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August 17, 2008
Week in Review #33 (2008-08-17)
The gold bugs are in disarray. I feel for them. Truly. They have it right for the long-term; but we are not buy-and-hold investors; we are traders. We cannot take -25% losses and more and stay in the game. It’s a tough game, and Job#1 is to protect capital.
Now the gold bugs understand where I am coming from. I am not the enemy. Governments that overspend are the enemy, and in time those legislators and their taxpayers will pay for their mistakes.
Nobody missed these words that started last week’s Week In Review:
In a nutshell, the precious metals are now in a confirmed Bear, and the gold bugs and silver crazies have been duped by their preachers. Now the flock is hearing all the old conspiracy theories, and the dialogue is getting more insane by the day.
As I have been writing all along, the goldminers and the gold bullion would be the last off the dance floor. Now you see the evidence. Speculation, which is linked to other prices, rises and falls in cycles. In the aftermath of gold’s plunge, however, I have no time for more explanations. I explained the process long before and then again as it happened before your eyes. Now it’s time we look forward.
The share prices of the metal miner majors will provide the best clue to future metal commodity prices and the share price recovery for the junior metal producers and explorers. The charts to watch are BHP (BHP), Rio Tinto (RTP), Anglo American (AAUK), CVRD (RIO), and Teck (TCK). If you can access the London Stock Exchange, be sure to look at Xstrata (LSE:XTA) as well.
These are the world’s major metals miners, and in the first couple days of July their share prices crashed. When all these stocks recover, then gold will recover regardless of the trend of the $USD at that point.
Gold is such a small component of the capital market; we ought to give it less attention. There is so much more going on and it’s all great stuff. Let’s see.
Global Economics Review
With respect to the US economy that is in dire straits, note that the tone is improving.
Weekly International Economic Report . This one from Econoday dated 8/8/08 is a week old, but maybe there will be a new one tomorrow.
This is an excellent weekly report by the way. I encourage everybody to read it and discuss it in the Discourse.
Here are the key US economic reports and the Econoday analysis from last week.
US Economic Calendar.US International Trade Report for June. For June, Econoday reported: “The U.S. trade deficit in June unexpectedly shrank in June despite a jump in the oil deficit. Weaker consumer and business demand appears to be the reason the deficit narrowed. The overall U.S. trade gap fell to $56.8 billion from a revised $59.2 billion deficit in May and came in much better than the market forecast for a $61.5 billion deficit. In June, exports jumped 4.0 percent while imports rose 1.8 percent. The oil gap jumped to $36.4 billion in June from $32.8 billion in May, while the nonoil goods deficit fell to $32.2 billion from $38.0 billion in May. The nonoil deficit improvement was due to a drop in both capital goods and consumer goods imports, indicating that both sectors are expecting a slowing in demand. Strength in exports was widespread but led by capital goods.” Note that a rallying $USD could hurt the prospects for export growth.US Retail Sales for July. For July, Econoday reported: “July retail sales remained modestly healthy outside of autos, which declined. Consumer spending is holding up reasonably well despite the ending of income tax rebates. Overall retail sales slipped 0.1 percent in July, following a 0.3 percent rise the month before. The headline number sales number was just below the market forecast for no change. Excluding motor vehicles, retail sales posted a moderate 0.4 percent gain in July, after a 0.9 surge in June. The consensus forecast for ex-auto sales was for a 0.5 percent boost. Higher gasoline sales were one of the stronger components, but other components were still positive overall. When excluding both motor vehicles and gasoline, sales rose 0.3 percent, after increasing 0.4 percent the month before. The July retail sales report shows consumers still spending but a key issue is that after inflation, sales are probably flat.”
US Consumer Price Index for July. For July, Econoday reported: “Consumer price inflation in July slowed at the headline level from a red hot June pace but remains very strong. Meanwhile, core inflation remains above trend as higher production costs appear to be feeding through. The headline CPI posted a 0.8 percent gain, following a 1.1 percent spike the month before. July's increase was sharply above the market projection forecast for a 0.4 percent rise. The core rate remained elevated with a 0.3 percent boost, matching June's gain and topping the consensus forecast for a 0.2 percent increase. Gains were widespread by major categories except for medical care…
Year-on-year, the overall CPI jumped to 5.5 percent (seasonally adjusted) in July from 5.0 percent in June. The core rate firmed to 2.5 percent from 2.4 percent the month before.”US Industrial Production for July. For July, Econoday stated: “Industrial production in July posted a modest gain, led largely by a sizable gain in motor vehicles. Manufacturing outside of autos was slightly positive net. Overall industrial production advanced 0.2 percent in July, following a 0.4 percent gain in June. The July increase was above the consensus expectation for no change. The manufacturing component jumped 0.4 percent, after edging up 0.1 percent in June. Utilities output fell 1.9 percent in July while mining output rose 0.9 percent… Within manufacturing, gains were widespread but notable strength was in motor vehicles which increased 3.6 percent. Manufacturing excluding motor vehicles rebounded 0.2 percent after a 0.2 percent dip in June. Market group data indicated that housing is still depressing certain industries with declines seen in appliances, furniture, and carpeting, among others. Consumer goods were up 0.3 percent in the latest month while business equipment posted a 0.8 percent boost. Business equipment was lifted by motor vehicles and aircraft… On a year-on-year basis, industrial production in July dropped to down 0.1 percent from up 0.2 percent in June.”
How is next week’s calendar looking?
US Economic Calendar.US Home Builders Housing Market Index for August. The National Association of Home Builders produces a housing market index based on a survey in which respondents from this organization are asked to rate the general economy and housing market conditions. The housing market index is a weighted average of separate diffusion indexes: present sales of new homes, sale of new homes expected in the next six months, and traffic of prospective buyers in new homes… For July, Econoday reported: “The housing market index from the National Association of Home Builders hit a record low in July, dropping for the third straight month, coming in at 16 and compared to 18 in June. Components were universally negative with present 1-family sales down to 17 from 16 in June, 6-months out index falling to 23 from 27 in June, and prospective buyer traffic falling to 12 in July from 16 the prior month. The news points to further deterioration in housing rather than stabilization.”US Housing Starts for July. For June, Econoday reported: “Housing starts in June posted an unexpected rebound, jumping 9.1 percent to an annualized 1.066 million unit pace and following a 2.7 percent decline in May. However, strength was lopsided - mainly in New York City and based on a one-time change in regulations. The June rebound was led by a 42.5 percent monthly surge in multifamily starts as single-family starts fell 5.3 percent. The surge in multifamily starts reflected the enactment of more restrictive building codes in New York City effective July 1, 2008 which created a rush to get permits before that date which in turn boosted starts. For July, there will almost certainly be a sizeable drop in multifamily and overall starts as starts in New York City fall back to probably even lower than pre-June levels (starts there probably were accelerated by more than one month). Markets should focus on the single-family component for now.”
US Producer Price Index for July. For June, Econoday reported: “The producer price index accelerated dramatically in June at the headline level but remained moderate at the core level. The overall PPI inflation rate remained red hot in June with a 1.8 percent jump, following a 1.4 percent spike the month before. The core PPI rate, however, held steady at a 0.2 percent rise and fell short of market expectations for a 0.3 percent gain. The headline number was led by a monthly 6.0 percent surge in energy costs and a 1.5 percent gain in food prices. Within energy, gasoline spiked 9.0 percent for the month and is up 39.7 percent for the year. More recently, deceleration in the overall import price index (1.7 percent from 2.9 percent in June) suggests that the headline PPI will ease in July but still remain relatively strong. Also, the July CPI came out earlier than the PPI and this index was much stronger than expected with a headline 0.8 percent boost.”
US Philadelphia Fed Survey for Aug. For July, Econoday stated: “The general business conditions component of the Philadelphia Fed's business outlook survey posted its eighth consecutive negative reading in July, coming in at minus 16.3 versus minus 17.1 in June. The new orders index pointed to further weakness overall for August as new orders remained notably negative at minus 12.1, compared to minus 12.4 in June. Prices in July were quite elevated with prices paid at 75.6 and prices received at 28.8.”
