[5:27pm ET Sunday] Capital markets are not perfect, but sometimes events occur to make us question whether they are manufactured. This week offered a perfect example.
Thirty minutes after the market opened on Friday, there was an extremely rare trading halt in a high profile blue chip stock. Intel Corp (INTC+1.1% on the day), halted their stock to announce an earnings guidance matter, which happened simultaneously with the U of Michigan consumer sentiment number being published and the release of the text of Fed Chairman Bernanke’s speech at a Fed sponsored audience in Jackson Hole, Wyoming.
The combination of these events is enough to make one wonder if this was all orchestrated...
Everybody’s asking, did the CFO of Intel really run into his boss’s office clutching a computer-generated earnings projection that was so much below the previous company guidance the company could not wait to the close? How the Intel senior management could not have understood these facts prior to the market opening at 9:30am ET is simply unbelievable.
We don’t want to promote conspiracy theories, but halting INTC at that time of the morning to disseminate a minor earnings guidance change was simply unacceptable to say the least. The ensuing 10 minutes of chaotic trading became in retrospect a classic case of “bang’em to buy’em.” Traders armed with such information a minute or two before it was announced could turn their machines loose, creating an aura of panic while they placed bids underneath the market allowing them to accumulate a very significant stake on the cheap.
Once the cause of the INTC trading halt hit the wires, and there few sellers left to dump the stock, big traders concluded the recent relative weakness of that stock, and several others, had adequately discounted an earnings contraction going forward. Concluding that the wholesale markdown of the equity market was overdone, big traders then moved quickly to buy stocks.
Bond traders gave the first clue that the equity morning sell-off would be reversed, as bonds (TLT-2.67% Friday) never got a bid when stocks were briefly plummeting.
Most relevant to us independent traders was the market’s reaction to negative news.
Shoot first, ask questions later headline generated selling trapped the shorts, setting the hook for buyers who were able to effortlessly drive prices higher (S&P+1.66% Friday).
The issue now is, did this episode, for whatever reason, change the market trend from Bear to Bull? Time will tell; it always does.
Another test of S&P 1040, another stick-save, and a close near the highs of the day. One would think that equities should now be able to lift to 1085 or 1105, but I am leery. Until senior traders and volume returns to the equity market, no one will know for sure whether S&P 1040 will ultimately prove to be a tradable intermediate-term low.
With US and Canadian Labor day around the corner, next week will likely be a slow one, so be prepared mentally for choppy trading for the next few sessions. Use the time to think about what happened on Friday morning, and whether the outcome will be significant.
A week ago in this space I opined we are close to a significant turning point, but said we are not there yet. I also opined that the bond bubble would grow as long as the Euro falls and the US Dollar can be pushed to extremes. The Euro was 1.27 a week ago. I said I believed it can (and probably will) fall to 1.20 or 1.21, again, in time. Yes, I wrote, eventually I do see the US Dollar failing, dropping to 80 or less, with precious metals rising to new highs, especially for gold. But, I concluded, despite some evidence to the contrary, not just yet!
Evidence, it has been written, is not necessarily fact, just like technical indicators are often wrong. Today we’ll look at the evidence and leave it up to you to decide.
Now, as I always say at this point, let’s look at what happened this week in capital markets, including the macro-economic, foreign and domestic equities, bonds, commodities, currencies and precious metals. You have to get your head around all of it before you can make a trading plan. Then you let the flowing prices come to you.
Let’s get into the details.
Global Economics Review
Weekly International Economic Report from Econoday.
Summary: “The buildup of tension in the markets was palpable as they awaited Friday morning’s remarks by Fed Chairman Ben Bernanke to central bankers including ECB President Jean Claude Trichet and Masaaki Shirakawa of the Bank of Japan in Jackson Hole, Wyoming. Needless to say, trading was tentative leading up to the speech. The reaction was bound to be biased simply because these are the dog days of August and volumes are low, so relatively small inputs can have a disproportionate impact on the market… At first equities swooned, but then thought the better of it and rallied. Investors decided to focus on the glass half full side of Mr Bernanke’s remarks — namely that the threat of a double dip and deflation remains a distant proposition for now. And coupled with a softer-than-feared downward revision to U.S. second quarter growth data, equity markets rebounded from their lows… Mr Bernanke’s words were interpreted as a signal that the Fed is not poised to take drastic action despite the lingering threat of a double dip recession. Mr Bernanke’s speech did not offer any idea when the current policy of ‘quantitative easing lite’ would become full-blown QE2. Bond traders said the back up in yields reflected disappointment that greater bond buying by the Fed was not imminent. Next week marks the end of the month, and that will fuel buying of Treasuries by money managers balancing their portfolios, while the August employment report also beckons… Mr. Bernanke said he expects the economy to continue growing in 2011 and subsequent years, signaling that further Fed action may not be needed. He stressed that the Fed is ready to act, if needed, to bolster the economy and to avoid deflation, for which he sees no significant risks at this time. He said Fed officials haven't agreed on what would be a trigger for further action… On the week, equities were mixed. In the Asia Pacific region, only three of 13 indexes tracked here were up. And in Europe, only the FTSE posted a weekly increase. In North America, U.S. indexes were down as was the Mexican Bolsa. Only the S&P/TSX Composite was up.”
Here are the key US economic reports from last week’s calendar.
