Not that anybody has actually proven that the Iranian nuclear programme is problematic, but Mr. Olmert says Israel or the US must stop that programme “by all possible means”. Given that Iraq under Saddam Hussein was deemed to be an equal problem, although never proven in that case either, the Americans have in the past seven years put their entire economic health and social framework at risk over this issue. So it goes without saying that the Olmert threat is a real one.

So-called “speculators” are just calling it like they see it. Where there’s smoke, we have been conditioned to look for a fire.

On the macro-economics front, while there may be a few positive comparable metrics in recent weeks, the overall situation is worsening. The US economy is slowing, unemployment hit worrisome numbers this week, and commodity prices are soaring out of control. Interest rates cannot fall, or inflation will simply soar higher, so central banks are between a rock and a hard place.

The impact that lower house prices and credit market squeezing is having on the average American is worrisome to bankers too. In one breath, the bankers are saying, with bravado, that they have seen the worst, yet in the next breath they go hat in hand to the owners of Sovereign Wealth Funds, soliciting their investment capital. The worst is yet to come, I feel.

Friday this week was particularly hard on the Bulls. Traders are wondering now if they were set up on Thursday, right before more depressing economic data was to be released. Traders had been led to believe that stronger banks, lower energy costs, better-than-expected monthly retail sales, booming technology markets and so forth, were just cause for Thursday’s huge gain of +214 points in the Dow Jones Industrial Average. Not! It’s amazing how quickly this hype disappears under the pressure of selling waves.

On Friday, traders were hit with realities from Wall Street, macro-economics and commodity markets. That started the session off weak, growing more extreme as the day wore on, closing down just shy of -400 Dow points. A day to remember.

This equity market situation is not comparable to a rope-a-dope tactic of a young Mohammed Ali. The Dow index almost a year ago was 14022; it’s now at 12209. Investors who are bullish, including all pension funds and most hedge and mutual funds, have been beaten up. We’ve been laughing at the banks, but we should be thinking about ourselves.

By keeping the public hopeful and interested in buying stocks over this past year, can you imagine the huge positions these banks and other major market players have unloaded? It’s what I call a rolling Bear. Rather than take down all stocks at once, in a rotating market only a few groups are knocked down at any one time. This process is somewhat orchestrated by selective ratings downgrades and institutional sales calls. It’s a fact that banks are involved in front-running sales practices at such times.

At the conclusion, the point when the key inside players have offed the last of their over-priced positions, I believe they will stop supporting (ie, promoting) the market. At that point in the Bear, the high-rise elevators will be moving swiftly non-stop to the basement, where independent traders ought to realize that the market savvy bankers, with control over lending and investment, expect to have virtually unrestricted access to the best values in the market. I have seen this every cycle since the 1960’s.

But I think not this time around! Something is different. Independent traders have become savvy too. They have read Graham & Dodd, Edwards & McGee, Buffett, Pring, Murphy and that ilk. They now tune into informed blog commentaries. They are focused on the corporate and industry fundamentals, interest rates, commodity prices, technical indicators and similar metrics.

Just think how much more understanding that independent traders now have with respect to the nuances of RSI, Stochastics, MACD and short selling versus their general trading knowledge as recently as 2002.

The 2000-2002 Bear market smartened up independent traders to the process of what they thought was Wall Street analysis was actually just synthesis, ie, good old story-telling—even in Congressional testimony I might add.

The humungous banks and brokers have been saying to themselves, if you can get away with it, hey why not try. Everybody else seems to be getting theirs. Game on!

Sadly, life has taken that turn. Still, it’s up to the rest of us to be ready to take advantage of a market blow-off. I think we’ll see it, but possibly not until after the summer.

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Global Economics Review

The macro-economic data continues to worsen, both in America and abroad.

Here are the key US economic reports and the Econoday analysis from last week.

US Economic Calendar.