As commodity prices sink and the $USD rallies, traders are not so concerned about the high inflation readings at present. Traders are looking forward at the potential of demand destruction causing a weakening economy to go both recessive and, in parts, deflationary. That is not going to help share prices for long. Traders will be closely watching the earnings and guidance from corporations and the declining earnings estimates and ratings downgrades from Wall St analysts.
US Equity Markets Review
DJIA stockcharts.com chart
The Monthly, Weekly and Daily RSI and Stochastics indicators are on the rise for the major market indexes, which followed up last week’s outstanding rally with higher prices this week except for the prices of the Dow 30 Financials AIG (AIG -7.6%), JP Morgan Chase (JPM -7.3%), Bank of America (BAC -4.8%) and Citigroup (C -4.3%) which pulled the DJIA index to a small loss W/W.
The RSI and Stochastic Dailies are further elevated, although not yet to extreme levels, which shows me that the short-term rally will run into resistance any time Crude Oil rallies or possibly even fails to decline from here.
As I opined last week, “(The broad market) is headed toward resistance in the next few weeks. If that were to happen, I’d say the driver would have to be a higher oil price. So as long as oil prices are falling, I’d say hang on to your calls and longs. Sell into strength on a very strong up day.”
The DJIA lost -0.63% to 11659.90 from 11734.32 and the S&P 500 was up +0.15% to 1298.20 from 1296.32. Note that the S&P 500 gained +0.41% on Friday, so the rest of the week was a loser.
There were 15 Dow components that were up and 15 down compared to 25 up the previous week, so I was correct in saying a week ago that the averages might be a bit higher this week, but the signs of resistance would be there.
At the end of this week, there were 6 of 10 sectors that lifted in price. The losers were Energy and Utilities, Industrials and Financials... especially Financials where the problems have merely been swept under the table for now.
On Friday, only Energy was down. The sub-sector Semi-conductors (SMH) dropped -0.16% on Friday, but Tech (XLK) was up +0.34%.
NASDAQ Composite ino.com chart
NASDAQ Composite stockcharts.com chart
The NASDAQ Composite was up this week by +1.6% from 2414.10 to 2452.52.
Apple (AAPL +8.2% a week ago was up +3.7% this week) and SanDisk (SNDK +16.9% a week ago was up +5.8% this week) were leaders on the NASDAQ. Research In Motion (RIMM +11.3% a week ago dropped -3.7% this week) was not.
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
The US equity market Sector ETF Summary
This week, there were 6 sectors up and 4 down. On Friday there were 9 of 10 up. Friday’s loss of -2.0% in the Oils (XLE) pushed it into the loss column for the week, losing -0.45% W/W.
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.
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
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.
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)
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:
Table 2: Senior oil & gas equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Crude Oil ($WTIC lost -$9.90/bbl a week ago and a further -$1.26/bbl -1.09% this week) was down to 113.94 by the end of Friday, but there was a low of $111.50. I noted that the 200-day Moving Average is 110.10, so the technically important support level is close by.
Will support hold for the $WTIC? It didn’t for the precious metals, which sliced through the 200d MA’s like a hot knife through butter. Recall as that happened for the precious metals, I said, “There was no fight in that dog”.
This coming week we get to see whether the oil speculators are any different than the precious metal speculators. Recall too that last week’s oil inventory numbers were probably estimated far too low so that if they are on the high side this Wednesday, watch for the $WTIC to drop below the 200d MA during Wednesday.
$WTIC has dropped from $145 just five weeks ago to under $114. Next week’s close could be under $110. The indicator there may have been Friday’s drop in XLE (-1.95% on Friday).
This week, the Energy sector ETF (XLE) lost -0.45% to close at 70.87. Next week, there could be prices in the 60’s.
Because all the oil stocks were down on Friday, it wasn’t a good week for the Bulls. Imperial Oil (IMO +0.55% W/W) managed a small gain to catch up to the others, but overall there were some big hits to the largest oil companies in the world. For example, PetroChina (PTR -4.4%) and PetroBrazil (PBR -4.6%) lost mega-billions in market cap.
The major US oil company Exxon (XOM -2.1%) is now down to $77.07. I watch XOM because (i) Exxon Mobil is by far the biggest company in the US, and (ii) oil is such an important economic driver.
I will re-state from the WIR of three weeks ago, and the week before that:
“… this is a solid sector for the future Bull, which means you need to start looking at the potential winners, and XOM, SU and PTR are ones I like at a price. The bigger the account (presumably longer term oriented), the more that it’s advisable to write puts on market pull-back days. But don’t chase them. Let them come to you. XOM closed at $79.72, but hit a low of $79.45 on Friday. The mid-70’s is my target. You can write the Jan-09 75 puts for $4.00 and the 70 puts for about $2.35. I think that’s money in the bank even if the stock is put to you. With a basis in the 60’s (say 68), and 2008 earnings projected at $8.72 (with $4.28 already in the bank), that would be a PE of just 7.8x. The average annual PE is going to be running ~12.0x, so I would feel good at writing those puts, particularly on very weak days in the market, and for XOM. In fact, I think the cash flow/share will be about $12.00 for 2009, so if I could buy the stock in a terrible Bear market at 6x cash flow (say mid-70’s or better), I’d be a happy trader. That’s because the Value Line chart shows the price tracking at 9x cfps since mid-2002, and I think we’ll see that again in 2010 (when cash flow/share is likely to exceed $13) with a price let’s say about $120. Besides, over the next two years, I’d expect to take in $3.00 in dividends. XOM goes ex-dividend on Aug 11.
This week for XOM (where the price dropped -2.1% to close at $77.07 from $78.72), the Jan-09 75 puts closed at $4.30 bid and the 70 puts at $2.51 bid. The lower in price that XOM trades, in the next month or so, the higher the prices of these puts, which means when you sell them, you take in more premium, which lowers your cost base, possibly into the high 60’s. If you have a basis in the mid-70’s or better for XOM, you are probably very well set for the next Bull market. You’ll get $1.55 dividends (est.) in 2008 and probably $1.75 in 2009 and $1.95-$2.00 in 2010. I do think you’ll see the price at $120 at least once before say August 2011.
Many of you heeded my warnings at the top of the cycle and exited XOM at 95. With written put options, you can now get in below 75. I think some of the more adept traders will get in with a basis of say 68, and if they hold for three years and receive those growing dividends, plus write additional puts on the way up, they will likely have a double with very little work. Even if the price just returns to the former high ($95.63), by selling in the 94-95 range in May and buying back in the low 70’s a few months later, “you would be doing yourself such a favor” as the woman in those ubiquitous FETV commercials says.
Prof. Burton Malkiel says you cannot time markets; I say the good professor is full of (expletive deleted). I have never met a trader who believes that college thesis crap.
To repeat, the point is that (i) you have to pick sound companies, and (ii) buy and sell their shares at attractive prices so that your dividends to basis is always rising. Don’t lose sight of the fact that when you trade, you are in the money business. This is not the academic world.
Oil & Gas Exploration & Production -Canada
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:
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Basic Materials (XLB +2.25% to 39.47) was 2nd place winner this week. Amazing then that the goldminer shares plunged a further -5% W/W, but that just goes to show that Energy and things like Steel has a greater influence on the Basic Materials sector than does precious metals.
I won’t persist in hammering away at a point you all now recognize, which is that precious metals bullion and miner share prices have been beaten to extremes. I made the point. Now you all have to look forward, which is that the miners will likely outperform the metal. I wrote that earlier this week and since then the script played out that way.
This week, the four precious metals futures prices plunged again: $GOLD (-8.4%), $SILVER (-15.7%), $PLATINUM (-11.0%) AND $PALLADIUM (-13.9%). But the goldminer indexes and ETF’s were down less: $XAU (-4.9%), GDX (-5.1%), and XGD (-6.5%).
For Friday, the numbers were: $GOLD (-2.8%), $SILVER (-10.0%), $PLATINUM (-6.8%) AND $PALLADIUM (-7.7%). But the goldminer indexes and ETF’s were down less: $XAU (-3.7%), GDX (-3.6%), and XGD (-3.6%).
