Not having a Santa hat means, I hope, I'll just be forced to chug another beer or two. Tough life. Now I have to get out of my swim suit and into a pair of jogging shorts.

Back to the market.

Last week I wrote: “I won’t sugarcoat this: Goldilocks died. Inflation is surging in the US for both producers (PPI) and consumers (CPI), which has brought an end to the 2002-2007 Bull market. The market topped out in October. From that point, global equity markets will experience a series of lower lows and lower highs, which is the definition of a Bear market.” Same old.

Despite a +205 point rally in the DJIA on Friday, taking the index to a 13450 weekly close, up from the prior week’s 13340, nothing has changed in this market other than international central banks are throwing fiat on the fire. Inflation is now the grinch.

The DJIA is off its 52-week high of 14198 on Oct 11. As I say, the line in the sand for the Bull-Bear struggle is 12800, but every time the market threatens it, the interventionists decree additional printing of money to stave a price collapse. Instead, we now have a value collapse.

The problem is inflation, and has been since Hank Paulson took over as US Treasury Secretary and his former chief economist at Goldman Sachs as head trader for the FOMC.

Just remember; Paulson is a Pied Piper and Cara the Rat Catcher.

These people in government and Humungous Bank & Broker never seem to accept the fact that the market is bigger than all the abusive power and insider trading they can load on it. It is their arrogance that pulls them down time and again, as it will this time.

As previously opined, traders know that the Fed will have great difficulty lowering rates again, which would further weaken the $USD and lift the price of imported goods, including commodities such as oil. The US public cannot afford it, and they are fed up with the constant lies and misrepresentation from authorities regarding this issue.

The lower $USD policy had been in effect by the US authorities to raise the price of foreign currencies in order to make US Treasury securities more attractive, which was driving up the price of bonds and the yields lower, which was relieving the pressure on the stressed mortgage and housing market in the US.

The problem with a lower dollar policy is that it invites inflation. If pushed to extreme limits, that inflation will become extreme. It now has.

The collateral positive through this period was that non-US investors were experiencing a wealth effect, and lower domestic inflation, which also encouraged them to buy equities, which drove these markets to record highs.

The $USD rallied hard and the gold price dropped sharply on Friday as traders expected a worsening liquidity crisis. The calamity in forex and precious metal markets will continue for several weeks and probably months before gold falls to probably 730, possibly as low as 650, and the $USD moves higher to at least 82, which will relieve some pressure on the US inflation front. At that point, I anticipate Crude Oil to be priced in the 75 range.

During the liquidity crisis and tightening process, I anticipate the US equity markets to possibly fall back to 10 and 2, which is to say to 10,000 for the DJIA and 2000 for the Nasdaq Composite.

You all know that corporate profits are the single key factor in determining stock prices. So how much profit increase, in the aggregate, do you think the US has seen this past year? Does anybody here know?

If you listen to the Administration and HB&B you would have to believe that corporate profits are close to +20 pct Y/Y, and certainly not less than +10 pct. You have been lied to and totally misled as usual.

Without adjustment for inflation, US corporate profits are up just +2.1 pct year-over-year. Adjusted for inflation, they are DOWN.

Moreover they are sinking FAST. In the aggregate, corporate profits in the 3Q fell to a $1.410 trillion annual rate from $1.441 trillion in the second quarter. This will get worse.

If you check the records, the same thing happened, except for two quarters, every quarter from 1Q1995 to 2Q1999. It was only through the massive printing of fiat money under the Clinton regime (Goldman Sachs Bob Rubin then as Treasury Secretary) that pumped up equity prices until they broke.

From 1Q2003, except for about eight quarters, total corporate profits, on a Y/Y basis, have been falling. Interventionists with their money printing habit and HB&B’s encouragement of corporate share buy-backs has given the public a totally different impression.

Inflation now has stopped that game. Interest rates will have to rise; credit expansion will have to be curtailed; financial institutions and corporations will have to fail; and the losses written off before the next Bull cycle can commence.

Anybody who sugarcoats this situation is either incompetent or refusing to act in a fit and proper manner, and ought to be held accountable.

What I am suggesting here is not a typical Christmas message: traders must be aware that the next drop in the market could be the big one. One of these days could be another October 19, 1987, when traders could not reach their brokers because their brokers were too busy selling stocks for Friends & Family or jumping from windows. You can trade the market day to day on the long side for gains, if you will, but your time horizon must be short and your stops tight.