ISM Manufacturing data for May. According to Econoday, the Institute for Supply Management's manufacturing index showed that “momentum isn't yet building in this sector but conditions are at least stable, according to the index which rose 1 point in May to a near 50 level of 49.6 that indicates little change from April. New orders were little changed at 49.7 but up nicely from the 46.5 level in May that was indicating contraction. Exports are the main driver for orders, up 2 full points to a 59.5 level that easily leads all components... Employment remains weak, little changed at 45.5 to indicate yet further month-to-month contraction. Prices paid are astronomical, at 87.0 to indicate that the vast majority of purchasers are reporting month-to-month increases in the prices they pay for raw materials. Supply chain readings were stable with inventories on the thin side and deliveries still a bit slow.”

US Factory Orders data for April. March orders were higher than expected, and April proved the same. But there were problems. Econoday reported: “Boosted by a price-related +2.8% month-to-month jump for nondurable goods, factory orders rose +1.1% in April despite a -0.6% decline for durable goods. The Commerce Department said the gain in non-durables was tied to petroleum and coal products. (But) a look at separate durable components shows a 4.2 percent month-on-month decline for vehicles and a 25 percent decline for construction machinery, which is no surprise given the housing slump. Computers fell 23 percent, a group suffering constant price erosion.”

ISM non-manufacturing survey data for May.

US Jobs Report for May. Econoday says, “The May employment report showed a further declining labor sector but was mixed in terms of meeting expectations. The biggest surprise was a half a percentage point jump in the unemployment rate. Nonfarm payroll employment in May declined 49,000, following a decrease of 28,000 in April and a fall of 88,000 in March.”

On Thursday, both the Bank of England (BOE) and European Central Bank (ECB) reported on their decision re monetary policy. As expected, the ECD kept its policy interest rate at 4% and the BoE stayed at 5%. I opined before these policy meetings, “My thinking is that there will be no further rate cuts this year on account of the inflationary pressures that policy generates.”

As stated a week ago, I believe that “the inflation and other macro-economic issues that Americans are struggling with are global in scope. High inflation rates will likely result in very few central bank rate cuts in the next couple years. If the global economy suffers further contraction, the monetary authorities can do very little at this point”.

Weekly International Economic Report .

So much for last week; for the most part, it was another bad one.

Let’s look ahead. Here is next week’s economic calendar, which is shaping up to be a not-so-quiet post-Memorial Day week:

US Economic Calendar.

US Pending Home Sales data for April.

US International Trade data for April. Huge deficits abound. As Econoday suggests, any drop in imports, which is normally a good sign, suggests that businesses are recognizing that the economy is weak.

ISM non-manufacturing survey data for May. The April data was borderline recessionary, and also a tad better than expected. Let’s see what information the latest data brings.

US Import and Export Price Report for May. Import prices were surging in April, up +1.8% in the month for a Y/Y gain of +15.4%. Price increases, stemming from the weak US Dollar plus the higher oil costs, even showed a huge +1.1% rise ex-petroleum, and the Y/Y rise was +6.2% -- the worst reading since the late 80s, according to Econoday. So let’s see what happened in May.

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US Equity Markets Review

DJIA ino.com chart

DJIA stockcharts.com chart

This week was bearish as 9 of 10 sectors dropped in price, and only 3 of 30 Dow components were up on the week. The DJIA index was down -3.4% W/W and -8.0% over the past year.

The S&P 500 and NASDAQ Composite lost -2.8% and -1.9% W/W, and are down by -7.3% and -6.7% over the past year.

There were no leaders this week.

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NASDAQ Composite ino.com chart

NASDAQ Composite stockcharts.com chart

Tech, including Semi-conductors, were gainers on the week.

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. If you want, add a couple like SNDK and ADBE:
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

This week, there was 1 sector up and 9 down. On Friday the scoreboard read all 10 sectors down. Only Energy (XLE) managed to eke out a weekly gain—of just 2 cents to 86.02.

