The tables in this report show that Energy stocks (XLE +3.63 pct W/W) boomed, and Basic Material (XLB +1.03 pct W/W) were strong as well.

When reviewing stats, you have to know the “W” may refer to Week and sometimes to 5 sessions, which in holiday weeks incorporates previously recorded data.

So if we take a look at XLB for example, I wrote that the gain was +1.03 pct and over 5 sessions, that’s correct. But if you recall, the previous week, XLB was on a downer all week until Friday where a gain of +1.68 pct on the day produced a gain on the week of 1.20 pct. With the holiday for Christmas when there was no trading, we double counted the Friday +1.68 pct gain to produce our +1.03 pct gain W/W. Hence, XLB lost on the four days of this week. A check of the prices shows that XLB closed this Friday at 42.00 and the prior Friday at 42.27, which is a loss of 27 cents.

I see this situation frequently where data is misconstrued to represent something it is not. Unfortunately, the lazy media are not as sharp-minded as the large capital pool traders who can skew these “results”. In other words, when the game is about serious money, you should expect these tricks. Having been around a bit, I know that every trick in the book is used to confuse the average trader.

So, when you see Table 1 showing 5 sectors up and 5 down on the week, the “week” is 5 sessions, whereas THIS week had only four and 9 of 10 sectors were down. For the same reason, Table 14 shows that 23 Dow stocks were up and just 7 down, but in fact in the four days of trading this week there were just 9 of the Dow 30 up and 21 down.

The winners this week were the commodity-sensitive Exxon (XOM), Alcoa (AA) and Caterpillar (CAT), the latter because it makes heavy duty mining equipment, plus General Electric (GE) and Honeywell (HON), which are heavy into military, which seems to be ramping up with US forces apparently being readied to move into Pakistan, AT&T (T) and Verizon (VZ), which are fairly safe large dividend payers, and Procter & Gamble (PG) and Microsoft (MSFT) which have strong and stable cash flow that becomes a safe haven situation when markets get nervous.

Overall, my take on the market as ready to fall under the weight of inflation and a stagnating economy in North America, Europe and Japan is unchanged.

Exxon (XOM) had a terrific week in the market, moving from $93.43 to $95 for a gain of $1.57, which if you add the prior Friday’s gain of $1.30 is a gain of almost $3 in five sessions. Now you know I say that six months from now your having sold XOM at 94 will have proven to be a great trade.

Two weeks ago, the Value Line analyst Robt Mitkowski, who I think is pretty good, wrote a report that concluded, from a price at that point of $88.12, Annualized Total Returns through 2010-2012 would be just +7 pct on the high side to $110 to as low as +3 pct on the low side to 90. The dividend yield at the time was +1.7 pct and expected to grow each year by +7.0 pct. The stock is now $95, so where’s the upside, meaning that if you are a buyer today you are holding a lot of risk. Risk management is our business.

Give this some thought: the price of crude oil has risen from the low 50’s to about 80 in the first three quarters of 2007, and yet, in the words of Mitkowski, “Despite higher oil prices, ExxonMobil’s net profit was slightly lower in the first nine months of 2007 than it was the previous year.” He goes on to add, “The added spending in recent years to raise oil pumping capabilities has worked, in theory. Exxon Mobil would have increased its production by about 3% in 2007 if it were not for less output from production-sharing contracts due to higher prices. The loss of control over Venezuelan assets also hurt results, contributing to a 2% decline in production. The company has put the work in to provide for about a 4% annual rise in volume for the next few years. However, it’s not clear to what extent circumstances will allow that potential to be realized. Expansion downstream is more selective. Competition is fierce to get in on promising new refining and chemicals facilities, with venues largely limited to up-and-coming Asian nations, such as China and Singapore. Exxon Mobil has its hand in a couple of such projects, but refining and chemicals product sales are likely to continue advancing by around 1% a year, on average.”

So Exxon has issues to deal with. What has been driving the stock is the +19 pct earnings growth due to, in Mitkowski’s words again, “formidable stock-buyback program enhances results nicely. The repurchase of $8.5 billion worth of common stock in the most recent quarter lifted share net to the same level as the prior year, despite 10% less net profit. For all of 2007, ExxonMobil is on track to top $30 billion in share repurchases. That would bring the three-year total to a likely $80 billion. Exxon feels that stock buybacks are a better use of capital than acquisitions.” That rapid per share earnings growth is now over, and the company is relying on crude prices and pump prices to continue to increase.

