupting than the first one from July. He says there are no signs of a recovery in the US housing  market; on the contrary there will be another downturn and that the correction is the most severe of any since  the second world war.  A correction could cost the US economy about 1000 billion dollars, according to Hildebrand.

Listen to this qualified opinion and not to some salesperson on Financial Entertainment TV. And please don't get hung up by negativity or by wanting to shoot the messengers who have important things to say. Pragmatism is the bottom line.

The good news is that the system will never break because life must go on. There will be a new bull market starting in a year or two, some new financial institutions, new Buy-side to Buy-side real-time trading systems, and wiser investors come out of this mess.

We will all know who to blame for the extreme prices to come in this Bear market, and his first name starts with Henry.

It may take years for the shake-out of the financial services sector from having total control of our capital markets, but the process has begun. I, for one, couldn't be happier.

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International Economics Review

The US holiday is over. HB&B and the People are back to work tomorrow.

US Economic Calendar for next week.

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

The strong rally on Friday moved the market from a very over-sold condition to what I think may be the last stand for the Bulls.

RSI > 70 (0)

RSI < 30 (10)

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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. (Screenshots will return after I get a new webmaster/techie)

“Jock” reports:

THIS WEEK saw  1 GREEN industry (tobacco) and 23 RED, compared to last week’s 0 green, 20 Red.
 
(insert weekly impulse chart)
 
Of the Cara 100 components, 6 are GREEN (last week: 14) ,  56 are RED - (last week: 52) Teck Cominco is RED, but does not appear below for lack of historical data:
 
(insert Cara 100 tables)
 
The component stocks of the major indices, on a weekly basis,  were (green/red):
 
(insert table: index components green-red)
 
ALL major US stock indices (DJIA, NDX, S&P500, Nasdaq, Russell2000, Wiltshire4500) stayed RED this week, as did Shanghai.  Hong Kong turned RED; Bombay stayed neutral.
 
The CRB commodity index fell to RED. The US dollar index fell to RED, and a new all-time weekly closing low. GOLD & SILVER stocks stayed NEUTRAL.
 
BOTTOM LINE: This week’s damage wasn’t large, but it was consistent across the board. Among all the indices I’ve followed, only Bombay, and precious metals stocks are neutral. ALL else is RED. All index components saw less GREEN, and more RED.
 
Jock
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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.

For newbie traders, I do recommend Dr. Elder’s books, and I hear from many of you that his boot camps are well worth the time and money. And if you are interested in learning more about technical analysis, I recommend all the work done by Martin Pring.

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US Equity Markets Review

DJIA ino.com chart

DJIA stockcharts.com chart

“Traders are taking note of a possible double top.” (WIR 39, Sept. 29, DJIA=13,895.63)

The Dow 30 closed the week at 12,980.88, supported by XOM (+4.5 pct W/W) and MMM (+3.9 pct W/W). The Friday over-sold rally was led by some Financials, AIG +3.3 pct but -6.9 pct W/W, C +3.2 pct but -8.3 pct W/W, GM (Ditech) +2.9 pct but -9.9 pct W/W, AXP +2.4 pct but -4.5 pct W/W, and JPM +3.1 pct but -3.6 pct W/W.

Are you starting to get the picture now that the rally Friday was a bounce off extreme losses earlier in the week before the Thursday holiday?

So, the Bull has received the fatal blows in July and October, but is still staggering.

btw, I see somebody here has referred to this phenomenon as the Dead Bank Bounce. Cute.

As you know, I have pointed out for several weeks now 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.”

You may have a month to do this selling. Being day traders now, we will have to watch and see how the market plays out.

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NASDAQ Composite ino.com chart

NASDAQ Composite stockcharts.com chart

“Traders are taking note of a possible double top.” (WIR 39, Sept. 29, Nasdaq=2701.5)

During this shortened week, prices were falling until the holiday on Thursday, and then rallied as I expected on the Friday to close at 2596.60, down -1.54 pct W/W. Nasdaq prices still have a fairly firm under-pinning, although growing weaker, so I think the Tech and small cap stocks will participate in the present rally.

