Bill Cara’s Week in Review #52, 2012

[4:30 pm ET Sunday] Did the cliff-inspired Friday reversal really dissuade you from buying the dips? Is it enough for President Obama to reject the Republican Party Plan B to turn you in a day from Bull to Bear. I surely hope not.

Remember, one day does not make a trend, and through Thursday this week US equities had been trending higher on the confidence that (i) Plan n would get approved in Washington, (ii) the US economy was showing clear signs of improving, and (iii) traders were in love with Europe, particularly Spain and Italy.

I wish I could have added a fourth point that on this dismal Friday the trading volume was light as traders took off early in the day, many not to return for 12 days (Wed. Jan 2.). But, unfortunately, the volume on Friday was up, way up.

Anyway, it is what it is — an equity market, like the US economy, on the rise. Despite the ominous sounding Fiscal Cliff, market prices continue to strengthen. That’s what happens during waves of quantitative easing.

This week, despite Friday’s drop of -0.94% on the day, the S&P 500 closed higher on the week by +1.17%. That is actually a rather large amount.

“Actually” btw is my new favorite word, having spent the day Friday with my granddaughter Caitlin, who at less than two and a half is quick to express an opinion on a great many subjects, sometimes beginning with the word “actually”.

In Europe this week, the major markets lifted a bit: the UK FTSE, German DAX and French CAC were up +0.3%, +0.5% and +0.5%. Italy (MIB +2.7%) and Spain (IBEX +3.3%) were up much more.

Commodities ($CRB +0.06% W/W), while down a tad this week, have barely changed over two weeks.

The $USD (+0.05% W/W) was mostly flat, but, with continuing strength in the econ data, US Bonds ($USB -0.98% W/W) were weak again. The US 20-year Treasuries (TLT) dropped -1.09% W/W after being down -0.67% the prior week and -0.92% on the Friday after that.

For a second week now, I have to say that — because of what happened to the S&P 500 on Friday — “While I think that bond money was looking to become equity money or commodity money this week, it remained cautious about the events in DC over Fiscal Cliff matters.”

Now to the charts that I keep in front of you each WIR.

As you know, I recommend studying certain key ratio charts in capital markets to assess “the weight of the evidence” before you firmly establish a mind-set on Bull or Bear. Some of these indicators are negative and some are positive. If it gets too extreme one way or the other, the trend is not likely to last in that direction and you’ll have to be looking for signs of a reversal.

For these studies I look at the ratio charts of:
• US Bonds ($USB) vs the US S&P 500 ($SPX)
• Global Dow Index ($GDOW) vs US 20-year Treasury Bonds (TLT)
• MSCI World Equity ex-US ($MSWORLD) vs the US S&P 500 ($SPX)
• US small cap Index ($RUT) vs the US large cap S&P 500 ($SPX)
• Canada (EWC, in USD) vs US S&P 500 (SPY)
• US Industrials (XLI) vs S&P 500 (SPY)
• Consumer Discretionary (XLY) vs Consumer Staples (XLP)
• Euro ($XEU) vs US Dollar ($USD)
• US Treasury Inflation Protected Bonds (TIP) vs US 20-yr Treasury Bonds (TLT)
• Goldminers (GDX) vs Gold Bullion ($GOLD)
• Silver Bullion ($SILVER) vs Gold Bullion ($GOLD)
• Junior Gold Miners (GDXJ) vs Senior Gold Miners (GDX)
• Oil Services Companies ($OSX) vs Integrated Oil companies ($XOI)
• Semi-Conductor Tech Companies (SMH) vs Major Tech Companies (XLK)

With these ratio charts, the good thing is that you are looking at the market speak, not the media. You can see for yourself the unfolding of relationships – i.e., what is actually happening in the market today, and from there you can study the reasons for it, such as the corporate or industry reports, the commodity prices, interest and dividend yields, impact of regulation and government policy, and so forth. Not all charts will give you a bullish or bearish picture, at least most of the time, but you take it all under consideration and go from there. There are different time frames – short, intermediate and long – and you are trying to time your entry or exit with the simultaneous reversal of all three.

1. Daily US S&P 500 ($SPX) vs Daily US Bonds ($USB)—conclusion: bullish for US equities since mid-November – around the time that well known market pundits went off the deep end regarding “fiscal cliff” and financial Armageddon.

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2. Daily MSCI World Equity ex-US ($MSWORLD) vs US 20-year Treasury Bond (TLT)—conclusion: still bullish except for the concern shown on Friday.

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3. Daily MSCI World Equity ex-US ($MSWORLD) vs US S&P 500 ($SPX)—conclusion: bullish for what is perceived to be the higher-risk non-US listed equities. US equities are being held in check by Fiscal Cliff concerns.

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4. Daily US small cap Index ($RUT) vs the US large cap S&P 500 ($SPX)—conclusion: bullish in higher risk small cap US equities vs large cap US equities. Traders may be hopeful of more cash flow into small caps due to change of SEC commissioner in January and impact on US Jobs Act legislation on investment in small companies. This week the Russell 2000 small cap index was up a stunning +2.93% W/W and on Friday it was down less than the S&P 500 or NASDAQ Composite indexes.

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5. Daily Canada (EWC, in USD) vs US S&P 500 (SPY)—conclusion: neutral, but possibly swinging from bearish to bullish.

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6. Daily US Industrials (XLI) vs S&P 500 (SPY)—conclusion: solidly bullish. Evidence that the US economy is in fairly good shape. Might be a sign that $USD about to sink, facilitating foreign sales and increases in shipping. May be a sign that traders perceive that energy costs are going to weaken, thereby enabling the US economy to grow more profitably and more quickly.

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7. Daily Consumer Discretionary (XLY) vs Consumer Staples (XLP)—conclusion: from bearish to bullish. This might be a sign that traders perceive a healthy xmas shopping season.

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8. Daily Euro ($XEU) vs US Dollar ($USD)—conclusion: bullish. Traders appear to be in agreement that the problems of Greece are being managed adequately and Fed QE in the US will soon commence in order that Congress can jump the fiscal cliff. Note the Euro started to overpower the US Dollar in mid-November, the time we perceived that central banks around the world were turning to a coordinated plan of QE.

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9. Daily US Treasury Inflation Protected Bonds (TIP) vs US 20-yr Treasuries (TLT)—conclusion: bullish, but weakened a tad after US inflation data looked promising. Then on Friday, “fiscal cliff” issues pushed traders into regular bonds.

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10. Daily Goldminers (GDX) vs Gold Bullion ($GOLD)—conclusion: neutral and now possibly close to ending the bearish cycle. Awaiting end of tax loss selling and new Bull starting early January.

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11. Daily Silver Bullion ($SILVER) vs Gold Bullion ($GOLD)—conclusion: From our previous assessment of “neutral and likely to go bearish for 1-2 weeks” to now what appears to be bearish capitulation.

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12. Daily Junior Gold Miners (GDXJ) vs Senior Gold Miners (GDX)—conclusion: bearish but possibly a final capitulation in the higher-risk juniors and now likely to go bullish early in January.

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13. Daily Oil Services Companies ($OSX) vs Integrated Oil companies ($XOI)—conclusion: volatile, but now appearing to go from strongly bearish to neutral.

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14. Daily Semi-Conductor Tech Companies (SMH) vs Major Tech Companies (XLK)—conclusion: very bullish for the higher risk chip stocks as Apple (AAPL -9.1% over 4 weeks) is pulling down XLK.

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This week I sum up the Bull:Bear picture as being 9 Bull, 2 Bear and 3 Neutral, which is more bullish than the previous week’s result of 8 Bull, 5 Bear and 1 Neutral. That’s the reason this week we went in the Growth accounts from ~15% cash to 11.5%, and from almost 20% cash in the All-Weather accounts to 12.5% cash.

The two bearish charts of these 14 are #11 [Silver Bullion ($SILVER) vs Gold Bullion ($GOLD)] and #12 [Junior Gold Miners (GDXJ) vs Senior Gold Miners (GDX)]. However, both charts are showing me signs of bearish cycle ending capitulation, which typically precedes a new bull run, particularly in emotional trading such as happens in precious metals.

In the very early stages of a new Gold Bull (i) investors don’t yet see the mining company operating results improving, and (ii) there is still not much M&A that almost always happens in an overheated market [when extreme premiums (excessive goodwill) tend to happen and also be accepted by the market].

When both these two charts (Charts 10 and 11) go bullish, likely early in January, I believe the broad equity market will be strongly bullish. Later, by mid-cycle, perhaps in March, the Precious Metals will become the equity market’s best performers.

Until then we will continue maintain our bullish long-term investment outlook and portfolio stance, believing that the soft economic data in the US, Europe and Japan requires a continuing easing of monetary policy, which will also boost precious metal bullion and related equities prices.

For an objective presentation of what happened this week in the US with the economic reports, here are the headlines from the Econoday analysts:


• Third quarter GDP growth gets surprise upward revision
• Personal income makes a comeback from Sandy
• Consumer sentiment downgrades on fiscal cliff worries
• Housing starts ease in November after earlier strong gains
• Existing home sales continue to recover
• FHFA home prices continue to gain ground
• Durable goods orders make moderate comeback
• Regional Fed manufacturing down in New York & KC, up in Philly
• Leading indicators slip in November

The bottom line this week, says Econoday: “Mostly favorable economic news has been mostly ignored due to the high noise level from negotiations over resolving the fiscal cliff. If the fiscal cliff is resolved—at least temporarily—there may well be notable upside potential for the economy and equities. If there is no resolution soon, however, the risk of damaging the recovery is significant.”

From the four previous weeks, the econ headlines were as follows:


• Retail sales rebound after Hurricane Sandy
• Industrial production rebounds in November but still soft
• Markit flash PMI for December suggests improvement in manufacturing
• Business inventories still under control
• U.S. international trade shrinks in October
• Consumer price inflation weakens in November
• Producer prices decline on energy
• The Fed mixes it up with latest FOMC decision
• Employment improves in November
• Motor vehicles sales surge in November
• Consumer credit posts another strong gain
• Consumer sentiment plunges in early December
• Markit and ISM manufacturing diverge in November
• ISM non-manufacturing improves in November
• Construction outlays jump on housing in October
• Q3 GDP revised up but the composition shifted toward inventory investment and away from demand
• Personal income slammed by Hurricane Sandy
• Consumer confidence adds to recent gains
• Case-Shiller and FHFA home prices continue uptrend
• New home sales disappoint in October
• Pending home sales show strength in October
• Durables orders weak at headline but some life in the detail
• Regional Fed manufacturing mixed and soft, again
• Beige Book shows growing but mixed economy

Because of the track-record of independence and objectivity, I encourage you to read the Econoday reports on the US economy. If we had more time in a day, we’d also be looking at the econ data for the rest of the world – at least more of it.

As for our studies this week, we’ll first look at the detailed economic data for the week that passed and the one ahead. Then we’ll get into the market prices, and the trends and cycles of Currencies, Bonds, Equities, Commodities and Precious Metals.

One final point before we get into our weekly study of markets, when it comes to trading equities I believe that the term “stock-picking” is lacking in the extreme. Instead, since a company is not a stock – i.e., a stock is just a price — you need to be “company picking” and “market timing”.

I cannot stress that more. While pure traders mat disagree, I strongly believe that investor success is a consequence of asset allocation and portfolio management as much or more than simply trading execution.


Global Economics Review

Global Report from Econoday Chief Economist Anne Picker:

Equities were decidedly mixed in the last full week of trading of 2012. Investors were cautious as the dialogue on the U.S. fiscal cliff waxed and waned. The failure of the Republicans to put a ‘plan B’ budget through the House of Representatives, even though President Obama said he would veto it, sent equities down on Friday. Economic data were virtually ignored given investor fixation with the rhetoric emanating from Washington… Global investors have been betting that Congress will overcome its budget deadlock despite an apparently serious setback. Republican lawmakers rejected a proposal on Thursday by their leader, House of Representatives Speaker John Boehner. The dollar climbed against the euro, stocks slid from Tokyo to London and safe haven government bonds rose but in only muted fashion, indicating a continued belief that a deal will be done. There is, however, good reason not to panic since the term “fiscal cliff” is somewhat misleading. The U.S. will not suddenly fall off it on January 1, 2013. Rather, the tightening process will be more gradual.

Econoday’s Global Perspective is written by chief economist Anne Picker.

US Report from Econoday Senior US Economist Mark Rogers:

Fiscal cliff optimism for a resolution rose and fell during the week. Despite disappointment Thursday night on a House vote that did not occur, optimism about a temporary resolution appears to be outweighing pessimism. Economic news was mostly positive and equities ended the week up notably.

Mark Rogers is the author of The Complete Idiot’s Guide to Economic Indicators, Penguin Books, 2009. I recommend it.

The reason I devote much time in the WIR to the reporting and analysis of economic data is for us to gain an understanding of important reasons behind the ebb and flow of capital market prices and the sector rotation within markets. After you follow these reports from month to month you will get a sense of the interrelationships between the business or economic cycle and the market cycle.


Here are the key US economic reports from last week’s calendar.

US Empire State Manufacturing Survey for Dec.

The manufacturing sector in the area of New York state has been contracting steadily since August. The general business conditions index of the Empire State report fell to minus 8.10 for the December reading vs minus 5.22 and minus 6.16 in the prior two months. This report has shown no effect from the landfall of Hurricane Sandy or the aftermath. The report for December is filled with negatives that include contraction for new orders, unfilled orders, and employment. The 12-month outlook is still positive but is far from robust… Last week’s PMI flash report, which is a national report, got out ahead of the regional reports this month. The flash report was very strong and contrasts with the continued weakness in this report, which of course is confined to only one area of the country. On Thursday, the regional manufacturing report from the Philly area will be posted and it, like the Empire State report, has been much weaker than national reports.

US NAHB Housing Market Index for Dec.

After the release of the latest data on 12/18/2012, 10:00:00 AM ET, Econoday reported, Home builders are reporting the best conditions in more than five years, based on the housing market index which keeps on improving with a two point gain in December to 47. This index is up now for eight months in a row and is quickly approaching the breakeven 50 level. A reading over 50 would indicate that more builders describe conditions as good than bad… Two components are now actually over 50 with present sales and six-month sales both at 51. The lagging component is traffic which is still on the sub-50 side at 36. But the report notes a positive about traffic, saying “more serious buyers” are coming forward. The report stresses that fewer vacant and foreclosed properties are on the market which is a big plus for sales. The report once again cites tight lending standards as a negative for the new home market… Regional data show a sharp pickup in the Northeast which was held down in November, likely the result of Hurricane Sandy. The region showing the greatest strength, and the only region over 50, is the Midwest with a reading at 53… The fact that the main index is still under 50 is a reminder of how deep the housing bust was and how lasting its effects have been. But recovery is now picking up steam and points to continued improvement for next year — and increasing economic leadership from residential construction. The Dow isn’t showing any reaction to this report which however is definitely a positive factor for the session. Housing starts will be posted tomorrow morning.

US Housing Starts data for Nov.

After the latest report on 12/19/2012, 8:30:00 AM ET, Econoday reported, Homebuilders slowed the pace of housing starts somewhat in November but this largely was minor pullback after strong gains the prior two months. However, October and September were revised down somewhat. Housing starts declined 3.0%, following an increase of 5.3% in October and a jump of 12.4% in September. The November starts pace of 0.861 million units marginally fell short of market expectations of 0.865 million and was up 21.6% on a year-ago basis… October was revised to 0.888 million units from the initial estimate of 0.894 million. September was bumped down to 0.843 million annualized units from the prior estimate of 0.863 units… The latest decrease in starts was led by the single-family component while the multifamily component edged down. The single-family component fell 4.1% in November after edging down 0.2% the prior month. The multifamily component eased 1.0%, following an 18.2% surge in October… By region, starts in September were led down by a 19.2% drop in the West Census region, followed by the Northeast with a 5.2% decrease. The Midwest rose 3.3% while the South advanced 2.9%… Home builders are moderately optimistic about future sales as housing permits rose 3.6% to an annual pace of 0.899 million units. This followed a 2.5% decline in October. Analysts projected November permits posting at 0.875 million units… Despite some monthly volatility, housing is on a moderate uptrend. Recent gains in the NAHB housing market index add to this view.

US Gross Domestic Product (GDP) final estimate for 3Q2012.

After the latest data was released on 12/20/2012, 8:30 AM ET, Econoday reported, For its final estimate for the third quarter, GDP got a notable upgrade. Real GDP growth for the third quarter was revised up to 3.1% annualized, compared to the second estimate of 2.7% annualized and to the advance estimate of 2.0%. Second quarter growth was a meager 1.3%. The latest number topped market expectations for a 2.8% advance… Demand figures also got a boost. Final sales of domestic product increased 2.4% versus the second estimate of 1.9% and second quarter growth of 1.7%. Final sales to domestic producers (which exclude net exports) were revised to 1.9%, compared to the second estimate of 1.7% and compared the prior quarter’s 1.4%… By components, the upward revision to GDP was primarily due to higher estimates for personal consumption, nonresidential fixed investment, exports, and government purchases. Imports were bumped down. Cutting into the upward revision were lower estimates for residential investment and inventory investment… Headline inflation for the GDP price index was left unrevised at an annualized versus 2.7% for the second estimate and 1.6% for the second quarter. The consensus called for a 2.7% rise. But when excluding food and energy, inflation pressure is not nearly as strong with the third quarter figure posting at 1.3%, matching the prior estimate of 1.3% and to the second quarter’s 1.4%… Today’s revision puts the economy in a little better position for continuing growth-assuming the fiscal cliff issue is resolved.

US Jobless Claims for week ending 12/15.

After the the release of the latest data on 12/20/2012, 8:30:00 AM ET, Econoday reported, Jobless claims continue to swing back and forth, making the data less than useful as a gauge for underlying employment. Initial claims swung 17,000 higher in the December 15 week to 361,000 following a revised 27,000 decline in the December 8 week. Weekly changes for the prior weeks are likewise extreme: minus 27,000, minus 24,000, minus 21,000, minus 35,000, plus 90,000. The latter of these of course reflect the initial impact and subsequent unwinding of Hurricane Sandy, while in the backdrop are shortened weeks and holiday effects… Continuing claims in data for the December 8 week rose 12,000 to 3.225 million. This series has also been affected by the storm and by seasonal factors but to a lesser degree. The four-week average for continuing claims is down 33,000 to 3.241 million which just about matches the recovery low posted just before Sandy hit. The unemployment rate for insured workers is unchanged for a third week at 2.5% which is a recovery low.

US Existing Home Sales for Nov.

After the release of the latest data on 12/20/2012, 10:00:00 AM ET, Econoday reported, An easing in the number of distressed properties on the market is definitely giving the housing sector a lift with the latest evidence coming from existing home sales which surged 5.9% in November to a 5.04 million annual rate that beats even the high-end Econoday estimate. The number of distressed sales came to 22% in the month, down from 24% in October. Distressed sales had been making up a third of all sales through much of the year… Hurricane Sandy seems to have had no significant effect on sales where in the Northeast they surged 6.9% following a modest decline in October. Sales in the other three regions all show gains for both November and October as well… Scarcity of supply is definitely an issue in the housing market, one that is limiting sales but one also that is helping prices. Supply fell sharply, to 4.8 months at the current sales rate from 5.3 months in October which was already a multi-year low. The number of existing homes on the market, at 2.03 million, is the lowest since 2001. The median price, getting a boost from higher priced homes, rose 2.1% in the month to $180,600. The year-on-year gain, at 10.1%, is in double digits for a second month in a row… This is a very strong report that confirms confidence in the residential sector which is increasingly taking leadership for economic growth. The Dow is moving higher following the report which should be a solid positive for the market through the session.

US Philadelphia Fed Survey for Dec.

After the release of the latest data on 12/20/2012, 10:00:00 AM ET, Econoday reported, Manufacturing strength is coming from an unexpected place, from the Philly Fed report whose general business activity index, which has been depressed through most of the year, has popped back into expansion at 8.1 vs November’s minus 10.7. New orders are at plus 10.7 in this month’s report which is only the third positive reading since April. Unfilled orders are also in positive ground, at plus 2.3 for the first gain since April… Shipments really surged, at 18.3 this month vs November’s minus 6.7 in a swing tied no doubt to Hurricane Sandy which clobbered the Mid-Atlantic region in late October and early November. Employment is also positive and optimism in the six-month outlook is more positive… This report is definitely positive and though it contrasts with weakness in Monday’s Empire State report, it confirms the wide strength in the prior week’s PMI flash for the national manufacturing economy. Watch for the Kansas City Fed’s manufacturing report tomorrow.

US FHFA House Price Index for Oct.

After the release of the latest data on 12/20/2012, 10:00:00 AM ET, Econoday reported, October FHFA home prices were up a better than expected 0.5% after remaining virtually unchanged in September. Analysts expected home prices to increase 0.3% in October. On the year, the index was up 5.6% after increasing 4.1% the month before… Regionally prices continue to be mixed. For the nine census divisions, seasonally adjusted monthly price changes on the month ranged from minus 1.3% in the Middle Atlantic division to plus 2.0% in the Pacific division while the 12-month changes ranged from a decline of 0.1% in the New England division to a 13.1% jump in the Mountain division… With recent manufacturing data showing that sector wavering, it is good news that housing is showing signs of improvement.

US Leading Economic Indicators for Nov.

After the release of the latest data on 12/20/2012, 10:00:00 AM ET, Econoday reported, The index of leading indicators shows an as-expected 0.2% decline in a November reading that is less than convincing. A jump in jobless claims is the chief negative in the month, one that is badly skewed by special factors and one in any case that has since been reversed. Manufacturing orders are the second area of weakness and here too, underscored by this morning’s Philly Fed report, a positive reversal is underway. Housing is a positive in today’s report and is likely to be an increasing positive in future reports as the housing sector appears to be building some steam.

US Durable Goods Orders for Nov.

After the release of the latest data on 12/21/2012, 8:30:00 AM ET, Econoday reported, New orders for durables have been very volatile in recent months and net flat. But maybe there is upward momentum with the latest report. New factory orders for durables in November rose 0.7% in November, following a 1.1% gain in October. Analysts expected a 0.5% gain. The very volatile transportation component was down slightly on aircraft subcomponents. Excluding transportation, orders increased 1.6%, following a boost of 1.9% in October. Market expectations were for a 0.2% rise in orders excluding transportation. For the core measure, gains were widespread… The transportation component fell 1.1% after a 0.6% dip in October. Weakness in the latest month was in subcomponents for nondefense aircraft, down 13.9%, and defense aircraft, down 12.3%. New orders for motor vehicles were up 3.5%… Outside of transportation, healthy gains were seen in primary metals, machinery, and electrical equipment. Computers & electronics saw a modest rise while “other” durables edged down… Core investment orders in the private sector put together two healthy gains in a row. Nondefense capital goods orders excluding aircraft increased 2.7% in November, following a 3.2% boost the month before. Shipments for this series also posted consecutive increases, rising 1.8% and 0.6% in November and October, respectively… Manufacturing may be regaining some momentum, but the pace is still moderate at best.

US Personal Income & Outlays data for Nov.

After the release of the latest data on 12/21/2012, 8:30:00 AM ET, Econoday reported, Personal income got some lift in November as businesses in the Northeast re-opened and employees returned to work after Hurricane Sandy. Spending also improved from a mostly return to normalcy in the region. Personal income gained 0.6% in November, following a 0.1% increase in October. Market expectations were for a 0.3% boost. Importantly, the wages & salaries component rebounded 0.6% in November after decreasing 0.3% in October. The Commerce Department earlier indicated that Hurricane Sandy caused a notable part of the loss in private wages and salaries… Consumer spending rebounded 0.4% after slipping 0.1% in October. The consensus forecast a 0.4% rise for overall consumer spending in October… By components for spending, durables rebounded 2.7%, following a 1.1% decline the prior month. Nondurables fell 1.0%, following a 0.1% dip in October. Services jumped 0.5%, following a 0.1% rise in October… Turning to inflation, the headline PCE price index fell 0.2% in November after edging up 0.1% the month before. Expectations were for a 0.2% decrease. The core rate slowed to no change after a 0.1% rise in October. The market median forecast was for 0.1% increase… Year-on-year, headline prices were up 1.4% in November compared to 1.7% in October. The core was up 1.5%, following 1.6% in October… It is hard to determine what the income and spending numbers mean by themselves. It will take another month of post-Sandy data to see the current trends. However, other reports on the consumer are looking moderately favorable-including consumer confidence… Today’s healthy durables and personal income numbers should be favorable for equities. But market focus is on lack of progress on the fiscal cliff and equity futures are pointing down significantly… The good news is that the economy is improving and inflation is subdued, leaving the Fed room to keep policy very loose.

US Consumer Sentiment Index for 2nd half of Dec.

After the release of the latest data on 12/21/2012, 9:55:00 AM ET, Econoday reported, The fiscal cliff is approaching and it’s not helping consumer sentiment which is down nearly 10 points in December to 72.9 vs November’s final reading of 82.7. A look at the two-week breakdowns points to an even lower 70s reading in the second half of this month, which is consistent with fiscal-cliff concern… Weakness is centered in expectations which ends December at 63.8 which is down nearly 15 points from November. A separate reading on the 12-month economic outlook is down an eye-popping 23 points in the month to 74… Current conditions are also down but less severely, at 87 for only a 3.7 point loss for the month. Inflation expectations are not an issue right now, at 3.2% for the one-year outlook and at 2.9% for the five-year outlook.

US Kansas City Fed Manufacturing Index for Dec.

After the release of the latest data on 12/21/2012, 11:00:00 AM ET, Econoday reported, Tenth District manufacturing activity declined further in December, though by a smaller amount than in October or November. Factories’ production expectations were somewhat more optimistic than last month, but a higher share of firms plan to decrease employment in coming months. Approximately half of all contacts cited fiscal policy uncertainty as having impacted their hiring decisions. Price indexes mostly increased, particularly for future raw materials, with the increase driven heavily by food prices… The month-over-month composite index was minus 2 in December, up slightly from minus 6 in November and minus 4 in October. Manufacturing activity was stable at most durable goods producing plants, while nondurable producers cited further declines… Most other month-over-month indexes also edged up slightly in December but remained below zero. The production index inched higher from minus 6 to minus 5. The new orders index improved to minus 8 from minus 14 in October. The order backlog and new orders for exports indexes also rose but remained negative. In contrast, the employment and shipments indexes fell after rising last month… Most price indexes increased from the previous month. The month-over-month finished goods price index rose from 3 to 7, and the raw materials price index increased after falling last month.


Here are the key US economic reports from last week’s calendar.

US Case-Shiller 20-city home price index for Oct.