Therein lies the rub. America cannot go from $50 to $100 oil in a year and avoid a massive recession. Oil prices and pump prices must come down or else. In fact, the point I have been making is that the damage has already been done, and only by interventionist moves from the US Treasury Department and Federal Reserve Bank, causing a lower USD, has the equity and debt markets remained pumped. But, for how long before inflation creep starts to push bond prices down and yields higher and the weekly Treasury auctions have to become bigger, also pushing bond prices lower and yields higher.

Then the share buyback game is over too. Same for the private equity deals. And with higher yields, the housing market crisis will worsen as rolling over ARMs will force even greater numbers of homeowners out of their homes.

But as long as commodity prices remain high, the cost of gasoline at the fuel pump will keep consumers at home and away from the stores, which will then cause bankruptcies among the retailers and the mall owners, which in turn will further depress manufacturing and shipping.

The US economy is in a corner and XOM a good case study in how it works through the mess. Everybody wants theirs. Exxon needs higher prices for crude and also at the fuel pump. The retailers hate it, which is why I have been pointing you to study the retailers and consumer spending and new unemployment claims data.

As far as the bankers at Humungous Bank & Broker go, the ones with the credit derivatives problem, JP Morgan, Bank of America and Citigroup, will have to resolve those issues. But that’s the tip of the iceberg. The ones with the dubious quality Collateralized Debt Obligations (CDOs) on their books, like Citi and Merrill Lynch, among others, also have serious problems. Then there are the banks and near-banks that delved into the sub-prime lending business, like HSBC, and the banks, asset managers, insurance companies, pension funds and hedge funds that bought them and are still holding them marked to cost and not true value. Then there are the big bond players like Morgan Stanley, Lehman Brothers and Bear Stearns who will start taking a major hit to profits should the bond market tank.

In fact, the outlook for HB&B is not a rosy one. Foreign investors from the Middle East and Asia are laying in wait, and could end up owning the great money center banks of America and Europe before all the dust has settled.

That’s the state of the world as I see it at the close of 2007.

As to my outlook, which was summed up in the prior couple weeks, it remains unchanged: “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.”

Maybe I should have stressed more in the past the point I am about to make: I trade by analysis of price series data (adding volume analysis for the micro-caps). The nuances of the trading tactics are affected by my mind-set. Some people incorrectly think that I trade like my mind-set, which for two and a half years has been bearish. No, the analysis of price trends (MACD) and cycles (RSI/STO) determines my tactics. I may buy something based on analysis, but if my mind-set is bearish, my finger is close to the sell button. As a manager of risk first and reward second, my primary job is to cut my losses off before they damage the portfolio.

I picked up a habit from a trader (unfortunately I cannot recall his name) whom I worked with almost 25 years ago, and it has always served me well. In his daily and weekly set ups, he listed his portfolio with current prices beside each name. Beside the price he drew two arrows starting from the same point, one pointing up and the other down, to where he believed the price would be a week or a month from then. If the potential upside (in his mind) was bigger than the downside, the upward pointing arrow was longer, and vice versa. Whenever he changed the length of those arrows, he would write the reason that changed his outlook.

This asset manager was constantly focused on price and causal factors. His set-up sheets were like a diary he would review. Traders, I think, need discipline like this because the world is always pushing and pulling you to do this or that. There is so much hot air that, if you don’t have a system of some kind, you will find yourself spinning in the breeze.

My system is a little different in that I use a simple Accumulation/Distribution Zone system with Buy/Sell Alerts based on RSI. It is not meant to be precise, but serve as a guide. If you are patient, and don’t over-commit to a new Buy or Sell, but simply change your tactics based on the signals, then eventually you will reduce your risk and increase your reward. And, over time, you will enhance your analytics (say by adding MACD to the RSI) and your tactics (say by using put and call options) and, undoubtedly, even your strategies (say by trading forex/gold or foreign stocks). In time, if you stick to your knitting, you will become a good trader, certainly superior to most of your friends and associates, and possibly better performers than the majority of professional asset managers.