So, now you want to sell the metal and buy the shares. If you are in cash, you might start looking at a few junior miners and explorers here. I won’t mention which ones because some of them will continue to fall, and this blog is not an advisory. Neither am I interested in receiving personal mail asking about this company or that one. I am not your advisor and I don’t know about those of you who write me to be able to give any kind of professional advice. This blog was set up in April 2004 to discuss trading principles, which requires using examples and taking shots at myths and charlatans at times in order to make my points. But that’s all. I do this for education. The truth is I would like to see you all be self-directed and successful.
This week, the Steels looked bad: Gerdau (GGB –9.5%), Mittal Arcelor (MT -6.6%) and Tenaris (TS -5.9%) had a tough week for the Bulls. Votorantim, Brazil's massive pulp and paper producer, (VCP -12.1% W/W) is another commodity producer that sank, to $21.73 from June’s high of $35.06.
Votorantim btw has been chosen the world’s best family-run company and its CEO won the industry’s CEO of the Year award for Latin America.
Most traders in North America, Europe and Asia-Pacific have never heard of Votorantim outside of my listing it as a Cara 100 company. Every industry and every region runs into challenging business conditions, but that should be expected, so wise traders sell at the cycle top and wait to buy back in at the cycle bottom.
Right around May 30, the RSI-7 and Stochastics peaked, right at the time most of the major commodity players did, and Votorantim was right in the mix.
As I have been saying, when you use a “simple little RSI system”, you need to study the nuances: (i) peer group technical data (ii) Stochastics and MACD studies of the price series motion, and (iii) the changes between the RSI-7, -14 and -21 data, including crossovers. It’s like golf – better you practice it rather than sitting in a classroom studying the mechanics.
How many of you academians, for example, noted that at the end of May, the Brazilian-Argentine commodity producers hit short-term momentum and price cycle highs in unison. Of course, the Argentine Tenaris (TS), which makes steel tube for the oil industry, rallied a final month (June) as oil was pushed to its final high, but even TS broke down just before the oil price cracked.
When you trade, you learn to be aware of the nuances.
And, when you do, you soon hold the belief that there is one helluva market manipulation underway and the only players capable of directing it are working for Humungous Bank & Broker (HB&B) and their biggest clients.
What I like about blogging is that as life passes most people by, I get one real life case study after another to show you. I know it’s having an impact because I frequently get letters from HB&B career people who tell me they learn more here in this free blog that they have from their education and work experience. When I started this blog in April 2004, I knew people would. I just didn’t know if people were going to try to brand me as just another blogger. :-)
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:
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The Industrials (XLI -0.70% W/W) closed at 35.64.
Boeing (BA), which had gained +9.4% the previous week, was down -5.0% to $64.45. With Boeing a week ago, I commented “lower fuel prices to contend with… would also help Boeing. But, there are serious issues in the economy and, in Boeing’s case, billions of dollars in cancelled orders due to their failure to deliver the Dreamliner anywhere close to on-time. Traders haven’t forgot these things. They simply closed some shorts, for now.”
I think there are lower prices to come on BA, into the 50’s, but the price has been falling for almost a year now. The 52-week high was $107.15 on Oct 2, 2007, while the low was on August 1 at $60.77.
Boeing lobbyists are having the US Administration fight any help the Canadian, Quebec or Ontario governments are providing Bombardier, which makes a small fuel-efficient regional turboprop and new jet that will compete successfully against any of the Boeing offerings, I believe.
ABB (ABB -5.9%) and Fluor (FLR -6.5%) were also losers this week, while Brazilian aircraft maker Embraer (ERJ) gained +10.7%. In the case of Embraer, the booming $USD helps their sales, and at the same time discourages international buyers of competitive planes from Boeing.
ERJ traders have made a huge gain by buying at the cycle top in oil and the cycle bottom in the $USD.
When you learn to line up your ducks like that, you can smile and say to your associates that you love it when a plan comes together. All business people, traders included, do the same.
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
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
A week ago, I wrote, “Speaking of closing shorts, the Consumer Cyclicals (XLY) was up +7.15% W/W, including a gain of +4.93% on Friday, closing at 30.43.” Last week, XLY was #2; this week, XLY was #1. Next week, XLY will be no higher than #5 or 6. Why, well a little birdie goes off in my head that says JC Penny (JCP), which a week ago was up +18.4% due to short-covering, was up a further +11.7% this week, including a hideous +8.4% on Friday. This is a company with a market cap of $8.9 billion with crummy results lately. So what if oil prices are falling; show me the beef at JCP (other than cost control) and I’ll cut them some slack.
I think HB&B is playing the public for suckers here, but we’ll see.
Whirlpool (WHR +6.4%) and Tata Motors (TTM -4.2%) were the other winners/losers in this sector. Wal-Mart (WMT +2.2%) had a good earnings report and had a good week, now at $59.37.
Isn’t it amazing that the Talking Heads who in 2H07 hated Wal-Mart at $42-45 are now loving it at $60. Are these people paid to do this or are they just incompetent?
I figure WMT has a couple weeks of higher prices here; then the bottom will fall out. The so-called tax rebates will run out and not be replaced with a second set. If they are, then don’t buy WMT, buy GLD because in that case we’d be looking at a 70-cent USD.
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
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Consumer Staples (XLP +1.97% W/W to 28.97) was another winner this week, good for #4 place among the sectors.
Starbucks (SBUX +10.4%, plus the earlier Friday’s gain of +4.1%) is now up almost +15% in six days. Commodity costs falling, losing stores being closed, and habitual clients (coffee addicts) with more money to spend after paying less at the fuel pump, add up to (drum roll…) more short-covering.
Tell me, how is SBUX is doing a moonshot when it just reported its first ever losing quarter last month, and major traders are selling. “Investors like Nelson Peltz (Maverick Capital) dumped the 842,000 shares it held, while Fidelity Management & Research shaved its Starbucks stake by 5.5 million shares”.
Other extreme traders in the Cara 100 are WFMI up +5.6% and PDA down 9.9%.
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
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The Healthcare sector (IYH) gained +0.83% W/W to close at 68.40, helped by Friday’s gain of +0.69%.
The healthcare provider and insurer United Health (UNH +6.5%) followed up the previous week’s gain of +10.2%.
Was there more short-covering there too.
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
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The Financials (XLF -2.52% to 21.30) stumbled. A week ago I opined, “Financials managed a modest gain this week after a moonshot last week. Traders know the problems there have been fixed. Not!” This week they were all down.
Merrill Lynch (MER -2.2%) was best off because the news here is just too bad to be believable. No further comment. Let’s dwell on reality: First there is Lehman Bros (LEH -13.2% W/W to $16.17). Need I say more?
How about IBN (-11.4%). Do you recall a week ago, I wrote: “ICICI of India (IBN +15.6%, including Friday’s gain of +8.0%) was the biggest winner. How is that a bank in India can zoom +8% in a single session? Answer: when the US Treasury Secretary has agreed to cover their losses in “investments” in US sub-prime debt, and other such garbage, like Fannie and Freddie.” These are not large cap stocks; they may be ping pong balls! Day traders are loving it.
Morgan Stanley (MS pinged down -9.2%, which is not surprising since a week earlier it ponged up +9.6%), Deutsche Bank (+5.0% following the week earlier loss of -7.4%), and Credit Suisse (-9.0%), which followed their management telling us the company has been taking AUM and CRO’s from UBS by the boatload down Lac Léman. BTW, private bankers call their key people Client Relations Officers, or CROs.
JP Morgan (JPM) dropped -7.3% as the guy on CNBC said was due to there no longer being a Jamie Dimon premium in the share price, as if that CEO and most of the executive management couldn’t be replaced in a heartbeat. Why are these people always kissing one another’s backsides so much? I guess they need to know where their next triple martini is coming from.
Fannie and Freddie, of course, continue on Death Watch. Fannie Mae (FNM) dropped a further -12.6% (including -3.9%) to $7.91. Pretty soon Fannie won’t qualify for margin. Freddie on the other hand lost just -0.85% this week, closing at $5.85. Maybe traders gave it the mercy rule after last week’s loss of more than -26%? But then again, Fannie lost -23.4% a week ago. Maybe there’s no mercy on Wall Street?... just friends in high places for use as the last resort.