US Existing Home Sales for July. Following release of the data on 8/24/2010 10:00:00 AM ET, Econoday reported, “It doesn't get worse than this. Existing home sales fell 27.2% in July to a 3.83 million annual rate for the lowest level in 15 years. The 3.83 million rate compares with expectations for 4.65 million. Supply at the current sales rate ballooned from June's already swollen 8.9 months to 12.5 months for the worst reading in 11 years… Yet prices showed little effect, down only 0.2% to a median $182,600 and reflecting relative strength for higher priced homes. The year-on-year median price edged lower but was still positive at 0.7%. Yet "was" is the word to note as extremely heavy supply, together with heavy foreclosures and distressed sales, point squarely at price pressures ahead… There's nothing to explain away July's collapse. Single-family and condo sales show nearly the same deterioration. Regional data show no substantial variation. Stocks are moving lower and money is moving to safety in immediate reaction to this report, one that marks a new bottom for the run of disappointing economic data. The street was looking for an improvement in tomorrow's new home sales report but that's definitely now an outdated consensus.”
US Durable Goods Orders for July. Following release of the data on 8/25/2010 8:30:00 AM ET, Econoday reported, “Manufacturing is not as strong as hoped-based on July durables. New factory orders for durable goods in July rebounded 0.3%, following a 0.1% decline the prior month. The July rebound came in significantly below the consensus forecast for a 2.5% comeback… The bounce back in July was led by the transportation component. Most other components slipped. Excluding transportation, new durables orders dropped 3.8%, following a 0.2% rise in June. While durables orders are a volatile series and some month-to-month dips are to be expected, the latest news is disappointing… Most of new orders strength came from transportation which jumped 13.1%, following a 1.0% decrease in June. Nondefense aircraft spiked 75.9% after falling 25.3% in June. Defense aircraft orders declined 8.3% in the latest month. Analysts often focus on the ex-transportation component to see the underlying trend without the sharp monthly swings from aircraft. But excluding transportation also excludes one of the other few big positives in the report. Looking for a silver lining, the ex-transportation series may actually overstate weakness a bit. Within transportation, motor vehicles continued to post healthy gains, rising 5.3% in July after increasing 4.0% in June… Other components were mostly down for the latest period. Declines were seen in fabricated metals, machinery, computers & electronics, and electrical equipment. Advances were seen in primary metals and in "all other." … Businesses may be hitting the pause button on equipment investment. Nondefense capital goods orders excluding aircraft in July fell 8.0%, following a 3.6% jump the month before. Shipments slipped 1.5% in July, following a 1.0% rise in June. However, orders and shipments for this series have shown strength for several months… Year-on-year, overall new orders for durable goods in July were up 9.3%, compared to 17.1% in June. Excluding transportation, new durables orders came in at up 9.5%, compared to 16.1% the prior month… Equity futures fell on the release.”
US New Home Sales for July. Following release of the data on 8/25/2010 at 10:00 AM ET, Econoday reported, “The mid-year dip that everyone expected following the April expiration of second-round housing stimulus is proving to be very deep. Yesterday's existing home sales report came in far below expectations as did today's new home sales report… New home sales fell 12.4% in July to a record low 276,000 unit annual rate. Like the existing home sales report, declines swept all regions. Also like the existing home sales report, supply rose steeply, to 9.1 months from June's 8.0 months. Unlike yesterday's report, prices for this report show weakness. The median price is down 6.0% to $204,000 for a minus 4.8% year-on-year comparison. The median price is the lowest since 2003… Markets are showing only modest initial reaction to this report with stocks extending opening losses and Treasury yields slipping further. Today's report together with yesterday's report may begin to trigger new talk in Washington for third-round housing stimulus.”
US Jobless Claims for Week Ending Aug 21. Following release of the data on 8/26/2010 at 8:30:00 AM ET, Econoday reported, “Jobless claims swung lower in the August 21 week in what should slow the deepening pessimism. Initial claims fell 31,000 for the second biggest decline of the year. Yet the 473,000 level is still on the high side when compared to levels in July, evident in the four-week average of 486,750 which is the worst since November. The prior week was revised 4,000 higher to 504,000, also the highest level since November… On the continuing side, continuing claims fell 62,000 in data for the August 14 week. The 4.456 million level is the best of the recovery as is the four-week average of 4.509 million. The unemployment rate for insured workers fell one tenth to 3.5%. The continuing news is probably good news for the jobs outlook, suggesting that those who have been out of work are increasingly finding jobs. But some of the decline also reflects the expiration of benefits as job seekers simply fall out of the insured labor pool… Stock futures are getting a lift from this report though the outlook for the July employment report still isn't very bright. The jobs market is certain to turn up in tomorrow's comments from Ben Bernanke.”
US GDP Q2 Revised Estimate. Following release of the report on 8/27/2010 8:30:00 AM ET, Econoday reported, “The Commerce Department confirmed the claim by many economists that second quarter growth was softer than initially believed. Second quarter GDP growth was revised down to 1.6% annualized from the advance estimate of 2.4%. The new figure was higher than analysts' expectation for 1.3%… The downward revision was primarily due to a higher net export deficit and a smaller gain in inventories. Also getting downgrades were residential investment and government purchases. Partially offsetting were modest upward revisions to personal consumption and nonresidential fixed investment… Many traders are focusing on final sales. Real final sales to domestic purchasers was revised up to 4.3% from the initial estimate of 4.1% while final sales of domestic product (adds in net exports) was revised down to 1.0% from the advance figure of 1.3%… Year-on-year, real GDP is up 3.0%, compared to up 2.4% in the first quarter… On the inflation front, the GDP price index was bumped up marginally to 1.9% annualized from the initial estimate of 1.8%. The median market forecast called for a 1.8% figure for the second estimate… Even though overall economic growth slowed substantially from the first quarter's 3.7% pace, domestic demand was actually stronger-4.3% compared to 1.3% in the first quarter. Certainly, there will be some slowing in domestic demand growth in the second half but a rebound in exports could help support the overall growth rate. The bottom line is that the latest GDP revisions are more supportive of continued recovery-albeit modest-than a double dip… On the news, equity futures gained, rates firmed marginally, and the dollar index edged up.”