Here’s the SPY Monthly, Weekly and Daily data charts:

SPY Monthly data:

SPY Weekly data:

SPY Daily data:

The tables I now show are for eleven GICS Sector Index Funds (ETF’s), including two for Technology (XLK and SMH), for a total of ten GICS sectors. They cover the full spectrum of the US equity market.

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	86.02	-1.50	-1.71%	0.02%	-1.97%	1.28%	8.20%	13.41%	12.22%	24.92%
IYZ	26.78	-0.64	-2.33%	-0.41%	1.90%	3.80%	-8.19%	15.33%	-10.40%	-21.63%
XLB	44.17	-1.31	-2.88%	-0.76%	-0.70%	0.55%	6.95%	7.08%	3.64%	8.93%
SMH	32.11	-0.79	-2.40%	-1.65%	-0.59%	1.10%	2.39%	12.90%	-4.26%	-11.30%
IYH	63.51	-1.55	-2.38%	-1.86%	-0.71%	-0.10%	-9.41%	-1.14%	-13.22%	-11.14%
XLU	40.54	-1.15	-2.76%	-1.86%	-2.59%	1.45%	-3.68%	6.85%	-7.76%	0.72%
XLP	27.95	-0.70	-2.44%	-1.90%	-0.96%	-0.18%	-1.55%	2.76%	-4.12%	0.98%
XLK	24.72	-0.69	-2.72%	-2.49%	0.77%	0.28%	-5.36%	12.26%	-8.00%	-2.49%
SPY	136.29	-4.49	-3.19%	-2.89%	-2.31%	-2.06%	-5.96%	3.99%	-9.71%	-10.24%
XLY	31.26	-1.28	-3.93%	-3.25%	-3.07%	-3.49%	-2.92%	2.66%	-9.68%	-21.26%
XLI	37.01	-1.50	-3.90%	-4.71%	-3.39%	-3.82%	-3.90%	2.44%	-7.48%	-4.49%
XLF	23.33	-1.31	-5.32%	-5.78%	-6.83%	-10.27%	-17.74%	-3.52%	-26.22%	-37.65%

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. SPY XLE XLB XLI XLY XLP IYH XLF XLK SMH IYZ XLU . You can also add more ETF’s – up to 30 in total.

For a list of components to many ETFs, 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

I use XLK for the Tech sector for a total of ten (10) sectors, but also include Semiconductors (SMH) because it is my bellwether on the economy plus use SPY to see where each sector stands relative the broad market.

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:

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
IMO	59.55	0.92	1.57%	2.58%	-1.46%	2.06%	8.43%	2.73%	16.06%	26.89%
ECA	92.60	1.91	2.11%	2.47%	-1.81%	7.95%	33.03%	19.48%	37.88%	45.25%
SLB	101.94	-3.05	-2.91%	0.80%	-0.52%	-3.43%	1.35%	16.29%	3.08%	27.78%
CVX	99.50	-0.49	-0.49%	0.35%	-2.36%	2.11%	6.46%	13.33%	8.89%	21.65%
SU	67.86	0.73	1.09%	-0.72%	-5.53%	9.47%	23.09%	24.70%	32.51%	53.98%
STO	38.43	1.01	2.70%	-1.84%	-9.00%	-1.31%	23.02%	25.38%	12.50%	39.34%
XOM	86.79	-2.52	-2.82%	-2.22%	-6.18%	-3.49%	-7.19%	2.70%	-5.09%	3.79%
TOT	84.47	-1.33	-1.55%	-3.20%	-5.66%	1.76%	1.43%	13.83%	0.93%	12.63%
CEO	171.28	-2.83	-1.63%	-3.39%	-13.58%	-5.20%	2.31%	13.51%	-9.71%	69.10%
PBR	68.07	-0.46	-0.67%	-3.45%	-5.48%	6.73%	-42.71%	-40.04%	-36.19%	24.35%
RIG	143.50	-3.97	-2.69%	-4.45%	-7.48%	-8.77%	-1.68%	3.66%	7.01%	44.89%
PTR	135.97	-6.32	-4.44%	-4.62%	-4.69%	-6.23%	-21.70%	-0.46%	-33.87%	2.03%