With the two Presidential campaign conventions coming up soon, I wonder how many speeches are going to be devoted to saying that Fannie and Freddie must be saved for Wall Street—I mean for Mom & Pop? Ha! Let them fail. If Mom & Pop has a job and aren’t cheaters, there will always be mortgage money available to them. If it’s not Fannie and Freddie, It’ll be Dickie and Janey.
Where is Walter Cronkite when you need him?
Sector 45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, MTK and SMH)
Here’s the SMH Monthly, Weekly and Daily data charts:
SMH Monthly data:
SMH Weekly data:
SMH Daily data:
Here’s the XLK Monthly, Weekly and Daily data charts:
XLK Monthly data:
XLK Weekly data:
XLK Daily data:
Table 9: Senior technology equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Tech (XLK +1.85% to 23.70 and Semi-conductors (SMH +1.40% to 30.40) were not in full-out rally mode this week like the previous week, but they were good for the Bulls or the future shorts or whatever.
Apple (AAPL +3.7%) and Research In Motion (RIMM -3.7%) were headed in opposite directions, for now.
Among the chip makers, Intel (INTC +0.1%) didn’t do much, but then there were no stories being floated that Seagate was going to buy it (ha!). In the latter case, SanDisk (SNDK) is up +22.8% in just two weeks (and up just +0.4% in 4 weeks), so maybe Seagate should report their intentions, or maybe the SEC ought to be looking into rumors.
Sector 50 (telecom: IYZ, VOX and IXP)
Here’s the IYZ Monthly, Weekly and Daily data charts:
IYZ Monthly data:
IYZ Weekly data:
IYZ Daily data:
Telecom (IYZ +2.21% W/W) closed at 24.06, and followed a gain of 2.46% the week earlier. But the Telcos are still down -17.5% YTD, making them next worst to Financials.
Are we looking to replace legacy with change? Just a thought.
Actually, the big telco’s are full of debt and they need HB&B to roll over the paper, but alas Wall Street doesn’t have enough capital to save its own skin.
Verizon (VZ) and AT&T (T) gained 1.1% and 2.2% respectively this week, following gains of +1.74% the previous week. T gained +1.7% on Friday.
Maybe the oil money in Texas was moved on Friday into T and JCP? :-)
Sector 55 (utilities: IDU, XLU, and VPU)
Here’s the XLU Monthly, Weekly and Daily data charts:
XLU Monthly data:
XLU Weekly data:
XLU Daily data:
Utilities (XLU -0.94% W/W) closed at 36.97.
As soon as I can get around to it, I’m going to set up new tables for the Dow Utilities and the major Telecom companies.
I’m also thinking of setting up tables of say ten key stocks on all the Exchanges covered by ADVFN.com, which continues to grow its service.
Bonds & Yields Review
Table 10: US Treasury Yields
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 1.78 | 1.80 | 1.63 | 1.31 |
| 6 Month | 1.92 | 1.93 | 1.87 | 1.80 |
| 2 Year | 2.38 | 2.43 | 2.49 | 2.41 |
| 3 Year | 2.24 | 2.28 | 2.35 | 2.35 |
| 5 Year | 3.10 | 3.15 | 3.19 | 3.19 |
| 10 Year | 3.84 | 3.89 | 3.93 | 3.93 |
| 30 Year | 4.47 | 4.52 | 4.54 | 4.58 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 2.10 | 2.08 | 2.17 | 2.29 |
| 2yr AAA | 2.02 | 1.98 | 2.12 | 2.25 |
| 2yr A | 2.48 | 2.40 | 2.52 | 2.38 |
| 5yr AAA | 2.82 | 2.88 | 2.94 | 2.81 |
| 5yr AA | 2.86 | 2.88 | 3.03 | 2.89 |
| 5yr A | 3.05 | 3.09 | 3.24 | 3.06 |
| 10yr AAA | 3.61 | 3.67 | 3.72 | 3.55 |
| 10yr AA | 3.60 | 3.60 | 3.69 | 3.55 |
| 10yr A | 3.65 | 3.69 | 3.74 | 3.61 |
| 20yr AAA | 4.57 | 4.63 | 4.73 | 4.74 |
| 20yr AA | 4.63 | 4.66 | 4.57 | 4.63 |
| 20yr A | 4.87 | 4.84 | 4.89 | 4.62 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 4.11 | 4.17 | 4.20 | 4.37 |
| 2yr A | 4.79 | 5.08 | 4.96 | 4.85 |
| 5yr AAA | 4.85 | 4.64 | 4.92 | 4.92 |
| 5yr AA | 5.44 | 5.46 | 5.41 | 5.53 |
| 5yr A | 5.39 | 5.68 | 5.64 | 6.19 |
| 10yr AAA | 4.78 | 4.99 | 4.73 | 5.30 |
| 10yr AA | 6.07 | 6.10 | 5.98 | 6.21 |
| 10yr A | 6.03 | 6.07 | 6.11 | 6.22 |
| 20yr AAA | 5.99 | 6.53 | 6.14 | 6.35 |
| 20yr AA | 5.79 | 6.33 | 5.94 | 6.75 |
| 20yr A | 6.25 | 6.79 | 6.40 | 6.61 |
Bond prices moved higher again this week as commodity prices came down and the $USD continued to rally.
For the week, the yields for the US Treasury 2-year, 5-year ($FVX), 10-year ($TNX) and 30-year ($TYX) were -9 bp, -9 bp, -9 bp, and -7 bp respectively, to 2.38, 3.10, 3.84 and 4.47, causing a nice bump to bond portfolios this week.
The 20-year TLT closed the week up +1.13% to 93.04, caused largely by Friday’s gain of 0.87%. The TIP didn’t do much this wee, but the price did move up _0.31%.
It could be that over the next few months, deflation in many parts of the economy plus firm interest rates to cut inflation where it exists will be the winning play. That might mean a narrower trading range for bonds than we’ve seen for a few years. I think it’s still too early to sell bonds and buy gold though. Probably soon though. It looks like I’ll be buying the gold before selling the bonds though. But, remember that deflation in the economy can also kill bond prices if the economy stays stagnant and rates lift as banks seek to raise increasing amounts of capital to replace their lost reserves.
Here is the $USB 30-year Treasury Bond chart.
Interest rates and bond yields.
Interactive Daily data charts:
Interactive Chart of Interest rates and bond yields.
US Bond Funds -- Interactive Monthly Data Charts
SHY Monthly data series chart:
IEF Monthly data series chart:
TLT Monthly data series chart:
AGG Monthly data series chart:
LQD Monthly data series chart:
TIP Monthly data series chart:
US Bond Funds -- Interactive Weekly Data Charts
SHY Weekly data series chart:
IEF Weekly data series chart:
TLT Weekly data series chart:
AGG Weekly data series chart:
LQD Weekly data series chart:
TIP Weekly data series chart:
US Bond Funds -- Interactive Daily Data Charts
SHY Daily data series chart:
IEF Daily data series chart:
TLT Daily data series chart:
AGG Daily data series chart:
LQD Daily data series chart:
TIP Daily data series chart:
Table 11: Interest-sensitive securities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
This week, Fannie was crushed, while Freddie just had a bad Friday. FNM dropped -12.6% and FRE -0.85% W/W. On Friday, the losses were -3.9% and -1.5% respectively.
FNM and FRE shares have fallen -87.1% and -90.3% respectively over 52-weeks.
Consumer Finance -USA -- Interactive Weekly Data Charts
Consumer Finance -USA -- Interactive Daily Data Charts
Commodities Review
The $CRB dropped -5.12 (-1.32%) to 382.30 this week. Until Friday, Crude Oil held up and Copper lost a minor amount. It was the precious metals that took most of the losses as commodity speculators were closing watching their equity trader peers dump positions.
Interactive Chart of Weekly CRB Commodities Index:
Interactive Chart of Daily CRB Commodities Index:
Oil Review
$WTIC (US Light Sweet Crude called West Texas Intermediate) dropped -$1.26/bbl (-1.09%) to 113.94. The low this week was $111.50.
The 50d MA for $WTIC is now at 131.02, and the 200d MA is 110.10. The latter is quite close to the weekly low price, and could serve as some support.