The Nasdaq Composite closed a week ago at 2637. I opined at the time that didn’t see anything that week to change my bearish outlook from the prior week, which was that “this index is likely to drop quickly to the 2400 level where upon there will be some gathering of the remaining Bulls to thwart a collapse below 2350. That 2350-2400 level is where I believe the next big fight will be.” Now I think we’ll see a lift, but not for long, and this 2350-2400 level will be tested again in December.

Here is the list of the ten highest-weighted non-financial stocks in the Nasdaq Composite. Put them in a watchlist (see Google Finance Portfolio) and watch them like a hawk:
AAPL MSFT GOOG QCOM RIMM CSCO INTC ORCL GILD EBAY

Daily RSI-7 for the Nasdaq 100 Big-10

Weekly RSI-7 for the Nasdaq 100 Big-10

Monthly RSI-7 for the Nasdaq 100 Big-10

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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 the scoreboard reads 3 up (Energy, Utilities and Cons. Staples) and 7 down (Financials being the worst). That's consistent with the DJIA, of which 10 components were up, and 20 down.

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
XLE	74.05	1.90	2.63%	4.59%	-2.37%	-2.48%	30.88%	9.38%	9.06%	28.43%
XLU	41.92	-0.04	-0.10%	0.60%	-0.80%	2.29%	13.85%	6.34%	-0.52%	16.25%
XLP	28.54	0.29	1.03%	0.35%	1.39%	1.39%	8.60%	6.18%	3.97%	10.49%
IYH	70.15	0.82	1.18%	-0.55%	0.29%	-1.60%	5.55%	2.96%	-3.12%	6.43%
XLY	33.55	0.58	1.76%	-1.44%	-3.31%	-7.14%	-12.90%	-7.91%	-15.77%	-12.06%
XLI	38.17	0.50	1.33%	-1.62%	-3.88%	-5.21%	8.35%	-1.78%	-1.06%	7.40%
XLB	39.52	0.58	1.49%	-1.94%	-6.79%	-7.01%	14.19%	2.65%	-1.76%	12.75%
SMH	31.79	0.36	1.15%	-2.78%	-3.81%	-6.09%	-5.30%	-14.61%	-13.19%	-10.50%
IYZ	28.50	0.28	0.99%	-3.16%	-6.37%	-11.35%	-3.91%	-13.16%	-15.93%	0.64%
XLF	29.27	0.68	2.38%	-4.63%	-3.62%	-10.49%	-20.72%	-15.04%	-22.69%	-19.17%

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:

The Energy sector ETF (XLE) gained +2.63 pct on Friday, pushing the sector to a gain of +4.59 pct W/W (four days this week), closing at 74.05.

The prior Friday saw a huge rally of +2.26 pct, so for the past five sessions, if my calculations are right [they should be checked], XLE has rocketed +6.9 pct. There is no rationale unless OPEC and the G-7 have agreed to leave Crude Oil at $100/bbl for now.

After Exxon (XOM) suffered a $10 haircut in a month, which was a loss of $55 billion in market cap, this week XOM rallied +4.5 pct, and all the major Oil stocks were strong.

Crude Oil closed this week up +4.34/bbl (+4.62 pct) to 98.18.

I have been saying that I think it’s going lower and that in time will work itself down to about 75. In the interim, this is a day trader’s market, so you can expect hour to hour changes. The thing is that Crude Oil over $100/bbl must lead to a recession based on current levels of personal income.

The 200-day Moving Average of $WTIC is at 72.30. But, as I say this average is “moving”. The 50-day MA is now at 87.29 and rising, so in a month or two, the 200-day MA will likely move up through 75, which is where I think the current price will eventually intersect it.