Before the release of the latest data on 12/26/2012, 9:00:00 AM ET, Econoday reported, The S&P/Case-Shiller 20-city home price index (SA) rose 0.4% in September following similarly solid gains of 0.5% and 0.3% in the two prior months. Improvement was really evident in the year-on-year rate which was up to plus 3.0% from plus 2.2 and plus 1.1% in the prior two months. Gains swept across nearly all 20 cities.

US Richmond Fed Manufacturing Index for Dec.

Before the release of the latest data on 12/26/2012, 10:00:00 AM ET, Econoday reported, The Richmond Fed manufacturing index improved to plus 9 in November from October’s minus 7. Still, the latest number reflected only modest growth for the month. New orders showed notable improvement as did shipments. The new orders index jumped to plus 11 from minus 6 in October.

US Jobless Claims for week ending 12/22.

Before the release of the latest data on 12/27/2012, 8:30:00 AM ET, Econoday reported, Initial jobless claims swung 17,000 higher in the December 15 week to 361,000 following a revised 27,000 decline in the December 8 week. Weekly changes for the prior weeks were likewise extreme: minus 27,000, minus 24,000, minus 21,000, minus 35,000, plus 90,000. The latter of these of course reflect the initial impact and subsequent unwinding of Hurricane Sandy, while in the backdrop were shortened weeks and holiday effects. Continuing claims in data for the December 8 week rose 12,000 to 3.225 million. This series has also been affected by the storm and by seasonal factors but to a lesser degree.

US New Home Sales for Nov.

Before release of the latest data on 12/27/2012, 10:00:00 AM ET, Econoday reported, New home sales for October edged down 0.3% to a 368,000 annual rate. This followed a 0.8% advance in September. The Commerce Department noted that Hurricane Sandy had only a minimal effect on October, hitting at month end and in only one area of the country. Sales in the Northeast, which is by far the least active region in the report, fell 32% in the month. Another unfavorable sign in the report was a second straight month of price weakness, down 4.2% for the median to $237,700. But these numbers are not based on repeat transactions and are affected by shifts in sales between price ranges. It is difficult to believe that new home prices for comparable houses can be down so sharply while other price measures are headed up. Supply remains low in the new home market at 4.8 months at the current sales rate.

US Consumer Confidence Survey for Dec.

Before release of the latest data on 12/27/2012, 10:00:00 AM ET, Econoday reported, The Conference Board’s consumer confidence index rose to a new recovery high of 73.7 in November from an upwardly revised 73.1 in October. Strength was centered in the expectations component which was up 1.1 points to 85.1. The present situation component was down one tenth to 56.6. Holding down the present situation were flat readings on the current jobs market with 38.8% of consumers still saying jobs are hard to get which was unchanged from October.

US Chicago Business Activity survey for Dec.

Before release of the latest data on 12/28/2012, 9:45:00 AM ET, Econoday reported, The Chicago PMI was up 5 tenths in November to 50.4, slightly above breakeven 50 to indicate slight month-to-month growth in general activity. The gain was led by growth in employment, where trends in this report were solid, and growth in production which has also been a solid center of strength in this report. Backlog orders were down for a fourth straight month, but just barely. Unfortunately, new orders showed significant monthly contraction, down more than 5 points to a 45.3 level that shows the most abrupt rate of monthly contraction of the recovery — since June 2009. This is also the second sub 50 reading of the last 3 months.

US Pending Home Sales Index for Nov.

Before release of the latest data on 12/28/2012, 10:00:00 AM ET, Econoday reported, The pending home sales index in October jumped a very strong 5.2% with the impact of Hurricane Sandy, based on only a fractional decline in the Northeast, proving to be very limited, at least in the October report. The Midwest showed a very strong gain as did the South. October’s pending home sales index was at a five-year high.


Technical Indicators & Patterns of International Markets

What follows is broad market research plus my original research data and number-crunching I do every week. If I were a football coach I would be studying film, breaking it down so I could study the opposition and how I need to prepare for the next contest. But I am a trader. It is all necessary work to help us be a winner.

Here is the Daily, Weekly, Monthly RSI-7 and EMA-8 data at Friday’s close as well as the MFI, ROC and DPO Daily data for some of the data series that I input into my Cara 100 Guidance and Risk Management System program:

wir12_52.15.gif
wir12_52.16.gif

Here is the same data for each sector ETF plus SPY.

wir12_52.17.gif

In summary we use the data to manage risk and show guidance. It is the on-board telemetry to support the performance trader.

The Cara 100 Scoreboard at the end of this week [WIR 52] shows:

8 with Daily RSI-7 below 30 [4 below 20] [1 below 15] [1 below 10]
3 with Weekly RSI-7 below 30 [1 below 20] [1 below 15] [0 below 10]
3 with Monthly RSI-7 below 30 [1 below 20] [1 below 15] [0 below 10]

The Bottom-Fishers Report:
Daily: RBY, ATVI, PAYX, CEF [Note: RBY was removed from the Cara 100]
Weekly: RBY, KSS, MRK
Monthly: EXC, RBY, ATVI

The Cara 100 Scoreboard from one week ago [WIR 51] shows:

9 with Daily RSI-7 below 30 [2 below 20] [0 below 15] [0 below 10]
4 with Weekly RSI-7 below 30 [1 below 20] [0 below 15] [0 below 10]
5 with Monthly RSI-7 below 30 [1 below 20] [1 below 15] [0 below 10]

The Cara 100 Scoreboard from two weeks ago [WIR 50] shows:

3 with Daily RSI-7 below 30 [2 below 20] [0 below 15] [0 below 10]
7 with Weekly RSI-7 below 30 [0 below 20] [0 below 15] [0 below 10]
6 with Monthly RSI-7 below 30 [3 below 20] [1 below 15] [0 below 10]

The Cara 100 Scoreboard from three weeks ago [WIR 49] shows:

3 with Daily RSI-7 below 30 [2 below 20] [1 below 15] [1 below 10]
6 with Weekly RSI-7 below 30 [2 below 20] [0 below 15] [0 below 10]
7 with Monthly RSI-7 below 30 [3 below 20] [1 below 15] [0 below 10]

The Cara 100 Scoreboard from four weeks ago [WIR 48] shows:

3 with Daily RSI-7 below 30 [1 below 20] [1 below 15] [1 below 10]
6 with Weekly RSI-7 below 30 [2 below 20] [1 below 15] [0 below 10]
7 with Monthly RSI-7 below 30 [3 below 20] [1 below 15] [0 below 10]

The Cara 100 Scoreboard from five weeks ago [WIR 47] shows:

40 with Daily RSI-7 below 30 [14 below 20] [8 below 15] [1 below 10]
27 with Weekly RSI-7 below 30 [4 below 20] [1 below 15] [0 below 10]
13 with Monthly RSI-7 below 30 [4 below 20] [2 below 15] [0 below 10]

The Cara 100 Scoreboard from six weeks ago [WIR 46] shows:

29 with Daily RSI-7 below 30 [5 below 20] [2 below 15] [0 below 10]
18 with Weekly RSI-7 below 30 [3 below 20] [0 below 15] [0 below 10]
8 with Monthly RSI-7 below 30 [4 below 20] [1 below 15] [0 below 10]

The Cara 100 Scoreboard from seven weeks ago [WIR 45] shows:

20 with Daily RSI-7 below 30 [5 below 20] [1 below 15] [0 below 10]
6 with Weekly RSI-7 below 30 [1 below 20] [1 below 15] [0 below 10]
4 with Monthly RSI-7 below 30 [1 below 20] [0 below 15] [0 below 10]

The Cara 100 Scoreboard from eight weeks ago [WIR 44] shows:

25 with Daily RSI-7 below 30 [5 below 20] [1 below 15] [0 below 10]
7 with Weekly RSI-7 below 30 [0 below 20] [1 below 15] [0 below 10]
6 with Monthly RSI-7 below 30 [1 below 20] [0 below 15] [0 below 10]

The Cara 100 Scoreboard from nine week ago [WIR 43] shows:

17 with Daily RSI-7 below 30 [3 below 20] [0 below 15] [0 below 10]
3 with Weekly RSI-7 below 30 [1 below 20] [1 below 15] [0 below 10]
3 with Monthly RSI-7 below 30 [1 below 20] [0 below 15] [0 below 10]

The Cara 100 Scoreboard from ten weeks ago [WIR 42] shows

25 with Daily RSI-7 below 30 [5 below 20] [1 below 15] [0 below 10]
3 with Weekly RSI-7 below 30 [1 below 20] [0 below 15] [0 below 10]
5 with Monthly RSI-7 below 30 [1 below 20] [0 below 15] [0 below 10]

The Cara 100 Scoreboard from 13 weeks ago [WIR 39] shows

3 with Daily RSI-7 below 30 [0 below 20] [0 below 15] [0 below 10]
2 with Weekly RSI-7 below 30
2 with Monthly RSI-7 below 30

This is an important study because it enables me to easily see which of the Cara 100 company stocks have turned comparatively weakest. I look for whether the weaklings are finding bids at the lower prices and bouncing back or whether they are leading the broad market lower. I look for which sectors they are in, and whether the drivers might be macro-economic, interest rates, commodity prices or corporate developments such as newly reported earnings, dividends or guidance regarding its operations or its industry.

After the new website goes live (January), this table will be synchronized with the Cara 100 and made a bit more sophisticated by incorporating various technical indicators and have performance tracking. I am spending a lot of time on this now and very little time on actual trading. Up next will be the Guidance System for Junior Miners.

I have found this basic quantitative system to be fairly good at indicating the prospects of a cycle top or bottom, but it is important to realize that individual technical indicators are just that. They are not absolutes, but only indicators and my system examines the trends of those indicators, hopefully enabling me a bigger picture of the market.

We use the more enhanced system to relatively weight the desirability from 1 to 100 of holding the individual Cara 100 stocks I get to know and trade. As you know, everything is relative in trading. However, we also must study the trends and cycles data of the broad equity market to get a sense of that bigger picture.

IMPORTANT NOTE:

With the new web platform close to completion, and new database programming underway, we decided to take the Cara 100 to a new level. We are soon going to have a Cara Growth 100 and a Cara All-Weather 100. Such additional information will (i) support our client trading, (ii) facilitate new studies for the premium blog we have under development, and (iii) lead to changes in the presentation of some of the material I present in the WIR. We’re looking forward to taking things up a notch in 2013.

No, I am not going to retire. My good health has finally returned so I’m able to focus more on the tasks at hand.

Yes, I am going to take off more time in 2013, as I should.

Here is the bigger picture technical data. The data can be found at: http://stockcharts.com/def/servlet/SC.scan

As you know, after the close on Friday, I often look at the 52-week new highs vs new lows at important juncture points.

On Sept 14, there were 943 New Highs and 101 New Lows.
On Sept 21, there were 498 New Highs and 64 New Lows.
On Oct 14, there were 97 New Highs and 102 New Lows.
On Oct 19, there were 115 New Highs and 127 New Lows.
On Oct 26, there were 89 New Highs and 127 New Lows.
On Nov 2, there were 240 New Highs and 119 New Lows.
On Nov 9, there were 89 New Highs and 202 New Lows.
On Nov 16, there were 43 New Highs and 318 New Lows.
On Nov 23, there were 173 New Highs and 64 New Lows.
On Nov 30, there were 235 New Highs and 108 New Lows.
On Dec 7, there were 168 New Highs and 97 New Lows.
On Dec 14, there were 140 New Highs and 82 New Lows.

On Dec 21, there were 169 New Highs and 117 New Lows, which is a growing extreme condition, but net bullish. On the NYSE, there were 83 New Highs and 5 New Lows over the past 52 weeks, which is strongly bullish.

wir12_52.18.gif
wir12_52.19.gif

As trend is as important as numbers or percentages, compare the current data above with the detailed data from Nov. 16, five weeks ago, which was clearly more bearish:

wir12_52.20.gif
wir12_52.21.gif

To repeat:

From my years of experience, I know that traders who rely entirely on mechanical systems will soon realize that common sense is another necessary ingredient.

No single system back-tests to continuous success – ever. Markets change because the approach and style of traders undergo continuous change. It’s why I say that to trade successfully you need to know a little about a lot of things, always keeping an open mind, looking for the weight of the evidence, all of it based on hard data.

Bear in mind that technical RSI-based Alert signals (i.e., potential Buy signals) are not given until a trend reversal occurs. The term ‘Accumulation’ applies to those stocks that are on a watchlist for purchase candidates. At that point, I begin to focus on the various aspects of technical, quantitative, fundamental and economic conditions for that company and stock (note that a company is not a stock), building sufficient weight of evidence as to cause me to buy the stock.

This is a process that I discuss in my book “Lessons from the Trader Wizard”, asking the reader to try to get a grasp (i.e., a little knowledge) of a wide number of investment topics that will, with experience, help you develop the judgment you need to make your own long-term or short-term oriented trading decisions.

Over my trading career, I have found most people do the opposite. They focus on one or two concepts (like PE or mutual funds or Elliott Wave or even RSI, etc), while harboring the belief that such an approach makes trading easy. Trading is not easy. The market is, frankly, an ugly game of deception that plays people. In recent years, because of digitalization and globalization factors, the deceit is even greater and trading made that much harder.

The only way to build your confidence is to be a student of the market, i.e., drilling down into the data and also understanding the big picture, a process which I try to help with my book Lessons From the Trader Wizard.

I have been using the WIR to state my understanding from the data that from late in the 2Q2012, and going forward, the market had been undergoing a cycle bottom process. I noted that my perspective early on was not the conventional wisdom. I also cautioned at the beginning that a bottoming process takes time and that the technical indicators, the ones I use or other ones, are not always going to pin-point exact bottoms (or tops). However, the trading process is a lot like real estate, which most people do understand: if you happen to rent and then become a buyer during a Buyers’ Market (when prices are down) and sell (and then rent) in a Sellers’ Market (when prices are very high), you will do a more effective job of (i) building assets quickly, and (ii) protecting those assets as good as you can during the tough times. Trading securities is a lot easier and much less costly, in fees and commissions, than ‘trading’ houses! The advantage in securities trading is in the great liquidity of the market.

The more experience you get in trading securities the more you realize that liquidity is the fuel that drives prices. If the market’s liquidity only came from independent traders who I call the owners of capital, then prices would mostly rise and fall because of corporate fundamentals, industry demand and supply, commodity and wage costs, and interest rates. The capitalist system investment model would be much easier to figure out than it is today where Interventionists, like governments and central bankers, have altogether different trading motives, and private equity corporate acquisitors and short and distort syndicates play such a major role in the market.

The market is an intellectual workplace. It’s true that, if we are serious investors and traders, we are all students of the market. And, writing about it, as participants in the Blog Discourse have come to realize, is part of a self-education process.


International Equity Markets Review

Over the past five weeks, the $MSWORLD jumped +3.04%, followed by weekly gains of +1.93%, +0.84%, +0.98% and +0.12%.

Here is the Weekly chart of the $MSWORLD (1613.32), closing well above the 8-week EMA (1582.62), which is in dashed blue and the S&P 500 ($SPX) in thin solid orange behind.

wir12_52.22.gif

The Weekly price series data is more important than the Daily – just as the Monthly is more important than the Weekly. It is the Weekly price series data however that most portfolio managers base their decision making today – if they look at the technical indicators at all.

After two weeks of big gains by Shanghai ($SSEC +4.3% and +4.1%), this week was flat. Hong Kong was down -0.4% W/W. India (SENSEX BSE 30) dropped -0.4%.

Most exchanges were up however. Brazil ($BVSP) was up +2.4% W/W.

With the Japanese Yen taking another tumble ($XJY -0.91% W/W), the NIKKEI 225 index ($NIKK) lifted +2.1%. The NIKKEI Dow was up +2.2% a week ago also.

After the Bank of Japan went all in on QE two months ago, the equity market has soared there. Look at the ~14% gain in the past two months.

wir12_52.23.gif

Here is this week’s international equity re-cap from Econoday:

wir12_52.24.gif

wir12_52.25.gif
wir12_52.26.gif


Below are 16 country index chart links from StockCharts.com (with their formal approval btw). Global equity markets do not trade in a vacuum. It is important to be watching these markets move through a trend juncture together, pushed and pulled by global currency and commodity strength or weakness as well as local and regional economic forces.


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 100.

FTSE 100 stockcharts.com chart


Here is the latest session data for the German DAX 30.

DAX stockcharts.com chart


Here is the latest session data for the French CAC 40.

CAC 40 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


Review of the ETFs for the International equity market

As you know, the country Exchange Traded Funds (ETF) are not the same as the domestic exchange indexes, but are (i) denominated in US Dollars, (ii) traded in NY, mostly by Americans, (iii) traded for several hours each day after Asia-Pacific and European markets have been closed, and (iv) a reflection of the most up-to-date news stories and investment analysis.

Also, depending on extreme currency fluctuations, the USD denominated ETFs may widely differ in performance from the results of the domestic exchanges.

When the world is worried and goes risk-off, it’s the international equities that get hammered the most, and that feeds the US Dollar market, which further lifts the Dollar and worsens the crisis. If that Dollar buying gets out of hand, the markets take on the appearance of a death plunge.

This week, the big winners were Japan (EWJ +3.73% W/W) and Australia (EWA +3.32%), which were well ahead of Germany (EWG +1.19%) in third place in my top 11 country ETFs.


Table 14: International equities via an ETF perspective (in $USD)

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

EWJ

9.740 -0.060 -0.61% 3.73% 3.84% 4.84% 4.84% 4.06% 8.22% 8.83%

EWZ

54.97 -0.57 -1.03% 1.44% 3.58% 5.39% -7.92% -1.72% 7.38% -4.20%

EWG

24.57 -0.16 -0.65% 1.19% 3.58% 6.18% 22.42% 4.87% 28.04% 28.64%

RSX

29.55 -0.42 -1.40% 0.89% 3.18% 5.39% 6.99% -0.61% 21.01% 8.24%

EWQ

23.41 -0.14 -0.59% 0.82% 3.31% 5.50% 16.12% 6.02% 25.46% 22.89%

ILF

43.52 -0.36 -0.82% 0.51% 2.45% 3.57% -0.57% -0.18% 7.96% 3.01%

GXC

72.13 -1.28 -1.74% -0.07% 1.75% 3.71% 12.33% 11.07% 17.00% 16.24%

EWW

69.59 -1.12 -1.58% -0.44% 0.97% 3.90% 25.82% 7.67% 23.10% 30.03%

EWC

28.32 -0.16 -0.56% -0.63% 0.60% 0.50% 3.36% -1.94% 12.74% 9.51%

EWU

17.84 -0.19 -1.05% -0.72% -0.06% 1.71% 7.21% 0.22% 12.27% 12.56%

EWY

61.65 -0.64 -1.03% -0.74% 1.35% 4.47% 13.60% 3.58% 13.85% 18.24%

EWM

14.74 -0.21 -1.40% -0.74% 0.34% -0.14% 8.62% 0.55% 6.81% 12.43%

EWH

19.13 -0.14 -0.73% -1.44% -0.78% -0.16% 20.92% 5.98% 21.00% 25.44%

EWS

13.54 -0.11 -0.81% -2.52% -1.46% 3.20% 20.89% -0.66% 15.43% 23.77%

EWA

24.75 -0.20 -0.80% -3.32% -2.56% 0.77% 12.09% 2.44% 18.03% 15.28%

EWT

13.15 -0.16 -1.20% -4.64% -4.08% -0.38% 11.06% -2.81% 10.88% 13.26%

IFN

20.51 -0.31 -1.49% -10.63% -12.01% -6.13% 4.22% -8.84% 6.82% 4.27%

Japanese equity market ETF: EWJ

Here is the Japanese (EWJ) equity market ETF Monthly, Weekly and Daily data charts:

Interactive EWJ Monthly data:

Interactive EWJ Weekly data:

Weekly EWJ

Interactive EWJ Daily data:

Daily EWJ


U.K. equity market ETF

Here is the United Kingdom (EWU) equity market ETF Monthly, Weekly and Daily data charts:

Interactive EWU Monthly data:

Interactive EWU Weekly data:

Weekly EWU Data

Interactive EWU Daily data:

EWU Daily data: Daily EWU Data


Canada’s equity market

Here is the Canadian (EWC) equity market ETF Monthly, Weekly and Daily data charts:

Interactive EWC Monthly data:

Interactive EWC Weekly data:

Weekly EWC Data

Interactive EWC Daily data:

Daily EWC Data


Taiwan’s equity market

Here is the Republic of China/Taiwan (EWT) equity market ETF Monthly, Weekly and Daily data charts:

Interactive EWT Monthly data:

Interactive EWT Weekly data:

Interactive EWT Daily data:


Indonesia equity market ETF

Here is the Indonesia Fund (IF) equity market ETF Monthly, Weekly and Daily data charts:

IF Summary from Yahoo Finance:
http://finance.yahoo.com/q/pr?s=IF

IF Summary from Google Finance:
http://www.google.com/finance?q=AMEX:IF

IF chart from StockCharts.com:
http://stockcharts.com/charts/gallery.html?IF

Interactive IF Monthly data:

Interactive IF Weekly data:

Interactive IF Daily data:


Here are the links to interactive charts from Investertech.com for the key country ETFs, which you can add technical indicators for as well.

Group 1:

(list one)

(list two)

(list three)

Group 2:

(list one)

(list two)

(list three)


US Equity Markets Review

While the talk has been bearish, the S&P 500 (+1.17% W/W) was higher this week, as it has been since mid-November. But Friday’s loss of -0.94% on the day on big volume was a downer. Here is the chart superimposed against TLT (20-year US Treasury Bonds) to show the counter-cyclicality.

wir12_52.27.gif

For the ten US equity market sectors, despite Friday’s big loss, only two of them were down W/W at the close on Friday, but only 14 of the Dow 30 stocks were higher W/W.

Financials (XLF +2.50% W/W) led the sectors, while the defensive pairs of Consumer Staples (XLP -2.20% W/W) and Healthcare (IYH -0.56%) were weakest.

This week one of the biggest stories was of the massive $1 billion short sale of Herbalife (HLF) by Bill Ackman of Pershing Square Capital.

http://seekingalpha.com/article/1078321-is-ackman-s-hatchet-job-on-herba…

http://seekingalpha.com/article/1078501-ackman-s-case-on-herbalife-doesn…

Can you tell from the chart when Ackman announced his short position?

wir12_52.28.gif

From $73 to $26 in less than 8 months for what had been widely considered a high quality company! Wow. Now Ackman says he believes it’s going to zero!

http://www.4-traders.com/HERBALIFE-LTD-12938/

Econoday summed up the US equity market this week as follows:

wir12_52.29.gif

Table 1 shows that for the past four weeks, the S&P 500 (SPY) gained +1.0%. But over the same period, the Goldminers indexes (GDX and GDXJ) were down -7.30% and -9.94%, respectively. So accounts that have been heavily weighted with Goldminers have suffered greatly. Thankfully, in my case, the cycle bottom is quickly approaching for the PM miners.


DJIA ino.com chart

DJIA stockcharts.com chart

NASDAQ Composite ino.com chart

NASDAQ Composite stockcharts.com chart

Here is the list of the ten highest-weighted non-financial stocks in the NASDAQ Composite. I recommend you put them in a watchlist (e.g., Google Finance Portfolio) and watch them like a hawk:

AAPL MSFT GOOG QCOM RIMM CSCO INTC ORCL GILD EBAY

Daily RSI-7 for the Nasdaq 100 Big-10
Weekly RSI-7 for the Nasdaq 100 Big-10
Monthly RSI-7 for the Nasdaq 100 Big-10

Add two of AMZN, DELL, JAVA or YHOO to get a Cara Dozen.

Or while you are at Investertech.com, input up to 30 tickers in the window above “Summaries” – say AAPL MSFT GOOG QCOM RIMM CSCO INTC ORCL GILD EBAY AMZN DELL JAVA YHOO plus up to 16 more – and click on Tech Chart, Basic View, Daily Watch, Performance or Fundamentals and you’ll get a lot of information to compare one against the others.


Here is the Monthly data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.

Monthly Nasdaq Composite Data

Monthly S&P 500 Data

Monthly Dow 30 Data

Monthly Russell 2000 Data

Here is the Weekly data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.

Weekly Nasdaq Composite Data

Weekly S&P 500 Data

Weekly Dow 30 Data

Weekly Russell 2000 Data

Here is the Daily data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.

Daily Nasdaq Composite Data

Daily S&P 500 Data

Daily Dow 30 Data

Daily Russell 2000 Data


Value Line Dow 30 Stocks Review

The DJIA stocks being reviewed this week [Value Line cycle 13, 26, 39 and 52], are Cisco Systems (CSCO), Verizon (VZ) and AT&T (T). One of them (Cisco) is a Cara 100 company, and we have positions in it for our All-Weather and Growth accounts.


AT&T [GICS 50, Dow 30] [Value Line cycle 13, 26, 39 and 52]
(T: Google Finance file)
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Investertech chart)
(T: ADVFN Financial Data)
(T: Profile)
(T: Value Line Report Dec. 21: next one is due Mar. 22)


Verizon [GICS 50, Dow 30] [Value Line cycle 13, 26, 39 and 52]
(VZ: Google Finance file)
(VZ: Yahoo Finance file)
(VZ: StockChart chart)
(VZ: Investertech chart)
(VZ: ADVFN Financial Data)
(VZ: Profile)
(VZ: Value Line Report Dec. 21: next one is due Mar. 22)


Cisco Systems [GICS 45, Dow 30, Cara 100] [Value Line cycle 13, 26, 39 and 52]
(CSCO: Google Finance file)
(CSCO: Yahoo Finance file)
(CSCO: StockChart chart)
(CSCO: Investertech chart)
(CSCO: ADVFN Financial Data)
(CSCO: Profile)
(CSCO: Value Line Report Dec. 21: next one is due Mar. 22)


Always before I study a company, I review my prior written notes. In 2011, wth Christmas and traveling during this quarterly cycle, I missed some of those reports. But, I do what I can do.

For WIR #26-2011

AT&T (T June 24 @ $30.44)
Verizon (VZ June 24 @ $36.00)

The $39 billion acquisition of T-Mobile USA from Deutsche Telekom AG, which is not expected to close until 1H2012, will have a large impact on the company’s balance sheet and operations. So, it’s fair to say that the stock could head in various directions.

Like Verizon (VZ), there is a huge dividend for AT&T (T), yielding over 5.5% in both cases, but fairly soft revenue and earnings growth.

I’m sure these stocks are of interest to long-term income-oriented accounts that desire a relatively low risk, but I’m not too keen unless the dividend yield could be supplemented with put option writes premium.