Friday’s rally was not unexpected. “Maromatics” in this community called it early in the week, saying that quadruple witching would shake up the market. I too told you I didn’t like the turn in the $USD in the closing hour on Monday. As the Dollar weakened after that, oil and gold strengthened, and I could feel the market’s arteries start pumping money back in.

An attempt to revive the dead, as I see it.

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Global Economics Review

US Economic Calendar for next week.

Inflation is surging in many countries for both producers and consumers as shown by the following report.

Econoday International Report.

It is important to review the following reports on US corporate profits and price inflation, and CPI. This is not a healthy picture.

Econoday Report on US Corporate Profits.

Econoday Report on US PPI.

Econoday Report on US CPI.

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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.

“Jock” reports:

Of the Cara 100 components, are 27 GREEN (last week: 19) 32 are RED - (last week: 40)

Cara 100 red/green chart

Ticker	Name	Score -5wks	Score -4wks	Score -3wks	Score -2wks	Score -1wks	Score -0wks
ABB	ABB Ltd.	+0	+0	+0	+0	-2	+0
ABV	COMP DE BEBA AM ADS	-2	-2	+2	+2	-2	-2
ADBE	Adobe Systems Inc.	-2	-2	-2	+2	-2	-2
AET	Aetna Inc.	+0	+0	+2	+2	+2	+2
AMAT	Applied Materials Inc.	+0	-2	+0	+0	-2	+0
ATVI	Activision Inc.	-2	-2	+2	+2	+2	+2
BA	Boeing Co.	-2	-2	+0	+0	-2	+0
BBBY	Bed Bath & Beyond Inc.	-2	-2	+0	+0	-2	-2
BBD	Banco Bradesco S.A.	+0	-2	+2	+2	+0	+0
BC	Brunswick Corp.	+0	+0	+0	+0	-2	-2
BDK	Black & Decker Corp.	+0	-2	-2	-2	-2	-2
BHP	BHP Billiton Ltd.	-2	-2	+0	+0	-2	-2
BMY	Bristol-Myers Squibb Co.	-2	-2	+2	+2	-2	-2
CCJ	Cameco Corp.	-2	-2	-2	-2	-2	+0
CCL	Carnival Corp.	-2	-2	+0	+0	+0	+0
CEO	CNOOC Ltd.	+0	+0	+0	+0	-2	-2
CHA	China Telecom Corp. Ltd.	-2	-2	+2	+2	-2	+0
CHL	China Mobile Limited	+0	+0	+0	+0	+0	+0
CHRW	CH Robinson Worldwide Inc.	-2	-2	+2	+2	+2	+2
COST	Costco Wholesale Corp.	+0	+0	+0	+2	+0	+0
CSCO	Cisco Systems, Inc.	-2	-2	-2	-2	+0	+0
CTSH	Cognizant Technology Solutions Corp.	-2	-2	-2	+0	+0	+2
CVX	Chevron Corp.	-2	-2	+0	+2	+2	+2
DB	Deutsche Bank AG	-2	+0	+2	+2	+0	+0
DELL	Dell Inc.	-2	-2	-2	-2	-2	+0
DEO	Diageo plc	+0	+0	+0	-2	-2	-2
DIS	Walt Disney Co.	-2	-2	+0	+0	+0	+0
DOW	Dow Chemical Co.	-2	-2	+0	+2	+2	-2
DNA	Genentech Inc.	-2	+0	+2	-2	-2	-2
ECA	EnCana Corp.	+0	+0	-2	+0	+0	+0
ERJ	EMBRAER - Empresa Brasileira de Aeron�utica S.A.	+2	-2	-2	+2	+2	-2
ERTS	Electronic Arts Inc.	+0	-2	+0	-2	+2	+2
EXC	Exelon Corp.	+0	+0	+0	+2	+2	+0
GE	General Electric Co.	-2	-2	-2	-2	-2	+0
GFI	Gold Fields Ltd.	+0	+0	-2	-2	-2	-2
GGB	Gerdau S.A.	+0	-2	+0	+2	-2	+2