Crude Oil ($WTIC +$11.19/bbl +8.79% W/W) surged, closing at a new all-time record of 138.54. You can blame this on what is called an exogenous event, the Prime Minister of Israel Mr. Olmert saying that Iran’s nuclear programme would have to be stopped at all costs.

This week, however, XLE gained just 2 cents +0.02% to close at 86.02.

Except for the Canadians (IMO +2.6% and ECA +2.5%) being up, most oil stocks suffered a bad week, which makes me believe that if Oil prices hold on Monday morning, then the oil stocks will rally a tad before getting hammered again. Ultimately, oil will be priced off the current supply and demand, not peak oil concepts or industry Talking Heads like Boone Pickens.

If the economy stays weak, oil prices will likely drop from here. As I say, in time they will have to because critically important industries like the airlines cannot make profits when the price of oil is over $100, or anywhere close, even when they cut capacity. If they over cut capacity, new fuel efficient turbo-prop based carriers like Toronto’s Porter Airlines will pop up all over and that will really screw the majors. Suffice to say, this is a serious problem and oil prices will have to come down or we’ll all have to move to a small island. :-)

The oil stocks that got hit hard this week were: PetroChina -4.6%, PetroBrazil -3.5%, China National Offshore -3.4% and Total -3.2%. That is a lot of market capitalization lost, particularly when the price of oil jumped +4.58% in a week.

The key to the latter is that if Mr. Olmert keeps his mouth shut, the oil price doesn’t zoom +8.41% on Friday. So, the question is, will somebody pay him enough to keep the stuff going on Monday.

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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:

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
TS	64.65	-0.24	-0.37%	5.46%	5.60%	19.92%	45.64%	32.89%	38.88%	34.63%
NUE	78.20	-2.34	-2.91%	4.55%	4.98%	-4.48%	34.90%	14.16%	27.69%	16.63%
MT	103.01	-1.24	-1.19%	3.70%	4.25%	7.28%	34.83%	32.23%	41.48%	65.77%
VCP	34.35	-0.58	-1.66%	2.05%	8.29%	11.78%	15.66%	5.86%	-0.29%	62.80%
PKX	138.50	-8.55	-5.81%	1.35%	3.54%	7.62%	-5.43%	5.48%	-18.98%	14.51%
GGB	50.54	-0.94	-1.83%	1.16%	1.45%	18.81%	76.10%	60.24%	71.96%	117.47%
BHP	83.82	-0.38	-0.45%	-0.62%	-9.19%	-3.32%	19.05%	14.27%	8.53%	53.80%
TCK	48.56	-0.45	-0.92%	-2.00%	-3.46%	0.60%	34.00%	14.74%	28.98%	13.19%
RTP	467.78	-7.39	-1.56%	-3.15%	-10.98%	-8.85%	11.46%	1.63%	0.93%	66.03%
AA	39.22	-0.86	-2.15%	-3.38%	-3.87%	-1.08%	8.55%	2.22%	9.37%	-1.58%
DOW	38.78	-1.17	-2.93%	-4.01%	-6.82%	-6.03%	0.08%	4.70%	-7.97%	-15.48%
RIO	37.44	-1.27	-3.28%	-5.88%	-9.65%	-6.42%	14.46%	9.76%	2.52%	-17.02%

Basic Materials (XLB -0.76% closing at 44.17) was a loser this week. But Friday’s loss was -2.88%.

Imagine that: $GOLD jumped +2.68% on Friday but the Basic Materials sold off like they did. The writing is on the wall.

The big loser was Dow Chemicals (DOW -4.0%).