The last point needs explanation. Asset managers are severely handicapped by (i) committees (ii) full investment or short-selling restrictions (iii) having to stick to a marketing theme that was used to build the Fund (iv) just plain never having been properly trained (v) personal greed or interest that is in conflict with the job mandate (vi) stress from competition pressure that often leads to mistakes, (vii) the time it takes to move into and out of humungous positions, and (viii) numerous others.

In other words, I am not taking an unfair shot at asset managers; I am merely pointing out to the rest of you that trading is not like driving in a Formula One race where you would never get off the starting grid much less have any chance whatsoever of beating a professional race driver. Trading is something you can all excel at if you apply yourself, knowing that the best pro traders may have advantages, but they are also handicapped.

So for this New Year’s Resolution, please add the one that you are going to apply yourself to better trading techniques, and we can then all look back at the end of 2008 with an air of satisfaction and growing confidence.

May you have a happy and prosperous new year.

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Global Economics Review

US Economic Calendar for next week.

It is important to review the following reports this week on the US economy. On balance, this is not a healthy picture. It is in fact a worsening condition.

Econoday Report on US New Home Sales for November.

Econoday Report on US Durable Goods Orders for November.

Econoday Report on US New Unemployment Claims.

Inflation is surging in many countries for both producers and consumers as shown by this Dec 21 report by Econoday. Ignore the Global Stock Market Recap and Currencies, which is a week old, but review the Indicator Scorecard to take note of the inflation creep and economic slowing around the world.

Econoday International Report (Dec 21).

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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:

THIS WEEK closed with 9 GREEN industries and 9 RED, compared to last week’s 7 green, 12Red – bringing the net sector tally from -5 industries to NEUTRAL.

Of the Cara 100 components, are 27 GREEN (last week: 27) 32 are RED - (last week: 32) – exactly the same as last week !

(note: this table is slightly different from the one Jock uses, and uses 5-day lookbacks instead of weekly data)