US Consumer Sentiment Survey for late August. Following release of the data on 8/27/2010 9:55:00 AM ET, Econoday reported, “Consumer sentiment lost steam over the last two weeks, sending Reuters/University of Michigan's index down seven tenths from the mid-month reading to a final August reading of 68.9. The implied reading for the second-half of the month is 68.2, barely ahead of July's final reading of 67.8. Weakness the last half of the month was centered in expectations, a leading component that points to trouble ahead for the main index. Consumer sentiment fell off a small cliff in July and has yet to recover, a reflection of the weak jobs market and losses in the stock market.”
Here are the key US economic reports from next week’s calendar.
US Personal Income and Outlays for July. Prior to release of the data on 8/31/2010 8:30:00 AM ET, Econoday reported, “Personal income in June was unchanged, following a 0.3% boost the month before. What the consumer really bases spending on fared even worse. The wages & salaries component slipped 0.1% after posting a healthy 0.4% advance in May. Overall personal consumption was flat, following a 0.1% rise in May. Tugged down by lower energy costs, the headline PCE price index dipped 0.1%, matching May's decrease. The core rate was flat after a 0.1% gain in May. Looking ahead, we should see improvement in July at least in wages and salaries as aggregate weekly earnings jumped 0.6%. PCEs are likely to rise as retail sales excluding autos rose 0.2% in July and unit new motor vehicle sales rebounded 3.3%. Look for a bump up in headline PCE inflation as the overall CPI gained 0.3% in July. But the core CPI rose only 0.1%.”
US Conference Board Confidence Survey for August. Prior to release of the data on 8/31/2010 10:00:00 AM ET, Econoday reported, “The Conference Board's consumer confidence index slipped to 50.4 in July from an upwardly revised 54.3 in June (initially 52.9). The latest decrease was led by a drop in expectations to 66.6 from 72.7 in June. But the present situation sub-index also declined-to 26.1 from 26.8. Looking ahead, we already have an early indication from the final August consumer sentiment index from Reuters/University of Michigan. The August sentiment reading was up only marginally at 68.9 from its July full-month reading of 67.8. The level remains quite low.”
US ISM Manufacturing Index for August. Prior to release of the data on 9/01/2010 at 10:00 AM ET, Econoday reported, “The composite index from the ISM manufacturing survey eased to 55.5 from 56.2 in June – but still reflected moderate growth in activity as the reading topped the breakeven point of 50. Production slowed nearly 4-1/2 points in July to what for now is a still very strong 57.0. Looking ahead, we may see more moderation in the composite in August as the July new orders index fell to 53.5 from 58.5 in June.”
US Construction Spending for July. Prior to release of the report on 9/01/2010 at 10:00 AM ET, Econoday reported, “Construction spending in June edged up 0.1%, following a 1.0% drop in May. The June rebound was led by a 1.5% jump in public outlays, following a 0.3% decline the prior month. In contrast, the private residential component declined 0.8% and private nonresidential outlays slipped 0.5% in June. Looking ahead, there likely will be weakness in at least the residential component of outlays as housing starts have been on a downtrend April. The May and June starts declines of 13.4% and 8.7%, respectively, should weigh on outlays despite a 1.7% uptick in starts in July.”
US Jobless Claims for Week Ending Aug 28. Prior to release of the data on 9/02/2010 at 8:30:00 AM ET, Econoday reported, “Initial jobless claims for the August 21 week fell 31,000 for the second biggest decline of the year to 473,000. The prior week was revised 4,000 higher to 504,000- the highest level since November. Continuing claims fell 62,000 in data for the August 14 week to a 4.456 million level, the best of the recovery. But much of the decline likely reflects the expiration of benefits.”
US Productivity and Costs for 2Q2010. Prior to release of the data on 9/02/2010 8:30:00 AM ET, Econoday reported, “Nonfarm business productivity for the first quarter was revised to an annualized increase of 2.8%, compared to the initial estimate of 3.6%. Growth in unit labor costs was nudged up to a 1.3% annualized decrease from the initial estimate of a 1.6% decline for the first quarter. Looking ahead, second quarter GDP is significantly slower than for the first quarter, coming in at a revised 1.6% annualized, compared to the first quarter's 3.7%. This indicates that productivity in the second quarter will likely be less robust in the second quarter while unit labor costs will be higher.”
US Factory Orders for July. Prior to release of the data on 9/02/2010 10:00:00 AM ET, Econoday reported, “Factory orders fell 1.2% in June after a 1.8% drop in May. For the latest month, the durable goods component fell 1.2% while orders for nondurable goods decreased 1.3%. More recently in the advance report, new factory orders for durable goods in July rebounded 0.3%, following a revised 0.1% decline the prior month.”