Rio Tinto base metals (RTP +5.9% recovered a bit from the prior week loss of -8.1%, and the one (-9.0%) the week before that.

As I opined two weeks ago, “These stocks had been very strong, so traders will be looking closely at the upcoming trading patterns. Typically, a global economic slow-down is expected to produce a cyclical bear phase in these stocks.” I have no interest in buying over-priced stocks.

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Sector 20 (industrial: IYJ, XLI, VIS, and IYT)

Here’s the XLI Monthly, Weekly and Daily data charts:

XLI Monthly data:

XLI Weekly data:

XLI Daily data:

Table 4: Senior capital goods makers and transportation:

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
GE	30.02	-1.04	-3.35%	-2.28%	-3.19%	-7.89%	-18.34%	-8.64%	-19.43%	-19.50%
ABB	31.72	-0.97	-2.97%	-2.34%	-3.73%	1.31%	10.75%	25.13%	7.45%	48.85%
FLR	181.83	-7.19	-3.80%	-2.52%	-3.66%	9.00%	25.92%	26.01%	16.30%	74.30%
FDX	88.86	-4.83	-5.16%	-3.11%	0.03%	-4.67%	3.13%	0.01%	-9.78%	-18.69%
CAT	79.99	-2.74	-3.31%	-3.21%	-2.71%	-2.95%	13.25%	13.06%	7.59%	1.66%
UPS	68.59	-2.46	-3.46%	-3.42%	-1.10%	-3.49%	-0.82%	-4.79%	-7.10%	-4.23%
MMM	74.86	-2.64	-3.41%	-3.48%	-2.32%	-2.72%	-9.49%	-3.96%	-11.74%	-13.58%
UTX	67.01	-2.96	-4.23%	-5.67%	-6.72%	-9.52%	-10.90%	-2.64%	-14.08%	-4.16%
TXT	58.95	-2.18	-3.57%	-5.76%	-4.18%	-4.12%	-11.76%	6.95%	-18.30%	10.95%
HON	54.01	-2.69	-4.74%	-9.41%	-9.03%	-9.01%	-9.83%	-6.04%	-7.25%	-5.81%
ERJ	33.27	-1.44	-4.15%	-11.33%	-12.75%	-17.73%	-26.28%	-21.66%	-29.71%	-30.62%
BA	73.16	-4.15	-5.37%	-11.61%	-10.13%	-13.69%	-15.54%	-7.99%	-20.29%	-25.57%

The Industrials (XLI -4.71% W/W), closing at 37.01, were almost as weak as the Financials.

A week ago, I reported, “There was some blue sky seen in the US economic data that was used to jack up the prices of UPS (UPS +2.41%) and Fedex (FDX +3.24%)”. I am not surprised that was a Bull trap as this week, the Industrial conglomerates were hammered, despite a falling $USD, which should be a help.

GE was best on the week and it lost -2.3%. Boeing (BA) plunged -11.6%. Embraer (ERJ) lost -11.3%.

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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:

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
TM	102.64	-4.10	-3.84%	0.58%	2.15%	2.07%	-3.59%	-1.70%	-9.50%	-16.80%
NKE	67.93	-2.14	-3.05%	-0.64%	4.49%	4.83%	7.35%	14.01%	3.85%	21.94%
TGT	52.52	-2.11	-3.86%	-1.57%	-0.92%	0.34%	6.08%	0.48%	-5.49%	-18.07%
DIS	33.01	-1.48	-4.29%	-1.76%	-1.79%	-4.48%	3.67%	5.63%	0.89%	-5.44%
BC	13.37	-0.83	-5.85%	-2.41%	-11.10%	-17.57%	-20.98%	-14.18%	-34.94%	-60.70%
EBAY	29.26	-0.80	-2.66%	-2.50%	-4.22%	-3.11%	-9.94%	11.98%	-13.36%	-6.13%
BDK	62.11	-1.75	-2.74%	-4.00%	-2.77%	-8.19%	-11.18%	-5.06%	-24.90%	-33.71%
JCP	38.57	-1.99	-4.91%	-4.15%	-4.79%	-10.18%	-7.39%	-9.82%	-13.98%	-52.49%
BBBY	30.47	-1.34	-4.21%	-4.36%	-3.15%	-5.17%	7.44%	9.56%	-5.40%	-19.56%
WHR	68.74	-2.27	-3.20%	-6.70%	-5.04%	-4.30%	-13.95%	-16.56%	-19.75%	-38.50%
CCL	37.23	-2.12	-5.39%	-7.06%	-1.90%	-7.98%	-14.73%	-3.40%	-17.74%	-25.81%
GOL	14.11	-0.49	-3.36%	-8.14%	-4.27%	-12.85%	-41.18%	-13.44%	-45.14%	-55.18%

Consumer Cyclicals (XLY -3.25% closing at 31.26) were next weakest after Industrials. The loss on Friday was -3.93%, and on the prior Friday was -1.71%.

The leader-board had Toyota up +0.6%, probably due to the utter disaster of sales in the US manufacturers reported this week.

The Cara 100 losers were due to the rising oil price: GOL Airlines (-8.1%) and Carnival Cruise (CCL -7.1%). At $138 oil, Carnival may have to forget their long cruises through the Caribbean and settle on Bahamas. :-)

A week ago, I mentioned Brunswick (BC), which had been down -18.3% over 2 weeks. I opined that it would take oil prices to fall well under $100/bbl before customers return to Brunswick’s pleasure boats (Sea Ray) and marine engines businesses, but since the stock was almost $17 two weeks earlier and then just $13.70, I had been looking at the RSI-7 M-W-D of just 13.90/28.30/11.97 and had been in the Accumulation Zone for two days. I said I would look but not buy. Alternatively, I wrote, “On further weakness (last week), I would consider writing a short put, say the Sep-12.50’s at +0.95, taking my cost basis to 11.55 if the stock is put to me this summer. If I could get $0.25 for the 10’s, I’d take that too… And if, as and when a Buy Alert is set off as the Daily RSI-7 hits 30 and rising, then I might be persuaded to also buy the stock, although I know this is a Bear market, so I am reluctant to take long equity positions over and above long-biased options positions.” But clearly the rocketing oil price this week put a stop to those ideas.

The stock did drop to 13.37 at the close Friday, and the Sept 12.50 puts closed at $0.80, up to +0.95 during the week, and offered at 0.95 Friday. The Sept 10 puts closed at 0.20, but traded up to 0.25, where they are offered. So, despite a horrible market environment the price points I set were reasonable.

In any case, if I can position myself to buy the stock with a potential 12-month gain of say 70% to 100%, then I’m in, and my leveraged options trades will take me there faster if my timing is good.

As I wrote, “if you can line up 10 trades like this, I believe at least 8 will be winners. Your Job #1 is to have more winners than losers and to keep the losses smaller percentage wise than the winners. But you need to be patient, and stand by with a plan in hand.”