GOL	GOL Linhas A�reas Inteligentes S.A.	+2	+2	+0	+2	-2	+0
GOOG	Google Inc.	+0	+0	+0	+2	+0	+0
GRMN	Garmin Ltd.	-2	-2	+2	+2	+2	+2
GS	Goldman Sachs Group Inc.	+0	+0	+0	+0	-2	-2
GSK	Glaxosmithkline plc	-2	+0	+2	+2	+2	-2
HBC	HSBC HLDGS PLC ADS	-2	-2	-2	+0	-2	+0
HDB	HDFC Bank Ltd.	+0	+0	+2	+2	+0	+0
IBKR	Interactive Brokers Group, Inc.
IBN	ICICI Bank Ltd.	+0	+0	+0	+0	+0	+0
IMO	Imperial Oil Ltd.	+0	+0	-2	+0	+0	+2
INFY	Infosys Technologies Ltd.	-2	-2	+0	+0	+0	+2
INTC	Intel Corp.	+0	-2	+2	+2	+0	+2
JCP	J. C. Penney Company, Inc	-2	-2	+0	+0	+0	+0
JNJ	Johnson & Johnson	+2	+2	+2	+2	+0	+0
KB	Kookmin Bank	-2	-2	+0	+0	+0	+0
KO	Coca-Cola Co.	+0	+0	+0	+0	+0	+0
KSS	Kohl's Corp.	-2	-2	+0	+0	-2	-2
LEH	Lehman Brothers Holdings Inc.	+2	+0	+2	+2	+2	+2
LLTC	Linear Technology Corp.	-2	-2	-2	+0	+0	+0
LYO	Lyondell Chemical Co.	+0	+0	+0	+0	+0	+2
MBT	Mobile Telesystems OJSC	+0	+0	+2	+2	+0	+0
MCO	Moody's Corp.	-2	-2	+0	+0	+0	+0
MFC	Manulife Financial Corporation	-2	-2	+0	+0	-2	-2
MICC	Millicom International Cellular SA	+2	+0	+2	+2	+0	+2
MU	Micron Technology Inc.	-2	-2	-2	+0	+0	-2
NKE	Nike Inc.	+0	+0	+2	+0	+0	+2
NOK	Nokia Corp.	+0	+0	+0	+0	+0	+0
NTES	Netease.com Inc.	+0	+0	+0	+2	+0	-2
NUE	Nucor Corp.	-2	-2	+2	+2	+2	+2
ORCL	Oracle Corp.	-2	-2	-2	+2	+2	+2
OXPS	optionsXpress Holdings, Inc.	+2	+0	+2	+0	+2	+2
PAYX	Paychex Inc.	-2	-2	+0	+0	-2	-2
PBR	PETROLEO BRASILEIRO	+0	+0	+0	+0	+0	+2
PG	Procter & Gamble Co.	+0	+2	+2	+0	+0	+0
PTR	PetroChina Co. Ltd.	-2	-2	-2	+0	-2	-2
QCOM	QUALCOMM Inc.	+0	-2	+0	-2	-2	+0
RIO	COMPANHIA VALE ADS	+0	+0	+0	+0	-2	+0
RIMM	Research In Motion Ltd.	+0	+0	+0	-2	+0	+2
RY	Royal Bank of Canada	-2	-2	+0	-2	-2	-2
SBUX	Starbucks Corp.	-2	-2	-2	-2	-2	-2
SLW	Silver Wheaton Corp.	+0	+0	+0	+2	-2	+2
SNDK	SanDisk Corp.	-2	-2	+0	+0	+0	+0
STO	StatoilHydro ASA	-2	+0	+0	-2	-2	-2
SU	Suncor Energy Inc.	+0	+0	-2	+0	+0	+2
SWK	Stanley Works	-2	-2	+0	+0	-2	-2
TCK	Teck Cominco Ltd.	-2	-2	-2	-2	-2	-2
TEF	Telefonica SA	+0	+0	+0	+0	+0	+0
TGP	Teekay LNG Partners LP.	-2	-2	-2	+0	+0	+0
TGT	Target Corp.	-2	+0	+0	-2	-2	-2
TM	Toyota Motor Corp.	+0	+0	+0	+2	-2	-2
TOT	Total SA	+0	+2	+2	+2	+0	+0
TS	Tenaris SA	-2	-2	-2	-2	-2	-2
TT	Trane Inc	+2	-2	+2	+2	+2	+2
UBS	UBS AG	-2	-2	+0	+0	-2	-2
UTX	United Technologies Corp.	-2	-2	+0	+2	+2	+2
VCP	Votorantim Celulose e Papel S.A.	+2	+0	+2	+2	+0	+0
VIP	Vimpel-Communications	+0	+0	+2	+2	+2	+2
WAG	Walgreen Co.	+0	+0	-2	+0	+0	+0
WBK	Westpac Banking Corp.	+0	-2	+0	+0	+0	-2
WFMI	Whole Foods Market Inc.	-2	-2	-2	-2	-2	+0
WHR	Whirlpool Corp.	+0	+0	+0	+2	+0	+0
WMT	Wal-Mart Stores Inc.	+2	+2	+2	+2	+2	+2
XOM	Exxon Mobil Corp.	-2	-2	+2	+2	+2	+2
YHOO	Yahoo! Inc.	-2	-2	-2	-2	-2	-2
Summary:	(+2/-2/other)	9/49/41	5/54/40	27/24/48	38/19/42	19/40/40	27/32/40
Net:	(+2)-(-2)	-40	-49	+3	+19	-21	-5