Four weeks ago in this space, I wrote, “I feel the market price (then at 129.47) will hit the 200-day MA price (then at 106.58) sometime in the next couple months.” We’re about there now.
The question is how much has the oil price been affected by ‘hot money’ speculators, how much by the $USD, how much by demand destruction in the economy, and so forth. There isn’t an easy answer. We just have to watch the trends and cycles in the data.
Here is the e-miNY Dec-07 Crude Oil chart.
Interactive Chart of Weekly Crude Oil:
Interactive Chart of Daily Crude Oil:
Gold & Precious Metals Review
So what do I write this week, August 17, after $GOLD plunged another $72.70/oz (-8.41%) to 792.10? I’ll tell you that holding $GOLD and shorting $SILVER (-15.66%), $PALLADIUM (-13.87%), and $PLATINUM (-10.99) would have made you money.
But that’s the kind of remark I made a week ago. The point is that while precious metals are breaking down, stay out of the way of the most speculative plays.
Overall, has my assessment been right all along? Well, in the previous WIR I wrote:
For $GOLD, the 50d MA is now 914.45, and the 200d MA is 891.62. The current price (864.80) is Bearish. I do think that, for gold and the other precious metals, there will be a testing of the 200d MA resistance, but that will likely fail and the market price will sink to a new cycle low that will set a base for the next Bull phase of the long-term secular Bull in precious metals.
There was no resistance in the 200-day Moving average, which now stands at 892.36 and the 50d MA is at 907.40 while the current price is at 792.10. That’s some down spike.
Is it enough to set a base for a new Gold Bull or a minor rally as the $USD pulls back to test the support for the recent run-up?
I don’t know, of course, but I would like to observe market dynamics if, as and when the $USD does pull back a bit. I’m not expecting to see a lot of leading action (higher volume and significantly higher prices) in the Explorers here, so I’ll keep watching the Barrick (ABX) and Goldcorp (GG/G) for clues.
If a long-term Bull, still holding on despite almost drowning underwater from holding gold bricks in each hand, would I average down here? Yes, I would. Why, the goldminers out-performed the bullion this week, for one. The incredible pullback in the bullion, for two. The whites of the eyes of the enraged Gold Bulls sending me flaming messages, for a third. The fact that interest rates are not going to sky-rocket and most of the majors are well capitalized (unlike the banks) at this point, for another. Next is the action in the oil market, which seems to be holding for now. I could go on, but really this is a gut call. I just don’t see the reason not to average down for long-term oriented traders who are committed to gold as a hedge against all fiat money, which is still being printed at much a faster rate than economic wealth is being created. There is still too much money being spent on war, give-aways to people who have no intention on saving it or investing it wisely, and on and on. So that’s my mind-set, and as you know, the traders of the little waves need to know whether they are dealing with a flood tide or an ebb tide. To be somewhat more clear, the precious metals are still in a long-term Bull phase, and will likely be in it for years. So the recent many weeks pullback was anticipated, and now the price in the 700’s is a better buy than when it was over 1000 in March.
Another way of putting it; my earlier target for a low in $GOLD was around 760 and this week it hit 777.70. A few months ago, with the unrelenting push that kept the gold price above 950 for so many weeks, I started to doubt whether we would ever see 800 gold again. Now we have, but the Gold Bugs, while mad, did not die. They’ll be back. I will be watching to see if they continue to buy the dips here, setting up a new base for higher prices. I don’t think it will take long to find out.
For sure, if, as and when there is another major falling out of the price of gold, I will be recommending all-out purchases. Be wary of the rise in the $USD though. If it continues to rally like that, the Gold Bugs had better pray for higher interest rates as the reason because if the USD continues to strengthen with flat or lower rates there could be something else going on here, such as economic wealth being created.
Yes, I have been watching the Russell 2000 small caps, and these stocks have been running hard. Okay, that’s likely because the long-only Fund managers have to invest new capital, and they are not doing it in the Financials, and probably not the Energy stocks for a while until they see how low the price of oil falls. They have to do something. If these small companies are showing higher earnings and solid forward guidance, then we could be into a new wealth growing phase (unexpectedly mind you), which will consume the unallocated assets that have been positioned in T-Bills and Gold.
Nothing is easy, but we have to consider all the possibilities.
Interactive Chart of Weekly Gold EOD Continuous Contract Index:
Interactive Chart of Daily Gold EOD Continuous Contract Index:
Interactive chart of recent trading for the Gold Bullion index.
Spot silver chart for the week
$SILVER plunged -$2.40/oz -15.66% W/W to close at 12.93. It was $19.55 a month ago.
Yes, the Silver Crazies are whipped, and that’s usually a good time to be a buyer.
For $SILVER, the 50d MA is now 17.20, and the 200d MA is 16.83.
I don’t want to say more at this point. But when the US oil inventories come out on Wednesday, you might have already considered a straddle on key silver stocks…
Interactive Chart of Weekly Silver EOD Continuous Contract Index:
Interactive Chart of Daily Silver EOD Continuous Contract Index:
Interactive chart of the Silver Bullion index.
$PLATINUM also crashed again, down -$171.40/oz (-10.99%) to 1388.20.
That’s bad because it also plunged -$95.70/oz a week ago. But the loss is nothing in % terms like that for $SILVER (-15.66%) or even $PALLADIUM (-13.87%) this week.
Let’s face it… traders in this space who were heavily margined were wiped out.
The 50-day MA for $PLAT is 1883.16 and the 200-day MA is 1826.99. How badly off are the Platinum Bulls? The current price of 1388.20 against the 50d and 200d MA’s says all you need to know—unless you are a day-trader who is thinking it’s over-sold and, like $SILVER etc, ready for a rebound.
Just be sure to look below before you jump in. You might not be able to manage the damage should it continue. This is a game that plays people, especially those who are unprepared.
Spot platinum chart for the week
Interactive Chart of Weekly Platinum EOD Continuous Contract Index:
Interactive Chart of Daily Platinum EOD Continuous Contract Index:
Interactive chart of the Platinum metal index.
$PALLADIUM lost -46.20/oz to close at 286.80. At the beginning of summer, it was a high of $484.90. That’s quite a plunge.
With the exception of a couple days in the interim, the current price is all the way back to 1Q06. There is no technical indication whatsoever that the falling price will stop here either. But I think it will, any time soon.
That’s not to say, the new $PALL Bull or precious metals Bull starts or re-starts here, but only that I think the plunge has been taken and now the cycle bottom work will take over.
If it doesn’t, then the market is likely to fall away another -$100/oz to $185/oz, which is the price we say in 3Q05.
The 50-day MA is now 418.24 and the 200-day MA is 424.79.
Spot palladium chart for the week
Interactive Chart of Weekly Palladium EOD Continuous Contract Index:
Interactive Chart of Daily Palladium EOD Continuous Contract Index:
Interactive chart of the Palladium metal index.
$COPPER contracts lost -$1.85 (-0.56%), closing at 331.45. This is a far cry from the loss of -6.86% a week ago.
The 50-day MA for $COPPER is now 364.20 and the 200-day MA is 353.42. Both are falling.
The big metal miners were not down as much as the goldminers or the Steelmakers this week.
Interactive Chart of Weekly Copper EOD Continuous Contract Index:
Interactive Chart of Daily Copper EOD Continuous Contract Index:
Interactive chart of the Copper metal index.
Table 12: Senior gold equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The Goldminer stock group indexes dropped this week across the board: $XAU -4.91%, GDX -5.10% and XGD -6.45%.
These are serious losses, but most of these losses took place on Friday where $XAU fell -3.67%, GDX -3.60% and XGD -3.59%. I could say that the Gold Bugs were too scared to stay in for the weekend. Then again on Friday, the prices of the precious metals were down for gold (-2.75%), silver (-9.96%), platinum (-6.78%) and palladium (-7.66%) as the $USD gained +0.60% on the day. Sometimes fear and prudence goes hand in hand.
The 50-day MA for $XAU is 175.18 and the 200-day MA is 180.00, and the current price is 137.38 after a drop from a mid-July high of 206.21. That is a typical full Bear market move in a month.
Traders will continue to go with the flow of the $USD, which presently is in a hurricane headed north.