US ISM Pending Home Sales Index for August. Prior to release of the data on 9/02/2010 at 10:00 AM ET, Econoday reported, “”
US National Employment Report for August. Prior to release of the report on 9/03/2010 at 8:30 AM ET, Econoday reported, “Nonfarm payroll employment in July declined 131,000 after falling a revised 221,000 in June and after a 432,000 boost in May. Of the July government plunge, 143,000 came from a drop in Census Bureau payrolls. State government fell 10,000 while local government dropped 38,000. Private nonfarm employment, which discounts the effects of hiring and firing temporary Census workers, accelerated moderately to a 71,000 increase, following a 31,000 gain in June. Average hourly earnings improved to up 0.2%, following no change in June. The average workweek for all workers rose to 34.2 hours from 34.1 hours in June. Turning to the household survey, the unemployment rate was unchanged at 9.5% in July. More recently, despite a dip this past week, initial jobless claims in August have been running higher than during July and this implies sluggish payroll and unemployment numbers. Employment indexes for the Philly and New York Fed manufacturing surveys were mixed as Empire rose while Philly slipped from positive to negative. Analysts will be tweaking their expectations with the ISM manufacturing and ADP reports just ahead of Friday's employment situation.”
US ISM Non-Manufacturing Index for August. Prior to release of the data on 9/03/2010 at 10:00:00 AM ET, Econoday reported, “The composite index from the ISM non-manufacturing survey in July improved to 54.3 from 53.8 month before. Yet business activity, akin to a production index, edged lower to a still very strong 57.4 – well above breakeven of 50. But we could see a higher composite in August as the new orders index rose nearly 2-1/2 points to 56.7.”
International Equity Markets Review
Regardless of Friday’s trading action in US markets, the international equity markets have not confirmed any change from the primary Bear status. Stock prices were mostly down this week.
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.
FTSE 100 stockcharts.com chart
Here is the latest session data for the German DAX.
Here is the latest session data for the French CAC 40.
Here is the latest session data for the 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
ETFs Review for International equity market
Of the 16 USD-denominated country ETFs trading in NY, all of them were up on Friday as shown in the table below, but W/W there were 10 down and 6 up.
Over two weeks, 10 of the 16 were lower.
Over four weeks, 14 of the 16 were lower, with only India (IFN +4.80%) and Hong Kong (EWH +1.25%) higher over that time. Germany (EWG -5.40%) and France (EWQ -5.31%) were down the most in the past four weeks. As such these four are the ones to focus on. Will India and Hong Kong remain bullish and Germany and France bearish or will there be reversals, and which ones?
I have recommended in this space watching the Brazil ETF (EWZ), particularly for those traders involved in commodity plays. I stated,
Watch this one closely. Should commodity prices fall because the $USD starts in rally mode, I believe Brazil will not be able to hold up. Also, weak economic data in countries that Brazil sells into would also be a negative.
This week, EWZ was down -1.14% W/W. However, on Friday, the Bernanke remarks in Jackson Hole WY, while not crashing the US Dollar, did pop Crude Oil (+2.5%) and Copper (+1.8%) prices higher on the day.
As I see it though, the Bernanke speech was that Quantitative Easing was a possibility only if the US economic data got worse. That’s not to say it will happen or that the European data would not deteriorate as much or more.
So, I think we need to watch the $USD closely. On Friday, the $USD closed down only -0.02%, which is nothing. The EWZ (and the EWG for Germany as well) will also give us an indication where traders think the global economy is headed.
Table 14: International equities via an ETF perspective (in $USD)
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Japanese equity market ETF: EWJ
Here is the Japanese (EWJ) equity market ETF Monthly, Weekly and Daily data charts:
U.K. equity market ETF
Here is the United Kingdom (EWU) equity market ETF Monthly, Weekly and Daily data charts:
EWU Daily data: 
Canada’s equity market
Here is the Canadian (EWC) equity market ETF Monthly, Weekly and Daily data charts:
Taiwan’s equity market
Here is the Republic of China/Taiwan (EWT) equity market ETF Monthly, Weekly and Daily data charts:
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
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)
Group 2:
(list one)
(list two)
US Equity Markets Review
This week the US small cap index (Russell 2000 $RUT +0.98% W/W) is the only one to lift, and that was only because of an enormous +2.83% gain on Friday. The other three major US equity indexes were up either +1.65% or +1.66%, which, given they all moved precisely the same, appears to me to be a market under control by interventionists. In fact, if it were my job heading the FOMC trading desk, and I was instructed to try to get the average person believing in small caps, and they would be the ones to be goosed.
Will we ever discover the full truth of interventionist trading in our capital markets? Those people can say it’s in the national interest to hide their actions so I doubt the markets will ever be transparent. Being the cynic then, I factor this information ($RUT being up so much when traders are pulling capital out of markets) into my decisions. However, the anomaly does force me to dig deeper into the data to glean the insights that become the basis of my trading decisions.
A week ago, if you recall, there were tiny gains made in the NASDAQ and Russell 2000, but relatively bigger losses in the DJIA and S&P indexes. I opined at the time that traders were basically not ready to show their hand and were probably undecided while trying to figure out why 20-year US bonds were up a whopping +3.67% that week, and more than that through Thursday. On that Friday a week ago, bonds did sell off, but so too did commodities, precious metals, precious metal stocks, as well as the S&P and Dow 30 that day, so it was clearly no case of moving from the safety of bonds to riskier equities.
Nothing happened this week to change my mind. I look at Friday’s action like a bluff.