Components of major indices (green/red) were as follows:

In all indices, the number of red components decreased. In all but the DJ-65, the number of greens increased. The increased greens in the Russell 2000 was most impressive.
DJIA, NDX, COMPQX and Russell 2000 were GREEN. SP-500, and Wiltshire 4500 were neutral. Hang Seng stayed RED. The Shanghai composite rose from red to neutral. Bombay stayed neutral

The CRB commodity index rose to GREEN, while the US dollar index stayed GREEN.

GOLD stocks remained neutral, while SILVER stocks rose from red back to neutral.

BOTTOM LINE: This week, there was significant improvement.

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.

Caraistas can ask Jock to explain the nuances of this system. Essentially it is the system I use with the exception that I use RSI instead of EMA. I also combine the use of three time horizons (based on monthly, weekly and daily price series data) in my analysis. I use the RSI for cycle studies and MACD for trend studies. I do this for individual stocks, then stocks in correlated groups (eg, gaming companies, gold producers, US retailers…), stocks in industries and sectors (using GICS coding) and across regional markets (actual domestic price data in international markets rather than $USD denominated and traded ETFs).

Once I can see how the market is acting, I use confirmation techniques by studying the relationships between equity prices and economic data (eg, lower US Industrial Production ought to negatively impact FDX), commodities (eg, hurt the buyer and help the seller), yields on fixed income (vs high dividend yield stocks), and international currency trends (eg, lower $USD helps US exporters and hurts US importers, ie, foreign exporters).

I see the market as a system, like the human mind and body. Watching cash flow into and out of stocks, industries and sectors is, to me, like watching a person breathe. If I were a medical clinician instead of a portfolio manager, I would be studying the data in order to improve the work-flow of patient care. For each patient, I would be watching for signs of stress, anxiety, change so that I could diagnose problems and recommend therapies.

For technical analysis study and approaches to trading, I do recommend Dr. Elder’s books and those of Martin Pring. But trading success will come quickest to traders who also use corporate fundamental and quantitative studies and economic studies.

In 1Q08, I shall compile a list of recommended books on all aspects of trading. I very much believe that traders need a thorough grounding in all aspects of trading.

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US Equity Markets Review

DJIA ino.com chart

DJIA stockcharts.com chart

DJIA=13,450 after a gain of +205 points on Friday.

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

The bearish trend direction must be confirmed in the Nasdaq-listed big cap tech stocks of which only MSFT and INTC are in the Dow 30 as well as by the Russell 2000 Small Caps. The R2000 started to pop on Thursday and the Techs as well. On Friday, however, the leaders were Energy and Gold as the $USD sank.

On the surface, I do not think Friday’s rally is sustainable. Inflation is too high and also on the rise, which is hurting buying power of consumers, which in turn is leading to lower corporate profits.

I do not believe that money by decree of the US Administration and the European Union is any solution. It is merely putting off the day of reckoning for HB&B and providing a longer window for insiders of these distressed financial institutions to be selling their shares.