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
STO	32.33	0.84	2.67%	6.03%	-5.55%	-3.84%	25.85%	17.14%	14.16%	21.31%
XOM	88.29	1.25	1.44%	4.50%	-1.26%	-3.58%	19.13%	5.42%	6.39%	21.09%
TOT	81.45	0.59	0.73%	4.44%	-2.92%	4.46%	14.77%	12.38%	7.21%	15.52%
CEO	173.70	14.70	9.25%	4.36%	-2.77%	-9.96%	84.26%	51.04%	84.34%	100.53%
CVX	86.67	0.92	1.07%	2.98%	-2.81%	-5.00%	22.12%	1.39%	6.47%	24.53%
SU	102.35	1.45	1.44%	2.59%	-8.07%	-3.58%	38.48%	19.36%	16.24%	34.14%
IMO	52.95	0.85	1.63%	1.34%	-8.60%	5.02%	48.49%	24.88%	13.07%	44.67%
PBR	100.78	1.74	1.76%	1.00%	-13.69%	14.81%	102.25%	75.67%	84.54%	121.06%
ECA	67.93	0.48	0.71%	0.85%	-7.21%	2.01%	49.82%	15.63%	10.38%	33.46%

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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 -1.94 pct this week, as well as -2.94 pct the prior week -2.58 pct the week before that. That’s quite a stumble, but on Friday XLB was up +1.49 pct and this sector will likely join the rally this coming week.

XLB closed the week at 39.52. It opened Oct 29 at 44.14. That’s a haircut of -10.5 pct in 20 sessions.

This week, Teck (TCK) dropped -9.6 pct after being down -11.0 pct the previous week [although there may be an overlap in the calculations because of the short week this week]. Rio Tinto was down -5.6 pct following the loss of -7.5 pct the previous week. So, the base metal miners are getting hammered, which is to be expected with $COPPER down -16.95 (-5.30 pct) to 302.95.

The major steelmakers, Nucor (NUE) and MittalArcelor (MT) recovered a bit, going up +4.4 pct and +2.7 pct respectively, after having been down the previous week -4.3 pct and -3.1 pct.

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	53.23	1.21	2.33%	4.41%	-5.87%	-14.52%	-2.33%	3.30%	-17.80%	-10.31%
MT	71.45	1.71	2.45%	2.73%	-6.87%	-9.49%	75.12%	19.88%	21.99%	69.27%
RTP	436.05	30.32	7.47%	-1.11%	-0.94%	24.05%	113.65%	66.69%	51.27%	107.95%
BHP	72.82	2.97	4.25%	-1.73%	-5.24%	-11.63%	87.34%	19.46%	40.69%	77.35%
PKX	153.48	3.97	2.66%	-2.00%	-5.15%	-12.19%	93.23%	11.14%	33.02%	99.69%
TS	45.94	-0.36	-0.78%	-2.21%	-3.75%	-10.74%	-5.32%	-1.71%	-3.22%	0.00%
AA	35.15	-0.02	-0.06%	-3.25%	-6.66%	-8.44%	19.84%	-1.73%	-12.93%	15.51%
RIO	32.56	0.13	0.40%	-5.62%	-11.90%	-2.78%	12.98%	-27.68%	-25.90%	20.68%
GGB	26.88	-0.29	-1.07%	-7.21%	-10.07%	-7.79%	63.70%	18.99%	23.08%	72.64%
TCK	37.84	0.30	0.80%	-9.63%	-19.44%	-22.92%	-45.36%	-10.31%	-5.57%	-48.94%

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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
MMM	82.75	1.51	1.86%	3.89%	-0.10%	-3.88%	5.74%	-6.76%	-5.90%	1.57%
UTX	73.46	0.68	0.93%	-0.66%	-1.66%	-2.98%	16.96%	0.22%	6.70%	11.66%
CAT	68.63	0.69	1.02%	-1.58%	-5.25%	-8.09%	12.21%	-8.70%	-9.73%	9.30%
GE	37.67	0.50	1.35%	-1.67%	-3.46%	-6.20%	-0.79%	-3.71%	0.19%	4.67%
BA	89.54	2.13	2.44%	-1.97%	-7.00%	-6.73%	0.41%	-7.44%	-6.31%	-0.62%
ABB	27.15	0.31	1.15%	-2.16%	-11.79%	-6.51%	52.36%	17.79%	27.82%	67.59%
HON	54.67	0.76	1.41%	-4.36%	-7.79%	-7.54%	21.22%	-2.15%	-3.31%	27.11%
FDX	93.60	1.89	2.06%	-7.66%	-8.63%	-9.39%	-14.73%	-15.15%	-11.75%	-21.10%
ERJ	44.25	-0.25	-0.56%	-7.74%	-5.53%	-7.81%	8.51%	7.74%	-5.17%	4.76%