I think the negative US economic data is bad enough to baffle traders, leading them to believe that another round of Quantitative Easing would be likely, whereupon they would buy equities in a case of ‘don’t fight the Fed’. But the actions of the market seem to be saying, ‘show me a falling USD or else I stay on the sidelines’.
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. Put them in a watchlist (see Google Finance Portfolio) and watch them like a hawk:
AAPL MSFT GOOG QCOM RIMM CSCO INTC ORCL GILD EBAY
Daily RSI-7 for the Nasdaq 100 Big-10
Weekly RSI-7 for the Nasdaq 100 Big-10
Monthly RSI-7 for the Nasdaq 100 Big-10
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.
Here is the Weekly data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.
Here is the Daily data chart of the Interactive Chart of Nasdaq Composite, S&P 500, Dow30, and Russell 2000 (small cap) indexes.
Dow 30 Stocks Review
This week, 17 of the 30 Dow stocks closed lower. Things are improving for the Bulls. A week ago, 23 of the 30 Dow stocks closed lower, and the week before that 26 of the 30 closed lower.
But a week ago I wrote in this space, “Rring the bell Abel and Mabel. When was the last time we saw Cisco (CSCO +4.07% W/W) top the Dow 30 leaderboard? Didn’t I recently write something abut Cisco as in it’s a good buy down at these levels.”
The Bulls must be crushed. From 1st to last in the Dow 30. This week CSCO dropped -6.39%, and I saw no indication, at any point, that traders were becoming investors with a longer-term time horizon. No, the fact is that traders are still apprehensive.
This week, the winners were Kraft Foods (KFT +3.09% W/W), which is not an inspirational story if you happen to be a Bull. In 2nd place was Home Depot (HD +2.02%), which is a follow up on the previous week’s gain of +3.15%. In 3rd place was AT&T (T +1.85%), which along with Verizon (VZ) in 6th place and the KFT in 1st, shows traders were nibbling at high dividend payers.
The leading losers (in addition to CSCO) were: Hewlett-Packard (PQ -4.34%), Caterpillar (CAT -4.30%), Intel (INTC -2.86%) and Alcoa (AA -2.37%).
As I continue to say; at the end of the day, we need to see more volume to have much appreciation for what’s truly happening.
Table 16: Dow 30 List
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Here are the links to interactive Dow charts from Investertech.com that I broke into groups of ten, which you can add technical indicators for as well.
(list one)
(list two)
For those of you who are relatively new at trading, or to this blog, why not pull the ten (10) Cara 100 companies out of the DJIA 30 list, and study the links for just these stocks? Keep a hard copy of the Value Line quarterly report plus a record of the Daily-Weekly-Monthly RSI-7 technical indicator. Study up on what the RSI is so you know it and have confidence that it is just like a football game yardstick that shows you how much risk your team is facing when trying to score points.
The Cara 100 high-quality company list has the following ten DJIA components:
Wal-Mart (WMT), Disney (DIS), Johnson & Johnson (JNJ), McDonalds (MCD), Exxon (XOM), Boeing (BA), Procter & Gamble (PG), IBM (IBM), Intel (INTC), and United Technologies (UTX)
There is no rocket science to these high-quality companies. In your typical week, you shopped at Wal-Mart and along the aisles, mostly the personal consumer products were from Procter & Gamble, except for maybe the baby powder from Johnson & Johnson. On the way there, you may have filled-up at an Exxon gas station, and on the way home, maybe you stopped for a Big Mac or a salad at McDonalds. Overhead, you watched airplanes from Boeing. If you were in a high-rise building, you probably rode in an Otis elevator from United Technologies. Maybe you no longer have an IBM PC, but you do know the company, and your present PC is likely powered by Intel. Every parent's kids want you to take them to Disney… All in all, this is just life we're talking about here. If you are alive, you know these companies like your children. You probably even see more of them… So, just quickly read those Value Line reports – one per company every 13 weeks – and keep an eye on the RSI (momentum) and MACD (trend)… Those guys on Wall Street may be worth a gazillion dollars, but they didn't do it the way you and I have to do it. So, stop listening to their stories that financial engineering and out-sourcing is what's making America strong. That is such a crock. Instead, live life, use common sense, do only what you understand, feel comfortable, and you'll be surprised at how quickly you can take control and free yourself of the shackles of HB&B.
This paragraph continues to run because, over time, it works.
Value Line Report(s) this past Friday
This week [cycle 9, 22, 35 and 48], Value Line reported on one DJIA component: Johnson & Johnson (JNJ), which is a component of the Cara 100. JNJ, by the way, was one of two stocks that lost ground on Friday (along with HPQ).
Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Google Finance file)
(JNJ: Yahoo Finance file)
(JNJ: StockChart chart)
(JNJ: Billcara2 chart)
(JNJ: ADVFN Financial Data)
(JNJ: Value Line Report Aug 27: next one is due Nov 26)
Here is what I have written about Johnson & Johnson in recent WIR’s:
Here is the blog entry about JNJ for WIR#35-2009 (Aug. 30, 2009):
The share price has lifted from $55.16 at the end of May to a close on 8/28 of $60.29. There were recent highs on July 30 at $62.47 and this week on Aug 25 at $61.49. About $60.00 has been the low going back about six weeks.