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NASDAQ Composite ino.com chart

NASDAQ Composite stockcharts.com chart

Nasdaq=2692. “Traders are taking note of a possible double top.” (WIR 39, Sept. 29, Nasdaq=2701.5)

Later, after I saw a short-term bottom, supported by strength in the Nasdaq 100 (non-financials), I wrote, “I think we’ll see a lift, but not for long, and this 2350-2400 level will be tested again in December.”

Clearly that did not occur, but I still believe there will be a major sell-off in the next couple weeks. A triple top is now in place. Without higher corporate profits, the share prices will sink as interest rates cannot be forced any lower due to the inflation situation.

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

On Thursday, the shares of Oracle (ORCL) took off on corporate results. Then on Friday, the shares of Research in Motion (RIMM) did the same. Then eBay (EBAY) and Qualcomm (QCOM) prices followed suit. Despite the enthusiasm, however, prices of these stocks are just recovering to early November levels. Traders have to watch the resistance from the Bears as this Tech group attempts to set new higher price levels.

As you know, I am betting against it. Time will tell.

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 7 up and 3 down, which is quite a change from the previous week’s 1 up and 9 down. Energy XLE remained as top performer with Telecom IYZ moving from #4 to #2.

On Friday, all my ETF’s rallied except for Utilities XLU, which dropped -0.58 pct on the day. XLE (+1.80 pct) was by far the best, setting a new record close of 79.30. This is high-risk territory, however, for XLE. The XLE Monthly RSI-7 is 79.4, but the Weekly and Daily RSI-7 are just above 70 and could give a significant Sell Alert with a single bad market session.

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	79.30	1.80	2.32%	3.32%	3.96%	7.09%	40.16%	4.76%	12.64%	34.04%
IYZ	30.26	0.63	2.13%	2.82%	0.77%	6.18%	2.02%	-10.61%	-10.95%	3.52%
SMH	33.12	0.30	0.91%	1.38%	-0.90%	4.18%	-1.34%	-14.15%	-14.75%	-0.78%
XLB	42.27	0.70	1.68%	1.20%	-1.54%	6.96%	22.13%	1.68%	3.07%	22.06%
XLP	29.34	0.38	1.31%	1.10%	-0.41%	2.80%	11.64%	6.07%	7.87%	12.46%
IYH	72.30	0.84	1.18%	0.82%	-1.12%	3.06%	8.79%	2.22%	2.67%	8.49%
XLI	39.47	0.42	1.08%	0.03%	-2.06%	3.41%	12.04%	-2.86%	0.23%	12.04%
XLY	33.19	0.04	0.12%	-0.39%	-4.49%	-1.07%	-13.84%	-10.54%	-16.29%	-13.25%
XLU	42.99	-0.25	-0.58%	-0.44%	-2.69%	2.55%	16.76%	6.62%	8.95%	17.14%
XLF	29.28	0.24	0.83%	-0.64%	-6.30%	0.03%	-20.69%	-15.38%	-20.86%	-20.24%

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) remained best performer (+3.32 pct), for whatever reason other than the huge move Friday (+2.32 pct) that occurred as the Japanese Yen cratered (-0.87 pct on the day). So, let’s call it the Carry Trade at work.

On Friday, I didn’t see evidence of dramatically higher crude oil prices (+0.27 pct on the day, but down as much on the week) or supply shortages and interruptions or evidence of economic growth.

The XOM was up +2.5 pct W/W to 93.43. Isn’t the market terrific? It’s possibly giving you yet another chance to sell XOM at 94 or better. You’ll look back in six months and say thank you, Mr. Market.

Canada’s SU and IMO were up +3.2 pct and +3.5 pct respectively W/W.

Crude Oil ($WTIC) closed this week down -0.24/bbl (-0.26 pct) to 91.31. But Friday, it was up +0.27 pct