XLI (Industrials) lost -1.62 pct to close at 38.17. This sector has taken major losses since early October. A rally attempt started Friday with XLI up +1.33 pct on the day.

3M (MMM) was up +3.9 pct W/W, but most of these stocks were soft. In fact all are down over two to four weeks.

After Fedex (FDX) was hammered -4.5 pct the previous Friday, this week the loss was -7.7 pct.

Traders will be watching US ISM Manufacturing Index on Dec 3, Factory Orders on the 5th, and Industrial Production data on the 14th. With further softness, I think FDX and UPS will drop further.

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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:

Consumer Discretionary (XLY) dropped -1.44 pct, to close at 33.55, but was up +1.76 pct on Friday.

The biggest losers were Brunswick Corp (BC -9.2 pct) and JC Penny (JCP -6.8 pct).

JC Penny has has a tough go of it for such a superior company. The stock has been hammered down for a long while now and some of the senior management replaced. I think that so goes the US retail economy, so too with JCP.

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	63.75	0.87	1.38%	1.11%	0.71%	-0.14%	30.55%	17.99%	16.29%	31.42%
EBAY	31.94	0.35	1.11%	-0.59%	-1.42%	-9.39%	5.87%	-6.61%	-2.86%	-5.70%
WHR	77.88	1.85	2.43%	-0.60%	5.44%	-7.23%	-8.01%	-19.68%	-30.79%	-9.46%
TM	109.40	1.32	1.22%	-0.98%	0.38%	3.45%	-19.14%	-5.13%	-9.12%	-8.60%
DIS	31.84	0.34	1.08%	-1.73%	-5.32%	-7.58%	-6.90%	-3.98%	-12.72%	-3.49%
SBUX	23.07	0.26	1.14%	-4.27%	-1.41%	-11.85%	-34.55%	-16.17%	-20.15%	-36.59%
CCL	42.73	0.39	0.92%	-4.41%	-4.60%	-9.91%	-16.13%	-5.34%	-14.08%	-15.52%
JCP	41.30	1.23	3.07%	-6.84%	-17.84%	-25.36%	-47.09%	-36.02%	-47.58%	-49.14%
BC	19.26	0.33	1.74%	-9.19%	-10.13%	-4.65%	-39.66%	-23.96%	-44.21%	-41.78%

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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
PEP	75.51	0.47	0.63%	2.62%	2.73%	4.90%	20.39%	11.19%	9.93%	20.74%
PG	72.86	0.60	0.83%	1.43%	2.85%	2.12%	12.89%	12.02%	15.47%	14.49%
MO	72.97	0.56	0.77%	0.97%	0.34%	0.98%	12.40%	6.32%	2.21%	15.59%
BUD	50.19	0.95	1.93%	0.76%	-0.57%	-3.98%	1.97%	4.56%	-2.26%	7.89%
KO	62.30	0.05	0.08%	0.56%	1.35%	1.63%	28.24%	15.41%	21.37%	32.27%
DEO	89.32	1.33	1.51%	0.44%	-2.24%	-1.24%	12.31%	9.23%	4.60%	17.05%
WAG	39.73	0.33	0.84%	0.35%	1.79%	-0.63%	-13.76%	-11.34%	-11.10%	-3.19%
WMT	45.73	0.87	1.94%	-1.02%	4.84%	4.22%	-3.83%	5.93%	-1.30%	-4.79%
ABV	69.09	0.71	1.04%	-6.03%	-8.79%	-10.68%	40.71%	6.82%	3.57%	48.84%
WFMI	40.75	-0.68	-1.64%	-11.03%	-11.24%	-14.41%	-10.40%	-5.98%	0.94%	-17.41%

XLP (consumer staples stocks) is the one beacon of light through the Oct sell-off. A week ago, XLP gained a striking +2.47 pct to close at 28.57, giving this sector the #1 ranking. This week, the gain was just +0.35 pct, including +1.03 pct on Friday to close at 28.54.