This stock has been the model of consistency, but, September is when volatility picks up. That’s when things get interesting, I think. If you ever do see a Weekly and Daily RSI drop below 30 into the Accumulation Zone, and if the broad market is not plunging at the time, I believe JNJ is one of those outstanding opportunities to add to your portfolio. In fact if you have just ten stocks in your portfolio, and they are conservative ones that you buy at attractive prices, JNJ maybe should be one. Then just read the research like Value Line and keep your eye on prices. If prices are up in the Distribution Zone but say only for the Monthly as well as the Weekly and Daily, I’d sell half and write covered calls on the other half, which is how a long-term oriented trader ought to invest. Similarly, in the Accumulation Zone, I’d follow a strategy of buying a half position and write puts at low prices that might get you filled on the other half plus some. If you get filled on them all, you will have a very attractive cost base, and you can later decide to sell some the next time the Daily gets up into the distribution Zone.
What you are doing is sticking to the shares of quality companies and actively managing your portfolio. You don’t have to feel compelled to trading a position every two weeks like I have been.
Here is the blog entry about JNJ for WIR#48-2009 (Nov. 27, 2009):
In the past 52 weeks, JNJ ($62.89) has lifted just +7.37% from $58.58. Along with the $1.80 dividend, the Total Return was 10.57%.
To follow up the recommendation of WIR #35, had you written the 60 and 55 puts for a total $1.55, you would have had the 60’s exercised for a net cost of $58.45. The low since my recommendation was $58.78, so you beat the low. The high since then has been $63.44 on Nov. 25 (the day before Thanksgiving, with a Daily RSI-7 above 80), which is a theoretical gain of $4.99. You would have picked up the dividend of $0.49 on Nov. 20 as well for a total return, over a couple months, of $5.48 (+9.38%) had you sold at the high, which based on the extreme RSI-7 that day you might have done.
My point is not to be ridiculous (with hypotheticals) but merely to show how the written recommendation could have worked out. In any case, you would be a winner, and let’s leave it at that. My purpose in writing this blog is not to give trade recommendations but only to teach you how I think when I am trading and what I know works – at least over the long run. In the short run, all of us are fooled. We also make mistakes. Nobody is perfect, including the finest neurosurgeon or rocket scientist. That shouldn’t stop us from learning and trying our best.
Back at Aug. 28, the charts show the RSI-7 numbers were as follows: Monthly 55.0 and dropping; Weekly 63.8 and dropping, and Daily 42.3 and dropping. So, apart from the put writes for options traders, I opined that “momentum is dropping, and purchases are not advised at this time”. Given that the stock was trading as low as $58.80 as recently as Nov. 3, and traded a lot under 60 through the week ending Nov. 6, I think my advice ex-options was also good. The risks in the equity market in the past 13 weeks (quarter) have been very high, and although JNJ is known as a “defensive” issue, I still believe that avoiding it would have been the right thing to do.
Do I think that today? Today the RSI-7 numbers are as follows: Monthly 61.3 and rising; Weekly 69.2 and looking toppy, and Daily 68.0 and also looking toppy. On the basis of my quick interpretation of the charts, I would avoid it. I would not have gone into Thanksgiving holding equities with RSIs in the 80’s.
Now, after Friday, the Daily and Weekly RSI-7 have fallen below 70 on the BillCara2.com system, but are slightly higher on the korvus system, which is also posted on the blog. I have asked for a reconciliation.
I have also warned that the RSI-7 system has not been working effectively for almost five months because of what I see as undue pressure from Interventionists as soon as these Sell signals are given. Not only does the Fed Sovereign Wealth Fund have a couple trillion to trade, they are also smart people. They track the conventional wisdom and tear it down in their effort to have markets go their way. At the end of the day, every day it seems, we feel like we’ve been at war with our own people – the Fed – and we probably have.
So, take it with a grain of salt that over the past seven trading sessions the Cara system has produced 21 Sell signals by my quick count. Having 21 out of 100 is a lot. But we had the same situation occur in July and then the market took off like a shot to much higher levels, so be careful.
As to the corporate metrics, if these things matter any more, please note that over the past five years, earnings per share have increased roughly 20% and the number of shares has fallen almost ten percent, so absolute earnings have not been growing quickly. The Value Line table shows the annual earnings growth rate as +13.0%, but their own earnings per share annual line item data does not reflect that, and as I point out the number of shares has fallen from 2.971 billion in 2004 to about 2.740 bn this year.
The Value Line five-year forward earnings estimates are for a growth rate of 7.5%, which is just over half as much as for the past ten and five year periods. Clearly, this mega-liner ($172 bn market cap) is slowing. But the profit margin and return on equity metrics are still superior, and with the solid free cash flow being generated, the current ratio has really improved in recent years, justifying the company’s A++ financial strength and “1” safety ratings from Value Line.
The VL analyst David Cohen points out that cash is being used for acquisitions, and also to support the management plan for head-count reductions. He also says the product pipeline is growing. His report is a good one to read.
If you place a 13.5 to 14 multiple on his projected $4.95 earnings for 2010, the price target would be 67-69. Let’s call it 68. With a projected forward dividend of $2.05, I’d have to buy the stock at $56 to make a Total Return of a targeted +26% over the next year or else I am not interested. The last time JNJ traded at that 56 level was back at the end of June and first week of July this year, just before the broad market soared.
Could we see JNJ at 56? Today the price is $62.89, so a drop of -11% would be needed, which given the need for these booming markets to correct, I think it’s possible. If it happens (the big if!), I’ll be a buyer because I think that would be a fairly low-risk trade with a fairly good prospect of satisfactory return on invested capital.