Ticker	Name	Score -5wks	Score -4wks	Score -3wks	Score -2wks	Score -1wks	Score -0wks
ABB	ABB Ltd.	-2	+0	+0	+0	-2	+2
ABV	COMP DE BEBA AM ADS	-2	+0	+2	+0	-2	-2
ADBE	Adobe Systems Inc.	-2	-2	+2	+0	-2	-2
AET	Aetna Inc.	+0	+2	+2	+2	+2	+0
AMAT	Applied Materials Inc.	-2	+0	+0	+0	+0	+0
ATVI	Activision Inc.	-2	+2	+2	+2	+2	+2
BA	Boeing Co.	-2	+0	+0	-2	-2	+0
BBBY	Bed Bath & Beyond Inc.	-2	-2	+0	-2	-2	-2
BBD	Banco Bradesco S.A.	-2	+0	+2	+0	+0	+0
BC	Brunswick Corp.	-2	+0	+0	-2	-2	-2
BDK	Black & Decker Corp.	-2	+0	+0	-2	-2	-2
BHP	BHP Billiton Ltd.	-2	+0	+0	-2	-2	-2
BMY	Bristol-Myers Squibb Co.	-2	+2	+2	+0	-2	-2
CCJ	Cameco Corp.	-2	-2	-2	-2	-2	+0
CCL	Carnival Corp.	-2	+0	+0	+0	-2	+0
CEO	CNOOC Ltd.	-2	+0	+0	-2	-2	-2
CHA	China Telecom Corp. Ltd.	-2	+2	+2	-2	+0	+0
CHL	China Mobile Limited	-2	+0	+2	+0	+0	+0
CHRW	CH Robinson Worldwide Inc.	-2	+2	+2	+2	+2	+2
COST	Costco Wholesale Corp.	+0	+0	+2	+0	+0	+2
CSCO	Cisco Systems, Inc.	-2	-2	-2	+0	+0	-2
CTSH	Cognizant Technology Solutions Corp.	-2	-2	+0	+0	+2	+0
CVX	Chevron Corp.	-2	-2	+2	+2	+2	+2
DB	Deutsche Bank AG	-2	+2	+2	+2	-2	+2
DELL	Dell Inc.	-2	+2	-2	-2	-2	+0
DEO	Diageo plc	-2	+2	-2	-2	-2	-2
DIS	Walt Disney Co.	-2	+0	+0	+0	+0	+0
DOW	Dow Chemical Co.	-2	+0	+0	+2	-2	-2
DNA	Genentech Inc.	-2	+2	-2	-2	-2	-2
ECA	EnCana Corp.	+0	-2	+0	+0	+0	+2
ERJ	EMBRAER - Empresa Brasileira de Aeron�utica S.A.	-2	-2	+2	+2	-2	-2
ERTS	Electronic Arts Inc.	-2	+0	-2	+2	+2	+2
EXC	Exelon Corp.	+0	+2	+2	+2	+0	+0
GE	General Electric Co.	-2	-2	-2	-2	-2	+0
GFI	Gold Fields Ltd.	-2	-2	-2	-2	-2	-2
GGB	Gerdau S.A.	-2	-2	+2	+0	+0	+2
GOL	GOL Linhas A�reas Inteligentes S.A.	-2	-2	+2	-2	-2	+2
GOOG	Google Inc.	+0	+0	+0	+0	+0	+0
GRMN	Garmin Ltd.	-2	+2	+2	+2	-2	-2
GS	Goldman Sachs Group Inc.	-2	+0	+0	-2	-2	-2
GSK	Glaxosmithkline plc	-2	+2	+2	+2	-2	-2
HBC	HSBC HLDGS PLC ADS	-2	-2	+0	+0	-2	+0
HDB	HDFC Bank Ltd.	+0	+2	+2	+0	+0	+0
IBKR	Interactive Brokers Group, Inc.
IBN	ICICI Bank Ltd.	-2	+0	+0	+0	-2	+0
IMO	Imperial Oil Ltd.	+0	-2	+0	+0	+0	+2
INFY	Infosys Technologies Ltd.	-2	-2	+0	+0	+0	+2
INTC	Intel Corp.	-2	+2	+2	+2	+0	+0
JCP	J. C. Penney Company, Inc	-2	+0	+0	+0	+0	+0
JNJ	Johnson & Johnson	+2	+2	+2	+0	+0	+0
KB	Kookmin Bank	-2	+0	+0	+0	+0	+0
KO	Coca-Cola Co.	+2	+2	+0	+2	+0	+0
KSS	Kohl's Corp.	-2	+0	+0	+0	-2	+0
LEH	Lehman Brothers Holdings Inc.	-2	+2	+2	-2	+2	+2
LLTC	Linear Technology Corp.	-2	+0	+0	+0	+0	+0
LYO	Lyondell Chemical Co.	+0	+0	+0	+0	+0	+2
MBT	Mobile Telesystems OJSC	+0	+2	+2	+0	+0	+2
MCO	Moody's Corp.	-2	-2	+0	+0	+0	+0
MFC	Manulife Financial Corporation	-2	+0	-2	-2	-2	-2
MICC	Millicom International Cellular SA	+0	+2	+2	+0	+0	+0
MU	Micron Technology Inc.	-2	-2	+0	+0	-2	-2
NKE	Nike Inc.	+0	+0	+2	+0	+0	+0
NOK	Nokia Corp.	+0	+0	+0	+0	+0	+0
NTES	Netease.com Inc.	+0	+0	+0	+0	-2	-2
NUE	Nucor Corp.	-2	+2	+2	+2	+0	+2
ORCL	Oracle Corp.	-2	-2	+2	+2	+2	+2
OXPS	optionsXpress Holdings, Inc.	+0	+2	+2	+2	+2	+2
PAYX	Paychex Inc.	-2	+0	+0	+0	-2	-2
PBR	PETROLEO BRASILEIRO	+0	+0	+2	+2	+0	+2
PG	Procter & Gamble Co.	+0	+2	+2	+0	+0	+0
PTR	PetroChina Co. Ltd.	-2	-2	+0	-2	-2	-2
QCOM	QUALCOMM Inc.	-2	+2	-2	-2	-2	-2
RIO	COMPANHIA VALE ADS	+0	+0	+0	+0	-2	+0
RIMM	Research In Motion Ltd.	+0	+0	-2	-2	-2	+2
RY	Royal Bank of Canada	-2	+0	-2	-2	-2	+0
SBUX	Starbucks Corp.	-2	-2	-2	-2	-2	-2
SLW	Silver Wheaton Corp.	+0	+0	+0	+0	+0	+2
SNDK	SanDisk Corp.	-2	+0	+0	+0	+0	-2
STO	StatoilHydro ASA	-2	+0	+2	-2	-2	+0
SU	Suncor Energy Inc.	+0	-2	+0	+0	+0	+2
SWK	Stanley Works	-2	+0	+0	+0	-2	+0
TCK	Teck Cominco Ltd.	-2	-2	-2	-2	-2	+0
TEF	Telefonica SA	+0	+0	+0	+0	+0	+0
TGP	Teekay LNG Partners LP.	-2	-2	+0	+0	+0	+0
TGT	Target Corp.	-2	+0	-2	-2	-2	-2
TM	Toyota Motor Corp.	-2	+0	+2	+0	-2	-2
TOT	Total SA	+2	+0	+2	+0	-2	+2
TS	Tenaris SA	-2	-2	-2	-2	-2	+0
TT	Trane Inc	-2	+2	+2	+0	+2	+2
UBS	UBS AG	-2	+0	+0	+0	-2	+0
UTX	United Technologies Corp.	-2	+2	+2	+2	+0	+2
VCP	Votorantim Celulose e Papel S.A.	+0	+2	+2	+0	+0	-2
VIP	Vimpel-Communications	+0	+2	+2	+2	+2	+2
WAG	Walgreen Co.	+0	-2	-2	+0	+0	+0
WBK	Westpac Banking Corp.	-2	-2	+0	+2	-2	-2
WFMI	Whole Foods Market Inc.	-2	-2	-2	-2	-2	-2
WHR	Whirlpool Corp.	+0	+0	+2	+0	+0	+0
WMT	Wal-Mart Stores Inc.	-2	+2	+2	+2	+0	+0
XOM	Exxon Mobil Corp.	-2	+0	+2	+2	+2	+2
YHOO	Yahoo! Inc.	-2	-2	-2	-2	-2	-2
Summary:	(+2/-2/other)	3/71/25	28/28/43	40/19/40	22/28/49	12/48/39	27/31/41
Net:	(+2)-(-2)	-68	+0	+21	-6	-36	-4