Something to ponder if you are an income-oriented investor is that future dividends might not be safe for some companies. A few years ago I made an assessment in the blog that JP Morgan (JPM) was like the US Treasury, never going to miss a dividend. I was wrong. The dividend was cut after the government bail-out deemed the banks’ shareholder dividends to be unfair to taxpayers even though, I believe, JP Morgan could have made those payments.

For many high-yielding stocks, there is presently a very high pay-out, which for Verizon is presently about 87% of earnings and for AT&T is about 73%. These companies, in a severe recession or depression, could suffer losses and be forced to cut the dividend. The companies also have a lot of debt, and their balance sheets are not as strong as say Cisco’s. It could be that a period of rapidly rising interest rates might impair their debt service ability and threaten the dividend. I don’t think these situations are likely to happen in the case of Verizon and AT&T, but it is a factor to consider if income is your requirement.

Not much else to say.


Cisco Systems (CSCO June 24 @ $14.93)

These charts show that CSCO is over-sold and tried to make a rally move starting this past Monday, but was hit with selling on Wed and Fri.

Technically, CSCO would be a very low risk purchase in the $14-$15 range as that price takes the stock back to the 2008-2009 Bear market lows. In other words, almost every buyer of stock for almost the past two and a quarter years has paid higher.

What strikes me immediately when looking at the Value Line page is:

1. the massive cash position of the company, roughly $8 per share, while the stock is trading at under $15
2. the balance sheet is massively liquid
3. Value Line’s analyst Kevin Downing raised the 6-month price outlook (“Technical”) from a ‘3’ (average) to ‘2’ (superior)
4. 2009 was a cycle low for revenues and, despite all the negative portrayals of this company, the revenues are now in constant lift, with 2012 expected to set a record high for revenues and revenues/share
5. 2012 earnings per share are expected to set a record
6. Cisco is now paying a dividend, which they ought to as they have more cash reserves and a stronger balance sheet than the Fed, and the ops are a cash cow
7. The downside is that CSCO sells their big telecom switches to governments that are having severe budget stresses these days
8. Return on Shareholder Equity has fallen below a 20% level that I require for tech and industrial companies that make it into the Cara 100 highest quality companies, but as long as revenues, cash flow and earnings continue to rise every year by some 7%-8% or more, then I’ll stick with it. Surely the growth in the Internet space can accommodate several strong competitors in addition to Cisco.

Taking a long view on this one is needed, but worth it I believe.


For WIR #39-2011

Telecom equipment and services giants, all of these:

AT&T (T Sept 23 @ $27.85)

A loss of $2.59 in the 13 weeks since June 24.

Verizon (VZ Sept 23 @ $35.88)

A loss of $0.12 in the 13 weeks since June 24.

Cisco Systems (CSCO Sept 23 @ $14.93)

A gain of +$0.68 in the 13 weeks since June 24.

From these charts, it is obvious that, although they lost in % terms over the past quarter, in terms of the broad market sell-off the traders have recently sought haven in the telco’s. In the past several hours, VZ has out-performed T, which might be due to differences in perceived risk, i.e., thoughts that US regulators will not ease up on their concerns about the proposed $39 billion take-over of T-Mobile by AT&T. In the past quarter, investors have obviously concerned about the deal because the stock is well under-performing VZ.

Cisco (CSCO) has dropped the most % wise in the past month and even in the 10 days since Value Line wrote their report. In a period of broad market weakness that is not surprising since the telco’s pay a rich dividend and Cisco, although starting to pay a dividend after all these years, pays very little.

On a balance sheet basis, with $45 billion in cash, Cisco wins hands down. The company could more than eliminate 100% of its debt if the Board chose to do so. Over the past ten years, the decision was to buy back stock, about 25% over that time. But, in absolute dollars, the company’s revenues and earnings have flourished too, far exceeding the growth of the telco’s.

Cisco’s products are precisely what are needed for all users, from the largest to the smallest, of the Internet. As sales are so heavily dependent on government orders, however, and those orders are under budget pressure, the company is having to reduce its growth estimates. Its projected earnings are helter-skelter too.

So the stock has been hammered in the past 18 months. At the best of times recently, the stock has been dead money. Will that improve? I think so. As VL projects a 17 PE multiple and 2012 earnings of $1.35 plus a dividend of $0.32, I can see a high price next year that could be close to the average of the highs of the past four years, which is about $25.60. Using the VL average PE multiple and $1.35 earnings, the stock could get to $23.00 or higher, well up from its current price of $15.61.

I note that on Sept 2 VL raised the stock outlook for the next 6 months (“Technical”) from a market average performer ‘3’ to a superior ‘2’. They did the same for T on Aug 26 and for VZ on Sept 16. So far, VZ is the only one that has performed significantly.

Not that I’m pleased with Cisco’s lower Return on Equity or Net Profit Margin metrics in recent years, there are other reasons for me keeping this company in the Cara 100. But I also have their number one competitor there too, which happens to be Juniper (JNPR).

To sum up the VL reports this week, the analysts seem to like the telco’s only for their high dividend yield, but CSCO they see as having perhaps the better long-term risk adjusted potential. I agree with that assessment. Presently in the major portfolios, we have a 1.43% portfolio weighted position in CSCO and zero in the other two.


For WIR #52-2011

Things are looking up for these telecom equipment and services giants. The current prices are all higher than their respective 8-month, 8-week and 8-day Exponential Moving Averages, which is a bullish sign.

As Cisco is a Cara 100 company, CSCO is therefore eligible for investment in our accounts. We do in fact hold CSCO in both the All-Weather and Growth portfolios. For pure telco’s, however, we presently only hold the Russian company Mobile TeleSystems (MBT), which we hold in both portfolios.

All charts here will show the stock in the solid black line vs the S&P 500 in the dashed orange line.

AT&T (T Dec 23 @ 29.87 vs Sept 23 @ $27.85)

A gain of $2.02 (+7.3%) in the 13 weeks since Sept 23.

The Daily chart shows that T is a bit on the high-risk side now, but I doubt it will pull back below $29.31 in the next couple days or $29.02 in the next couple weeks, based on the 8-period EMA and rising RSI, STO and TRIX.

VL lowered their 3-6 month ‘Technical’ price outlook on Dec 9 from a ‘2’ to a ‘3’.

The T-Mobile deal may in fact crash unless the EU exerts pressure on the US regulatory agencies. But the loss is just 50 cents a share cash in break-up cost, and there is still a chance the deal may get the approval. It’s probably now in the White House hands.

Does Obama look to Germany for campaign funds? :)

The $1.72 dividend this year, with $1.76 in the wings for 2012, represents a solid income component to this stock if that’s what you are seeking. Even if they have to pay out on the T-Mobile deal, I think the dividend is well protected.

Do I like the capital appreciation potential? Not really. The metrics for revenue, cash flow and dividends looking forward a couple years are not sufficiently enticing to make me want to buy-and-hold this one.

Verizon (VZ Dec 23 @ $39.38 vs Sept 23 @ $35.88)

A gain of $3.50 (+9.8%) in the 13 weeks since Sept 23.

VZ is even more over-bought than T, for now. Bullish long-term, but cautious in the short-term, especially if risk-on capital is slow to move into equities and decides to go for the commodity price sensitive stocks first, which sometimes happens.

The Verizon dividend may not be as high as for AT&T, but it is still very attractive for income seeking long-term holding accounts. But, again, the metrics for revenue, cash flow and dividends looking forward a couple years are not sufficiently enticing to make me want to buy-and-hold this one either.

Sorry, but even if I think the S&P 500 might lift in 2012, and I do, I cannot look to VZ or T to interest me.

Cisco Systems (CSCO Dec 23 @ $18.47 vs Sept 23 @ $14.93)

A gain of +$3.54 (+23.7%) in the 13 weeks since Sept 23.

Now, Cisco is a different story. This one is the 800-pound gorilla in the internet infrastructure space and demands for bandwidth and speed are never-ending.

CSCO stopped under-performing and began to out-perform the market after bottoming in early August. The chart is bullish going into 2012. It did get a bit over-bought on Friday though.

Looking forward a couple years, I find that the Cisco metrics for revenue, cash flow and dividends may not be superb, but they are still strong enough to be enticing. I remain pretty much in the buy-and-hold camp with CSCO even though for several quarters many traders questioned my wizdom.

However, I think that a lot of Cisco’s problems are in the past. We’ll see. Btw, for my 12+ month outlook for a balanced Growth portfolio, I selected CSCO in this telecom space at the Whistler Conference that ended Oct 3 and for the Balanced accounts (conservative all-weather type), I went with Mobile TeleSystems, largely for the huge dividend. MBT did not disappoint since then capital growth wise either!

Value Line raised their 6-12 month ‘Timeliness’ and 3-6 month ‘Technical’ share price outlooks in mid-Nov from ‘4’ to ‘3’ and from ‘3’ to ‘2’ respectively.

The company has over $8 in cash and the share price is still just $18.47. The company has phenomenal cash flow and earnings power, which on the $10 non-cash component of the share price is a tremendous bargain.

VL has increased their 2012 earnings projection from $1.35 to $1.45 since the last quarterly report, and management is very narrowly guiding forward so that number is likely to be out-performed. At 2012 earnings of say $1.50 and a 17x PE in a stronger equity market looking out a year, I think the prospects of $25.50 are good. That would be a gain of +38% in the next 12-18 months. The 18 cent dividend this year could possibly double next year as well.

All in all, I like this stock, which is why we hold it.


For WIR #13-2012

AT&T (T Mar 23 @ 31.52 vs Dec 23 @ 29.87 vs Sept 23 @ $27.85)

A gain of about +5.5% in the 13 weeks since Dec 23.

The Daily data chart shows a possible break-down in the bullish price momentum seen in the longer-term Weekly and Monthly data charts. Depending on your time horizon, you can go to the Weekly or Monthly EMA-8 to see the current level of support. Also the RSI-7 for both Weekly and Monthly data is above 70, which puts T into the Distribution Zone, but there is no obvious price or RSI breakdown at this point, so there is no SELL Alert.

The Value Line analyst likes the company and the stock. As for me, I like the dividend yield, which is an extremely high 5.6%, but choose not to hold the stock because the company is too slow growing and has an inadequate ROE for my needs. T is not in the Cara 100 and so I would not consider investing in it.

Verizon (VZ Mar 23 @ 39.42 vs Dec 23 @ $39.38 vs Sept 23 @ $35.88)

Flat in the 13 weeks since Dec 23.

These charts are quite similar to the ones for T, which is not surprising since the two companies are direct competitors and both 800-pound gorillas in the US telephony space. The Daily data chart shows a possible break-down in the bullish price momentum seen in the longer-term Weekly and Monthly data charts. Depending on your time horizon, you can go to the Weekly or Monthly EMA-8 to see the current level of support. Also the RSI-7 for both Weekly and Monthly data is above 70, which puts VZ into the Distribution Zone, but there is no obvious price or RSI breakdown at this point, so there is no SELL Alert. But, just like for T, you have to keep your eye on the Daily and Hourly price data now.

The Value Line analyst likes the company and the stock. As for me, I like the dividend yield, which although not as good as T is still an extremely high 5.1%, but I choose not to hold the stock because the company, like AT&T, is too slow growing and has an inadequate ROE for my needs. VZ is not in the Cara 100 and so I would not consider investing in it.

Cisco Systems (CSCO Mar 23 @ 20.53 vs Dec 23 @ $18.47 vs Sept 23 @ $14.93)

A gain of about +11.2% in the 13 weeks since Dec 23.

These charts are much more bullish to the ones for T and VZ.

Cisco is the 800-pound gorilla in the international internet communications space. The Daily data chart shows the same bullish price momentum seen in the longer-term Weekly and Monthly data charts. Even the Hourly data is quite positive. Depending on your time horizon, you can go to the Weekly or Monthly EMA-8 to see the current level of support. Also the RSI-7 for both Weekly and Monthly data is still below the 70 line for the Monthly, Weekly and Daily price data, and the level is rising in each case, so this is a very bullish technical condition.

Of these three companies, only Cisco is a member of the Cara 100 best quality, large cap companies in the world, based on financial strength, management, returns on equity, profit margins, and so forth. Although Return on Shareholder Equity has dropped below the level I’d like to see, once you factor in the company’s $47 billion in cash, then ROE is not a problem for me. In other words, the extreme financial strength and safety is a balancing factor. If the company were to dividend out much of that cash, the ROE would pop up to a much higher level. The first time dividend of $0.18 this past year will likely grow to $0.26 this year and $0.30 for 2013. I’d like to see that dividend tripled.

The business factor that is most growing the Cisco business is the phenomenal growth in mobile bandwidth demand, cloud computing and virtualized data centers. The telephony switch business is also returning to normal levels.

I agree with the conclusion of the Value Line analyst: “These timely shares should appeal to long-term investors as well as those focused on momentum. In addition to its rebounding core operations, the company’s strong positions in data center, collaboration, wireless, and video products augur well for solid risk-adjusted long-term price appreciation potential.”

In fact at the Cara Whistler 2011 Conference on Sept 29-Oct 3, I selected CSCO as my pick for large cap Growth in the 12-24 month time frame. Since then, the stock has grown +35.15% from $15.19 to $20.53.

Also if you re-read what I wrote about Cisco in the past three WIRs (see above), you cannot say I have not been extremely bullish on CSCO when most traders were avoiding it. Yes, I was buying it. It’s my second biggest Tech position in Growth and biggest in All-Weather in our portfolios.


For WIR #26-2012

AT&T (T J 22 @ 35.17 vs Mar 23 @ 31.52 vs Dec 23 @ 29.87 vs Sept 23 @ $27.85)

A gain of about +10.9% in the 13 weeks since March 23, which had been up +5.5% in the 13 weeks since Dec 23.

If you look back to the week of April 23, you will see that T was launched to higher prices. About two days before that the fuse for VZ was lit.

The Daily data chart shows a possible break-down in the bullish price momentum seen in the longer-term Weekly and Monthly data charts. Depending on your time horizon, you can go to the Weekly or Monthly EMA-8 to see the current level of support. Also the RSI-7 for both Weekly and Monthly data is above 70, which puts T into the Distribution Zone, but there is no obvious price or RSI breakdown at this point, so there is no SELL Alert.

As stated the previous quarter: “The Value Line analyst likes the company and the stock. As for me, I like the dividend yield, which is an extremely high 5.6%, but choose not to hold the stock because the company is too slow growing and has an inadequate ROE for my needs. T is not in the Cara 100 and so I would not consider investing in it.” With the price bump, the yield is now about 5.1%. My opinion has not changed, either for T or VZ.

Verizon (VZ Jun 22 @ 43.95 vs Mar 23 @ 39.42 vs Dec 23 @ $39.38 vs Sept 23 @ $35.88)

Up +10.8% in the 13 weeks since Mar 23 following a flat quarter before that.

These charts are quite similar to the ones for T, which is not surprising since the two companies are direct competitors and both 800-pound gorillas in the US telephony space.

The Value Line analyst likes the company and the stock. As for me, I like the dividend yield, which although not as good as T is still an extremely high 4.7%, but I choose not to hold the stock because the company, like AT&T, is too slow growing and has an inadequate ROE for my needs. VZ is not in the Cara 100 and so I would not consider investing in it.

But I’d like to point out an observation about the Telco ETF. In the past year, T and VZ have gained +13.9% and +22.3% respectively. These companies/stocks dominate in the Telco industry ETF (IYZ), but in the past year, IYZ is down -9.9%. Even the S&P 500 is only up +3.7% in the past year.

So, what’s going on? I suspect that the managers of major funds have gone long T and VZ to earn the extremely high dividend and they have shorted IYZ and/or possibly constituent stocks like Nokia (NOK -60.0% Y/Y), Telefonica (TEF -46.6%) and France Telecom (FTE -39.2%). Now, if you are an astute speculator, you might want to watch the extremely high dividends of the latter three companies, checking for non-payment risk, plus note the relative differences in the RSI-7 for the Monthly, Weekly and Daily.

Cisco Systems (CSCO Jun 22 @ 17.13 vs Mar 23 @ 20.53 vs Dec 23 @ $18.47 vs Sept 23 @ $14.93)

A loss of -16.0% in the 13 weeks since Mar 23 vs a gain of about +11.2% in the prior quarter.

CSCO had a tough early May along with the rest of the market, but worse than the average of high quality companies. But, I think the worst is over. We’ll know more if and when the Weekly RSI-7 (presently 17.28) has been crossed to the upside by the end of week price (presently 17.13). But the RSI, Stochastics and TRIX for the weekly data charts are looking promising for the Bulls.

FD: Presently we hold no CSCO in either the Growth or All-Weather portfolio accounts.

I happen to think that the company turned in a fairly good quarter and their conservative guidance in early May was grossly over-reacted to by Wall Street. It is a fact that business conditions are not the best, but this company has managed to continue growing earnings and building balance sheet strength, and recently dividend pay-outs that will soon be quite acceptable, as good as most high-quality companies in the S&P 500.

There is no reason I can fathom as to why this stock is the Dow 30’s 4th worst performer in the past six months and the past three months. With a forward PE under 9 and a superb balance sheet, there is very low risk at this price.


From WIR #39-2012

AT&T (T Sep 21 @ 38.08 vs Jun 22 @ 35.17 vs Mar 23 @ 31.52 vs Dec 23 @ 29.87 vs Sept 23 @ $27.85)

A gain of about +8.7% in the 13 weeks since June 22, which had been up +10.9% in the 13 weeks since March 23, and up +5.5% in the 13 weeks after Dec 23.

Verizon (VZ Sep 21 @ 45.64 vs Jun 22 @ 43.95 vs Mar 23 @ 39.42 vs Dec 23 @ $39.38 vs Sept 23 @ $35.88)

Up +5.33% in the 13 weeks since June 23, which had been up +10.8% in the 13 weeks after Mar 23 following a flat quarter before that.

Cisco Systems (CSCO 18.90 @ Sep 21 vs 17.13 on Jun 23 vs Mar 23 @ 20.53 vs Dec 23 @ $18.47 vs Sept 23 @ $14.93)

A gain of +11.70% in the 13 weeks since Jun 23 vs a loss of -16.0% in the previous 13 weeks after Mar 23 vs a gain of about +11.2% in the prior quarter.

The Monthly chart reflects the tough market and business environment the company faced from competitors and from slowing corporate capex and much lower government purchases in the past eight years. But digital communications is a rapid growth industry and Cisco is the 800-pound gorilla as to its infrastructure. I believe there will be much better days ahead for this company.

The telco companies have benefitted greatly from smart phone adoption by consumers, and that market is expected to continue growing rapidly. The Apple iPhone 5 introduction this week has apparently broken all records around the world, so the sellers and carriers are bound to thrive as a result.

The telcos AT&T and Verizon are near multi-year highs, with very high RSI values, which indicates higher than average risk. The dividends are extremely high in each case, and the dividend to net earnings ratios are in the 70% to 80% levels, which is very high, also an indicator of risk should cash flow drop.

However the financial condition of both companies – if not the balance sheet — is very strong, mostly based on cash flow. But cash flow in each case is expected to slow in its growth rate over the next 3 to 5 years.

I note that Value Line analysts Hellman and Nugent increased the anticipated one-year price performance among large cap stocks to a “1” – on Aug 10 for T and on Jul 6 for VZ – which means superior performance was expected and that has happened. This week, in fact, IYZ (Telco ETF) was #1 sector performer and it has been well above average recently. I attribute this performance in the stock prices to the iPhone buzz, and it may continue for a while, although a week ago both VL analysts dropped the 3- to 6-month stock price outlook down to a market average “3”.

If you can play a defensive game with prudent and timely use of stops and put and call options overwriting, then you can earn a respectable Total Return from these telcos. The VL analyst who covers VZ is slightly more optimistic in that regard, mostly due to the company’s wireless services.

I don’t much care to follow these particular telcos, as you know.

Cisco (CSCO) is a Cara 100 company and usually one we have in the Growth and All-Weather portfolios, as we do today. But trading CSCO is always a challenge, particularly if you don’t do options overwriting, which we stopped doing a while back in order to put the focus back on portfolio performance and away from hedging.

In any case, the balance sheet at Cisco is impeccable, and the growth metrics for cash flow, earnings and dividends is quite impressive. The dividend doubled this year and is likely to grow by over +50% again in 2013, and very much after that. The company has the cash to push the envelope – all $49 billion in the bank vs current liabilities of just $18 billion, much of which is unearned as yet, a mere bookkeeping matter.

In fact, after the recent increase in dividend, the company stated it would use 50% of its cash flow to dividends and share buy-backs. With cash flow expected to grow +9.5% per year for the next 3- to 5-years, what does that tell you. It tells me that CSCO will become more heavily weighted in our portfolios, and also return as a Cara Growth portfolio selection at the conference this coming week.

Maybe that’s a spoiler alert, but it is what it is. CSCO is all good as far as I’m concerned. Revenues may grow at +8.0% going forward vs +11.0% for the past ten years, but that’s based on government budget constraints, which will affect many companies and many industries. However this company produces an essential product and has the resources to maintain industry leadership for many years. Value Line is a Cisco fan, and so am I.

Unfortunately I will be too busy with the conference and incoming business associates next weekend to do the WIR, so I will say here that next week Value Line will be reporting on Procter & Gamble (PG) and Home Dept (HD).

Both of these are very good companies, although only P&G is in the Cara 100 presently. Home Depot used to be but I dropped it several years ago – for good reason – but lately I have been considering a move to put it back – also for good reason.

Home depot is a company that will benefit in the Great Reflation. Besides the metrics are looking good enough to get into the Cara 100. The stock has enjoyed a terrific quarter thanks to expectations of QE.


WIR #52-2012

All charts here will show the stock in the solid blue line vs the S&P 500 in the solid thin orange line.

AT&T (T Dec 21 @ 33.67 is down -11.5% in the 13 weeks since Sep 21 @ 38.08)

http://www.investertech.com/tkchart/tkchart.asp?stkname=T&wt=3
http://www.investertech.com/tkchart/tkchart.asp?stkname=T&wt=1
http://www.investertech.com/tkchart/tkchart.asp?stkname=T&wt=0

Weekly data:

wir12_52.30.gif

I’m not surprised as 13 weeks ago in my last report I pointed you to the warning clouds and said I felt that traders might be shorting the sector ETF (and various telco-related stocks) against T and VZ. The warnings was that hot money can reverse, and apparently it has as some of those other telco-related stocks have been soaring this past quarter, while T and VZ dropped a lot.

4-traders.com has T rated Neutral (short-term), bearish (mid-term) and neutral (long-term).

http://www.4-traders.com/AT-T-INC-14324/

The chart shows me a Bear, but it has dropped a lot this past 13 weeks and could possibly be ready for a turn. I don’t trade it.

As to the Value Line report, it’s just a “mixed bag”. They prefer Verizon (VZ).

Verizon (VZ Dec 21 @ 43.57 is down -4.3% from Sep 21 @ 45.64)

http://www.investertech.com/tkchart/tkchart.asp?stkname=VZ&wt=3
http://www.investertech.com/tkchart/tkchart.asp?stkname=VZ&wt=1
http://www.investertech.com/tkchart/tkchart.asp?stkname=VZ&wt=0

Weekly data:

wir12_52.31.gif

4-traders.com has VZ rated bullish (short-term), neutral (mid-term) and neutral (long-term). That’s better than T.

Value Line also likes VZ as “a recommended selection for the next six to 12 months. However, those willing to commit funds over the long haul are likely to find many other options out there that offer more alluring appreciation potential. That said, this equity’s dividend yield is more than twice that of the average issue under Value Line review. Moreover, its relatively low Beta and Safety rank of 1 (Highest) make it the darling of many a conservative account.”

How can anybody argue with that?

And with that, I’ll pass.

Cisco Systems (CSCO Dec 21 @ 19.96 is up +5.6% from 18.90 @ Sep 21)

This is where I like to say that Cisco is a Cara 100 company and besides we went long again Nov. 21 @ ~18, so we’ve had a real good month with CSCO.

This is called “talking one’s book” because obviously there are many times when I don’t like to say, and I don’t.

http://www.investertech.com/tkchart/tkchart.asp?stkname=CSCO&wt=3
http://www.investertech.com/tkchart/tkchart.asp?stkname=CSCO&wt=1
http://www.investertech.com/tkchart/tkchart.asp?stkname=CSCO&wt=0

Weekly data:

wir12_52.32.gif

4-traders.com has CSCO rated bullish (short-term), bullish (mid-term) and neutral (long-term).

Value Line lowered the short-term 3-6 month rating on Dec 21 from a ‘2’ (market out-performer” to a ‘3’ (average performer).

Our ranking for CSCO dropped out of the top 33% on Friday, down to #48, but we continue to hold it.

The company started paying a dividend in 2Q2011 and now those dividends are increasing. After paying out $0.18 for 2011, the amount should go to $0.36 in 2012 and possibly to more than $0.50 for 2013.

As Value Line has reported: “CEO John Chambers said he expects the company to grow the top line 5% to 7% annually, and earnings 7% to 9% for the next three to five years. This is a solid forecast, in our view, considering Cisco’s size and challenging operating environment. Our long-term revenue growth target of 7.5% assumes macroeconomic conditions will improve.”

The point is there is improvement and this $20 stock ought to be $30 in two to three years. I’d be a buyer of the dips and trim back every time the RSI falls below the 70-line after being in the Distribution Zone (70 and above) for some time on the Daily and the Weekly.

I am in full agreement with the VL report conclusion: “This financially strong tech company is a solid choice, in our view. Overall, Cisco is executing admirably, outperforming competitors, and appears well exposed to strong growth markets like cloud computing, ‘‘bring your own device’’, smartphones, data centers, and video.”

But for the next couple weeks, there ought to be a pull-back, possibly to about the 19.00 level. There is first level support at 18.80 and next at 17.10. On the upside, there is resistance showing at 20.40.


The Dow 30 Company links in chronological order of the upcoming reports.