“I have been saying that I think $WTIC is 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 200-day Moving Average of $WTIC is at 75.33, up from 74.58 the previous week. As I say, this average is “moving”. The 50-day MA is now at 91.41, up from 90.36 and obviously still rising, “so (as I wrote a few weeks ago) 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
PBR	113.20	5.20	4.81%	5.47%	6.08%	12.32%	127.17%	54.86%	83.77%	130.50%
IMO	54.00	1.74	3.33%	3.53%	4.33%	1.98%	51.43%	7.70%	15.48%	49.79%
SU	106.59	2.04	1.95%	3.22%	4.25%	4.14%	44.22%	11.12%	17.79%	35.49%
XOM	93.43	1.30	1.41%	2.47%	2.11%	5.82%	26.07%	1.21%	10.83%	23.14%
CEO	163.22	5.69	3.61%	2.27%	-8.79%	-6.03%	73.14%	5.43%	39.56%	84.24%
CVX	94.04	1.99	2.16%	2.20%	3.39%	8.50%	32.51%	-0.84%	13.51%	28.42%
TOT	80.46	0.99	1.25%	1.07%	-2.86%	-1.22%	13.37%	-1.20%	1.40%	11.94%
ECA	68.15	0.63	0.93%	0.78%	1.29%	0.32%	50.31%	8.85%	3.62%	43.26%
STO	29.39	0.60	2.08%	-1.08%	-2.71%	-9.09%	14.40%	-15.11%	-1.54%	13.26%

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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) gained +1.20 pct W/W, including +1.68 pct on Friday. So, Friday made the week for XLB, which it did for most of these sectors. The rest of the week was a loser. Now we have to see if the gains are sustainable.

Gerdau Steel of Brazil (GGB) closed the week up +6.6 pct. Like the other steels and base metals, the shares are priced to reflect a rapidly growing global economy, which is no longer the case. Check the RSI/MACD of these stocks to see the risk you hold.

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
GGB	29.46	1.18	4.17%	6.58%	-1.50%	9.60%	79.42%	17.84%	15.44%	87.88%
AA	36.35	0.96	2.71%	3.30%	-1.52%	3.41%	23.93%	-2.81%	-9.89%	24.06%
MT	73.24	1.84	2.58%	2.75%	-0.93%	2.51%	79.51%	-3.77%	10.45%	74.80%
RIO	33.30	0.84	2.59%	1.22%	-8.77%	2.27%	15.54%	9.36%	-27.62%	14.12%
TCK	35.63	1.83	5.41%	1.08%	-8.48%	-5.84%	-48.55%	-25.80%	-21.12%	-50.99%
NUE	60.43	1.35	2.29%	0.83%	-2.50%	13.53%	10.88%	1.56%	-2.94%	8.59%
TS	44.57	0.99	2.27%	0.04%	-4.83%	-2.98%	-8.14%	-14.04%	-8.12%	-11.57%
RTP	420.33	15.67	3.87%	-0.51%	-10.19%	-3.61%	105.94%	27.92%	36.21%	102.38%
BHP	70.69	2.19	3.20%	-0.53%	-8.19%	-2.93%	81.86%	-2.54%	17.06%	81.30%
PKX	153.00	5.60	3.80%	-1.77%	-9.77%	-0.31%	92.62%	-15.94%	22.65%	82.49%

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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
UTX	77.83	1.43	1.87%	1.49%	-0.31%	5.95%	23.91%	-2.01%	8.17%	24.01%
HON	60.71	0.02	0.03%	1.22%	3.76%	11.05%	34.61%	3.44%	7.68%	35.63%
ABB	28.00	0.99	3.67%	1.16%	-5.08%	3.13%	57.13%	9.46%	25.00%	59.18%
BA	89.07	1.88	2.16%	0.74%	-4.39%	-0.52%	-0.11%	-13.18%	-8.36%	-0.97%
GE	37.14	0.62	1.70%	0.62%	-0.24%	-1.41%	-2.19%	-9.96%	-4.28%	-1.67%
MMM	86.05	1.56	1.85%	0.14%	-0.16%	3.99%	9.95%	-6.14%	-1.56%	9.19%
CAT	72.73	1.22	1.71%	-0.90%	-1.98%	5.97%	18.92%	-6.95%	-10.73%	19.60%
FDX	94.29	0.66	0.70%	-1.70%	-5.92%	0.74%	-14.10%	-9.42%	-14.99%	-13.13%
ERJ	45.87	-0.08	-0.17%	-2.82%	-3.63%	3.66%	12.48%	4.13%	-8.75%	12.98%

XLI (Industrials) was flat (actually a penny gained +0.03 pct) W/W, after gaining +1.08 pct on Friday, to close at 39.47.

As I wrote three weeks ago, “the econ data is still coming through quite soft and this week the same thing is likely (which happened). So I wouldn’t go chasing the Industrials unless there is a definite reversal in the data.”