Here is the blog entry for WIR#9-2010 (Feb. 28, 2010):
Value Line has in the past quarter made important upward revisions to JNJ’s forecasted per share sales, cash flow, earnings, dividends, and book value. Also revised higher were Annual PE Ratio, Annual Dividend Yield, Operating and Net Margins, and Shareholder Equity.
As a result, the Technical Timeliness (short-term 3- to 6-month) ranking was moved on Feb 12 up to a ‘2’ from a ‘3’, which puts JNJ into the top 400 out of 1700 in the survey vs the top 1300, although the more important 1-year Timeliness ranking remained at ‘3’.
http://www.valueline.com/sup_faqs_rc_vlis.html
However, the stock over the past 13 weeks has increased just 11 cents from $62.89 to $63.00.
One of the factors the VL analyst liked was the company’s acquisitions program is bolstering the growth prospects. He concluded the stock over the next 3- to 5- years ought to be appealing to conservative investors, and I agree with that.
Other analysts like the stock as well. The consensus is a rating of 2.1 on a scale of 1 (best) to 5 (worst). Zacks says the Average Broker Ranking is a very low 1.78. They have it ranked a ‘3’ (average) and a Recommendation as Neutral. Zacks also currently rates the drug manufacturers the 214th out of 217 industry groups. They rate Novo-Nordisk (NVO) a ‘4’ and Glaxosmithkline a ‘5’.
I too made several changes in the Cara 100 Sector 35 healthcare group, dropping Glaxo (GSK), Bristol Myers (BMY), and Myriad (MYGN) and adding Celgene (CELG), CR Bard (BCR), Merck (MRK) and Pfizer (PFE). Merck and Pfizer were there in past years, but got dropped for several years when they ran into regulatory and litigation issues. At this point, however, I think they are in pretty good shape and, like the others on our Sector 35 list, including JNJ, we want to trade them.
The Monthly-Weekly-Daily RSI-7 for JNJ for WIR 49 (Nov 29, 2009) was 61.3/69.2/68.0. Now at Feb 28, it is 58.8/48.2/40.7. So you can see that price momentum is slowing, which often leads to a price break-down. Hence, my summary of 13 weeks ago still applies:
If you place a 13.5 to 14 multiple on his projected $4.95 earnings for 2010, the price target would be 67-69. Let’s call it 68. With a projected forward dividend of $2.05, I’d have to buy the stock at $56 to make a Total Return of a targeted +26% over the next year or else I am not interested. The last time JNJ traded at that 56 level was back at the end of June and first week of July this year, just before the broad market soared… Could we see JNJ at 56? Today the price is $62.89, so a drop of -11% would be needed, which given the need for these booming markets to correct, I think it’s possible. If it happens (the big if!), I’ll be a buyer because I think that would be a fairly low-risk trade with a fairly good prospect of satisfactory return on invested capital
The low on the stock this quarter was just $61.89 (Feb 5) so $56 is a bit of a stretch, but I’m patient. Earnings for 2010 are now projected at $5.00, so, with a 13.5 to 14 multiple, the price target would be 67.50-70. Let’s call it 69. Since I bumped my dividend projection to $2.08, which is a tad higher than VL, and I have a higher TP, and since VL has upped the Technical Ranking to a ‘2’, I’m going to raise my desired acquisition price to 58, which from the following chart you can see is the technical support level that held on numerous occasions after the rally last July.
Today the price is $63.00, so a drop of -8% would be needed, which given the potential for these booming markets to correct, I think is possible.
I have noticed that volume has fallen right off in February and that on the highest volume days this month the price dropped, not a good sign for the Bulls. So, yes, I will wait.
Here is the blog entry for WIR#22-2010 (May 30, 2010):
Well, well, I like it when prices come to me. The low this month (and quarter) was $58.19, and the close this week was $58.30.
That’s pretty darn close to my target Buy at $56.00, which you know would be helped along with a put write. Given that the July 57.50 puts were trading Friday at $1.59 ($1.54-$1.61 bid-offer at the close), If exercised between now and July 16, your cost is $55.91. Or you could buy the stock now at $58.30 and write three July 55 puts at $0.88 to get your cost to $56 with an obligation to buy three times as many shares at $55, if exercised, taking your cost to $55.83.
The point is we’re in at under $56 and that was my long time target price for the Buy.
The following chart shows you the importance of patience. It also highlights the relevance of the RSI-7.
Bingo; the Daily data RSI-7 is now at 12.97. The Weekly RSI-7 is at 20.18. The Monthly is still at 42.74, indicating some possible downside later this year. But if you buy the stock now with the Daily and Weekly RSI so low, you’ll be able to sell half when those RSI-7’s peak above 70 and use the gain to lower your cost base.
Now in fishing terms, I’m not telling you to go catch a mahi-mahi, snapper, grouper or whatever; but only how to fish. You need to get to a point where these steps are automatic. Then when the opportunity presents itself, you just do it. In virtually 100% of cases, the fisherman in the next boat will land a better catch; however, over the years you will come home a winner.
To study these companies; after re-reading my previous notes along with the recent Value Line studies, I review the technical indicators on the charts.
As for Johnson & Johnson, the stock is down -9.9% YTD. It was down -9.3% in May. So, short-term traders and value-oriented investors are having a sniff at this point.