Procter & Gamble [GICS 30, Dow 30, Cara 100] [Value Line cycle 1, 14, 27 and 40]
(PG: Google Finance file)
(PG: Yahoo Finance file)
(PG: StockChart chart)
(PG: Investertech chart)
(PG: ADVFN Financial Data)
(PG: Profile)
(PG: Value Line Report Sep. 28: next one is due Dec. 28)


Home Depot [GICS 25, Dow 30] [Value Line cycle 1, 14, 27 and 40]
(HD: Google Finance file)
(HD: Yahoo Finance file)
(HD: StockChart chart)
(HD: Investertech chart)
(HD: ADVFN Financial Data)
(HD: Profile)
(HD: Value Line Report Sep. 28: next one is due Dec. 28)


Hewlett-Packard [GICS 45, Dow 30] [Value Line cycle 2, 15, 28 and 41]
(HPQ: Google Finance file)
(HPQ: Yahoo Finance file)
(HPQ: StockChart chart)
(HPQ: Investertech chart)
(HPQ: ADVFN Financial Data)
(HPQ: Profile)
(HPQ: Value Line Report Oct. 5: next one is due Jan. 4)


IBM [GICS 45, Dow 30, Cara 100] [Value Line cycle 2, 15, 28 and 41]
(IBM: Google Finance file)
(IBM: Yahoo Finance file)
(IBM: StockChart chart)
(IBM: Investertech chart)
(IBM: ADVFN Financial Data)
(IBM: Profile)
(IBM: Value Line Report Oct. 5: next one is due Jan. 4)


Intel [GICS 45, Dow 30, Cara 100] [Value Line cycle 2, 15, 28 and 41]
(INTC: Google Finance file)
(INTC: Yahoo Finance file)
(INTC: StockChart chart)
(INTC: Investertech chart)
(INTC: ADVFN Financial Data)
(INTC: Profile)
(INTC: Value Line Report Oct. 5: next one is due Jan. 4)


Alcoa [GICS 15, Dow 30] [Value Line cycle 3, 16, 29 and 42]
(AA: Google Finance file)
(AA: Yahoo Finance file)
(AA: StockChart chart)
(AA: Investertech chart)
(AA: ADVFN Financial Data)
(AA: Profile)
(AA: Value Line Report Oct. 12: next one is due Jan. 11)


Dupont [GICS 15, Dow 30] [Value Line cycle 3, 16, 29 and 42]
(DD: Google Finance file)
(DD: Yahoo Finance file)
(DD: StockChart chart)
(DD: Investertech chart)
(DD: ADVFN Financial Data)
(DD: Profile)
(DD: Value Line Report Oct. 12: next one is due Jan. 11)


Merck [GICS 35, Dow 30, Cara 100] [Value Line cycle 3, 16, 29 and 42]
(MRK: Google Finance file)
(MRK: Yahoo Finance file)
(MRK: StockChart chart)
(MRK: Investertech chart)
(MRK: ADVFN Financial Data)
(MRK: Profile)
(MRK: Value Line Report Oct. 12: next one is due Jan. 11)


Pfizer [GICS 35, Dow 30, Cara 100] [Value Line cycle 3, 16, 29 and 42]
(PFE: Google Finance file)
(PFE: Yahoo Finance file)
(PFE: StockChart chart)
(PFE: Investertech chart)
(PFE: ADVFN Financial Data)
(PFE: Profile)
(PFE: Value Line Report Oct. 12: next one is due Jan. 11)


3M Company [GICS 20, Dow 30, ex-Cara US 100 June-06] [Value Line cycle 4, 17, 30 and 43]
(MMM: Google Finance file)
(MMM: Yahoo Finance file)
(MMM: StockChart chart)
(MMM: Investertech chart)
(MMM: ADVFN Financial Data)
(MMM: Profile)
(MMM: Value Line Report Oct. 19: next one is due Jan. 18)


General Electric [GICS 20, Dow 30, ex-Cara 100] [Value Line cycle 4, 17, 30 and 43]
(GE: Google Finance file)
(GE: Yahoo Finance file)
(GE: StockChart chart)
(GE: Investertech chart)
(GE: ADVFN Financial Data)
(GE: Profile)
(GE: Value Line Report Oct. 19: next one is due Jan. 18)


United Technologies [GICS 20, Dow 30, Cara 100] [Value Line cycle 4, 17, 30 and 43]
(UTX: Google Finance file)
(UTX: Yahoo Finance file)
(UTX: StockChart chart)
(UTX: Investertech chart)
(UTX: ADVFN Financial Data)
(UTX: Profile)
(UTX: Value Line Report Oct. 19: next one is due Jan. 18)


Coca Cola [GICS 30, Dow 30, Cara 100] [Value Line cycle 5, 18, 31 and 44]
(KO: Google Finance file)
(KO: Yahoo Finance file)
(KO: StockChart chart)
(KO: Investertech chart)
(KO: ADVFN Financial Data)
(KO: Profile)
(KO: Value Line Report Oct. 26: next one is due Jan. 25)


Kraft Foods [GICS 30, Dow 30] [Value Line cycle 5, 18, 31 and 44]
(KRFT: Google Finance file)
(KRFT: Yahoo Finance file)
(KRFT: StockChart chart)
(KRFT: Investertech chart)
(KRFT: ADVFN Financial Data)
(KRFT: Profile)
(KRFT: Value Line Report Oct. 26: next one is due Jan. 25)


Wal-Mart [GICS 30, Dow 30, Cara 100] [Value Line cycle 6, 19, 32 and 45]

(WMT: Google Finance file)
(WMT: Yahoo Finance file)
(WMT: StockChart chart)
(WMT: Investertech chart)
(WMT: ADVFN Financial Data)
(WMT: Profile)
(WMT: Value Line Report Nov 2: next one is due Feb 1)


Disney [GICS 25, Dow 30, Cara 100] [Value Line cycle 7, 20, 33 and 46]
(DIS: Google Finance file)
(DIS: Yahoo Finance file)
(DIS: StockChart chart)
(DIS: Billcara2 chart)
(DIS: ADVFN Financial Data)
(DIS: Profile)
(DIS: Value Line Report Nov 9: next one is due Feb 8)


American Express [GICS 40, Dow 30] [Value Line cycle 8, 21, 34 and 47]
(AXP: Google Finance file)
(AXP: Yahoo Finance file)
(AXP: StockChart chart)
(AXP: Billcara2 chart)
(AXP: ADVFN Financial Data)
(AXP: Profile)
(AXP: Value Line Report Nov 16: next one is due Feb 15)


Bank of America [GICS 40, Dow 30] [Value Line cycle 8, 21, 34 and 47]
(BAC: Google Finance file)
(BAC: Yahoo Finance file)
(BAC: StockChart chart)
(BAC: Billcara2 chart)
(BAC: ADVFN Financial Data)
(BAC: Profile)
(BAC: Value Line Report Nov 16: next one is due Feb 15)


JP Morgan [GICS 40, Dow 30] [Value Line cycle 8, 21, 34 and 47]
(JPM: Google Finance file)
(JPM: Yahoo Finance file)
(JPM: StockChart chart)
(JPM: Billcara2 chart)
(JPM: ADVFN Financial Data)
(JPM: Profile)
(JPM: Value Line Report Nov 16: next one is due Feb 15)


Microsoft [GICS 45, Dow 30] [Value Line cycle 8, 21, 34 and 47]
(MSFT: Google Finance file)
(MSFT: Yahoo Finance file)
(MSFT: StockChart chart)
(MSFT: Billcara2 chart)
(MSFT: ADVFN Financial Data)
(MSFT: Profile)
(MSFT: Value Line Report Nov 16: next one is due Feb 15)


Johnson & Johnson [GICS 35, Dow 30, Cara 100] [Value Line cycle 9, 22, 35 and 48]
(JNJ: Google Finance file)
(JNJ: Yahoo Finance file)
(JNJ: StockChart chart)
(JNJ: Investertech chart)
(JNJ: ADVFN Financial Data)
(JNJ: Profile)
(JNJ: Value Line Report Nov. 23: next one is due Feb. 22)


Caterpillar [GICS 20, Dow 30] [Value Line cycle 9, 22, 35 and 48]
(CAT: Google Finance file)
(CAT: Yahoo Finance file)
(CAT: StockChart chart)
(CAT: Investertech chart)
(CAT: ADVFN Financial Data)
(CAT: Profile)
(CAT: Value Line Report Nov. 23: next one is due Feb. 22)


McDonalds [GICS 30, Dow 30, Cara 100] [Value Line cycle 10, 23, 36 and 49]
(MCD: Google Finance file)
(MCD: Yahoo Finance file)
(MCD: StockChart chart)
(MCD: Investertech chart)
(MCD: ADVFN Financial Data)
(MCD: Profile)
(MCD: Value Line Report Nov 30: next one is due Mar 1)


Chevron Corp [GICS 10, Dow 30] [Value Line cycle 11, 24, 37 and 50]
(CVX: Google Finance file)
(CVX: Yahoo Finance file)
(CVX: StockChart chart)
(CVX: Investertech chart)
(CVX: ADVFN Financial Data)
(CVX: Profile)
(CVX: Value Line Report Dec. 7: next one is due Mar. 8)


ExxonMobil [GICS 10, Dow 30, Cara 100] [Value Line cycle 11, 24, 37 and 50]
(XOM: Google Finance file)
(XOM: Yahoo Finance file)
(XOM: StockChart chart)
(XOM: Investertech chart)
(XOM: ADVFN Financial Data)
(XOM: Profile)
(XOM: Value Line Report Dec. 7: next one is due Mar. 8)


Boeing Co [GICS 20, Dow 30. Cara 100] [Value Line cycle 12, 25, 38 and 51]
(BA: Google Finance file)
(BA: Yahoo Finance file)
(BA: StockChart chart)
(BA: Investertech chart)
(BA: ADVFN Financial Data)
(BA: Profile)
(BA: Value Line Report Dec. 14: next one is due Mar. 15)


Travelers Co [GICS 40, Dow 30] [Value Line cycle 12, 25, 38 and 51]
(TRV: Google Finance file)
(TRV: Yahoo Finance file)
(TRV: StockChart chart)
(TRV: Investertech chart)
(TRV: ADVFN Financial Data)
(TRV: Profile)
(TRV: Value Line Report Dec. 14: next one is due Mar. 15)


AT&T [GICS 50, Dow 30] [Value Line cycle 13, 26, 39 and 52]
(T: Google Finance file)
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Investertech chart)
(T: ADVFN Financial Data)
(T: Profile)
(T: Value Line Report Dec. 21: next one is due Mar. 22)


Verizon [GICS 50, Dow 30] [Value Line cycle 13, 26, 39 and 52]
(VZ: Google Finance file)
(VZ: Yahoo Finance file)
(VZ: StockChart chart)
(VZ: Investertech chart)
(VZ: ADVFN Financial Data)
(VZ: Profile)
(VZ: Value Line Report Dec. 21: next one is due Mar. 22)


Cisco Systems [GICS 45, Dow 30, Cara 100] [Value Line cycle 13, 26, 39 and 52]
(CSCO: Google Finance file)
(CSCO: Yahoo Finance file)
(CSCO: StockChart chart)
(CSCO: Investertech chart)
(CSCO: ADVFN Financial Data)
(CSCO: Profile)
(CSCO: Value Line Report Dec. 21: next one is due Mar. 22)


While it is important to have an understanding of the financial summaries of the companies you invest in, I don’t think you need to be an expert financial analyst to become a great trader. In fact, details often get in the way. A successful trader has a big picture understanding of the macro-economic, corporate fundamental, quantitative data series, and stock price and volume technical picture.

In other words you need to know a little about a lot of things rather than have an expert understanding of one and very little about the rest of the factors that impact a company and its stock price.

Something for newbies to think about:

With respect to investing in general for most people, I think if you focus on just six to ten stocks and the reports of the same one or two analysts for each, you will be less likely to miss the nuances. The greater depth of understanding of the companies will help you better analyze the price charts. In other words, you’ll be able to gain control of your investments rather than get stuck on the road to perdition, flipping from one salesperson’s pitch to another.

With the help of the free Dow 30 quarter-yearly reports from Value Line, it’s not difficult to pick those 6 to 10 stocks, keep the reports and your notes in a hard-copy binder, plus carefully selected items from other analysts you can find on the Web and print out for your files.

To each his own because putting in the hours to study companies and stocks that don’t interest you at all is not going to work out. For me, a six-sector mix of Dow 30 companies like Chevron (CVX), Boeing (BA), Disney (DIS), Walmart (WMT), Merck (MRK) and Intel (INTC) would do the trick, although you might pay heed to what I have to say about the Energy market going into 2013..

That’s not to say you would want to stay fully invested in these stocks at all times if in fact you do follow them and buy them. Every stock has a price motion that swings from over-sold to over-bought. You don’t want to be buying them when they are over-bought and you want to buy them when they are over-sold.

As of August 3, 2012, these six stocks had an average market cap of $146.9 billion, an average RoE of 30.3, and average dividend yield of 2.71%, average Performance YTD and over 12 months of 15.89% and 34.73% respectively, an average beta of 0.873 (you sleep better), and an average PE multiple of 14.2 (vs Dow 30 average of ~17.5).

At times, all of these stocks will encounter operating and financial challenges, but on average if you buy to hold (as a core portfolio), adding to your positions at long-term cycle lows (Monthly price series data showing a RSI-7 under 30 and basing), writing puts at those entry points, and selling a bit and writing calls on the rest at long-term cycle highs (Monthly price series data showing a RSI-7 over 70 and peaking), then you will do well for Total Return (capital growth plus dividend and premium income) over 5-10-20 years.

And every three to five years or so, when there seems to be a market long-term cycle peak occurring, you might wish to revisit the composition of this list, possibly switching one of the stocks with a replacement of similar high quality but probably more current in terms of a growth story.

Also, try to understand what Value Line can do for you: For 1700 stocks in its universe, VL offers a Timeliness Ranking (6 to 12 month relative price outlook) and a Technical Ranking (3 to 6 month outlook) from 1 to 5.

http://www.valueline.com/About/Ranking_System.aspx

But VL is much more than a ranking system. It’s a discipline. Every quarter year, the empirical data is laid out in a consistent presentation along with notes from the covering analyst. Together with services like StockCharts, Finviz and ADVFN, you will find that VL gives you the tools you need for successful trading and managing wealth.

It may take years, but it really is worth the time and effort to get to know the companies you trade. After a while, you’ll appreciate the price motion of each stock and, with more confidence, you’ll be able to go with the flow, selling when the market is chasing the price, and then letting the price come to you when they are trying to sell it, and you may want it.

In other words, do the homework to find the companies with very high quality and then put yourself into selling in a seller’s market and being a buyer in a buyer’s market, as the real estate people like to say. To seize the opportunities without undue risk, you need to be prepared, and this is how to go about it.

Don’t let a salesperson yank your chain with every new idea that is a hot story: stick to your knitting and your goals and objectives will be reached.

People sometimes ask me why I don’t sell my story to Financial Entertainment TV. But these same people don’t understand that common sense in the form advocated by Charles Dow, and repeated often by me, is not exciting enough for today’s media.

You see; I have been writing the same things for years. In the 2005 WIR-13, I republished my public Dow 30 diary from Week 32-1999: Aug 14 (10973.65):

For years we’ve made the case that the market is a game that plays people. Without enough self-discipline to control one’s emotions, an investor will never be successful. He or she will simply be conned by every ‘head fake’ and outright deception that Wall Street can serve up in their constant pursuit of greed… Every individual investor has to have a plan and to work that plan. We’d like our Dow 30 Journal to carry a guarantee of investment success, but that’s not possible. What is absolutely certain however is that with just two things –”facts and common sense”– anybody can take on Wall Street and win… At the turn of the century, Charles Dow in fact said: “The man who is prudent and careful in carrying on a store, factory or real estate business seems to think that totally different methods should be employed in dealing with stocks. Nothing is further from the truth.”

All of this I re-published in Lessons From the Trader Wizard (2008), which has been published in an updated 2012 e-book version, available for under $10 at Amazon.com.


Sector ETF Summary for the US equity market

Over the past 13 weeks, the S&P 500 is down -2.11%. Over the past quarter year, the top performing sector has been Financials (XLF +3.60%), while Technology (XLK -8.12%) has been the worst, dragged down by Apple (AAPL -25.82%) and Hewlett-Packard (HPQ -18.48%).

My forecast on HPQ was probably my most awful for 2012. The Board of Directors there is even worse than I figured. Without a new Board, I cannot see any CEO turning that ship around. Some people think the same of Apple. I’m not one of those, although I think the stock is burdened by the Law of Big Numbers, and the company’s pricey products getting hit hard by competition.

Still, I think Tech will be a leading sector in 2013.

Backgrounder:

Each week these numbers change dramatically. Trading short-term is now a prerequisite to risk management and long-term success, and, going up against Wall Street on a short-term basis is a difficult challenge at best.

With sector rotation and the extent of volatility affecting performance, you have to learn to trade. I repeat this statement every week.

The price performance tables that I show every day 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

XLF

16.40 -0.30 -1.80% 2.50% 2.31% 3.54% 22.94% 3.60% 15.41% 28.23%

SMH

32.95 -0.34 -1.02% 1.26% 1.63% 4.80% 6.81% 2.04% 4.34% 11.02%

XLE

72.07 -1.11 -1.52% 1.19% 0.71% 0.64% 1.44% -3.49% 14.36% 5.37%

XLB

37.00 -0.66 -1.75% 0.95% 2.64% 1.65% 7.46% -1.20% 8.76% 11.24%

XLY

47.28 -0.73 -1.52% 0.92% -0.30% 0.25% 20.15% -0.53% 9.65% 22.36%

XLK

28.95 -0.42 -1.43% 0.91% 0.63% 0.35% 12.17% -8.12% 2.77% 15.71%

XLI

37.93 -0.52 -1.35% 0.82% 1.15% 3.24% 9.97% 2.57% 9.53% 13.39%

IYZ

24.33 -0.17 -0.69% 0.50% 1.50% 3.27% 14.17% -6.89% 11.66% 16.13%

SPY

142.79 -2.33 -1.61% 0.48% 0.26% 1.02% 11.99% -2.11% 7.81% 15.00%

XLU

35.31 -0.53 -1.48% 0.28% -0.42% 3.58% -0.08% -2.00% -2.59% -0.62%

IYH

84.13 -0.65 -0.77% -0.56% -0.59% 0.39% 16.30% -1.35% 9.00% 18.44%

XLP

35.17 -0.70 -1.95% -2.20% -2.79% -1.40% 8.35% -2.20% 4.02% 8.72%

You can do a table like Table 1 (below) by entering the following string into the Summary window at Investertech.com and then clicking on the link for Performance. You can also add more ETFs – up to 30 in total. For a list of components to many ETFs, go to the AMEX.com and NYSE.com web sites, and click on ETFs.

SPY XLE XLB XLI XLY XLP IYH XLF XLK SMH IYZ XLU .

You can use this tool to set up personal watchlist charts by industry group and sub-groups.

Another chart you ought to be reviewing every week is the candleglance view from StockCharts.com:

http://stockcharts.com/scripts/php/candleglance.php?XLE,XLB,XLI,XLY,XLP,…
http://tinyurl.com/33m3ss4

Sector rotation is one study I spend hours doing every week.

http://en.wikipedia.org/wiki/Sector_rotation

For a summary chart view, this presentation from StockCharts will save you lots of time.
http://stockcharts.com/scripts/php/candleglance.php?XLE,XLB,XLI,XLY,XLP,…
http://tinyurl.com/33m3ss4

Once involved, you’ll drill down into the nuances of this next chart (link), looking at the cyclical reversals and trying to see the drivers.

http://stockcharts.com/charts/performance/perf.html?[SECT]

http://tinyurl.com/ykk3oyc

The principles of sector rotation have been studied and written about for hundreds of years by many people. My work is based on the individual who mentored me in this subject and taught me more about investing and trading than any other, the late Ian Notley, my former associate. Notley is considered perhaps the finest trend and cycles analyst of the past 50 years. He was recruited to North America in the 1970’s by another friend of mine, Ian McAvity, editor of Deliberations, himself one of the world’s great trend and cycle analysts.

http://www.topline-charts.com/ian_mcavity.htm

The technical analysis work of both Ian’s was inspired by E.S. Coppock.

http://www.topline-charts.com/Encyclopedia/coppock_curve_interpretation.htm


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

SPY Monthly data: SPY Monthly Data

SPY Weekly data: SPY Weekly Data

SPY Daily data: SPY Daily Data


10 (energy: XLE) ETF Chart for Energy:XLE

15 (basic materials: XLB) ETF Chart for Basic Materials:XLB

20 (industrial: XLI) ETF Chart for Industrial:XLI

25 (consumer discretionary: XLY) ETF Chart for Energy:XLY

30 (consumer staples: XLP) ETF Chart for Consumer Staples:XLP

35 (healthcare: IYH) ETF Chart for Health Care:IYH

40 (financial: XLF) ETF Chart for 00Financial:XLF

45 (technology, semiconductor: SMH) ETF Chart for Technology, Semiconductor:SMH

50 (telecom: IYZ) ETF Chart for Telecom:IYZ

55 (utilities: XLU) ETF Chart for Utilities:XLU


Individual US Sector ETFs and Stocks 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 Monthly Data

XLE Weekly data: XLE Weekly Data

XLE Daily 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

NE

35.87 -0.51 -1.40% 5.90% 2.93% 4.15% 13.23% -4.95% 20.09% 13.51%

NFX

26.97 -0.19 -0.70% 4.70% 4.58% 11.72% -31.89% -18.40% 5.68% -27.23%

CNQ

29.18 0.36 1.25% 3.92% 3.77% 2.67% -25.92% -11.74% 13.10% -18.51%

APA

80.00 0.03 0.04% 3.87% 4.56% 3.71% -16.61% -9.70% -1.64% -10.74%

PBR

19.97 -0.61 -2.96% 2.36% 6.51% 6.34% -23.52% -14.07% 2.10% -20.79%

RIG

45.64 -0.86 -1.85% 2.22% -1.06% -1.40% 13.65% -5.99% 7.39% 14.44%

CVX

109.71 -0.67 -0.61% 1.75% 2.54% 4.02% -0.60% -6.87% 9.69% 4.06%

PTR

142.06 -0.50 -0.35% 1.54% 2.93% 6.81% 8.13% 8.32% 8.24% 17.69%

TOT

51.60 -0.14 -0.27% 1.45% 3.70% 3.24% -1.66% -1.24% 19.17% 5.33%

SU

32.88 -0.23 -0.69% 1.45% 1.17% -3.07% 7.24% -2.81% 22.19% 20.22%

SLB

69.69 -1.41 -1.98% 1.13% -2.98% -2.09% -0.57% -7.10% 11.40% 2.92%

IMO

43.30 -0.31 -0.71% 0.60% 0.25% -1.16% -4.88% -8.13% 8.58% 1.71%

TLM

11.21 -0.18 -1.58% 0.54% 0.72% -4.02% -15.78% -19.76% 5.75% -4.84%

PDS

8.080 -0.200 -2.42% -0.25% 9.78% 11.45% -26.21% -10.12% 27.44% -20.55%

CEO

215.58 -2.50 -1.15% -0.56% -0.56% 1.04% 16.76% 5.93% 15.59% 24.32%

XOM

87.23 -1.66 -1.87% -0.97% -1.55% -2.09% 1.43% -5.10% 6.24% 4.94%

The ETF for Oiler stocks is XLE. This week, XLE closed at 72.07, up +1.19% W/W. The $WTIC gained +2.61% W/W as well as +0.85% the prior week.

A week ago in this space I stated, “But, you know, in my private equity work, I have been studying the Eagle Ford Shale Trend of Texas and am beginning to believe the analysts who have been saying (i) new technology in horizontal drilling and fracking is destroying the peak oil theory, and (ii) the US will become the world’s leader in Oil & Gas by the year 2020, replacing Saudi and Russian oilfields… So I am now going to reduce my 2013 high-low forecast for Crude Oil by $10 to $15/bbl, and I believe the risks, given the latest inflation data, are to the downside.”

I now believe that $70-$90 will be the range for 2013 and probably beyond. But with QE, other prices will lift higher over the next few years, which as it plays through the system will, in my view, lead to more oil and gas production and relatively low cost of energy as one of the primary drivers of a stronger economy.

Shale fields are enormous, not only in the US but elsewhere in the world. But technology is the key and the US is the leader. In any case, energy should be the big story of 2013.

Over the past four weeks, XLE has been up +0.64% vs +1.02% for the SP500.

Here is the Weekly chart of XLE (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. Note that the 8-week EMA is 71.28 and the last price is 71.22, so the Bear has entered the ring.

wir12_52.33.gif

FD: We added PBR to both Growth and All-Weather portfolio accounts and we kept CEO in All-Weather. We are still about 15.7% weighted to the S&P 500 sector weight.

Note that our equity positions are, by company policy, restricted to Cara 100 companies in the broad based portfolios. However we are working on new lists for a Cara Growth 100 and a Cara All-Weather 100.

For All-Weather, we are in a much smaller individual position weighting because this account invests in more of a balance of equities, bonds, precious metals and cash.

For Growth, we intend to drop trading value-oriented mega-cap stocks like XOM, CVX, PBR and CEO, and move to a list of mid-cap stocks of companies that have demonstrated faster growth in recent years.

Here is the current candleglance chart of 10 important Sector 10 components:

http://stockcharts.com/scripts/php/candleglance.php?XOM,PTR,CVX,PBR,TOT,…

Here below is the list of Cara 100 companies in this sector along with their stock tickers. For the Energy (Oil & Gas industries) Sector, the market cap (Aug. 17, 2012) of the 12 Cara 100 stocks was $1.114 trillion vs the same total on Dec. 9, 2011.

I’ll try to update this data once a quarter from now on.

As you know by now, there is a difference between a company and a stock. At times, you can be invested in a great company but the stock is a disappointment.

A stock is a price set in the market. It could change minute to minute depending on various price drivers, some of which have little or nothing to do with the corporation. That price might be materially different that say a consensus valuation of enterprise value of the company, which in turn might be materially different than one company or individual might be prepared to pay to acquire the whole company.

But, first and foremost I believe in investing in the shares of the highest quality companies – just like I believe that we must choose our friends wisely. Track records like price trends tend to persist. For a Cara 100 company, I select only those that trade its shares on the NYSE or NASDAQ, which requires a high level of transparency and where the information is easy to come by. Most major Canadian companies and a great many international companies are dually listed on these exchanges in the US too. I try to build the Cara 100, which is where I invest, with an international flavor, which helps me diversify risk and also observe many different operating environments simultaneously, which also helps me better interpret the macro-economic data we get.

A Cara 100 company has to have a strong balance sheet and a strong Board of directors and management team, the CEO in particular. Compared to the peer group, the operating and net profit margins must be at or near the highest, the Return on Shareholder Equity up there as well, generally close to or above 20%. I need to see acceptable growth rates in revenues, cash flow, earnings, dividends and book value.

These figures are easy to get. FINVIZ.com does a good job of that.

As for the price data charts I find best, I like StockCharts.com. A full range of information comes from 4-traders.com.