This week, the $USD had another one of its most bullish weeks in recent memory, up +1.7% to go along with the gain of +1.8% on the previous Friday, for a total move of over +3.5% in just six days. As I wrote last week, Gold traders simply cannot sacrifice their capital under such circumstances.
But, I am also looking for the speculators to jump back in, and for potentially the gold price and the $USD to start moving in sync. For the latter to happen, I think interest rates will have to start rising though and that may take some time because the lower oil/commodity prices are taking the pressure off the Fed to move in that direction, and the banks do not want to see it if it would further damage the housing market.
However, at some point in the future, there will, I expect, be an uncoupling in the Gold/$USD hedge with the growing prospect of deflation. Traders will also be watching the plight of all economies hit the skids and the value of all fiat money be destroyed. In a global deflation, traders and long-term investors will move into gold.
To watch the moves in precious metal miners, you will have to monitor the individual stock charts, preferably in real-time, as follows:
NEM ABX AU GFI GG HMY AUY KGC BVN
Interactive Daily data
Interactive Weekly data
MDG LIHRY AEM BGO IAG EGO RGLD GOLD CDE GRS
Interactive Daily data
Interactive Weekly data
SSRI SIL NG KRY UXG GRZ TSE_HRG TSE_GUY TSE_AGI
Interactive Daily data
Interactive Weekly data
NXG GSS MNG DROOY MFN RNO RANGY MRB CLG
Interactive Daily data
Interactive Weekly data
Here are the key Silver miners and the SLV ETF:
SLV SIL CDE HL PAAS SSRI SLW MGN
Interactive Daily data
Interactive Weekly data
Here are the Weekly and Daily Data charts of the indexes:
Interactive Chart of Weekly U.S. Goldminers Index:
Interactive Chart of Daily U.S. Goldminers Index:
The U.S. goldminer share trust ETF trades under the ticker symbol GDX.
Here are the U.S. Goldminer ETF (GDX) index Weekly and Daily data charts:
GDX Weekly data:
GDX Daily data:
The Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF trades under the ticker symbol TSE:XGD. Yes, just like GDX on the AMEX, you can trade XGD on Toronto.
Here are the Weekly and Daily data charts for the TSX Goldshares (XGD) index:
Interactive Chart of XGD Weekly data:
Interactive Chart of XGD Daily data:
Forex Review
This week the $USD gained +1.70% to 77.15. The price has been bullish for five straight weeks.
The 50-day MA for the $USD is 73.35 and the 200-day MA is 74.18.
At some point soon, traders will start questioning why the Euro is dropping so quickly when it is apparent that the US economy is growing much more slowly than Germany.
Interactive Chart of Weekly U.S. Dollar Index:
Interactive Chart of Daily U.S. U.S. Dollar Index:
The Euro ($XEU) lost -2.24% W/W, closing at 1.46.86. That drop from a cliff continues.
The Euro 50day MA is 1.5567 and the 200day MA is 1.5214.
Interactive Chart of Weekly Euro Dollar Index, priced in USD:
Interactive Chart of Daily Euro Dollar Index, priced in USD:
The Pound lost -2.94% W/W, closing at 1.8651. The UK economy is in difficulty.
The 50-day MA and 200-day MA are at 1.9672 and 1.9884.
Weekly British Pound Index:
Daily British Pound Index:
Weekly Japanese Yen Index:
The Japanese Yen ($XJY) dropped just -0.31% this week to 90.49.
The Yen’s 50-day MA is 93.01 and the 200-day MA is 93.72. The Japanese economy is not in great shape either.
Daily Japanese Yen Index:
The Loonie (Cdn Dollar) actually reversed course after many losing weeks in a row, gaining +0.63% to 94.39 US this week. Most of the gain happened on Friday (+0.41%) despite Crude Oil and Precious Metal prices getting hammered on the day. Could Friday’s action be a forerunner to higher oil, metal and precious metal prices?
The 50-day MA and 200-day MA is at 97.70 and 99.53 respectively.
Weekly Canadian Dollar Index:
Daily Canadian Dollar Index:
Here is the China Yuan (CNY) chart.
International Equity Markets Review
There were mostly lower prices this week in the global equity markets, which is not surprising since the US market was down at 10:08am ET Friday, then gained a bit of ground through the day, particularly after 2:30pm when the European markets were closed.
UK FTSE moved down from 5489.2 to 5454.8
German DAX moved down from 6561.65 to 6446.02
Aussie All-Ords moved little from 5037.6 to 5038.9
Shanghai Composite moved down from 2605.7 to 2450.6
HK Heng Seng moved down from 21885.2 to 21160.6
India’s BSE 30 moved down from 15167.8 to 14724.2
Japan’s Nikkei 225 moved down from 13168.4 to 13019.4
There are 16 country index charts from StockCharts.com (with their formal approval btw) because I think it is important to be watching these markets move through a trend juncture together, and in relation to currency and commodity strength or weakness.
I also made some additions to the country-based ETF tables as I intend to focus more on ETF’s in 2008. In time, I will also set up tables and track the domestic market prices. This will come after we switch to the Drupal platform this month.
As I say, “the world is now a very small one in capital markets and international business. No longer are corporations just American, British, French, German, Italian, Canadian or Japanese. Most do business internationally. We need to observe their businesses and capital market prices on a global basis.”
Here is the latest session data for the exchanges of the Americas.
Here is the latest chart for the Brazilian Bovespa stock exchange in Sao Paulo.
Brazilian Bovespa stockcharts.com chart
Here is the latest session data for the Toronto Stock Exchange composite index.
Toronto 300 stockcharts.com chart
Toronto CDNX stockcharts.com chart
Europe
Here is the latest session data for the bourses of Europe.
Here is the latest session data for the London stock exchange FTSE.
FTSE 100 stockcharts.com chart
Here is the latest session data for the German DAX.
Here is the latest session data for the French CAC 40.
Here is the latest session data for the Milan Italy stock exchange MIBTEL.
Italian Milan Index stockcharts.com chart
Here is the latest session data for the Swiss market index.
Swiss Market Index stockcharts.com chart
Asia-Pacific
Here is the latest session data for the Asia-Pacific stock exchanges.
Here is the latest chart for the Japanese Nikkei 225 index.
Tokyo Nikkei 225 Index stockcharts.com chart
Here is the latest chart for the Singapore index .
Singapore Straits Times Index stockcharts.com chart
Here is the latest chart for the Shanghai Composite index .
Shanghai Composite Index stockcharts.com chart
Here is the latest chart for the Hong Kong Hang Seng index .
Hong Kong Hang Seng stockcharts.com chart
Here is the latest chart for the India BSE 30 index .
Mumbai BSE 30 Sensex Index stockcharts.com chart
Here is the latest chart for the Australian All Ordinaries index .
Sydney All Ordinaries Index stockcharts.com chart
Russia (RTS) stockcharts.com chart
Table 13: International equities via an ETF perspective (in $USD)
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Other than India, France and UK, the International ETF’s that trade in NY (denominated in USD) were soft again, particularly Russia, Brazil, and Canada, which are powerful in commodities, and China, which is showing much power in these Beijing Games.
Japanese equity market ETF: EWJ
Here is the Japanese (EWJ) equity market ETF Monthly, Weekly and Daily data charts:
U.K. equity market ETF
Here is the United Kingdom (EWU) equity market ETF Monthly, Weekly and Daily data charts:
EWU Daily data:
Canada’s equity market
Here is the Canadian (EWC) equity market ETF Monthly, Weekly and Daily data charts:
US Equity Markets Review
The DJIA (-0.63%), S&P 500 (+0.15%), NASDAQ Composite (+1.59%), and Russell 2000 small cap (+2.60%) were mixed.
The big movers in the DJIA holding it back were the Financials (AIG, JPM, BAC and C).
This is the dog days of summer, but do not dismiss the heavy money flows out of the Financials.
Analyst Joe Granville, who has been very right and very wrong over the years, was interviewed on Financial Entertainment TV (very fitting), telling the audience he called a new Bull market for US stocks shortly after the mid-July bounce. I wonder how much capital Joe is running these days. In other words, who really cares?