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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
WMT	58.37	-1.43	-2.39%	1.09%	4.14%	2.12%	24.46%	16.79%	18.47%	15.01%
BUD	57.28	-0.47	-0.81%	-0.31%	8.94%	12.05%	10.94%	24.28%	8.69%	7.85%
PG	65.37	-1.30	-1.95%	-1.03%	-0.38%	-0.83%	-9.60%	-1.71%	-11.88%	3.45%
KR	27.30	-1.10	-3.87%	-1.23%	0.33%	3.06%	6.35%	8.42%	-2.95%	-8.70%
WAG	35.53	-1.17	-3.19%	-1.36%	-0.42%	1.02%	-4.85%	-0.31%	-2.90%	-19.78%
DEO	77.46	-2.14	-2.69%	-1.48%	-1.20%	-4.19%	-8.93%	-4.79%	-11.28%	-8.69%
WFMI	28.50	-1.23	-4.14%	-1.72%	1.79%	-15.38%	-28.32%	-17.65%	-33.61%	-27.39%
KO	55.80	-1.39	-2.43%	-2.55%	-4.24%	-0.87%	-8.66%	-5.58%	-11.53%	7.31%
SBUX	17.67	-0.85	-4.59%	-2.86%	3.39%	11.48%	-8.49%	0.40%	-22.67%	-37.23%
ABV	66.34	-2.02	-2.95%	-3.39%	-9.95%	-12.16%	-8.47%	-16.46%	-13.57%	-3.95%
PEP	65.52	-1.77	-2.63%	-4.07%	-4.18%	-2.99%	-12.98%	-6.56%	-14.94%	-2.30%
PDA	57.80	-2.12	-3.54%	-12.02%	-1.95%	3.96%	20.09%	18.37%	13.60%	65.47%

Consumer Staples (XLP -1.90% W/W) was forced into a losing week because of the -2.44% loss on Friday, closing at 27.95.

A week ago, I gave some pretty good advice on Cara 100 Brazilian Perdigao (PDA), which had soared +11.45% that week, hitting a record $66.11, closing at 65.70. With a RSI-7 at 80.15/84.10/75.81 for the M-W-D, I opined the stock had been in the Distribution Zone for 3 days and that “a Sell Alert will be made as the Daily RSI-7 falls below 70. If the Weekly RSI-7 also falls below 70, then I would off the stock”.

Perdigao was added to the Cara 100 on Jan-08 this year at $47.42. At a week ago Friday’s close of 65.70, that was a 5-month gain of about +38.5%, which I joked was up near my usual Buffett-type performance (LOL).

[Actually, when I add or subtract companies to/from the Cara 100 there is zero consideration for the stock price or the technical analysis metrics I use.]

I said “I’m not interested in holding PDA in the high 60’s, particularly a food processor with a Forward P/E of 34 and almost no dividend. When the M-W-D RSI-7 reaches numbers in the 80’s, I’ll buy my hot dogs somewhere else, thank you. Now, rather than write a covered call, I would not hesitate to sell the stock. I feel strongly I could buy this one back at under $60 in a year’s time. My objective is to protect capital, not sit with amazement while Chinese traders buy up stocks on the Sao Paulo Bovespa with the capital handed to them by Wal-Mart USA customers.”

I hope you got the point because PDA closed this week at $57.80. A covered call would have meant nothing but a tad less aggravation (ie, smaller loss). I nailed the trade because the M-W-D RSI-7 at the close this week fell to 62.9/54.0/35.8. When you sell a stock at 65.70 and it falls exactly a week later to 57.80, that’s a one-week gain of +12.0%, using the weekly closing prices.

As you get into the nuances of trading equities and options, you will (hopefully) come to see that timing is not easy, but if you look to trade the extreme cases, and don’t get greedy, you make a dollar here, a dollar there. You start to realize that trading is (i) risk management, and (ii) position (or some people call it money) management. You never look for the big score; you try to make it one trade at a time.

In that context, I have been reading a lot about this Talking Head or Newsletter Writer’s Trading Rules. In my book, I call them guidelines. I’m not interested in rules. I’m interested in learning how to trade, which requires an application of protocols based on inter-market relationships and a feeling for the nuances. Trading requires skill, not rules.

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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
DNA	73.69	0.58	0.79%	3.98%	6.97%	7.86%	9.33%	-7.30%	10.70%	-2.91%
NVO	67.33	1.33	2.02%	3.11%	1.19%	-0.41%	5.53%	-2.76%	-49.07%	-35.27%
AMGN	44.24	-0.69	-1.54%	0.48%	3.44%	5.28%	-5.06%	0.00%	-19.78%	-22.78%