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

In all indices, the number of red components increased; in none did the green components increase. The deterioration within the Russell 2000 was most impressive.

Among the major indices, only the CRB, NDX, and Shanghai composite were GREEN.

The DJIA, COMPQX, Russell 2000, SP-500, Wiltshire 4500, Bombay Composite, and the US$ index were neutral. Hang Seng stayed RED.

GOLD and SILVER stocks both rose from neutral to GREEN.

BOTTOM LINE: This week, the market sectors rose to fully neutral – that’s the headline! Index components saw more REDs, and GOLD and SILVER stocks strengthened to GREEN.

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.

As I pointed out a week ago, 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.

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

And, I’ll ensure that Jock’s report is fully automated too.

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US Equity Markets Review

DJIA ino.com chart

DJIA stockcharts.com chart

DJIA=13366, down from 13,450 a week ago Friday.

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

I do not think the US major market levels are 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=2674 down from a week ago Friday at 2692. “Traders are taking note of a possible double top.” (WIR 39, Sept. 29, Nasdaq=2701.5)

After I saw a short-term bottom of about 2550 in December, 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, save for a crash on (part-day) Monday, but I still believe there will be a major sell-off in the next couple weeks.

A clearly defined head-and-shoulders pattern is in place for the Nasdaq Composite, and a similar but lesser defined one for the Dow 30. I believe that without higher corporate profits reported for 4Q07 and higher guidance for 1Q08, the average share price 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

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 5 up and 5 down using a five-session week, but 1 up and 9 down based on the calendar week. The latter is the same as the result from two weeks ago. Energy XLE remained as top performer.

A week ago, I wrote, “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.”

Presently there are 7 of the Cara 100 in the Distribution Zone and 3 in the Accumulation Zone. In recent days, there have been two Sell Alerts and five Buy Alerts. This week was soft, but did not set off the alarm bells. Yet.