To Joe’s credit, he introduced the On Balance Volume (OBV) technical indicator many years ago. Money flow studies are taken seriously by the major accounts. So, give the man his due.
A dozen NASDAQ stocks to watch.
Here is the Monthly data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.
Here is the Weekly data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.
Here is the Daily data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.
Table 14: Dow 30 List
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
You can do this table yourself by entering the following string into the Summaries window at www.billcara2.com and then clicking on the link for Performance.
AA AIG AXP BA BAC C CAT CVX DD DIS GE GM HD HPQ IBM INTC JNJ JPM KO MCD MMM MRK MSFT PFE PG T UTX VZ WMT XOM
Here are the links to interactive Dow charts from Billcara2.com that I broke into groups of ten, which you can add technical indicators for as well. (list one) (list two) (list three)
Value Line Report(s) this past Friday
This week, Value Line reported on two DJIA components, Disney (DIS), which is a Cara 100 company, and 3M (MMM), which was until June 2006, when I switched it out for Boeing (BA).
Disney [GICS 25, Dow 30, Cara 100]
(DIS: Google Finance file)
(DIS: Yahoo Finance file)
(DIS: StockChart chart)
(DIS: Billcara2 chart)
(DIS: ADVFN Financial Data)
(DIS: Value Line Report Aug. 15: next one is due Nov. 14)
3M Company [GICS 20, Dow 30]
(MMM: Google Finance file)
(MMM: Yahoo Finance file)
(MMM: StockChart chart)
(MMM: Billcara2 chart)
(MMM: ADVFN Financial Data)
(MMM: Value Line Report Aug. 15: next one is due Nov. 14)
Disney and 3M are two very different companies as the Value Line reports show. Obviously they are in quite different industries, but look deeper at the performance and in Value Line’s expectations and you’ll see why Disney is a Cara 100 company and 3M is no longer one, since mid-2006.
Disney took on a terrific CEO and 3M lost one. Management helps make good companies. For 3M, earnings, cash flow and dividend growth hit the wall in 2007, 2008 and 2009 (estimated), while for Disney, the opposite is true. Margins and Return on Equity percentages are falling for 3M and rising for Disney. Value Line’s projected annual Total Returns are higher for DIS than MMM. The Total Returns for the past 1, 3 and 5 years are higher for DIS than MMM.
The problem isn’t that 3M is a lousy company; it happens to be, in my view, a terrific company (it’s in the USA 100, just no longer in the Global 100). But, we only have so much time to study companies, so it’s a matter of comparisons within the good ones to cut out the best ones to monitor more closely.
Your monitor list is simply your highest quality list. This is your basket and you watch the basket closely until technical and quant studies determine whether the stocks of these companies have risen to a Distribution Zone or fallen to an Accumulation Zone. Then you really focus your time and attention on the prices because that is the point where decisions are made. Experienced and skillful traders make good decisions usually, but not always. But, I have never seen a dimwit or an inexperienced trader consistently make good decisions, so I go by what I know works.
So can you.
The Dow 30 Company links in chronological order of next reports. I added the Google Finance links, which are superb.
American International Group [GICS 40, Dow 30]
(AIG: Google Finance file)
(AIG: Yahoo Finance file)
(AIG: StockChart chart)
(AIG: Billcara2 chart)
(AIG: ADVFN Financial Data)
(AIG: Value Line Report May 23: next one is due Aug. 22)
American Express [GICS 40, Dow 30]
(AXP: Google Finance file)
(AXP: Yahoo Finance file)
(AXP: StockChart chart)
(AXP: Billcara2 chart)
(AXP: ADVFN Financial Data)
(AXP: Value Line Report May 23: next one is due Aug. 22)
Bank of America [GICS 40, Dow 30]
(BAC: Google Finance file)
(BAC: Yahoo Finance file)
(BAC: StockChart chart)
(BAC: Billcara2 chart)
(BAC: ADVFN Financial Data)
(BAC: Value Line Report May 23: next one is due Aug. 22)
Citigroup [GICS 40, Dow 30]
(C: Google Finance file)
(C: Yahoo Finance file)
(C: StockChart chart)
(C: Billcara2 chart)
(C: ADVFN Financial Data)
(C: Value Line Report May 23: next one is due Aug. 22)
JP Morgan [GICS 40, Dow 30]
(JPM: Google Finance file)
(JPM: Yahoo Finance file)
(JPM: StockChart chart)
(JPM: Billcara2 chart)
(JPM: ADVFN Financial Data)
(JPM: Value Line Report May 23: next one is due Aug. 22)
Microsoft [GICS 45, Dow 30]
(MSFT: Google Finance file)
(MSFT: Yahoo Finance file)
(MSFT: StockChart chart)
(MSFT: Billcara2 chart)
(MSFT: ADVFN Financial Data)
(MSFT: Value Line Report May 23: next one is due Aug. 22)
General Motors [GICS 25, Dow 30]
(GM: Google Finance file)
(GM: Yahoo Finance file)
(GM: StockChart chart)
(GM: Billcara2 chart)
(GM: ADVFN Financial Data)
(GM: Value Line Report May 30: next one is due Aug. 29)
Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Google Finance file)
(JNJ: Yahoo Finance fle)
(JNJ: StockChart chart)
(JNJ: Billcara2 chart)
(JNJ: ADVFN Financial Data)
(JNJ: Value Line Report May 30: next one is due Aug. 29)
McDonalds [GICS 30, Dow 30]
(MCD: Google Finance file)
(MCD: Yahoo Finance file)
(MCD: StockChart chart)
(MCD: Billcara2 chart)
(MCD: ADVFN Financial Data)
(MCD: Value Line Report Jun. 6: next one is due Sept. 5)
Chevron Corp [GICS 10, Dow 30]
(CVX: Google Finance file)
(CVX: Yahoo Finance file)
(CVX: StockChart chart)
(CVX: Billcara2 chart)
(CVX: ADVFN Financial Data)
(CVX: Value Line Report Jun. 13: next one is due Sep. 12)
ExxonMobil [GICS 10, Dow 30, Cara 100]
(XOM: Google Finance file)
(XOM: Yahoo Finance file)
(XOM: StockChart chart)
(XOM: Billcara2 chart)
(XOM: ADVFN Financial Data)
(XOM: Value Line Report Jun. 13: next one is due Sep. 12)
Boeing Co [GICS 20, Dow 30. Cara 100]
(BA: Google Finance file)
(BA: Yahoo Finance file)
(BA: StockChart chart)
(BA: Billcara2 chart)
(BA: ADVFN Financial Data)
(BA: Value Line Report Jun. 20: next one is due Sep. 19)
AT&T [GICS 50, Dow 30]
(T: Google Finance file)
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Billcara2 chart)
(T: ADVFN Financial Data)
(T: Value Line Report Jun. 27: next one is due Sep. 26)
Verizon [GICS 50, Dow 30]
(VZ: Google Finance file)
(VZ: Yahoo Finance file)
(VZ: StockChart chart)
(VZ: Billcara2 chart)
(VZ: ADVFN Financial Data)
(VZ: Value Line Report Jun. 27: next one is due Sep. 26)
Procter & Gamble Co. [GICS 30, Dow 30, Cara 100]
(PG: Google Finance file)
(PG: Yahoo Finance file)
(PG: StockChart chart)
(PG: Billcara2 chart)
(PG: ADVFN Financial Data)
(PG: Value Line Report Jul. 4: next one is due Oct. 3)
Home Depot [GICS 25, Dow 30]
(HD: Google Finance file)
(HD: Yahoo Finance file)
(HD: StockChart chart)
(HD: Billcara2 chart)
(HD: ADVFN Financial Data)
(HD: Value Line Report Jul. 4: next one is due Oct. 3)
General Electric [GICS 20, Dow 30, Cara 100]
(GE: Google Finance file)
(GE: Yahoo Finance file)
(GE: StockChart chart)
(GE: Billcara2 chart)
(GE: ADVFN Financial Data)
(GE: Value Line Report Jul. 11: next one is due Oct. 10)
Hewlett-Packard [GICS 45, Dow 30]
(HPQ: Google Finance file)
(HPQ: Yahoo Finance file)
(HPQ: StockChart chart)
(HPQ: Billcara2 chart)
(HPQ: ADVFN Financial Data)
(HPQ: Value Line Report Jul. 11: next one is due Oct. 10)
IBM [GICS 45, Dow 30]
(IBM: Google Finance file)
(IBM: Yahoo Finance file)
(IBM: StockChart chart)
(IBM: Billcara2 chart)
(IBM: ADVFN Financial Data)
(IBM: Value Line Report Jul. 11: next one is due Oct. 10)
Intel [GICS 45, Dow 30, Cara 100]
(INTC: Google Finance file)