BA gained +0.74 pct W/W after a Friday move of +2.16 pct. Likewise, ABB lifted +1.16 pct W/W after Friday’s +3.67 pct heavy lifting. The previous week, BA and ABB were both losers, down -5.1 pct and -6.2 pct, respectively.

Fedex (FDX -1.7 pct W/W) closed Friday at 94.29, for a tough two weeks (-5.92 pct). Two weeks ago I wrote, “(despite the big gain this week) the stock (at 100.22) is still down -14.2 pct Y/Y, and the economic data, which drives Fedex, is not robust.”

FDX is down -15.0 pct over just six months, which is a reflection of the US economic slowdown, particularly in Industrial Production, which started to hit the retailers in July-August.

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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) lost -0.39 pct W/W, to close at 33.19. Even Friday’s gain (+0.12 pct), on a red hot market day, was nothing for the Bulls to be pleased about.

eBay (EBAY) was the big winner (+4.9 pct), while Brunswick Corp (BC) dropped -1.4 pct W/W.

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
EBAY	34.30	0.93	2.79%	4.89%	1.69%	7.39%	13.69%	-12.05%	10.18%	11.08%
JCP	43.85	0.35	0.80%	3.13%	-8.49%	6.17%	-43.83%	-34.04%	-40.37%	-44.04%
NKE	66.27	0.26	0.39%	3.03%	1.33%	3.95%	35.72%	15.74%	23.68%	32.14%
WHR	82.57	1.02	1.25%	1.57%	-3.74%	6.02%	-2.47%	-10.45%	-28.06%	0.94%
TM	107.40	1.54	1.45%	1.03%	-5.96%	-1.83%	-20.62%	-6.66%	-14.07%	-17.43%
CCL	45.33	1.32	3.00%	0.69%	0.73%	6.08%	-11.03%	-7.88%	-6.21%	-7.60%
DIS	32.94	0.61	1.89%	-0.21%	0.46%	3.45%	-3.68%	-4.80%	-3.66%	-4.63%
SBUX	21.06	0.53	2.58%	-0.89%	-6.90%	-8.71%	-40.26%	-23.33%	-19.80%	-42.13%
BC	17.95	0.11	0.62%	-1.37%	-11.97%	-6.80%	-43.77%	-19.76%	-47.05%	-43.27%

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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
WAG	38.47	2.22	6.12%	5.14%	3.66%	-3.17%	-16.50%	-15.28%	-14.23%	-16.30%
WFMI	42.58	0.82	1.96%	4.93%	-1.09%	4.49%	-6.38%	-5.44%	11.03%	-11.55%
BUD	53.44	0.51	0.96%	1.29%	1.23%	6.48%	8.57%	5.68%	0.64%	9.17%
WMT	48.21	0.36	0.75%	1.22%	-1.65%	5.42%	1.39%	9.00%	-0.37%	5.47%
DEO	86.33	0.85	0.99%	0.94%	-0.67%	-3.35%	8.55%	-0.46%	2.52%	11.31%
MO	77.43	-0.19	-0.24%	0.79%	-0.22%	6.11%	19.27%	12.97%	12.90%	20.36%
ABV	72.11	0.52	0.73%	0.60%	-5.29%	4.37%	46.86%	-0.48%	2.66%	48.31%
PG	74.08	0.89	1.22%	0.24%	-0.05%	1.67%	14.78%	6.76%	19.72%	15.66%
KO	63.07	0.79	1.27%	-1.16%	-0.13%	1.24%	29.83%	11.53%	21.08%	29.61%
PEP	77.35	0.86	1.12%	-1.41%	0.45%	2.44%	23.33%	8.27%	17.41%	22.02%

XLP (consumer staples) gained +1.10 pct W/W to close at 29.34, but Friday’s gain (+1.31 pct) made the week.

Walgreen (WAG +5.14 pct W/W) had quite a week on Friday (up +6.12 pct). Just like most of the other exaggerated moves on Friday, I attribute this to quadruple witching where the hedge funds are squaring the books. Let’s see what next week brings.

Coca-Cola (KO) and Pepsi (PEP) were losers, -1.16 pct and -1.41 pct respectively. Not even a big day could put the fizz back in the bottle.

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Sector 35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)</