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	80.31	0.63	0.79%	3.63%	3.37%	9.83%	41.94%	7.17%	16.81%	35.61%
XLB	42.00	-0.05	-0.12%	1.03%	-1.73%	1.74%	21.35%	-0.28%	4.35%	19.73%
XLI	39.35	-0.03	-0.08%	0.77%	-1.38%	0.36%	11.69%	-4.02%	1.16%	11.66%
IYZ	29.85	-0.01	-0.03%	0.74%	0.37%	3.22%	0.64%	-11.82%	-11.69%	0.91%
XLP	29.03	0.11	0.38%	0.24%	-1.19%	-0.07%	10.46%	3.90%	7.44%	10.59%
IYH	71.25	-0.03	-0.04%	-0.29%	-1.56%	-1.86%	7.21%	0.65%	1.98%	6.84%
SMH	32.63	-0.11	-0.34%	-0.58%	-1.63%	-0.06%	-2.80%	-14.80%	-14.89%	-3.35%
XLF	28.86	-0.15	-0.52%	-0.62%	-3.83%	-4.60%	-21.83%	-15.61%	-20.67%	-21.94%
XLY	32.93	-0.03	-0.09%	-0.66%	-2.66%	-3.54%	-14.51%	-10.35%	-16.17%	-14.60%
XLU	42.92	0.32	0.75%	-0.74%	-2.45%	0.89%	16.57%	7.49%	9.29%	16.85%

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, moving from 79.30 to 80.31. Of course, West Texas Intermediate Crude ($WTIC) moved up from 91.31/bbl to 96.00.

A week ago, the XOM was up +2.5 pct W/W to 93.43. This week it closed at 95.00.

A week ago, I wrote, “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.” You’ll be even happier selling at 95 for all the reasons I gave off the top.

“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 76.09, up from 75.33 the previous week. As I say, this average is “moving”. The 50-day MA is now at 92.29, up from 91.41 and obviously still rising, “so (as I wrote a few weeks ago when the 200d-MA was down at 70) 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.”

Most of the Oil stocks were up on Friday by +1 to +2 pct, which I attribute to the crisis in Pakistan and to the $USD drop.

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	117.62	1.65	1.42%	8.91%	6.36%	21.82%	136.04%	55.79%	94.16%	131.22%
IMO	56.51	0.87	1.56%	8.13%	9.45%	14.97%	58.47%	14.02%	22.48%	53.39%
STO	31.00	0.65	2.14%	7.68%	1.77%	-5.08%	20.67%	-8.61%	2.62%	17.11%
SU	110.19	2.10	1.94%	5.39%	6.90%	12.55%	49.09%	16.22%	24.59%	39.32%
TOT	83.71	1.63	1.99%	5.34%	2.79%	4.21%	17.95%	3.31%	5.01%	16.41%
CEO	165.09	0.35	0.21%	4.80%	1.56%	-11.13%	75.12%	-0.81%	46.02%	78.49%
XOM	95.00	1.33	1.42%	3.12%	2.46%	7.24%	28.19%	2.64%	13.64%	22.85%
CVX	94.86	1.11	1.18%	3.05%	1.91%	9.59%	33.66%	1.37%	12.69%	27.71%
ECA	69.21	0.77	1.13%	2.50%	2.40%	5.78%	52.65%	11.90%	13.55%	47.54%

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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 ground W/W, falling from 42.27 to 42.00.

A week ago Friday, after XLB gained +1.68 pct on the day, I wrote, “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.”

Alcoa (AA) was a winner this week. On Friday some of the steelmakers had big gains (MT +2.1 pct) (PKX +1.9 pct), but prices through the sector were mixed, except for the goldminers on Friday which boomed from +2 to over +6 pct for most of the majors except GFI, which gained just +0.8 pct on the day.

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
MT	77.80	1.58	2.07%	8.96%	5.36%	7.06%	90.69%	-0.71%	24.18%	84.10%
TCK	36.81	0.33	0.90%	8.91%	3.31%	2.59%	-46.84%	-22.85%	-13.20%	-50.76%
PKX	154.25	2.89	1.91%	4.65%	-6.07%	-1.32%	94.20%	-13.72%	30.23%	85.62%
BHP	71.36	0.18	0.25%	4.18%	-4.01%	-5.42%	83.59%	-9.21%	20.44%	79.30%
AA	36.86	-0.13	-0.35%	4.15%	1.46%	0.85%	25.67%	-5.78%	-6.21%	22.78%
RTP	421.00	-5.40	-1.27%	4.04%	-3.89%	-8.68%	106.27%	22.60%	38.93%	96.74%
GGB	29.40	-0.25	-0.84%	3.96%	4.44%	7.18%	79.05%	12.13%	14.75%	80.48%
NUE	60.85	0.31	0.51%	3.00%	0.15%	5.99%	11.65%	2.32%	4.57%	10.08%
RIO	33.38	-0.23	-0.68%	2.83%	-0.63%	-2.85%	15.82%	-1.62%	-24.15%	11.49%
TS	44.78	0.33	0.74%	2.75%	-2.50%	-4.70%	-7.71%	-14.90%	-8.56%	-9.43%