(INTC: Yahoo Finance file)
(INTC: StockChart chart)
(INTC: Billcara2 chart)
(INTC: ADVFN Financial Data)
(INTC: Value Line Report Jul. 11: next one is due Oct. 10)
Alcoa [GICS 15, Dow 30]
(AA: Google Finance file)
(AA: Yahoo Finance file)
(AA: StockChart chart)
(AA: Billcara2 chart)
(AA: ADVFN Financial Data)
(AA: Value Line Report Jul. 18: next one is due Oct. 17)
Dupont [GICS 15, Dow 30]
(DD: Google Finance file)
(DD: Yahoo Finance file)
(DD: StockChart chart)
(DD: Billcara2 chart)
(DD: ADVFN Financial Data)
(DD: Value Line Report Jul. 18: next one is due Oct. 17)
Merck [GICS 35, Dow 30]
(MRK: Google Finance file)
(MRK: Yahoo Finance file)
(MRK: StockChart chart)
(MRK: Billcara2 chart)
(MRK: ADVFN Financial Data)
(MRK: Value Line Report Jul. 18: next one is due Oct. 17)
Pfizer [GICS 35, Dow 30]
(PFE: Google Finance file)
(PFE: Yahoo Finance file)
(PFE: StockChart chart)
(PFE: Billcara2 chart)
(PFE: ADVFN Financial Data)
(PFE: Value Line Report Jul. 18: next one is due Oct. 17)
United Technologies [GICS 20, Dow 30, Cara 100]
(UTX: Google Finance file)
(UTX: Yahoo Finance file)
(UTX: StockChart chart)
(UTX: Billcara2 chart)
(UTX: ADVFN Financial Data)
(UTX: Value Line Report Jul. 25: next one is due Oct. 24)
Caterpillar [GICS 20, Dow 30]
(CAT: Google Finance file)
(CAT: Yahoo Finance file)
(CAT: StockChart chart)
(CAT: Billcara2 chart)
(CAT: ADVFN Financial Data)
(CAT: Value Line Report Jul. 25: next one is due Oct. 24)
Coca Cola [GICS 30, Dow 30]
(KO: Google Finance file)
(KO: Yahoo Finance file)
(KO: StockChart chart)
(KO: Billcara2 chart)
(KO: ADVFN Financial Data)
(KO: Value Line Report Aug 1: next one is due Oct. 31)
Wal-Mart [GICS 30, Dow 30, Cara 100]
(WMT: Google Finance file)
(WMT: Yahoo Finance file)
(WMT: StockChart chart)
(WMT: Billcara2 chart)
(WMT: ADVFN Financial Data)
(WMT: Value Line Report Aug. 8: next one is due Nov. 7)
Disney [GICS 25, Dow 30, Cara 100]
(DIS: Google Finance file)
(DIS: Yahoo Finance file)
(DIS: StockChart chart)
(DIS: Billcara2 chart)
(DIS: ADVFN Financial Data)
(DIS: Value Line Report Aug. 15: next one is due Nov. 14)
3M Company [GICS 20, Dow 30, Cara US 100 June 25-06]
(MMM: Google Finance file)
(MMM: Yahoo Finance file)
(MMM: StockChart chart)
(MMM: Billcara2 chart)
(MMM: ADVFN Financial Data)
(MMM: Value Line Report Aug. 15: next one is due Nov. 14)
Wrap-up:
I wanted to discuss a lot of additional points today, but I had to deal with lots of mail. People want help. I am not their financial advisor, so what am I supposed to do? I am afraid there are some very persistent people who I have probably offended with my bluntness, but so be it.
I wish I had the time to look into Goldman Sachs (GS) this week. The Point & Figure chart shows a technical breakdown. Something’s going on there. Maybe the turf war has started already in preparation for the return of Treasury Secretary Hank Paulson? I don’t know, but something is amiss.
Then there is the growing unemployment in the US that is a growing concern.
The Russian Trading System index ($RTSI) chart has also broken down, falling below 4Q06 prices. That’s more than just falling oil prices. Could it be something to do with Putin and the govt’s illegal (even if provoked) move into Georgia?
The missing crowds of Chinese gamblers in Macau must be a concern to many traders. I have been watching Melco (MPEL) for a turnaround. So far, I just see a couple Dead Cat Bounces.
In Canada, the $30 billion dollar restructuring of the Asset Backed Commercial Paper will be impacted by the ruling tomorrow of the Ontario Appeals Court. What I don’t understand is why the smaller broker-dealers have to pay up when they too were duped by the HB&B syndicators who represented this ABCP was the same as a Money Market Fund. What a cruel joke, and a fraud from the top. Regrettably, I figure the top of the dung pile and the judges sleep in the same bed.
The Ontario court story made me think of another one. Amusing story perhaps, but a year ago I received a parking ticket—my first in almost 50 years. I swear. Now speeding is a different story. But I am always careful where I park, and one day with a luncheon meeting at George Brown College in Toronto, I was lucky to find a parking spot on Adelaide St W outside the front door of the school. I read the sign and paid the meter and displayed the stub properly. On my return I saw I had been tagged for something like $90. So on a subsequent day, I filed a notice of objection with the city. That was delivered by mail and instructions were given to wait for a court date. Meanwhile I received more notices of the tickets and the time went by where the auto license sticker could not be renewed without paying the fine, which I did. Finally the long awaited court date at Old City Hall in Toronto. I noted that a very long line of people were pleading guilty at the judge’s near demand and then he suspended sentence and they walked out with no fine. I saw the traffic cop rubbing his hands to get into the fray. I also saw that many of these people were college students who were nailed by the same traffic cop at the same six (or so) parking spots. When my turn came I pleaded not guilty. Oh the judge says do you really want to endure a trial. I replied that of course, I knew my actions and I knew the signage. So he was flustered. Then the traffic cop took the stand and he repeated that he remembered my vehicle from over a year ago (ha! Bloody Liar!) and I broke the law because the signage was clear. So I took the stand and was examined. Then the judge says that they have by-laws at the court table for people like me who try to cheat. I couldn’t believe this idiot. I assured him I was 100% correct. Then I was asked if I wanted to say a final thing before they checked the by-law and I said, yes, I’d like to ask the traffic cop how many people did he nail with this scam, and immediately the prosecutor and the judge warned me to take a seat. Meanwhile, after frantically searching the pages of the huge by-law book, the prosecutor whispered to the traffic cop that he didn’t have a case. She then told the judge that there was no evidence to convict me. That too was a lie. They had evidence I was innocent and they were pissed I hadn’t pleaded guilty. The judge then asked me to stand and he had the utter arrogance to say to me that he couldn’t convict me but I should be more careful where I park in the future. He even said that I had admitted my guilt when I paid the fine, not saying that to fail to do so meant I couldn't get new license plates. This guy was a complete idiot. I smiled to him, but he and I are of about the same (older) age and he knew that I was thinking he was the biggest jerk I had met in a very long time. As I departed from the courthouse there was a group of students who gathered around me to say that they were afraid to do what I did. I told them that they watched a Lesson in life. When you are sure of the ground you walk on, don’t ever give in to the opponent. It’s not that he or she wins or loses; it’s that you lose self-respect. Remember that. Winning in life is about self-confidence. You’ll be surprised at the authorities who want to break you just because they think they have the power to do it. My wife was in that courtroom. She still wonders why I just didn’t give in. Why, I told her, would I ever want to plead guilty in a court trial for something I had never done. I respect myself too much for that.
Have a good day.
Posted by Posted by Bill Cara on August 17, 2008 06:11:33 PM | Category: Cara Week in Review