Pepsi (PEP) gained +2.6 pct W/W while Whole Foods Market (WFMI) dropped a stunning -11.0 pct.

Here’s the skinny on WFMI, from BusinessWeek:

Sales in stores open at least one year rose 8.2% in the fourth quarter from a year ago, after a 7% growth rate in the first and third quarters and a dip to 6% in the second quarter.
On Nov. 21, Whole Foods reported a fourth-quarter profit of $33.9 million, or 24 cents a share, down from $39.8 million, or 28 cents a share a year ago, despite the 8.2% gain in same-store sales and a 35% increase in total sales to $1.74 billion. The results fell short of a 30-cent consensus estimate among analysts. For fiscal 2007, the company earned $182.7 million, or $1.29 a share, versus $203.8 million, or $1.46 a share, in fiscal 2006.
In the latest quarter, the store contribution was about $149 million, or 8.5% of sales, while general and administrative (G&A) costs were roughly $67 million, or 3.9% of sales, higher than average due to about $13 million, or six cents a share, in legal and integration costs, as well as the addition of Wild Oats' G&A expenses.
Sales at Wild Oats stores open at least one year were up 3.9% for the last five weeks of the quarter, and accelerated to a 6.6% growth rate in the first seven weeks of the new fiscal year.
For fiscal 2008, the company projects that sales will grow 25% to 30%, of which about 10% is expected to come from the Wild Oats stores. Comparable-store sales are estimated to grow at a rate of 7.5% to 9.5%.
But the company said it doesn't expect to produce operating leverage in fiscal 2008. That will be the result of a lower store contribution as a percentage of sales, driven by a higher percentage of sales coming from new and acquired stores, which contribute less than its existing stores, as well as by investments in labor and benefits at the Wild Oats stores and ongoing, but moderate, hikes in health care costs as a percentage of sales.

I recommend you read the whole article if you follow this stock.

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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
NVS	55.98	3.49	6.65%	6.04%	6.28%	8.32%	-3.72%	6.51%	0.23%	-4.55%
GSK	50.79	2.92	6.10%	3.06%	-0.22%	0.08%	-5.61%	-1.53%	-4.74%	-1.47%
UNH	54.07	0.66	1.24%	1.98%	7.52%	11.42%	2.85%	11.21%	0.26%	16.13%
BMY	28.08	0.62	2.26%	1.19%	-2.26%	-4.36%	6.44%	-3.17%	-6.40%	13.55%
DNA	74.82	0.66	0.89%	0.39%	-0.70%	0.19%	-8.53%	2.05%	-3.66%	-7.48%
BMET	45.99	0.06	0.13%	0.24%	0.31%	0.48%	10.90%	1.05%	8.47%	41.68%
JNJ	66.88	-0.26	-0.39%	0.00%	3.55%	4.58%	0.72%	7.68%	4.81%	0.16%
AET	54.14	0.34	0.63%	-1.29%	-0.88%	-3.30%	26.26%	9.57%	4.32%	31.06%
PFE	22.98	0.63	2.82%	-1.33%	-0.56%	-5.39%	-12.59%	-6.66%	-15.95%	-15.20%
AMGN	53.76	0.92	1.74%	-1.88%	-4.05%	-6.19%	-21.40%	6.99%	-1.79%	-26.03%

IYH (healthcare) lost -0.55 pct W/W to close at 70.15.

The winner was JNovartis (NVS) up +6.0 pct and Glaxo (GSK) up +3.1 pct W/W, which for GSK may finally be a turn. The loser was Amgen (AMGN) down -1.9 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