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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
ABB	29.13	0.33	1.15%	7.85%	2.68%	1.60%	63.47%	11.06%	29.70%	63.74%
CAT	73.16	0.43	0.59%	2.31%	-1.43%	2.01%	19.62%	-6.72%	-7.50%	19.33%
GE	37.34	0.15	0.40%	2.25%	-0.64%	-2.10%	-1.66%	-9.81%	-2.05%	-0.37%
BA	88.25	-0.63	-0.71%	1.22%	-0.34%	-5.32%	-1.03%	-15.94%	-7.26%	-0.84%
HON	61.20	0.01	0.02%	0.84%	0.91%	11.52%	35.70%	2.91%	8.55%	34.62%
MMM	85.09	-0.31	-0.36%	0.71%	-2.11%	1.77%	8.73%	-9.07%	-2.03%	8.87%
UTX	76.87	0.03	0.04%	0.62%	-0.95%	1.90%	22.38%	-4.49%	8.13%	22.38%
ERJ	46.20	-0.74	-1.58%	0.54%	-1.32%	5.41%	13.29%	5.19%	-4.49%	12.24%
FDX	90.62	-1.28	-1.39%	-3.21%	-6.76%	-5.79%	-17.45%	-13.49%	-19.36%	-16.05%

XLI (Industrials) lost ground W/W using the calendar week, from 39.47 to 39.35.

As I wrote four weeks ago, with XLI at 39.40, “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.”

GE, HON and CAT were winners this week.

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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 ground from 33.19 to 32.93.

I think the focus ought to be on the US Retailers now. The January 10th reporting by the majority of them will indicate the results of the important December period as well as set the important guidance for 1Q08. I remain skeptical that the consumer can handle more spending with more challenging borrowing conditions and higher prices as the fuel pump.

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
CCL	44.61	0.12	0.27%	1.36%	-0.40%	0.00%	-12.44%	-7.89%	-8.10%	-10.17%
EBAY	33.78	0.13	0.39%	1.23%	-0.91%	0.69%	11.97%	-13.43%	5.69%	11.45%
TM	106.60	-0.92	-0.86%	0.70%	-3.47%	-5.38%	-21.21%	-8.78%	-14.49%	-20.60%
JCP	43.77	0.51	1.18%	0.62%	0.41%	-1.71%	-43.93%	-30.93%	-39.98%	-43.62%
DIS	32.42	-0.01	-0.03%	0.28%	-1.04%	-1.19%	-5.20%	-5.73%	-4.22%	-6.08%
WHR	80.79	-0.69	-0.85%	-0.93%	-3.18%	1.81%	-4.57%	-9.33%	-28.22%	-2.67%
BC	17.55	0.11	0.63%	-1.63%	-6.40%	-11.45%	-45.02%	-23.23%	-46.74%	-45.09%
SBUX	20.13	-0.33	-1.61%	-1.95%	-6.37%	-12.63%	-42.89%	-23.17%	-23.89%	-43.65%
NKE	64.31	-0.69	-1.06%	-2.58%	-1.00%	-0.62%	31.70%	9.63%	10.33%	29.66%

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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	38.62	0.24	0.63%	6.54%	5.38%	3.57%	-16.17%	-18.25%	-11.28%	-16.17%
ABV	72.79	0.37	0.51%	1.68%	-1.89%	-1.64%	48.25%	-0.46%	4.91%	48.13%
PG	74.25	0.36	0.49%	1.45%	-0.20%	0.13%	15.04%	5.56%	21.01%	15.15%
DEO	86.21	-0.16	-0.19%	0.85%	-0.35%	-6.24%	8.40%	-1.73%	3.62%	7.92%
PEP	77.03	0.33	0.43%	0.71%	-2.11%	0.64%	22.82%	5.15%	18.05%	21.79%