Cara 100 Sector 10 (Energy) list:

APA Apache Corporation [GICS 10, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


CEO CNOOC [GICS 10, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


CNQ Canadian Natural Resources [GICS 10, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


CVX Chevron Corp [GICS 10, Cara 100 V50]

(Profile)
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(News)
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(Consensus Analysis)


NE Noble Corp [GICS 10, Cara 100 V50]

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NFX Newfield Exploration [GICS 10, Cara 100 G50]

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PBR Petroleo Brasileiro SA [GICS 10, Cara 100 V50]

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PDS Precision Drilling [GICS 10, Cara 100 G50]

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SLB Schlumberger [GICS 10, Cara 100 V50]

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SU Suncor Energy Inc [GICS 10, Cara 100 G50]

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TLM Talisman Energy [GICS 10, Cara 100 G50]

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XOM Exxon Mobil Corp [GICS 10, Cara 100 V50]

(Profile)
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http://tinyurl.com/3m4est9
http://tinyurl.com/3c8sxec

Integrated Oil & Gas – Canada

Oil & Gas Exploration & Production -Canada

Info from SeekingAlpha.com this week

10 Chevron (CVX) Dec.17: 3:13 PM Chevron (CVX +0.5%) has offered to pay $149M to settle two civil lawsuits in Brazil related to an oil spill in 2011, with final approval of the deal likely in January, Brazil’s federal prosecutor’s office says. The deal can be approved if the country’s environmental regulator confirms the spill didn’t cause any environmental damage, as Chevron has claimed. Dec.14: 5:23 PM Chevron (CVX) would be willing to pay ~300M reais ($150M) to settle lawsuits in Brazil over an offshore oil spill last year, a senior executive and a federal prosecutor say. CVX and its drilling contractor Transocean (RIG) face up to $20B in damages, but a judge is unlikely to accept the steep fines sought by the prosecutor who first filed the charges. Dec.10: 3:39 PM Chevron (CVX -0.1%) joins the hunt for natural gas in South Africa, saying it plans to partner with Falcon Oil & Gas (FOLGF.PK), one of only three firms with permission to conduct seismic studies of the local geology. South Africa is estimated to hold the world’s fifth-largest shale gas reserves, and lifted a temporary ban on fracking just three months ago.

10 Cnooc’s (CEO) Dec.14: 12:26 PM China’s biggest foreign acquisition is underwhelming Wall Street, with Cnooc’s (CEO) analyst ratings sinking to their lowest level in three years as the $15B takeover of Canada’s Nexen means escalating production expenses. “This deal doesn’t improve Cnooc’s earnings very much,” one analyst yawns; except for the Chinese government, there’s no reason investors should be excited about the deal.

10 Exxon Mobil (XOM) Dec.21: 8:28 AM Statoil (STO) and partner ExxonMobil (XOM) find more gas offshore Tanzania, its third discovery in the country this year. STO did not release an estimate for the find but said it was “promising” and new figures would be revealed in 2013; it had already found ~9T cubic ft. of gas in the area and said it would need another 3T to make commercial development viable. Dec.17: 11:23 AM ExxonMobil (XOM +0.5%) soon will begin exploring off South Africa after agreeing to acquire a 75% participating interest in the Tugela South Exploration Right from Impact Oil & Gas, with an option to grab a 75% stake in three more offshore areas which together cover 16M acres. XOM also signed a deal with the country’s government to examine the hydrocarbons potential of the deepwater Durban basin. Dec. 17: 11:12 AM Exxon Mobil (XOM) is considering entering the U.K.’s nascent shale gas industry, the Sunday Times reports, just six months after withdrawing from Poland’s more mature sector. XOM’s interest will be a boost to the government, which last week lifted an 18-month ban on fracking; FT says the U.K. economy already has benefited to the tune of $90B in investments thanks to the shale boom

10 Petroleo Brasileiro (PBR) Dec.21: 12:00 PM Brazil’s government go-ahead for Petrobras (PBR -3.6%) to raise its gasoline prices in early 2013 likely will raise demand for domestically produced sugar-based ethanol, but effects also could reach U.S. shores. Ethanol output in the U.S. is expected fall ~10% next year, and a robust export market could give Brazilian mills even more incentive to produce ethanol instead of sugar. Dec.19: 2:29 PM Petrobras (PBR +4%) says it aims to cut costs by 32B reais ($15.4B) during 2013-16 by targeting a range of objectives in its upstream, downstream and power segments. PBR is seeking to cut costs and boost revenue after a decline in output, a government fuel-price freeze, soaring prices for offshore oil development and rising debt put its $235B 2012-16 investment plan at risk.

10 Suncor Energy (SU) Dec.14: 10:46 AM Canadian energy interests need to accept what the courts already have: After 170 legal victories, First Nations now hold the balance of power in deciding the fate of Canada’s resource projects because they have rights others don’t, according to Bill Gallagher. He praises Suncor (SU) and Syncrude oil sands for their cooperative approach; Northern Gateway and other pipeline projects should take note.


Sector 15 (basic materials: IYM, XLB, IGE and VAW)

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

XLB Monthly data:

XLB Monthly Data

XLB Weekly data:

XLB Weekly Data
XLB Daily Data

Table 3: Senior Basic Materials:
XLB Daily data:

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

41.68 -0.31 -0.74% 5.71% 7.48% 5.31% 3.81% 0.43% 24.53% 14.79%

FBR

11.31 0.07 0.62% 3.48% -0.96% 11.76% 37.93% 20.70% 69.57% 54.93%

RIO

56.78 -0.38 -0.66% 3.39% 8.36% 17.44% 8.50% 14.89% 23.84% 16.45%

NUE

43.52 -0.45 -1.02% 2.93% 6.88% 5.79% 7.40% 10.21% 16.49% 10.01%

CCJ

19.99 -0.84 -4.03% 2.88% 7.24% 14.36% 6.50% -5.66% -4.22% 10.87%

VALE

20.10 -0.36 -1.76% 2.03% 11.79% 14.73% -13.36% 7.83% 4.42% -6.60%

DOW

31.99 -0.50 -1.54% 1.81% 5.58% 8.88% 7.39% 5.72% -2.80% 17.27%

TCK

36.09 0.08 0.22% 1.18% 3.56% 10.71% -4.75% 17.25% 17.94% 4.49%

BHP

76.97 -0.80 -1.03% 0.86% 5.55% 8.53% 2.96% 10.04% 21.90% 8.71%

MT

17.00 -0.52 -2.97% 0.35% 8.42% 12.66% -14.01% 7.05% 13.94% -5.56%

PKX

81.34 -0.79 -0.96% -0.04% 4.82% 12.15% -4.03% -3.86% 1.33% -3.04%

GGB

8.720 -0.210 -2.35% -0.23% -1.80% -3.65% 5.44% -12.45% 6.60% 15.19%

FCX

33.58 -0.40 -1.18% -0.59% 5.93% -13.63% -14.99% -17.39% 1.79% -11.05%

AA

8.570 -0.130 -1.49% -1.95% 0.82% 2.63% -7.15% -6.13% 0.23% -3.16%

POT

39.94 -0.29 -0.72% -2.37% 1.22% 4.06% -8.67% -9.23% 0.48% -0.70%

The ETF for Basic Materials stocks is XLB. These are the producers of commodities and related products.

This week, XLB gained +0.95%, to close at 37.00. A week ago the gain was +1.66%.

Cameco (CCJ +2.9% W/W) was strong this week after gaining +4.2% a week ago. But on Friday the price stumbled with a loss of -4.0% on the day.

Here is the Weekly chart of XLB (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. The 8-week EMA is 36.19, and the last price 37.00. So the Basic Material Bull is solidly in the ring.

wir12_52.34.gif

FD: CEF is our biggest position. We hold 10% (down this week from ~14.3%) in CEF in All-Weather and 5% (down from ~9.0%) in Growth. In splitting the Cara 100 into a Cara Growth 100 and a Cara All-Weather 100, we decided to call CEF a core holding in the All-Weather and to add Royal Gold (RGLD) to the Cara 100, for trading largely in the Growth portfolios.

As at Aug. 17 2012, the total market cap of the 17 Cara 100 stocks in this sector was $492,456 billion. As at Dec. 9, 2011, the total market cap of the 17 Cara 100 stocks in this sector was $567.3 billion. Of course, over 50% of the total is attributed to two stocks, BHP and VALE, and BHP is by far the biggest of those two.

As for the price data charts I find best, I like StockCharts.com. A full range of information comes from 4-traders.com.

Cara 100 Sector 15 (Basic Materials) list:

BHP BHP Billiton Ltd [GICS 15, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


CCJ Cameco Corp [GICS 15, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


DOW Dow Chemical Co [GICS 15, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


FBR Fibria [Votorantim] Celulose [GICS 15, Cara 100 G50]

(Profile)
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(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


FCX Freeport McMoRan [GICS 15, Cara 100 G50]

(Profile)
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(Fundamental Analysis)
(Consensus Analysis)


GGB Gerdau SA [GICS 15, Cara 100 G50]

(Profile)
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(Fundamental Analysis)
(Consensus Analysis)


MUX McEwen Mining [GICS 15, Cara 100 G50]

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(Fundamental Analysis)
(Consensus Analysis)


NGD New Gold Inc [GICS 15, Cara 100 G50]

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(Consensus Analysis)


NUE Nucor Corp [GICS 15, Cara 100 V50]

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POT Potash Cp of Saskatchewan [GICS 15, Cara 100 G50]

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(Consensus Analysis)


RGLD Royal Gold [GICS 15, Cara 100 V50]

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SLW Silver Wheaton Corp [GICS 15, Cara 100 G50]

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TCK Teck-Cominco Ltd [GICS 15, Cara 100 G50]

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TS Tenaris SA [GICS 15, Cara 100 G50]

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VALE Companhia Vale Do Rio [GICS 15, Cara 100 G50]

(Profile)
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TS Tenaris SA [GICS 15, Cara 100 G50]

(Profile)
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http://tinyurl.com/3uyrm6k
http://tinyurl.com/3hwo6k7

Here is the current candleglance chart of 10 important Sector 15 components:

http://stockcharts.com/scripts/php/candleglance.php?BHP,VALE,RIO,MT,DOW,…

Info from SeekingAlpha.com this week

15 BHP Billiton (BHP) Dec.19: 3:13 PM BHP Billiton (BHP -0.3%) reportedly picks mining venture B&A Mineração as the preferred bidder for its stake in Mount Nimba, one of the largest iron ore deposits in Guinea. B&A, a relative newcomer founded by former Vale CEO Roger Agnelli, beat rivals such as ArcelorMittal (MT) for the deal estimated at $500M-$600M. Newmont Mining (NEM -0.9%) also owns a major stake in the project. Dec.19: 4:25 AM BHP Billiton (BHP) is thinking about selling its U.K. petroleum operations, which include crude oil and natural gas fields and a processing plant. The divestments would be part of BHP’s strategy of narrowing the focus of its mining and energy portfolio, and follow other deals such as the proposed sale of an Australian gas-export project for $1.63B.

15 Freeport-McMoRan (FCX) Dec.20: 2:24 PM A $12.5B loan package slated to back Freeport McMoRan’s (FCX -0.4%) recent big acquisitions reportedly is facing significant pushback, as banks invited to participate at the top tier level of syndication are finding the share of the bridge loan FCX and its lead banks are offering them too small. The second tier’s hold level of the bridge is said to be ~5% vs. the top tier’s 22%. Dec.20: 8:13 AM Freeport McMoRan (FCX) is upgraded to Buy from Hold at Deutsche Bank, which believes investors will move past anger over FCX’s big move into oil and gas to acceptance. The firm views the move as a leveraged financial play to engineer a higher growth rate with an exploration upside kicker on Gulf of Mexico assets. FCX +1.4% premarket.

15 Potash (POT) Dec.14: 10:32 AM Pricing cuts by Potash (POT) for U.S. customers came as a surprise to industry watchers given the 36 weeks of announced shutdowns across various potash mines from Sept. 2012 through Feb. 2013. National Bank Financial cut its FY 2013 and 2014 EPS forecasts on the news, noting the shut-ins account for ~1.6M metric tons of output, or ~13% of POT’s 2012 potash operating capability.

15 Rubicon Minerals (RBY) Dec.18 : 8:25 AM Rubicon Minerals (RBY) -2.6% premarket on news it is facing legal action by the Wabauskang First Nation relating to the company’s flagship Phoenix gold project in Ontario. Phoenix is fully permitted to potential production, RBY says, but the company remains committed to further discussions.


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

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

XLI Monthly data: XLI Monthly Data

XLI Weekly data: XLI Weekly Data

XLI Daily 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

ERJ

27.70 0.15 0.54% 12.37% 6.91% 2.03% 5.24% 2.55% 5.97% 13.25%

HON

64.21 -0.08 -0.12% 4.32% 3.61% 4.82% 15.53% 6.10% 15.84% 18.49%

FLR

59.15 -0.38 -0.64% 3.61% 5.02% 9.92% 13.79% -0.08% 26.58% 20.22%

UTX

82.54 -0.63 -0.76% 3.20% 1.91% 5.00% 10.55% 2.22% 10.32% 12.12%

FDX

92.74 -0.53 -0.57% 2.94% 3.78% 5.71% 8.89% 9.89% 2.33% 10.09%

BA

76.17 -0.03 -0.04% 2.90% 2.05% 3.30% 2.63% 8.86% 6.73% 3.51%

UPS

74.84 -0.29 -0.39% 2.73% 2.28% 3.97% 0.92% 4.12% -2.93% 3.27%

ABB

20.83 0.03 0.14% 2.31% 4.73% 10.74% 5.10% 6.82% 29.62% 14.20%

CMI

108.07 0.30 0.28% 1.67% 6.27% 8.46% 18.69% 12.37% 18.14% 22.85%

JOY

62.52 -0.59 -0.93% 1.43% 8.86% 9.43% -17.79% 5.23% 14.05% -17.20%

TXT

24.48 -0.23 -0.93% 0.91% 2.90% 2.94% 31.33% -9.73% -1.05% 33.55%

MMM

93.10 -1.03 -1.09% 0.89% 1.74% 3.12% 11.51% -0.12% 7.34% 16.37%

CAT

87.90 -1.60 -1.79% -1.24% 1.05% 4.44% -6.47% -4.16% 3.44% -4.07%

GE

20.88 -0.17 -0.81% -3.42% -2.70% -0.76% 13.73% -7.32% 6.91% 18.03%

PAYX

31.40 -0.99 -3.06% -6.85% -5.39% -3.21% 3.19% -9.12% -2.18% 6.59%

The ETF for Industrial and Transportation stocks is XLI. These are the users of commodities and related products as well as the freight transportation systems that move commodities and business packages to markets around the world.

This week, XLI gained +0.82% W/W to close at 37.93. Over the previous four weeks XLI was up +3.24%.

Leading the winners were Embraer (ERJ +12.4% W/W) and Honeywell (HON +4.3%).

FD: We hold ABB, CAT, CMI and JOY in the Growth and All-Weather Portfolios. We are now at ~91% S&P 500 weighted, up from 90% a week ago and ~58% two weeks ago.

Here is the Weekly chart of XLI (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. The 8-week EMA is 36.97, and the last price 37.93, so the Bulls continue running here.

wir12_52.35.gif

As at Aug 17, 2012, the total market cap of nine Cara 100 stocks in this sector was $337 billion. About 87% of the total is attributed to five stocks, UTX, MMM, CAT, BA and ABB.

As for the price data charts I find best, I like StockCharts.com. A full range of information comes from 4-traders.com.

Cara 100 Sector 20 (Industrials and Transports) list:

ABB ABB Ltd [GICS 20, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


BA Boeing Co [GICS 20, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


CAT Caterpillar [GICS 20, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


CMI Cummins Inc [GICS 20, Cara 100 V50]

< a href=”http://www.4-traders.com/CUMMINS-INC-12214/”>(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


ERJ Embraer-Empresa Brasil [GICS 20, Cara 100 G50]

(Profile)
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(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


JOY Joy Global [GICS 20, Cara 100 G50]

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(Consensus Analysis)


MMM 3M [GICS 20, Cara 100 V50]

(Profile)
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(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


PAYX Paychex Inc [GICS 20, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


UTX United Technologies, [GICS 20, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


http://tinyurl.com/3z2wq7l

The Industrials, Base Materials and Energy sectors are typically the three sectors that are most inversely correlated to the US Dollar.

The US, Swiss and Brazilian companies in the Industrial sector, like the others, get most of their income from abroad. They are also producers and/or transporters of commodities, which increase in price as the Dollar falls.

Here is the current candleglance chart of 10 important Sector 20 components:

http://stockcharts.com/scripts/php/candleglance.php?GE,UTX,UPS,MMM,CAT,A…

To check on general and detailed info for the Industrials group, the Thomson Reuters service is a good one:

http://www.reuters.com/sectors/industries/significant?industryCode=52442

Here is the link to all sectors and industries as classified by Reuters:

http://www.reuters.com/assets/siteindex#sectorsAndIndustries

Info from SeekingAlpha.com this week

20 Boeing (BA) Dec.17: 4:24 PM The Boeing Company (BA) declares $0.485/share quarterly dividend, 10% increase from prior dividend of $0.44. Forward yield 2.62%. For shareholders of record Feb. 15. Payable Mar. 08. Ex-div date Feb. 13. The board resumes share repurchase plan with repurchase currently expected to total between $1.5B-$2.0B in FY13.


Sector 25 (consumer discretionary: XLY, IYC and VCR)

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

XLY Monthly data: XLY Monthly Data

XLY Weekly data: XLY Weekly Data

XLY Daily 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

NKE

105.10 6.10 6.16% 8.45% 6.60% 8.63% 8.56% 8.89% 6.53% 9.08%

BC

27.75 -0.30 -1.07% 6.08% 7.73% 11.40% 48.95% 15.87% 32.40% 64.30%

TM

90.77 -1.86 -2.01% 5.64% 5.42% 6.03% 33.92% 11.37% 19.03% 41.28%

TTM

27.47 -0.44 -1.58% 3.93% 4.29% 15.03% 51.68% 8.32% 29.33% 65.78%

AMZN

256.92 -4.58 -1.75% 3.10% 1.44% 7.10% 43.51% -0.21% 16.48% 47.36%

DIS

50.00 -0.93 -1.83% 2.73% 1.54% 1.50% 30.51% -5.20% 5.49% 37.85%

EBAY

51.35 -0.79 -1.52% 1.97% -0.75% 4.77% 63.85% 3.80% 22.76% 69.25%

MCD

90.18 0.14 0.16% 1.46% 1.92% 3.60% -8.76% -3.77% 2.90% -9.09%

WHR

101.38 -0.95 -0.93% 1.28% 3.44% -1.31% 108.99% 18.96% 74.31% 106.31%

SBUX

53.60 -0.61 -1.13% 0.45% -0.07% 4.71% 18.37% 4.95% -0.87% 18.48%

SNA

78.22 -0.91 -1.15% 0.42% 0.20% 0.50% 52.65% 8.67% 26.26% 50.77%

LVS

46.28 -0.84 -1.78% -0.19% 6.03% 4.75% 4.02% 3.03% 3.42% 7.65%

KSS

43.35 -0.44 -1.00% -1.03% -1.68% -17.03% -9.74% -17.93% -0.98% -12.30%

TGT

59.60 -0.76 -1.26% -1.49% -4.30% -7.57% 16.59% -8.92% 3.83% 15.24%

CCL

37.02 0.03 0.08% -1.86% -2.35% -5.27% 12.32% -0.99% 7.06% 12.93%

BBBY

55.72 -0.64 -1.14% -4.29% -4.28% -7.38% -4.56% -9.50% -8.91% -9.30%

JCP

19.59 -0.50 -2.49% -6.63% 7.82% 13.30% -44.06% -24.33% -13.78% -43.40%

Consumer stocks are organized by the S&P industry classification system as Discretionary Spending, Staples (the ‘must have’ consumer purchases) and Healthcare (also ‘must have’). Most income here is from the US consumer – in US Dollars – so there is less of an inverse correlation to the US Dollar as we saw in Energy, Basic Materials and Industrials/Transports.

The ETF for Consumer Discretionary stocks is XLY. This week XLY gained +0.92% W/W, but is only up +0.25% over the past four weeks. The close Friday was 47.28.

Nike (NKE +8.5% W/W) was strong this week. But that’s all the stock has gained for all of 2012, and the big gain (+6.2%) was made just on Friday! Amazingly, that move happened after earnings were reported to have dropped -22% from the prior year’s comparable Q2, and revenues for the quarter were shy a tad from analyst expectations. But the earnings of $1.03 did bear expectations of $1.00. Wow! Something else is going on here!

Here is the Weekly chart of XLY (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. The 8-week EMA is 46.64, and the last price 47.28, so this is another sector where the Bears appear to have hibernated.

wir12_52.36.gif

FD: We now hold Brunswick (BC), and Tata Motors (TTM) in both the Growth and the All-Weather portfolios. We raised our exposure here to over 47% from ~38% a week ago.

BC was up +6.1% and TTM up +3.9% this week. Toyota Motor (TM +5.6%) was also strong with the weak Yen.

As at Aug. 17, 2012, the total market cap of the 16 Cara 100 stocks in this sector was $642.6 billion. About 67% of the total is attributed to four stocks, TM, AMZN. DIS and MCD. MCD was 2nd biggest of these in 4Q2011, but has suffered weakness in 2012.

As for the price data charts I find best, I like StockCharts.com. A full range of information comes from 4-traders.com.

Cara 100 Sector 25 (Consumer Discretionary) list:

AMZN Amazon.com [GICS 25, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


BBBY Bed Bath & Beyond [GICS 25, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


BC Brunswick Corp [GICS 25, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


CCL Carnival Corp [GICS 25, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)

DIS Disney Co [GICS 25, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


KSS Kohl’s Corp [GICS 25, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


MCD McDonalds Corp [GICS 25, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


NKE Nike Inc [GICS 25, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


SBUX Starbucks Corp [GICS 25, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)

SNA Snap-On [GICS 25, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


TGT Target Corp [GICS 25, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


TM Toyota Motor Corp [GICS 25, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


TTM Tata Motors [GICS 25, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


WHR Whirlpool Corp [GICS 25, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


http://tinyurl.com/3pxbyu7
http://tinyurl.com/4xx8ogp

Here is the current candleglance chart of 10 important Sector 25 components:

http://stockcharts.com/scripts/php/candleglance.php?TM,DIS,NKE,TGT,EBAY,…

Info from SeekingAlpha.com this week

25 Bed Bath & Beyond (BBBY) Dec.19: 4:43 PM More on Bed Bath & Beyond: The company is establishing a new $2.5B stock buyback program, increasing its total authorization to $2.72B. That’s good for buying back 19% of shares at current levels. FQ3 same-store sales rose 1.7% Y/Y, down from FQ2′s 3.5% – the company thinks Hurricane Sandy had a 0.9% impact. FQ4 guidance is for EPS of $1.60-$1.67, below a $1.75 consensus. BBBY -3.7% AH. CC at 5PM ET

25 Disney (DIS) Dec.21: 8:17 AM Disney (DIS) wins approval with the European Union to buy Lucasfilm for a cool $4.05B in cash and stock. Though the decision wasn’t unexpected, Europe’s top regulator can take a narrower view on certain deals than U.S. counterparts. Just ask UPS.

25 McDonald’s (MCD) Dec.18: 7:25 AM Bah, humbug! McDonald’s (MCD) wants franchisees to stay open on Christmas after a push to keep selling burgers on Thanksgiving helped lift November same-store sales. According to internal estimates, the extra revenue haul for Christmas could reach as high as $84M if stores take the plunge. Dec.17: 7:57 PM Finding encouragement from strong numbers posted on Thanksgiving Day, McDonald’s (MCD) is urging its franchises to remain open on Christmas Day this year. The burger giant says that franchises that remained open on Thanksgiving accounted for almost one percentage point of the company’s 2.5% domestic same store sales growth in November. What that could mean to the company’s bottom line? Well, if all 14K stores participated – a long shot at best – it could equate to nearly $72M in Ronald’s stocking this quarter.

25 Starbucks(SBUX) Dec.21:10:16 AM Starbucks (SBUX -1.6%) continues to nail down liquor licenses in major cities as it slowly rolls out its “evenings” menu replete with wine and beer. Stores in Seattle, Atlanta, L.A., Chicago, and Portland already serve alcohol , while other metro areas play the waiting game. The company will also test the concept in Spain and Japan.

25 Target (TGT) Dec.20: 10:10 AM Cleveland Research downgrades Target (TGT -1.8%) to Neutral from Buy on valuation concerns and in light of the firm’s channel checks showing the retailer is seeing sluggish December sales trends.

25 Toyota Motors (TM) Dec.18: 8:23 AM A sobering thought for automakers circling around today is that gas mileage ratings need to be accurate or profits could be pinched. The development comes after Hyundai (HYMLF.PK) and Kia Motor (KIMTF.PK) tell U.S. senators they will allow owners of vehicles with overstated fuel economy ratings until the end of 2013 to file for compensation. The bill for the pair of Asian automakers could topple $100M each.


Sector 30 (consumer staples: XLP, VDC, RTH and IYK)

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

XLP Monthly data: XLP Monthly Data

XLP Weekly data: XLP Weekly Data

XLP Daily 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

WFM

91.18 -0.52 -0.57% 2.98% 0.65% -4.08% 30.93% -8.59% -3.22% 33.21%

COST

99.49 0.29 0.29% 2.65% 0.94% 1.60% 17.60% -2.80% 10.06% 18.74%

KR

26.30 -0.33 -1.24% 0.04% -1.90% 5.28% 7.26% 11.06% 14.15% 7.43%

WMT

68.65 -0.35 -0.51% -0.15% -5.04% -2.21% 13.79% -7.79% 1.40% 15.59%

PEP

69.63 -0.48 -0.68% -0.76% -0.90% -0.80% 4.86% -1.30% 1.65% 5.44%

DEO

116.78 -3.14 -2.62% -0.91% -3.05% -3.24% 31.81% 5.01% 17.73% 37.87%

BUD

87.50 -1.05 -1.19% -0.93% -0.28% 0.60% 42.58% 0.56% 25.99% 48.25%

ABV

41.70 -0.19 -0.45% -0.97% -1.40% 1.98% 14.72% 8.54% 10.90% 15.77%

KMB

84.05 -0.90 -1.06% -1.18% -2.17% -3.77% 14.79% -1.49% 4.14% 15.06%

WAG

36.31 -1.24 -3.30% -1.22% 0.58% 9.73% 9.83% 3.42% 24.56% 8.81%

PG

68.72 -1.10 -1.58% -1.73% -2.23% -1.25% 2.83% -1.01% 15.01% 4.12%

KO

36.89 -0.16 -0.43% -2.04% -2.17% -2.74% 5.19% -3.00% -1.18% 6.07%

KRFT

45.53 -0.90 -1.94% -2.34% 1.93% 0.55% -4.29% 0.00% 0.00% 0.00%

The ETF for Consumer Staples stocks is XLP. As the purchases of consumer staples are considered must-have, the normal swings in economic growth and contraction do not affect these companies as much as say the Consumer Discretionary stocks.

This week, XLP stumbled, dropping -2.20% W/W to close at 35.17. Over the past four weeks there was a loss of -1.40%.

Going through the larger XLP components, I don’t see how the ETF got hammered so much. Kraft (KRFT -2.34% W/W) was the big loser from what I see. Coca Cola (KO -2.04% W/W) is also a big weight in the XLP ETF.

Here is the Weekly chart of XLP (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. The 8-week EMA is 35.26, and the last price 35.17, so the Bulls are no longer in charge.

wir12_52.37.gif

FD: We are holding Procter & Gamble (PG), Starbucks (SBUX) and Walgreen (WAG) in the All-Weather portfolios in this sector and Starbucks (SBUX) and Walgreen (WAG) in Growth. Our new position in WAG is a small one, thankfully because the stock dropped -3.3% on Friday after reporting a not so hot quarter. The stock had traded very well earlier in the week, so I guess there was some deception going on.

As at Aug. 17, 2012, the total market cap of the 8 Cara 100 stocks in this sector was $791,473.5 billion. As at Dec. 9, 2011, the total market cap of the 8 Cara 100 stocks in this sector was $773.8 billion. About 80% of the total is attributed to four stocks, WMT, KO, PG, and ABV.

As for the price data charts I find best, I like StockCharts.com. A full range of information comes from 4-traders.com.

Cara 100 Sector 30 (Consumer Staples) list:

ABV AmBev (Companhia de Bebidas) [GICS 30, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


COST Costco [GICS 30, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


DEO Diageo plc (ADR) [GICS 30, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


KO Coca-Cola [GICS 30, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


PG Procter & Gamble Co [GICS 30, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


WAG Walgreen Company [GICS 30, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


WFM Whole Foods Market Inc [GICS 30, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


WMT Wal-Mart Stores Inc , [GICS 30, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


http://tinyurl.com/3m9fr8p

Here is the current candleglance chart of 10 important Sector 30 components:

http://stockcharts.com/scripts/php/candleglance.php?WMT,PG,KO,PEP,ABV,KR…

Info from SeekingAlpha.com this week

30 Walgreen (WAG) Dec.21: 7:39 AM More on Walgreen (WAG): Prescription sales fell 7.2% compared to a year ago while generic introductions negatively impacted sales by 4.9 percentage points in the quarter. Overall, total sales in comparable stores declined a disappointing 8%. The company opened 218 new drugstores during the period. WAG -2.2% premarket.

30 Wal-Mart (WMT) Dec.19: 7:27 AM Wal-Mart (WMT) could face steep fines over the allegations it systematically bribed officials in Mexico through an affiliate, according to attorneys familiar with FCPA rules. A hefty fine would only add to a growing tab of legal fees and investigation costs already sitting north of the $100M mark. Dec.18: 3:46 AM “Wal-Mart de Mexico (WMT) was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited.” says the NYT in another in-depth investigation into the company. “It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction.”


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

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

IYH Monthly data: IYH Monthly Data

IYH Weekly data: IYH Weekly Data

IYH Daily 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

WLP

61.31 -0.20 -0.33% 4.82% 6.11% 9.36% -9.32% 3.46% -11.73% -6.65%

AET

46.63 -0.36 -0.77% 2.33% 4.29% 8.47% 9.98% 17.75% 14.40% 10.87%

BAX

67.25 -0.55 -0.81% 1.97% 3.35% -2.27% 33.06% 10.23% 30.63% 35.94%

UNH

55.03 -0.43 -0.78% 1.81% 2.15% 2.06% 6.88% -2.05% -5.67% 10.08%

ABT

66.05 0.50 0.76% 1.07% 0.79% 2.45% 16.45% -5.13% 6.12% 19.14%

MYGN

27.13 -0.38 -1.38% 0.67% -0.80% -10.70% 29.19% -0.91% 20.79% 33.78%

CELG

79.70 -0.32 -0.40% 0.43% 1.30% 1.52% 16.08% 3.14% 34.08% 19.76%

MDT

42.02 -0.66 -1.55% 0.38% -1.27% -2.89% 8.61% -3.07% 11.16% 13.97%

NVS

63.19 -0.57 -0.89% 0.00% 1.40% 4.24% 8.61% 3.15% 15.75% 11.98%

PFE

25.08 -0.35 -1.38% -0.40% -1.88% 2.24% 14.16% 2.33% 10.97% 15.68%

BMY

32.56 -0.01 -0.03% -0.52% 0.00% -0.18% -7.00% -3.12% -6.41% -7.74%

JNJ

70.27 -0.48 -0.68% -0.59% -0.26% 1.02% 6.66% 1.75% 5.84% 8.17%

NVO

162.00 1.28 0.80% -0.65% 0.50% 1.69% 38.51% 1.91% 17.33% 41.57%

BIIB

149.91 -1.30 -0.86% -0.89% -0.91% 0.03% 32.08% -3.01% 7.69% 34.46%

GSK

43.65 -0.35 -0.80% -1.07% 0.76% 1.11% -5.68% -6.63% -4.42% -3.26%

GILD

72.78 -0.88 -1.19% -1.97% -1.54% -4.39% 73.87% 7.41% 45.79% 87.34%

AMGN

87.16 -1.25 -1.41% -2.29% -1.31% -0.50% 35.95% 6.25% 21.65% 38.04%

MRK

41.52 -0.64 -1.52% -4.64% -6.97% -6.23% 8.41% -7.55% 5.25% 11.22%

The ETF I use for Healthcare stocks is IYH.

This week IYH was down -0.56% W/W. IYH closed at 84.13.

Over the past four weeks there was a gain of +0.39%.

The big leaders this week were health insurers Wellpoint (WLP +4.8% W/W) and Aetna (AET +2.3%, which followed the previous week’s gain of +1.9%).

Here is the Weekly chart of IYH (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. The 8-week EMA is 83.67, and the last price 84.13, and so based on the Weekly and the Monthly the IYH is still in the Bull ring.

wir12_52.38.gif

FD: We hold AET and GILD in the Growth and All-Weather portfolios. We are about 35% S&P sector weighted, basically unchanged this week.

As at Aug. 17, 2012, the total market cap of the ten Cara 100 stocks in this sector was $992.3 billion. Of these, the smallest three are AET, with a market cap of $12.7 billion (down from $14.4 billion Dec 9, 2011), Celgene (CELG) at $29.8 billion, and Gilead Sciences at $42.9 billion (down from $29.3 billion Dec 9, 2011). Six of the ten are over $100 B in market cap.

As for the price data charts I find best, I like StockCharts.com. A full range of information comes from 4-traders.com.

Cara 100 Sector 35 (Healthcare) list:

ABT Abbott Laboratories [GICS 35, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


AET Aetna Inc [GICS 35, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


BMY Bristol Myers Squibb Co [GICS 35, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


CELG Celgene Corp [GICS 35, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


GILD Gilead Sciences [GICS 35, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


GSK GlaxoSmithKline plc (ADR) [GICS 35, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


JNJ Johnson & Johnson [GICS 35, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


MRK Merck [GICS 35, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


NVS Novartis [GICS 35, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


PFE Pfizer [GICS 35, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


http://tinyurl.com/4yta7j7

Here is the current candleglance chart of 10 important Sector 35 components:

http://stockcharts.com/scripts/php/candleglance.php?JNJ,PFE,NVS,MRK,GSK,…,

Info from SeekingAlpha.com this week

35 GlaxoSmithKline (GSK) Dec.19: 4:40 PM GlaxoSmithKline (GSK) reaches a $150M preliminary settlement with U.S. drug wholesalers claiming the company improperly delayed the market entry of competitive generic alternatives to its nasal spray Flonase. The settlement was reached with AmerisourceBergen (ABC), Cardinal Health (CAH), and McKesson (MCK), among others, who maintained that GSK had abused the citizen’s petition process to monopolize the market and overcharge for the spray by restricting access to less expensive generic versions. Dec.17: 8:04 PM GlaxoSmithKline’s (GSK) Revolade received draft guidance support from the National Institute for Health and Clinical Excellence – the financial watchdog for the U.K health system – which overturns a 2010 ruling that said the drug was too costly. The drug is a treatment for a rare disorder called chronic immune thrombocytopenic purpura, and occurs in patients who have had their spleens removed. GSK received the institute’s stamp of approval after agreeing to sell it to the state-run medical system at a discount. 10:43 AM GlaxoSmithKline (GSK) says the FDA has approved its Fluarix Quadrivalent flu vaccine. Fluarix Quadrivalent is the first intramuscular vaccine to cover against four influenza strains, and GSK plans to make it available in time for the 2013-14 flu season. Healthcare providers traditionally order flu vaccines a year in advance of each flu season. Dec.14: 4:13 PM The FDA approves GlaxoSmithKline’s (GSK) raxibacumab injection to treat inhalational anthrax, a form of the infectious disease caused by breathing in the spores. Raxibacumab is the first monoclonal antibody approved under the FDA’s Animal Efficacy Rule, which allows findings from animal studies to support FDA approval when it is not feasible or ethical to conduct trials in humans. In this case, because inhalational anthrax is a rare and lethal disease, it is not possible to conduct adequate trials in humans.

35 Novartis (NVS) Dec.19: 7:41 PM Recent Phase III study results published in the New England Journal of Medicine show Novartis’ (NVS) drug canakinumab significantly relieves symptoms in patients with serious form of childhood arthritis. The drug was assessed in two trials and both showed canakinumab provided substantial symptom relief and delayed disease flare recurrence,thus allowing patients to substantially reduce or discontinue use of corticosteroids.

35 Pfizer (PFE) Dec.18: 4:02 PM Pfizer (PFE +0.9%) is set to begin laying off about 20% of its U.S. primary care medicines sales force – equating to some 600 employees – in an attempt to lower costs. The cuts are slated to begin this month. Dec.17: 11:09 AM Pfizer Inc. (PFE) declares $0.24/share quarterly dividend, 9% increase from prior dividend of $0.22. Forward yield 3.81%. For shareholders of record Feb. 01. Payable Mar. 05. Ex-div date Jan. 30.


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 Monthly Data

XLF Weekly data: XLF Weekly Data

XLF Daily data: XLF Daily Data

Table 8: Senior financial company equities

Sorted by 1-Week Price Performance
Symbol
Close 1Day
Change
1Day
%Change
1W
%Change

2W
%Change

4W
%Change

YTD
%Change

3M
%Change

6M
%Change

12M
%Change

GS

128.44 -1.28 -0.99% 7.61% 10.18% 6.76% 34.69% 10.04% 36.78% 39.61%

BAC

11.29 -0.23 -2.00% 6.71% 6.11% 14.04% 94.66% 23.93% 44.37% 115.87%

MS

18.92 -0.35 -1.82% 4.82% 11.49% 15.16% 17.66% 10.77% 35.53% 26.89%

SCHW

14.32 -0.14 -0.97% 4.53% 6.79% 8.24% 22.29% 5.45% 16.90% 27.97%

WFC

34.48 -0.58 -1.65% 4.01% 3.76% 3.86% 21.28% -1.40% 6.62% 28.23%

JPM

44.00 -0.53 -1.19% 2.78% 3.38% 7.08% 25.79% 7.63% 23.91% 36.14%

TD

84.30 0.09 0.11% 2.70% 3.95% 2.57% 11.48% 0.40% 10.82% 17.87%

BBD

17.69 -0.03 -0.17% 2.55% 4.80% 6.18% 3.94% 0.86% 18.96% 6.89%

IBN

44.63 -0.28 -0.62% 2.55% 2.20% 18.57% 58.54% 12.30% 53.05% 72.18%

MA

493.57 -4.96 -0.99% 2.34% 3.67% 2.56% 33.99% 7.41% 17.19% 31.91%

BNS

58.59 -0.18 -0.31% 2.04% 4.51% 6.62% 14.75% 6.08% 15.00% 20.93%

DB

43.68 -1.11 -2.48% 1.96% -2.54% -0.43% 9.67% 2.42% 23.01% 16.70%

RY

60.88 -0.36 -0.59% 1.77% 3.12% 4.10% 16.92% 6.04% 22.08% 27.39%

HBC

52.66 -0.39 -0.74% 1.21% 1.90% 4.84% 34.23% 10.61% 21.62% 38.94%

CS

24.60 -0.73 -2.88% 0.16% 0.74% 6.31% 0.12% 7.52% 32.47% 5.58%

HDB

41.09 -0.40 -0.96% -0.22% -2.75% 2.04% 51.51% 11.75% 36.10% 58.47%

UBS

15.96 -0.62 -3.74% -2.39% -1.42% 0.63% 28.92% 23.53% 36.41% 36.64%

The ETF for Financial stocks is XLF. If you want to check on strictly banking stocks, the $BKX Banking industry Index is what you want. For Insurance, try $INSR.

This week the Financial (XLF) sector gained +2.50% W/W to close at 16.40, which was the best performing sector.

Over the past four weeks there has been a gain of +3.54%.

This week the big gains came from Goldman Sachs (GS +7.6% W/W and up +10.2% over the past two weeks), Bank of America (BAC +6.7%), Morgan Stanley (MS +4.8% W/W and +11.5% over two weeks), and Schwab (SCHW +4.5%). With a loss of -3.7% on Friday UBS (UBS -2.4% W/W) was down on the week.

FD: We hold the Indian bank ICICI (IBN) and Canada’s Scotiabank (BNS) in both portfolios, as well as Royal Bank of Canada (RY) in Growth.

Here is the Weekly chart of XLF (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. The 8-week EMA is 15.87, and the last price 16.40, and so in this Bull-Bear struggle the Bull is clearly pulling ahead.

wir12_52.39.gif

As at Aug. 17, 2012, the total market cap of the seven Cara 100 stocks in this sector was $323.3 billion vs $307.2 billion as at Dec. 9, 2011. Of these, the smallest three are SCHW, and the two Indian banks IBN and HDB. HDB is by far the smallest.

As for the price data charts I find best, I like StockCharts.com. A full range of information comes from 4-traders.com.

Cara 100 Sector 40 (Financials) list:

BBD Banco Bradesco SA (ADR) [GICS 40, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


BNS Bank of Nova Scotia (USA) [GICS 40, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


HDB HDFC Bank [GICS 40, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


IBN ICICI Bank [GICS 40, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


MA Mastercard [GICS 40, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


RY Royal Bank of Canada (USA) [GICS 40, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


SCHW Charles Schwab Corp [GICS 40, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


TD Toronto Dominion Bank (USA) [GICS 40, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


http://tinyurl.com/4y24xyy

Here is the current candleglance chart of 10 important Sector 40 components:

http://stockcharts.com/scripts/php/candleglance.php?HBC,JPM,WFC,C,BAC,GS…

Daily charts of electronic brokers and exchanges

Weekly charts of electronic brokers and exchanges

Info from SeekingAlpha.com this week


Sector 45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, MTK and SMH)

The ETF for Technology stocks is XLK. Because the Semi-conductor manufacturers are a technology that is needed in the manufacture of most equipment and in most manufacturing processes today, I think it is the most important technology. So; I also focus on the Semi-conductor industry group, and the ETF for that is SMH.

XLK gained +0.91% W/W to 28.95 while SMH gained +1.26% W/W to 32.95.

Over four weeks, SMH and XLK are up +4.80% and +0.35% respectively, which is a bullish sign for the market.

A week ago I reported: “Research in Motion (RIMM) soared +16.9% W/W and is now up +59.7% in four weeks. If you happen to have speculated, it was a great bet. But do we really think Apple is going to be unseated as the (smart phone) industry elephant?”

Some of you think Apple is already rotten in the barrel, but I don’t get it. Anyway AAPL was up this week +1.9% and RIMM plunged -22.3%, all of which happened on Friday. I cannot keep up with RIMM – it’s good, it’s bad, it’s good, it’s bad… My BB just sits on the shelf while I use the iPhone.

Oracle (ORCL +5.6% W/W) has been improving.

Here is the Weekly chart of XLK (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. The 8-week EMA is 28.78, and the last price 28.95, so this sector is beginning to look bullish, but let’s call it neutral.

A week ago I reported: “The Weekly data chart clearly shows a rejection of the attempt to break the 8-week EMA and by the 50-line of the 7-week RSI. That’s ugly. However I suggest you terminate that “Bear” notion. Remove AAPL from the equation and XLK looks ok. Well, actually it looks neutral.”

wir12_52.40.gif

FD: After dropping MSFT and QCOM and adding CTSH, we now hold ADBE, ATML, CSCO, CTSH, GOOG, IBM, INTC, and JNPR in the Growth and All-Weather portfolios, in this sector. We moved from a ~131% weighting compared to the S&P sector weighting, up to ~138%. It was just at ~62% four weeks ago, so we are liking Tech more.

Our holdings are restricted to Cara 100 companies.

As at Aug. 12, 2012, the total market cap of the 18 Cara 100 stocks in this sector was $1.984 trillion. Of these, there are eight over $100 billion in market cap each. There are also seven at about $20 billion down to ATML at $2.6 billion. At Aug. 17, 2012, AAPL market cap stood at $607.5 billion. MSFT ($259 billion) and IBM ($230 billion) are next biggest.

A full range of information comes from 4-traders.com. As for the price data charts I find best, I like StockCharts.com.

Cara 100 Sector 45 (Technology) list:

AAPL Apple Inc [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


ADBE Adobe Systems Inc [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


ATML Atmel Corp [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


ATVI Activision Inc [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


BIDU Baidu [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


BRCM Broadcom Corp [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)



CSCO Cisco Systems Inc [GICS 45, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


CTSH Cognizant Technology [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


EMC EMC Corporation [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


GOOG Google [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


IBM IBM [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


INFY Infosys Technologies Ltd [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


INTC Intel Corp [GICS 45, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


JNPR Juniper Networks [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


MSFT Microsoft [GICS 45, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


ORCL Oracle [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


QCOM Qualcomm Inc [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


SNDK SanDisk Corp [GICS 45, Cara 100 G50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


http://tinyurl.com/3d8t3xl
http://tinyurl.com/3stja82

Here is the current candleglance chart of 10 important Sector 45 components:

http://stockcharts.com/scripts/php/candleglance.php?AAPL,MSFT,GOOG,IBM,O…,

Here is the current candleglance chart of 10 important Semi-conductor stock components:

http://stockcharts.com/scripts/php/candleglance.php?INTC,TSM,TXN,BRCM,AM…

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

SMH Monthly data: SMH Monthly Data

SMH Weekly data: SMH Weekly Data

SMH Daily data: SMH Daily Data

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

XLK Monthly data: XLK Monthly Data

XLK Weekly data: XLK Weekly Data

XLK Daily data: XLK Daily Data

Table 9: Senior technology 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

STP

1.1300 -0.0800 -6.61% 8.65% 26.97% 37.80% -51.91% 4.63% -40.53% -50.44%

ORCL

33.76 -0.18 -0.53% 5.63% 5.76% 9.18% 30.55% 3.97% 21.40% 31.01%

EMC

25.62 -0.29 -1.12% 3.64% 2.85% 3.26% 17.96% -8.57% 5.96% 19.00%

QCOM

61.61 -1.25 -1.99% 2.98% -3.52% -2.41% 11.47% -4.12% 11.75% 15.18%

JNPR

20.17 -0.18 -0.88% 2.96% 4.56% 20.78% -4.13% 9.09% 27.02% 3.70%

MSFT

27.45 -0.23 -0.83% 2.39% 3.78% -0.90% 2.58% -11.99% -8.93% 6.56%

GOOG

715.63 -6.73 -0.93% 1.95% 4.59% 7.14% 7.55% -2.50% 26.61% 14.35%

AAPL

519.33 -2.40 -0.46% 1.87% -2.61% -9.13% 26.29% -25.82% -10.10% 31.00%

CTSH

73.73 0.01 0.01% 1.65% 4.85% 10.91% 12.19% 7.46% 27.19% 16.15%

BIDU

98.70 -1.14 -1.14% 1.33% 10.45% 2.58% -20.59% -11.17% -12.72% -12.63%

IBM

193.42 -1.35 -0.69% 0.87% 0.77% -0.04% 3.82% -6.10% 0.02% 6.59%

CSCO

19.96 -0.28 -1.38% 0.50% 3.26% 5.94% 7.14% 5.61% 17.97% 11.38%

ADBE

37.71 -0.16 -0.42% 0.40% 6.29% 12.90% 31.99% 11.47% 20.75% 34.82%

DELL

10.43 -0.07 -0.67% 0.00% -0.19% 9.21% -30.37% 0.68% -13.08% -29.05%

INFY

42.67 0.23 0.54% -0.35% -4.00% 1.94% -20.17% -12.42% 0.73% -13.54%

SAP

79.61 -1.48 -1.83% -0.97% 0.87% 3.11% 46.26% 9.20% 38.28% 52.39%

HPQ

14.34 -0.09 -0.62% -2.78% 2.87% 15.27% -46.13% -18.48% -29.36% -43.63%

FSLR

30.92 -1.33 -4.12% -5.04% 3.38% 26.46% -13.61% 45.85% 112.65% -2.77%

ATVI

10.65 -0.13 -1.21% -6.66% -6.08% -5.25% -12.70% -11.84% -6.91% -10.73%

EA

13.89 -0.05 -0.36% -9.22% -6.40% -3.34% -31.54% 4.91% 15.75% -29.99%

RIMM

10.91 -3.21 -22.73% -22.29% -9.16% -6.43% -29.66% 69.15% 8.45% -20.83%
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

ATML

6.230 0.010 0.16% 9.49% 14.73% 25.10% -26.62% -1.74% -5.18% -20.33%

AMD

2.5900 0.1900 7.92% 8.37% 9.75% 32.82% -52.74% -28.06% -54.72% -49.02%

ALTR

34.50 -0.24 -0.69% 4.99% 9.25% 8.29% -8.24% -6.10% 5.02% -3.36%

SNDK

44.32 0.09 0.20% 3.87% 4.90% 10.44% -6.85% -2.06% 23.11% -7.94%

AMAT

11.50 0.12 1.05% 3.79% 4.83% 10.58% 7.48% 0.52% 2.95% 12.75%

BRCM

33.18 -0.29 -0.87% 3.49% -3.07% 5.07% 12.67% -8.44% -1.25% 14.85%

STM

7.120 0.020 0.28% 2.89% 9.88% 17.88% 11.25% 16.91% 28.06% 24.69%

KLAC

48.37 -0.14 -0.29% 2.52% 2.50% 7.08% 1.92% 1.49% -0.10% 3.11%

XLNX

36.10 -0.20 -0.55% 2.06% 3.56% 5.59% 11.28% 3.29% 13.17% 13.10%

ADI

42.19 -0.16 -0.38% 2.03% 2.20% 3.56% 17.10% 4.64% 13.05% 20.13%

LLTC

34.22 -0.17 -0.49% 1.91% 1.66% 5.45% 12.79% 3.98% 13.01% 15.69%

TER

16.75 -0.12 -0.71% 1.58% 5.74% 5.15% 21.82% 14.73% 18.79% 24.81%

INTC

20.77 -0.26 -1.26% 1.14% 3.00% 5.30% -15.38% -10.22% -22.26% -12.31%

TXN

30.93 -0.35 -1.12% 0.42% 3.62% 4.53% 3.86% 6.69% 12.11% 8.30%

TSM

16.95 -0.15 -0.88% 0.00% -0.47% 0.65% 27.83% 14.53% 24.91% 33.36%

UMC

1.9900 -0.0200 -1.00% -1.00% -1.49% 5.85% -9.13% -5.24% -4.78% -4.33%

LSI

6.860 0.110 1.63% -4.19% 1.93% 1.93% 11.18% -9.14% 5.38% 26.57%

MU

6.320 -0.470 -6.92% -7.74% -1.71% 11.27% -6.51% -0.63% 12.06% 14.08%

Info from SeekingAlpha.com this week

45 Adobe Systems (ADBE) Dec.20: 5:43 PM Adobe (ADBE) is acquiring Behance, owner of a popular site for discovering and sharing digital artwork. Behance has over 1M members (many of them doubtlessly Adobe buyers), and complements Adobe’s fast-growing Creative Cloud, which just received a big update. Like Autodesk, Adobe is trying to make social networking features a big part of its cloud migration efforts.

45 Apple(AAPL) Dec.21: 10:55 AM The iPhone’s (AAPL) U.S. share soared to 53.3% in the 12 weeks ending Nov. 25, per Kantar ComTech – that’s up from 48.1% in the 12 weeks ending Oct. 28, and far above the 35.8% seen in the year-ago period. Android’s (GOOG) U.S. share fell to 41.9% (down 1090 bps Y/Y). But again, the roles are switched in Europe, and then some: Android had a 61% share in the EU5 (up 920 bps Y/Y), and the iPhone 25.3% (up 250 bps). Android had 72.2% of “Urban China,” and 60.7% of Brazil. Dec.20: 12:07 PM Apple (AAPL -0.8%) is ticking lower after Susquehanna’s Chris Caso argues recent iPhone-related order cuts (confirmed by his own checks) are due to demand falling short of expectations. “Based on what we believe has been produced since 3Q12, we don’t see any way that AAPL can meet consensus sell-through numbers.” On a brighter note, Digitimes claims Apple has ramped its iPad Mini orders after having cut them earlier due to component shortages. CRUS -3.4%. SWKS -2%. Dec.20: 8:03 AM The Apple (AAPL) vs Samsung (SSNLF.PK) patent war continues its back and forth, with the European Commission set to charge the South Korean company “very soon” and issue it with a statement of objections as part of an investigation into whether the company breached antitrust rules through its use of injunctions against Apple (AAPL). Yesterday, Samsung won a victory on the Western front. Dec.18: 2:52 PM After falling hard last week, Apple (AAPL +2.3%) is outperforming again today. Likely helping are positive notes from RBC and Wells Fargo, both of whom take kindly to Apple’s initial Chinese iPhone 5 sales data. After digesting the data, Wells thinks a prior estimate for 46M FQ1 iPhone sales will be met or exceeded. However, the firm is worried about what it sees as “evolutionary versus revolutionary steps in innovation.” Dec.16: 9:37 PM More on Apple: Shares could be pressured tomorrow by a downgrade to Neutral from Citi, which is lowering its PT to $525. The firm says checks indicate Apple has cut its March quarter iPhone 5 orders following a 45%-50% increase in monthly output from October to December. UBS recently said its checks suggested the iPhone 5′s build rate would fall sharply in the March quarter, while Jefferies claimed iPhone component suppliers saw big order cuts last week. Citi, which started Apple at Buy on Nov. 26, also thinks Samsung (SSNLF.PK) is doing very well. (Read the comments on this)

45 Cisco Systems (CSCO) Dec.20: Cisco (CSCO) has been on an acquisition spree this last year. The recent quarter results of Cisco also managed to beat consensus revenue and earnings estimates. The stock is trading at P/e of 9.6x (ex-cash 7x) and pays a dividend yield of 2.7%. I believe there is still more upside to CSCO based on strong fundamentals and low multiples. The stock is still trading below its 52 week high and I am setting a target price of $24, using a 12x multiple; 16% upside. Therefore I recommend investors to go long CSCO as there is still more upside available. Dec.18: 11:32 AM Cisco (CSCO +0.4%) is betting big on network management software: fresh off acquiring Cariden (I, II), the company says it’s buying BroadHop, a provider of policy control software for carriers. While Cariden focuses on managing infrastructures and optimizing capacity, BroadHop’s software helps manage end-user mobile/wireline services. Both purchases support Cisco’s ONE platform for remotely programming its hardware. Earlier this year, Cisco bought ClearAccess, a developer of modem/set-top provisioning software.

45 Google (GOOG) Dec.18: 2:12 PM Google Music (GOOG), hardly a stranger to imitating iTunes, is now introducing an iTunes Match clone. But there’s a big difference: iTunes Match goes for $25/year, whereas Google’s service, which scans a user’s collection and makes copies of recognized tracks available in the cloud, is completely free. Sources tell AllThingsD Google is writing “big up-front checks” to music labels for the service, which might help Google Music step out a bit from iTunes’ huge shadow. 1:28 PM Even as many fret about mobile monetization, eMarketer is hiking its 2012 U.S. mobile ad sales forecast to $3.84B from a prior $2.61B. Also, its 2013 and 2014 forecasts now stand at $6.97B and $10.94B. That could be lifting Millennial Media (MM +5.7%), whose 2013 and 2014 estimates are now at $138M and $199M, and Pandora (P +4.3%), which is at $347M and $496M. Market leader Google’s (GOOG) U.S. sales are now expected to total $2.17B in 2012, $3.98B in 2013, and $6.33B in 2014. For Facebook (FB), the numbers are $339M, $851M, and $1.22B. Dec. 17: 5:59 AM Google (GOOG) is poised to offer concessions to end an FTC investigation into its business practices and thereby escape enforcement action. However, Google has resisted efforts to reach an agreement over accusations that it manipulates search results so they favor its services. Meanwhile, the FTC will probably limit Google’s ability to request injunctions against rivals’ products that incorporate standards essential IP. Dec.14: 4:24 PM If Google+ fails to meet Google’s (GOOG) high ambitions, it won’t be for a lack of effort. 18 new features are launching today, including panoramic photo support, low-bandwidth Hangouts, and a revamped events feature. Also, the Google+ iOS app has been overhauled. A groups feature was introduced earlier this month, as was the integration of Snapseed’s photo-editing software. Google+ has plenty of users, but most of them don’t seem to use it often relative to Facebook and Twitter.

45 IBM (IBM) Dec.21: 5:28 AM A federal judge the SEC and IBM (IBM) over their $10M settlement covering anti-bribery allegations brought up last year. A rather hot U.S. District Judge Richard Leon said he won’t “rubber stamp” the deal unless the parties agree to additional FCPA reporting terms imposed by the court or produce a mountain of evidence on why such terms would be too burdensome. During the hearing, Leon promised not to roll over like the SEC has in the case. Dec.19: 10:52 AM IBM is acquiring StoredIQ, a developer of information lifecycle management (ILM) software. Like so many other firms, StoredIQ pitches itself as a big data play, claiming its solutions give businesses control over the growing volumes of unstructured data spread out over PCs, storage systems, and other hardware, both for management and regulatory purposes. The deal comes as IBM tries to grow its storage software ops in the face of sputtering hardware sales. Dec.17: 2:24 PM Among the sensory technologies IBM’s R&D labs expects to have a big impact over the next 5 years: haptic capabilities that deliver a real-life sense of touch (IMMR is a player here); image-recognition capabilities for billions of photo/video uploads (Facebook and Google are both investing here); sensor networks for analyzing audio activity; and smell sensors embedded into mobile devices. Should these technologies take off, IBM could benefit via IP licensing, and from providing analytics solutions to process the data they create.

45 Oracle (ORCL) Dec.21: Last Thursday, Oracle (ORCL) announced that it is going to acquire Eloqua for $871 million in cash. This was a continuation of the series of acquisitions to establish Oracle’s presence in the cloud computing field. In direct competition with IBM, Salesforce and SAP AG, this will probably not be the last acquisition either. Dec.18: 7:58 AM Oracle (ORCL) is due to release its FQ2 results after the bell, with analysts expecting that EPS rose to $0.61 from $0.54 and that revenue edged up 2.5% to $9.03B, helped by a strong increase in software-license revenue. Pacific Crest Securities has “heard about more large deals than we have in the recent past,” although JMP Securities says the “hardware business (Sun) in the U.S. may have again been light.” Oracle (ORCL) is due with its Q2 results in tonight’s after-hours session, and analysts polled by Capital IQ expect the company to report a profit of $0.61 per share on revenue of $9.02 billion.

45 SanDisk (SNDK) Dec.20: 5:09 PM SanDisk (SNDK) is adding $750M to its stock buyback program, increasing its total authorization to $1.25B. That’s good for buying 11.7% of shares at current levels. Though well above their June lows, SanDisk shares are still down on the year.


Sector 50 (telecom: IYZ, VOX and IXP)

The ETF for I use for Telecom stocks is IYZ.

This week, IYZ gained +0.50% W/W to close at 24.33.

Over the past four weeks the gain was +3.27%.

Nokia (NOK +4.5% W/W) had another gain on the week, but did take a hit of -4.6% on Friday.

This week Verizon (VZ -1.5% W/W) and AT&T (T -1.0%) were both down. As soon as T has a reversal, I anticipate IYZ to start a Bull run.

Here is the Weekly chart of IYZ (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. The 8-week EMA is now 23.93, and the last price 24.33, so the Bull, which entered the ring a week ago, is now starting to trot.

Two weeks ago I wrote in this space: “the Bear might be entering hibernation. Time will tell whether this ETF trips over the falling EMA-8 and the upcoming 50 line for the RSI-7 on the Weekly data.” It did not stumble.

wir12_52.41.gif

FD: We now hold nothing in this sector.

As at Aug. 17, 2012, the total market cap of the former group of three Cara 100 stocks in this sector was $120.3 billion, down from $147.8 billion as at Dec. 9, 2011. Of these, Telefonica (TEF) dropped from $83.4 billion to $59.6 billion in market cap. Then as of Aug 31, with Rogers included, the market cap of the four of them was $141.6 billion with RCI being $20.8 billion of that.

As for the price data charts I find best, I like StockCharts.com. A full range of information comes from 4-traders.com.

Cara 100 Sector 50 (Telecom) list:

CHA China Telecom Corp [GICS 50, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


MBT Mobile TeleSystems (ADR) [GICS 50, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


RCI Rogers Communications [GICS 50, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


TEF Telefonica SA [GICS 50, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


http://tinyurl.com/3dd857s

Here is the current candleglance chart of 10 important Sector 50 components:

http://stockcharts.com/scripts/php/candleglance.php?T,VZ,CHL,CHA,VOD,TEF…,

Table 14: Telecom

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

NOK

3.9900 -0.1900 -4.55% 4.45% 3.64% 12.08% -22.37% 44.04% 67.65% -17.73%

DCM

14.76 0.11 0.75% 2.07% -0.07% 2.93% -20.77% -10.92% -6.70% -16.52%

RCI

45.58 -0.12 -0.26% 1.56% 2.13% 3.78% 18.11% 12.35% 29.30% 21.19%

MBT

18.47 -0.01 -0.05% 1.37% 3.59% 5.42% 22.16% 5.06% 9.68% 25.31%

TEF

13.47 0.01 0.07% 1.13% 4.42% 2.05% -24.03% -7.36% 8.98% -20.58%

CHL

57.82 -0.65 -1.11% 1.10% 1.17% 1.65% 17.76% 5.11% 11.41% 23.42%

BCE

43.12 0.09 0.21% -0.05% 0.16% 1.77% 3.28% -1.15% 8.15% 7.32%

TU

65.56 0.27 0.41% -0.26% 1.60% 1.19% 22.22% 5.66% 14.68% 24.00%

FTE

11.08 0.13 1.19% -0.89% 3.84% 3.45% -31.09% -14.11% -9.40% -28.10%

T

33.67 -0.50 -1.46% -1.00% -0.21% -2.01% 10.83% -11.58% -3.88% 14.91%

VZ

43.57 -0.24 -0.55% -1.45% -1.89% -0.43% 9.67% -4.54% 0.55% 11.06%

CHA

54.76 -1.31 -2.34% -1.62% -2.89% -3.78% -6.44% -7.76% 26.00% -2.14%

AMX

23.15 -0.04 -0.17% -2.49% 0.74% -4.14% -0.17% -8.28% -7.36% 4.00%

VOD

25.13 -0.32 -1.26% -2.71% -2.90% -1.22% -11.04% -12.92% -9.05% -7.81%

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

IYZ Monthly data: IYZ Monthly Data

IYZ Weekly data: IYZ Weekly Data

IYZ Daily data: IYZ Daily Data

Info from SeekingAlpha.com this week


Sector 55 (utilities: IDU, XLU, and VPU)

The Utilities sector ETF is XLU.

This week, XLU had a gain of +0.28% W/W to close at 35.31.

FD: We hold a small position in Exelon (EXC +0.74% W/W) in the All-Weather portfolio accounts, and nothing at all in the Growth.

Here is the Weekly chart of XLU (in solid blue with the 8-week EMA in dashed blue), and the $SPX in thin solid orange. The 8-week EMA is now 35.34, and the last price 35.21. The Bulls took a step back from the 8-week EMA and 50-line of the 7-week RSI.

wir12_52.42.gif

As at Aug. 17, 2012, the total market cap of the two Cara 100 stocks in this sector was $64.4 billion.

As for the price data charts I find best, I like StockCharts.com. A full range of information comes from 4-traders.com.

Cara 100 Sector 55 (Utilities) list:

EXC Exelon Corp [GICS 55, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


TRP TransCanada Corp [GICS 55, Cara 100 V50]

(Profile)
(Quotes)
(News)
(Calendar)
(Financials)
(Technical Analysis)
(Fundamental Analysis)
(Consensus Analysis)


Table 12: US Utilities

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

TRP

47.48 -0.11 -0.23% 3.28% 2.68% 4.05% 9.00% 3.42% 14.94% 9.81%

PCG

41.49 -0.43 -1.03% 2.42% 1.77% 3.29% 1.64% -2.58% -5.79% 1.05%

PEG

30.74 -0.07 -0.23% 2.26% 2.26% 5.13% -3.36% -3.03% -2.54% -2.94%

FE

41.61 0.07 0.17% 2.09% 0.39% 1.31% -2.80% -5.84% -13.56% -6.09%

D

51.94 -0.26 -0.50% 1.47% 0.48% 3.63% -1.07% -1.44% -3.24% -1.61%

AEP

43.45 -0.15 -0.34% 1.42% 0.42% 5.90% 6.57% -1.27% 11.13% 6.36%

DUK

64.51 -0.54 -0.83% 1.10% 0.30% 6.72% 198.38% 0.67% 183.56% 197.97%

SO

43.32 -0.19 -0.44% 0.86% -0.94% 3.07% -3.80% -4.29% -6.76% -5.54%

EXC

29.88 -0.07 -0.23% 0.74% 1.05% 4.59% -28.98% -15.55% -18.85% -31.12%

NGG

57.13 -0.17 -0.30% 0.26% 0.78% 0.40% 16.31% 2.33% 12.02% 21.22%

ED

56.05 -0.39 -0.69% -0.12% 0.04% 3.60% -7.58% -5.16% -8.53% -9.22%

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

XLU Monthly data: XLU Monthly Data

XLU Weekly data: XLU Weekly Data

XLU Daily data: XLU Daily Data

http://investertech.com/markets/mkview.asp?qte=ss&ty=tk&qt=AEP+D+DUK+ED+…

Here is the list of North American Utilities that I follow:

AEP D DUK ED EXC FE NEE NGG PCG PEG SO TRP

For study purposes, there is a good mix of electric (AEP, D, DUK, FE, NEE and SO), gas (NGG, TRP) and diversified (ED, EXC, PCG, PEG) utilities.

Here is the current candleglance chart of 10 important Sector 55 components:

http://stockcharts.com/scripts/php/candleglance.php?SO,NGG,EXC,TRP,D,DUK…,

Info from SeekingAlpha.com this week

55 TransCanada Pipelines (TRP) Dec.21: 4:47 PM A U.S. decision on TransCanada’s (TRP) Keystone pipeline could slip into next summer, the Eurasia Group warns, as increased pressure from environmentalists forces Washington to pore over every detail. A lengthy delay could add more pressure to already deeply discounted Canadian oil prices.


Bonds & Yields Review

There was another move from bonds to cash this week, but also into equities.

In terms of basis points (bp) moves W/W, the yields this week on the 2-, 5-, 10- and 30-year US Treasuries were up +3 to 0.26%; up +8 to 0.76%; up +7 to 1.77%; and up +7 to 2.93%. The higher yields mean lower bond prices, this week.

One of the key US Treasury prices is the TLT (average 20-year Treasury fund). TLT dropped -1.09% W/W to 122.25. all of this loss happened early in the week as on Friday there was a gain of +1.09% on the day.

Although also weak, the inflation-protected Treasuries (TIP -0.25% W/W) was a tad stronger than the TLT.

Here is the Weekly chart of TLT, offset by $SPX. Note the inverse correlation between stocks and bonds.

wir12_52.43.gif

FD: We increased from a 10.1% portfolio weighted position in the 7-10 year Bonds (IEF -0.44% W/W) in the All-Weather Portfolio accounts to ~13.0%.

Here is the Weekly chart of IEF, offset by $SPX.

wir12_52.44.gif

Clearly we trade the position frequently and do so to keep the accounts balanced as to asset allocation, as best we can. As I say, it’s not easy.

Here is the Econoday write-up on Bonds this week:

wir12_52.45.gif

Backgrounder:

A long time ago, the Treasury bonds ceased being income instruments; but, with an extremely low beta, they do hedge portfolio risk for some (very, very long-term oriented) traders, and the counter-cyclicality to the S&P 500 is obvious from the charts. The problem, again, is Total Return.

The TIP:TLT ratio chart is also a very effective indicator of trend reversals between inflation and deflation and back. Equity markets will lift when traders first see that inflation is on the way. I showed that chart at the open of this WIR.

Wall Street traders no longer view the Treasuries as income instruments. They trade them like penny stocks – only there is significantly less margin required by Humungous Bank & Broker (HB&B). lol … Of course, there is not much default risk to HB&B because they always have a buyer in the Fed ready to take them off the hook. That is not so funny.

Income investing btw will not go away. Risk averse investors have a need. This is an area of business I am personally pursuing now with asset-backed securities for accredited investors because I think the bond market is virtually dead for long-term oriented investors, and will not be revived for a few years.

My project is an oil & gas land play in the Texas Eagle Ford Shale Trend. I had tried to do a diamond deal, but the shell turned out to be a dud, which is why we do due diligence. But I still hope to find a good shell – hopefully in less than the six months the last one took — and then pursue the diamonds. I am presently looking for a diamond cutting and polishing company in India to fit into the plan.

As I say, I think it’s deplorable what the central planners have done to the fixed income market. Older people need higher income.

Table 10: US Treasury Yields

US Treasury Bonds
Maturity Yield Yesterday Last Week Last Month
3 Month 0.03 0.01 0.01 0.06
6 Month 0.09 0.09 0.07 0.11
2 Year 0.26 0.26 0.23 0.27
3 Year 0.37 0.38 0.33 0.36
5 Year 0.76 0.75 0.68 0.68
10 Year 1.77 1.80 1.70 1.68
30 Year 2.93 2.98 2.86 2.81
Municipal Bonds
Maturity Yield Yesterday Last Week Last Month
2yr AA 0.74 0.78 0.71 0.59
2yr AAA 0.60 0.58 0.50 0.47
2yr A 0.96 0.84 0.87 1.00
5yr AAA 1.09 1.08 0.94 0.81
5yr AA 1.26 1.27 1.11 0.93
5yr A 1.65 1.67 1.50 1.54
10yr AAA 2.02 2.06 1.84 1.50
10yr AA 2.03 2.02 1.76 1.61
10yr A 2.35 2.35 2.11 2.32
20yr AAA 2.11 2.32 1.81 1.90
20yr AA 3.00 2.90 2.77 2.64
20yr A 2.91 2.81 2.52 2.80
Corporate Bonds
Maturity Yield Yesterday Last Week Last Month
2yr AA 0.60 0.59 0.59 0.56
2yr A 0.83 0.82 0.84 0.82
5yr AAA 0.91 0.90 0.90 0.90
5yr AA 1.20 1.21 1.22 1.24
5yr A 1.54 1.55 1.52 1.60
10yr AAA 2.19 2.22 2.15 2.11
10yr AA 2.43 2.49 2.43 2.45
10yr A 2.60 2.64 2.58 2.65
20yr AAA 3.88 3.90 3.89 3.84
20yr AA 3.52 3.62 3.30 3.39
20yr A 4.05 4.07 4.06 4.00

http://stockcharts.com/scripts/php/candleglance.php?TLT,IGOV,$DJCBP

Here is the $USB 30-year Treasury Bond chart.

Interest rates and bond yields.

TNX0X Weekly Data

IRX0X Weekly Data

Interactive Daily data charts:

TNX0X Daily Data

IRX0X Daily Data


Interactive Chart of Interest rates and bond yields.


US Bond Funds — Interactive Monthly Data Charts SHY Monthly data series chart:

US Bond Funds - Monthly Data For SHY


IEF Monthly data series chart:

US Bond Funds - Monthly Data For IEF


TLT Monthly data series chart:

US Bond Funds - Monthly Data For TLT


AGG Monthly data series chart:

US Bond Funds - Monthly Data For AGG


LQD Monthly data series chart:

US Bond Funds - Monthly Data For LQD


TIP Monthly data series chart:

US Bond Funds - Monthly Data For TIP


US Bond Funds — Interactive Weekly Data Charts

SHY Weekly data series chart:

US Bond Funds - Weekly Data For SHY

IEF Weekly data series chart:

US Bond Funds - Weekly Data For IEF

TLT Weekly data series chart:

US Bond Funds - Weekly Data For TLT

AGG Weekly data series chart:

US Bond Funds - Weekly Data For AGG

LQD Weekly data series chart:

US Bond Funds - Weekly Data For LQD

TIP Weekly data series chart:

US Bond Funds - Weekly Data For TIP


US Bond Funds — Interactive Daily Data Charts

SHY Daily data series chart:

US Bond Funds - Daily Data For SHY

IEF Daily data series chart:

US Bond Funds - Daily Data For IEF

TLT Daily data series chart:

US Bond Funds - Daily Data For TLT

AGG Daily data series chart:

US Bond Funds - Daily Data For AGG

LQD Daily data series chart:

US Bond Funds - Daily Data For LQD

TIP Daily data series chart:

US Bond Funds - Daily Data For TIP


Table 11: Interest-sensitive securities

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

DRE

13.92 -0.04 -0.29% 3.49% 3.11% 3.65% 13.82% -8.18% -1.35% 16.68%

NLY

14.76 0.00 0.00% 3.22% 2.15% 0.00% -8.15% -15.95% -12.97% -12.04%

AVB

136.65 1.08 0.80% 3.05% 2.22% 6.31% 5.08% -1.56% -1.16% 5.99%

EQR

56.61 0.11 0.19% 2.02% 2.72% 3.95% 0.02% -1.43% -4.81% 0.12%

SHY

84.41 0.01 0.01% -0.06% -0.05% -0.01% -0.05% -0.04% 0.05% -0.08%

AGG

111.12 0.10 0.09% -0.21% -0.48% -0.75% 0.99% -0.74% -0.07% 1.27%

TIP

122.04 0.34 0.28% -0.25% -0.90% 0.14% 4.62% 0.44% 1.77% 4.26%

IEF

107.63 0.29 0.27% -0.44% -0.94% -0.47% 2.60% 0.03% -0.39% 2.66%

TLT

122.25 1.32 1.09% -1.09% -1.75% -1.58% 2.36% 0.58% -3.52% 2.64%

Some people think this 11-minute video is a good basic explanation of the bond market:
http://www.youtube.com/watch?v=EmVrny8k6qo


Commodities Review

This week Commodities ($CRB -0.26% W/W) dropped a tad. Crude Oil was up and Metals down.

Here is the Weekly data chart of $CRB (solid blue line with 8-week EMA in thin dashed blue) vs S&P 500 Index (solid thin orange line). The Weekly EMA-8 is 296.50 while the last price has risen to 294.13, so commodities are presently bearish, probably waiting until the fiscal issue is no longer defined by the word “cliff”.

wir12_52.46.gif

Let’s see if in the next couple weeks – possibly soon after the New Year — the Bear hibernates and the Bull returns.


Although I use the $CRB (Reuters/Jeffries Index), principally because it’s the oldest, there are many commodity indexes: http://www.crbtrader.com/crbindex/ • Astmax Commodity Index(AMCI) • Commin Commodity Index • Dow Jones-AIG Commodity Index • Goldman Sachs Commodity Index • Reuters/Jefferies CRB Index • Rogers International Commodity Index • Standard & Poor’s Commodity Index • NCDEX Commodity Index • Deutsche Bank Liquid Commodity Index (DBLCI) • UBS Bloomberg Constant Maturity Commodity Index (CMCI)

Here is a link to an article that discusses the major ones that have been around for a while: http://www.rogersrawmaterials.com/overviewandanalysis.PDF

Here is a current price summary of the heaviest weighted commodities contracts: http://money.cnn.com/data/commodities/

These indexes change their component weightings perhaps annually or even monthly, for example: http://www.seekingalpha.com/article/43586-the-new-generation-of-diversif… http://tinyurl.com/a5myfj

$CRB Index

Open Futures Contracts


Interactive Chart of Weekly CRB Commodities Index:

CRB Commodities Index - Weekly Chart

Interactive Chart of Daily CRB Commodities Index:

CRB Commodities Index - Daily Chart


Oil Review

This week $WTIC gained +$2.26/bbl (+2.61%) to close at $88.99. A week ago there was a gain of +$0.73/bbl (+0.85%). The chart is turning from bearish to neutral and may soon go bullish.

The weekly high-low was 90.54—87.00 vs (i) 87.68—85.21 (ii) 90.33—85.68 and (iii) 88.99—85.36 the prior three weeks.

I have written in this space: “I still think the average price for $WTIC in 2013 will exceed $110. There is usually a late in the year seasonal play, lasting through Q1.”

A week ago I modified my outlook:

I do expect to see a pop in the price early in the New Year, but that will be mostly US Dollar weakness related. There may also be concerns about war in the Middle East, which continues to simmer. The issue I now see is that prices, while they did lift post-election, did not lift as much as I had anticipated. A slow economy has a lot to do with that, but the issue I now think is bigger. I think, frankly, the whole Peak Oil theory is dead. America today – tomorrow the world – is the beneficiary of a radical new technology in oil and gas drilling that is truly revolutionary. A couple years ago, these developments in horizontal drilling and fracking (i.e., hydraulic fracturing) in shale formations led to the discovery of immense new gas reserves in the US and the price of Natural Gas on the market collapsed. I believe the same is soon going to happen to Crude Oil.

Background: For the uninitiated, here is a link to the innovation story:

http://www.youtube.com/watch?v=VY34PQUiwOQ

There are many opponents to fracking, and I was one who initially was alarmed at what I was reading, which I reported. But I have now reviewed too many analyst reports to realize that fracking is truly revolutionary and will lead to the US soon becoming the major energy market power in the world, ahead of Saudi Arabia and Russia.

As a matter of fact, I have been devoting some of my private equity initiatives into a new fund that raises capital for land banking (i.e., the sub-surface rights) in the Eagle Ford Shale Trend of South Texas.

http://www.rrc.state.tx.us/eagleford/index.php

For those who are interested, I will be assembling a report on my activities that will include material from several broker-dealers. It will be available around January 21, and I’ll present a link on the home page to make it available.

Here’s the Weekly data charts of $WTIC in solid blue vs the $USD Index in solid thin green. Note the counter-trend. Note also that the 8-week EMA is 87.94 and the price is now at 88.99.

wir12_52.47.gif

Econoday summed up this week in the Crude Oil market as follows:

wir12_52.48.gif

Here is the e-miNY Dec-07 Crude Oil chart.

Interactive Chart of Weekly Crude Oil:

Crude Oil- Weekly Chart

Interactive Chart of Daily Crude Oil:

Crude Oil- Daily Chart


Gold & Precious Metals Review

The gold market

Here is the 18-month Weekly data chart of $GOLD with the $USD, in the overlaid solid green line. Note the counter-trend. Note the 8-week EMA is at 1702.41 and the price is down to 1657.40. That is clearly bearish.

wir12_52.49.gif

This week, $GOLD dropped -$40.10/oz -2.36% W/W) to close at $1657.40. The high-low for the week was 1704.40—1636.00.

The past four weeks of Fiscal Cliff negotiations has taken $GOLD downhill quickly. Traders are getting tired of hearing of a ‘don’t spend and don’t tax’ regime, but still are anxious it might happen. I’ll believe it when I see it, and I won’t hold my breathe waiting.

Despite the recent pull-backs, I have stated clearly in these pages: “I continue to believe that within a few months $GOLD will surge to $1900 (back to the highs of August 2011) and then after a period of consolidation up to $2300. In about a year [4Q2013], I believe $GOLD will be in the $2700-$3000 range.” … “I’d say many of you are hopeful, but most of you don’t believe it will happen.”

Central bank co-ordinated Quantitative Easing ought to be ready to go soon after the US Congress signs a budget bill that deals with the Fiscal Cliff. I anticipate massive global QE to begin in January. Japan has already got a head start.

http://en.wikipedia.org/wiki/Quantitative_easing

http://en.wikipedia.org/wiki/United_States_fiscal_cliff

To repeat: “When the trend turn does happen, it will climb one heck of a wall of worry.” That’s because nobody in authority wants you selling fiat money to buy Gold. They will do all in their considerable power to scare you out of Gold.

Interactive Chart of Weekly Gold EOD Continuous Contract Index:

http://investertech.com/tkchart/tkchart.asp?stkname=gld&cht=Tech+Chart&p…

http://investertech.com/tkchart/tkchart.asp?stkname=gld&cht=Tech+Chart&p…

http://investertech.com/tkchart/tkchart.asp?stkname=gld&cht=Tech+Chart&p…

Here is the current candleglance chart of 10 important precious metals and copper market components:

http://stockcharts.com/freecharts/candleglance.html?$SILVER,$GOLD,$PLAT,$COPPER,GDX,GDXJ,UXG,SVM,SLW,FCX,

Spot gold chart for the week

Interactive Chart of Weekly Gold EOD Continuous Contract Index:

GOLD EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Gold EOD Continuous Contract Index:

GOLD EOD Continuous Contract Index- Daily Chart

Interactive chart of recent trading for the Gold Bullion index.


The silver market

Spot silver chart for the week

Interactive daily data

This week, $SILVER dropped -$2.39 (-7.38% W/W) to close at $29.98, near the low.

The Weekly hi-low was 32.60—29.64 vs (i) 33.88—32.24, (ii) 33.93—32.58 and (iii) 34.49—32.90 over the previous three weeks, which is definitely a bearish pattern. But this week was extremely bearish, and showed signs of capitulation.

Every dip is an opportunity to buy Silver bullion, as I see it. After now falling so much in the month, I now believe that within one year Silver bullion will be $125/oz. Call it a great hedge to the Global QE I think is on the horizon.

In a Bull market for Silver I anticipate the shares of royalty company Silver Wheaton to vastly outperform the broad market.

Investors who wish to hold the Silver physical metal for the very long-term (say 4 to 6 years or more) will find that scarcity of the metal, like that of Gold and Platinum, can do in numbered bars and stored in bank vaults.

It is already true that Precious Metals and other metals must be safeguarded in vaults. It is a fact that base metals like Copper that are accessible in the streets, even behind wire fences, are being stolen. Manhole covers in the streets are being stolen. This theft of metals is now a serious matter for industrial users.

Here is the Weekly chart of $SILVER in the solid blue line (with the 8-week EMA in dashed thin blue, now at 32.21) and the $USD in solid thin green. Note the counter-trend.

wir12_52.50.gif

As many of you know, my company offers allocated bullion bars to long-term investors who want to own numbered bars and store them in the world’s safest vaults. The smallest bar for Good Delivery (virtually pure) silver is 31.1 kg (1,000 troy ounces).

As an active trader in mines and metals, I usually watch the Sydney and London miners overnight to give me a heads-up as to where prices will be at 9:30am ET in the US and Cdn market.

I also watch the action of all the major precious metals and metals, and the related stocks, before I come to a conclusion on any one of them.

Here is the current candleglance chart of 10 important precious metals and copper market components:

http://stockcharts.com/freecharts/candleglance.html?$SILVER,$GOLD,$PLAT,$COPPER,GDX,GDXJ,UXG,SVM,SLW,FCX,

http://stockcharts.com/scripts/php/candleglance.php?$SILVER,$GOLD,$PLAT,$COPPER
http://tinyurl.com/22rsj4r

http://stockcharts.com/charts/gallery.html?s=$silver
http://tinyurl.com/y8k8ud4

Interactive Chart of Weekly Silver EOD Continuous Contract Index:

SILVER EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Silver EOD Continuous Contract Index:

SILVER EOD Continuous Contract Index- Daily Chart


The platinum market

http://stockcharts.com/charts/gallery.html?s=$plat
http://tinyurl.com/ydwz4pn

This week, $PLAT plunged -$68.20/oz (-4.23% W/W) to close at $1546.00. The price has dropped to the October technical support levels.

The hi-low this week was 1621.00—1526.50 vs (i) 1615.40—1571.00 and (ii) 1625.80—1583.00 over the past two weeks. As you can see, the bottom fell out after the Republican Plan B failed on Thursday evening.

Six weeks ago, at $1549.60, I wrote here that “I think time will show that anytime soon was a good time to load up.” We are back to that time.

Here is the Weekly chart of $PLAT in the solid blue line (with the 8-week EMA in dashed thin blue, now at 1587.80) and the $USD in the solid thin green line.

wir12_52.51.gif

Here is a list of PLAT/PALL stocks to watch:

ANO Anooraq Res.
ELR.TO Eastern Platinum
JLP.L Jubilee Platinum
NKP.AX Nkwe Platinum
PDL.TO North American Palladium
PLA.AX Platinum Australia
PLG Platinum Group Metals
NKL.V Prophesy Platinum Corp

Spot platinum chart for the week

Interactive Chart of Weekly Platinum EOD Continuous Contract Index:

PLAT EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Platinum EOD Continuous Contract Index:

PLAT EOD Continuous Contract Index- Daily Chart

Interactive chart of the Platinum metal index.


The palladium market

The Palladium market is often a leading indicator.

Seven weeks ago I had written in this space: “But (despite the loss) at least the long-term bottom is being tested.” The price then was $599.95, and it’s now $679.15.

This week there was a loss of -$21.25 (-3.03% W/W).

The weekly hi-low was 705.20—671.35 vs (i) 706.00—680.25 (ii) 702.00—673.25 and (iii) 692.50—646.90 over the past three weeks. That pattern is not very bearish.

Here is the Weekly chart of $PALL in the solid blue line (with the 8-week EMA in dashed thin blue, now at 669.20), and the $USD in the thin solid green line. Like the others, see the counter-trend.

wir12_52.52.gif

Spot palladium chart for the week

Interactive Chart of Weekly Palladium EOD Continuous Contract Index:

PALL EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Palladium EOD Continuous Contract Index:

PALL EOD Continuous Contract Index- Daily Chart

Interactive chart of the Palladium metal index.


The (base metal) copper market

This week, $COPPER dropped -$0.11 (-3.01% W/W) to close at 3.56.

Here is the Weekly data chart of $COPPER in the solid blue line (with the 8-week EMA in dashed thin blue, now at 3.59) and the $USD in the solid thin green line. Note the counter trend.

Like the Precious Metals, the red metal hit the wall Thursday evening, the switch pulled by Wall Streeters sitting in on Fiscal Cliff talks in DC, upset that Plan B was going nowhere.

wir12_52.53.gif

http://stockcharts.com/charts/gallery.html?s=$copper
http://tinyurl.com/ybgnb7f

Interactive Daily data

Interactive Weekly data

Interactive Chart of Weekly Copper EOD Continuous Contract Index:

COPPER EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Copper EOD Continuous Contract Index:

COPPER EOD Continuous Contract Index- Daily Chart

Interactive chart of the Copper metal index.


Goldminer Equities

Table 12: Senior gold 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

GFI

11.88 0.10 0.85% 1.54% 4.95% -1.41% -24.67% -10.34% -8.55% -23.21%

AU

30.34 0.16 0.53% 1.47% 0.60% -2.97% -30.81% -17.13% -13.59% -28.34%

HMY

8.290 -0.110 -1.31% 0.73% 6.83% 1.72% -31.26% -10.76% -15.49% -30.97%

NEM

44.58 0.48 1.09% 0.65% 0.36% -6.52% -28.19% -20.83% -6.74% -29.10%

BVN

34.80 0.06 0.17% 0.06% 3.94% 2.20% -10.54% -10.75% -8.57% -12.17%

CDE

23.31 0.13 0.56% -0.93% 2.73% -3.32% -7.97% -19.79% 33.66% -8.84%

HL

5.660 0.030 0.53% -1.22% -0.35% -4.07% -1.74% -17.13% 25.50% 0.35%

MUX

3.7500 0.0700 1.90% -2.34% 5.34% -1.83% 0.81% -20.04% 31.12% 17.92%

ABX

33.38 -0.26 -0.77% -2.48% -0.65% -6.08% -29.74% -22.12% -12.82% -27.87%

AUY

16.91 0.28 1.68% -2.76% -5.32% -13.50% 10.38% -12.56% 11.40% 11.47%

GDX

45.18 0.11 0.24% -2.80% -1.63% -7.30% -16.02% -17.57% 0.80% -14.69%

PAAS

18.17 0.20 1.11% -3.40% -0.98% -6.44% -19.99% -19.10% 2.37% -18.26%

NG

4.4700 0.1700 3.95% -3.66% -1.11% -3.25% -50.99% -27.79% -19.31% -49.03%

ANV

29.13 0.08 0.28% -3.70% -5.79% -12.63% -10.40% -26.29% 2.90% -11.00%

KGC

9.380 -0.020 -0.21% -3.99% -3.50% -7.31% -23.55% -9.20% 12.07% -20.51%

KGN

3.8400 0.0100 0.26% -4.24% -5.88% -8.35% -7.25% 1.32% 25.90% -4.48%

GG

35.20 -0.55 -1.54% -4.40% -5.68% -14.89% -22.67% -24.99% -5.30% -21.62%

IAG

11.21 0.18 1.63% -4.51% 4.38% -8.42% -32.10% -31.35% -5.00% -30.07%

AEM

51.01 0.17 0.33% -4.57% -4.96% -9.68% 33.29% -2.02% 26.86% 36.50%

GDXJ

20.29 0.08 0.40% -4.74% -3.29% -9.94% -22.20% -20.31% 4.97% -23.55%

CEF

21.13 0.07 0.33% -4.78% -7.41% -9.51% 3.78% -11.22% 8.41% 4.40%

EGO

12.72 0.06 0.47% -5.43% -6.06% -17.56% -13.70% -18.20% 3.84% -7.15%

SSRI

14.24 -0.18 -1.25% -6.62% 3.71% 0.07% -3.65% -15.04% 19.46% 4.40%

SLW

34.49 -0.40 -1.15% -7.04% -3.50% -6.76% 12.71% -13.58% 30.00% 16.64%

RBY

2.4500 -0.0500 -2.00% -10.26% -15.22% -21.22% -37.82% -35.53% -21.22% -35.53%

SVM

5.010 -0.090 -1.76% -11.33% -4.39% -13.92% -26.43% -24.32% -14.94% -21.72%

The senior Goldminers ETF (GDX -2.80% W/W) and Junior Goldminers ETF (GDXJ -4.74%) took big losses this week despite making gains on Friday.

Was the throwing of the towel on Thursday night enough to represent capitulation?

The $USD was only up +0.05% this week, so a strong US Dollar was clearly not the culprit.

The biggest losses this week, as seen in my monitor, were Silvercorp (SVM -11.3% W/W) and Rubicon (RBY -10.3%). Silver Wheaton (SLW -7.0%) also was hammered.

Here is the Weekly GDX chart with the $USD in the background in solid green.

wir12_52.54.gif

As I opined off the top of the WIR, I do detect changes, but it’s really early January that I have been watching for a bullish break-out.

I recall a group of portfolio managers telling me how many years ago, looking for a cycle bottom in gold, they would ask their technical analyst every week, “Are we there yet?” The answer was always “Almost!” When finally the analyst exclaimed “We’re there!” the boardroom went silent until one of the others said quietly, “But we have no money left.”

Time and bear phases can be a killer, especially for Goldminer stocks. Then just when you think it cannot get any worse, when traders give in to the Bear, the fully fed Bear departs and the Bull enters the ring.

I do believe there will be a Gold Bull appear soon after the start of the New Year.

But, maybe that’s just my Christmas wish.

Here is the current candleglance chart of 10 important Gold and Silver mining companies:

http://stockcharts.com/scripts/php/candleglance.php?ABX,GG,NEM,KGC,BVN,G…,


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

LIHR IAG EGO RGLD GOLD TSE_AGI GSS NG NGD AEM

Interactive Daily data

Interactive Weekly data


Here are the key Silver miners and the SLV ETF: SLV SIL SVM 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 US Goldminers Index:

Weekly US Goldminers Index - Weekly Chart

Interactive Chart of Daily US Goldminers Index:

Daily US Goldminers Index - Daily Chart


The US goldminer share trust ETF trades under the ticker symbol GDX.

Here are the US Goldminer ETF (GDX) index Weekly and Daily data charts:

GDX Weekly data:

GDX Weekly Data Chart

GDX Daily data:

GDX Daily Data Chart


The Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF trades under the ticker symbol TSE:XGD.

Just like GDX on the AMEX, you can trade XGD on Toronto. Canadian Dollar fluctuations will impact XGD vs GDX.

Here are the Weekly and Daily data charts for the TSX Goldshares (XGD) index:

Interactive Chart of XGD Weekly data:

XGD Weekly Data Chart

Interactive Chart of XGD Daily data:

XGD Daily Data Chart


Central Bank Update and Currencies Overview

You know my posture re currencies: “We are all forced to be currency traders today.” That requires continuous study of the central bank meetings.

In this section, I reproduce any of the Econoday studies of international central bank meetings and reports for the current week – if there are any. This week the Bank of Japan, pushed by the new Prime Minister, voted for massive stimulus. In time the other central banks will do the same.

wir12_52.55.gif

These are important reviews to be reading and following month to month.

Here is the Econoday summary of what they saw in the international currency market this week.

wir12_52.56.gif

I still believe that most of the central banks want to devalue their currencies simultaneously, and will soon take the BoJ lead. However, all central bankers need to know what the Fiscal Cliff resolution is before they can play their cards.

I believe the Fiscal Cliff is actually the US Dollar teetering on the edge. As soon as the spending vs tax policies are put in place, the world will get to see it is front-end loaded for spending, with minimal cut-backs, and back-end loaded in terms of higher taxes to come. The difference will be made up by the balance sheet expansion of the Fed, which will put downward pressure on the US Dollar.

Background:

The $USD is a trade-weighted US Dollar index, we used to call the Morgan Dollar.

The Forex market is a four trillion dollar a day marketplace, which dwarfs the size of the stock and bond markets. In this market, the Euro/USD is the highest volume trader, and London is the center of the universe.

The current value of $USD is a mean value of rate fluctuations of six world currencies (Japanese yen, Euro, British pound, Canadian dollar, Swiss franc and Swedish krona) that each trade against the USD. The Euro is by far the biggest component.

(As inserted in this space continuously) For some time I have opined that the $USD clearly no longer meets the needs of a globalized world with respect to a reserve currency benchmark.

There was some nonsense being peddled at the GOP convention this year that maybe the US ought to peg its Dollar to GOLD. Will not happen!

You see; neither side of the room at the country club in DC would agree to “play” in handcuffs.

I have suggested that Gold may now be the de facto benchmark and that I do not foresee a time when any of the G-20 governments or central bankers would want to cede power to the hard money crowd, so, if there are to be changes, a new form of paper money is likely to be introduced or, more likely, a new US Dollar index.

I would not be surprised, as I have often stated, if this US Dollar Index is someday reconstructed to include the Chinese Yuan, Brazilian Real, Indian Rupee, Russian Ruble, and Mexican Peso. What we have today – something we used to call the Morgan Dollar – is a joke. A new US Dollar index would simply be constructed by all G-20 currencies based on their past five-year trade weighted average. Then every five years, change the weighting to reflect the latest international trade data of the US.

As I see it, such a development has been crucially needed for the almost nine years I have been blogging. If you recall, I referred to it as a need for a General Agreement on Currencies.

There is a Powershares ETF that tracks the G-10 currencies (NYSE:DBV). I think we need track that vs the $USD. The ratio is expressed as a line $USD:DBV.

http://tinyurl.com/ltxpk4

As commodities are mostly priced in $USD for international transactions presently, you still need to study forex price trends and cycles when trading commodity price-sensitive instruments.

For currency traders, there is also an Emerging economy E-10 currency fund, the Wisdom Tree Emerging Currency Fund (NYSE:CEW), apparently holding the Mexican new peso, Brazilian real, Chilean peso, South African rand, Polish zloty, Israeli shekel, Turkish lira, Chinese yuan, South Korean won, Taiwanese dollar, and Indian rupee. I don’t know much about it.

http://tinyurl.com/6ybt2bz

Regarding currencies, I find the ADVFN.com service (with inexpensive real-time price feed) to be quite useful. I have set up a monitor (one of 200-some tickers) for currencies, which you can do as well.

Click on: http://www.advfn.com/p.php?pid=m_tools

Into the window for stocks, enter the following string of currency pairs:

FX:EURUSD, FX:AUDUSD, FX:GBPUSD, FX:EURGBP, FX:EURCHF, FX:EURCAD, FX:USDCAD, FX:EURJPY, FX:USDJPY, FX:AUDJPY, FX:EURAUD

When you call up the stocks, you’ll see they are interactive, which means they update in real-time (if you paid the $10/mo for this data) or 15-20-minute delayed prices (free), and can be displayed with indicators and overlays.

If you are new to examining currency pairs charts; think about it that in any pair where the latest trend line is rising, the first ticker is the one that is strong. So EURUSD, which is the way the contract is traded, when the trend line is up, the Euro is in rally mode against the US Dollar.

The symbol USD in any pair is the denomination versus $USD, which is the trade-weighted US Dollar index (i.e., multiple currencies as described above).

A chart of the Euro vs Dollar (i.e., EURUSD) with an overlay of currencies (GBP, AUD and CAD in this case) will show you if, as, and the point when, currencies are impacting capital markets. We are looking for commonality in trend direction of the currencies in their trading against the US Dollar.


Individual Currencies Review

This week, the US Dollar ($USD) gained a tad (+0.05% W/W) to close at 79.62.

Here is the 18-month Weekly data chart of the $USD (solid blue line along with 8-week EMA in thin dashed blue, closing at 80.08) vs S&P 500 solid thin orange line, showing counter-cyclicality.

wir12_52.57.gif

The high-low this week was 79.70—79.01 vs (i) 80.66—79.50 (ii) 80.66—79.57 (iii) 80.59—80.02 (iv) 81.26-80.13, (v) 81.46-80.90, (vi) 81.09-80.28, (vii) 80.61-79.67, (viii) 80.27-79.47, (ix) 79.97-78.93, and (x) 80.21-79.32 over the previous ten weeks.

Two weeks ago I opined: “I still believe there is a reversal from Bull phase to Bear unfolding… Perhaps the coming weeks will show more lower highs and lower lows, indicative of the Bear.” That’s been happening.

http://stockcharts.com/charts/gallery.html?s=$usd
http://tinyurl.com/y9c3sr4

Weekly US Dollar Index - Weekly Chart

Interactive Chart of Daily US US Dollar Index:

Daily US Dollar Index - Daily Chart


The Euro this week gained +0.17% W/W to close at 131.88. On Friday this week there was a large loss of -0.45% on the day because of US Dollars flooding home after Thursday evening’s defeat of the Plan B.

The new high-low for the Euro this week was 133.08—131.50 vs (i) 131.73—129.17 (ii) 131.08—128.77, (iii) 130.24-128.81 (iv) 129.91-127.59, (v) 128.02-126.72, (vi) 128.27-126.90, (vii) 130.10-128.21, (viii) 130.83-128.91, (ix) 131.39-129.30, and (x) 129.92-128.59 over the previous ten weeks.

Although the closing price did not trumpet the action, that was a very bullish strengthening move this week by the Euro.

Here is the Weekly data chart of the Euro ($XEU) in US Dollar terms (in the solid blue line, closing at 131.88, with the 8-week EMA in thin dashed blue, closing at 130.07) vs the S&P 500 (in the thin solid orange line). That’s very bullish for the Euro.

wir12_52.58.gif

Interactive Chart of Weekly Euro Dollar Index, priced in USD:

Weekly Euro Dollar Index - Priced in USD

Interactive Chart of Daily Euro Dollar Index, priced in USD:

Daily Euro Dollar Index - Priced in USD


The Pound sterling future ($XBP) lost a tad -0.04% W/W to close at 161.72. There was a big loss of 0.66% on Friday, while the rest of the week was strong.

Here is the Weekly data chart of the Pound (solid blue line) and the S&P 500 (in the solid thin orange line).

wir12_52.59.gif

The hi-lo for the week was 163.02—161.52 vs (i) 162.14—160.56 (ii) 161.31—160.03, (iii) 160.56-159.62, (iv) 159.02-158.30, (v) 160.08-158.88, (vi) 161.65-160.08, (vii) 161.44-159.14 and (viii) 161.79-159.97 over the previous eight weeks. So the Pound Sterling Bull continues to run through the streets of Mayfair.

http://stockcharts.com/charts/gallery.html?s=$xbp
http://tinyurl.com/yasdzc2

Weekly British Pound Index:

Weekly British Pound - Weekly Chart

Daily British Pound Index:

Daily British Pound Index - Daily Chart


Weekly Japanese Yen Index:

The new Japanese govt and the Bank of Japan have come to an agreement to open the money floodgates and let the rates stay at zero with huge new loans and other stimulus measures. These people gave us the definition of QE.

Of course, their currency continues to weaken. This week the Yen ($XJY) dropped -0.91% W/W after falling -1.15% a week ago. The close was 118.73.

In late September, the Yen contract traded above 128.

The contract hi-lo for the week was 119.55—118.20 vs (i) 122.38—120.74 (ii) 122.44-120.93, (iii) 123.30-121.15, (iv) 126.03-122.77, and (v) 126.43-124.31 over the previous five weeks. That is a free fall.

A bad joke could be that if, for political reasons, the Chinese will not willingly buy Japanese cars, Japan will send them as gifts. In effect, by dropping their currency, the discount amounts to a gift.

What nations won’t do to maintain employment!

Soon, this scenario will be playing on the major stages of the US and Europe too. All the Chinese have to do to bring it about is to cry “Hard Landing!”

Here is the Weekly data chart of the Yen (solid blue line) and the S&P 500 (in the thin solid orange line).

wir12_52.61.gif

Weekly Japanese Yen - Weekly Chart

Daily Japanese Yen Index:

Daily Japanese Yen Index - Daily Chart


Daily Canadian Dollar:

This week the Cdn Dollar ($CDW) strengthened a bit this week, but there was a loss on Friday.

$CDW dropped -0.76% W/W to close at 100.71. There was a large loss of -0.53% on Friday.

A bad joke is that the banker in charge of Canada has been surreptitiously moving some loyalty card credits into a column headed England.

Actually what has been happening is that all central banks are making those moves. When the action is complete, around the world, then they can all get to use that great loyalty card in the sky. No bank will fail No country will fail. Incredible.

http://www.cnbc.com/id/100310162/Federal_Reserve_Central_Banks_to_Extend…

The high-low for the Loonie this week was 101.70—100.47 vs (i) 101.80—101.14 (ii) 101.26—100.48, (iii) 100.95-100.38, (iv) 100.85-100.09, (v) 100.13-99.43, (vi) 100.90-99.66, (vii) 100.80-99.84 and (viii) 101.13–100.06 over the previous eight weeks.

By the look of this BoC governor Mark Carney has completed the task of marrying the Loonie to the US Dollar so that the Amero can be rolled out north and south.

wir12_52.62.gif

Now he can depart to London, where in time, as head of the Bank of England, he can do the same for what will possibly become the Sterling Amero.

The Weekly data chart of the Loonie shows the very high correlation between the Cdn Dollar ($CDW) in the solid blue line to the S&P 500 ($SPX) in the thin solid orange line.

wir12_52.63.gif

As written up in this space previously:

There is usually a rising Canadian Dollar when commodity prices and related beneficiaries like Oilers and Miners are in strong long-term Bull phases. The opposite happens in disinflationary markets, and early on in deflationary markets. In deflationary markets, the G-8 govts and central banks tend to flood the international financial system with new money (to generate a wealth effect) and the Oilers and Miners benefit from that.

http://stockcharts.com/charts/gallery.html?s=$cdw
http://tinyurl.com/ycx58us

Weekly Canadian Dollar Index:

Weekly Canadian Dollar - Weekly Chart

Daily Canadian Dollar Index:

Daily Canadian Dollar Index - Daily Chart

Here is the China Yuan (CNY) chart.


Wrap-up:

Maybe it’s the fact this WIR is #52, the one that precedes xmas and the new year that gets me thinking philosophically and about the need for change.

A few weeks ago – in mid-November — I started off WIR#47, the one I personally spent the most time pondering this year because I could feel people getting pushed and pulled from my reality, with these words, including a quote from Ayn Rand, who I know many of you detest, but whom I think had a vision of the evils we face today.

Life, for me at least, has always been a battle between ideals and pragmatism, which I think is apparent in what I write and how I write this blog… Even the title (‘Capital Markets and Social Equity; Perspective and Discussion’) is an attempt to draw you into thinking about the ills of our society while we struggle to improve our life through investing and trading.

“When you see that trading is done, not by consent, but by compulsion; when you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal, not in goods, but in favors; when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you; when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed.”Ayn Rand

In the realm of social equity, we can and must do better.

Change is all around us – some good, some bad.

With the structural changes I see happening in the US and international economy, I have been making changes to the Cara 100, particularly in the Energy sector, as noted, where I am going from Big Oil to mid-size Oil, and from some foreign companies to US companies that are focused in the mid-west and Texas.

While the change in the US economy will take place over several years, from an asset allocation point of view I think you have to change your thinking. Bonds will be replaced by equities in the overall mix and large value-oriented equities will be replaced by smaller growth-oriented ones.

I have given this matter so much thought over the past couple weeks that I decided to make many structural changes in the Cara 100 and in the way we trade. Soon there will be a Cara Growth 100 and a Cara All-Weather 100.

No longer will we be trading Exxon and Chevron in our Growth portfolio accounts. Same thing for Central Fund, which is a holding company (gold and silver bullion) in any case. These companies will be in the Cara All-Weather 100, where we will attempt to maintain a low beta and a balance between equities that are subjected to all the primary price drivers, including the economic data, commodity prices, and interest and dividend yields.

Cara Growth 100 will be small and mid-cap stocks with a range of market capitalization from $1 billion to $50 billion. There will be some exceptions, but the average market cap will drop a lot. The number of US-based companies will increase because I think that’s where the capital flow will trend over the next three to five years.

As to the short-term, we have to see how the Fiscal Cliff debate gets translated into policy and legislation.

One final point is a comment I make each week: “From my years of experience, I know that traders who rely entirely on mechanical systems will soon realize that common sense is another necessary ingredient.” I’ll put that a different way by saying that to objectively study actual price and volume data, and the trends and cycles of the various data series, you need to stop listening to the biased opinions of others so you can concentrate on the facts. Only then will you be able to use good sense and sound judgment.

In closing, Pat and I once again, and Jack, Vad, Stephen, Deron, Harp, Jeff and Geoff extend a very Merry Xmas and a Happy New Year to all our many, many friends in this community. If it were possible, we would love to meet all of you at the Cara Toronto 2013 Conference in September, or wherever we could arrange to meet.


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