The Value Line shows that the corporate balance sheet strength has gone from really strong to even stronger. Also, the revenue and income by segment is extremely well diversified by product group and between US and non-US operations. There is nothing in the VL analyst’s report for JNJ that raises a concern for me. Technical timing (up to 6 months) was lowered on March 5 this year from a good ‘2’ to an average ‘3’. Well, the stock has dipped ~-9% from ~$64 on that date to its present level of $58. Just based on that price pullback, I’d raise the ‘Technical’ rating to a ‘2’.
In any case, I think at a $56 entry cost, you can look forward to a good total return over the next five years. The dividend alone is going to be $2.14 this year; ~$2.30 in 2011, and growing about +8% annually. If your cost base is $56, the dividend yield for 2010 would be a rather solid +3.82%, and for 2011, the $2.30 dividend would yield +4.11%, and growing with each successive increase in dividends.
This is what conservative investing is all about.
Here is the blog entry for WIR#35-2010 (Aug 29, 2010):
Nine months ago, I wrote in the WIR:
If you place a 13.5 to 14 multiple on his projected $4.95 earnings for 2010, the price target would be 67-69. Let’s call it 68. With a projected forward dividend of $2.05, I’d have to buy the stock at $56 to make a Total Return of a targeted +26% over the next year or else I am not interested. The last time JNJ traded at that 56 level was back at the end of June and first week of July this year, just before the broad market soared… Could we see JNJ at 56? Today the price is $62.89, so a drop of -11% would be needed, which given the need for these booming markets to correct, I think it’s possible. If it happens (the big if!), I’ll be a buyer because I think that would be a fairly low-risk trade with a fairly good prospect of satisfactory return on invested capital.
The price then dropped quite a bit and so I wrote in this space three months ago:
Well, well, I like it when prices come to me. The low this month (and quarter) was $58.19, and the close this week was $58.30… That’s pretty darn close to my target Buy at $56.00, which you know would be helped along with a put write. Given that the July 57.50 puts were trading Friday at $1.59 ($1.54-$1.61 bid-offer at the close), If exercised between now and July 16, your cost is $55.91.
This Friday, JNJ closed at $57.60 after paying a dividend of $0.54. The low on the day was $56.99, close to the low for several months at $56.86 on July 22, which happened to be the 52-week low and the low back to 2Q2009.
So as a long run entry point, JNJ at $56 is still the number. Today you can write Jan 2011 55 puts for $2.13, taking your cost base to under $53.
If 2011 earnings are $5.10/share as projected by Value Line, and dividends are $2.11/share in the next year, your $53 entry price would be a PE of just 10.4 and a dividend yield of 4.0%. Given that the average projected PE is 16.0 and yield is 2.6%, I think this is an excellent opportunity to make the trade. Even if you don’t write the Jan 55 puts, which might not in fact be exercised, you could buy the stock, if not now then later on market weakness.
I’m trying to help conservative investors build a sound portfolio here. Nothing more. By following my quarterly notes on these Dow 30 stocks you’ll see how I can help you do that. These notes (in this section) are not about short-term trading.
To study these Dow 30 companies; after re-reading my previous notes along with the recent Value Line studies, I review the technical indicators on the charts.
http://billcara2.com/tkchart/tkchart.asp?stkname=JNJ&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=JNJ&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=JNJ&ind=rsi&wt=0
If you do find say ten quality companies to follow, you’d add information from several other research sources, most of which comes free on the internet, and some of which is good.
This report from Value Line shows that per share revenues, cash flow, earnings, dividends, working capital, operating and net profit margins, and book value are all consistently rising. The VL analyst also points out that foreign sales as a percentage of total sales, currently about 50%, are rising, and I think it’s plausible that Johnson & Johnson produces the type of products that may be staples in advanced economies they are now becoming less discretionary in the emerging economies as the middle class is growing.
So, what’s not to like?
Somehow, traders in recent years have gone off the tracks with their obsession on day trading via technical indicators. As the average trader loses to the sharpies that largely control the market, the small traders have withdrawn capital and volume has fallen a lot. I think that will likely change after a major sell-off in prices and the fundamental values of high quality stocks like JNJ just can no longer be ignored. I think traders will start buying the shares, employing their capital in the market again, and Wall Street fundamental analysts will come back in style. This rationale is why I never once considered dropping this section from the WIR.
Trust me on this; I may be trading daily, sometimes hourly, but I don’t like doing it. It’s awfully difficult – even for a Trader Wizard – to compete with billion dollar investments in technology that is ripping capital markets apart and causing so many others to leave. If the lawmakers would sit back and open their eyes to what’s been happening here for years they’d investigate.
When your money is on the line and you are being played this way and that way by the media (CNBC, Bloomberg, etc), it’s awfully hard to remain unemotional. Something needs to be done to counter the hype and noise in the market, and the lawmakers have the power to do that. So far, I’m not confident they will. Everything I read seems directed at the symptoms and not the causes.
I’m not going to write more about JNJ here. You know I like it. I also like CSCO, INTC, BA and others for the reasons I have given over time here.
The Dow 30 Company links in chronological order of the upcoming reports.
McDonalds [GICS 30, Dow 30, Cara 100]
(MCD: Google Finance file)
(MCD: Yahoo Finance file)
(MCD: StockChart chart)
(MCD: Billcara2 chart)
(MCD: ADVFN Financial Data)
(MCD: Value Line Report Jun. 4: next one is due Sept. 3)
Chevron Corp [GICS 10, Dow 30]
(CVX: Google Finance file)
(CVX: Yahoo Finance file)
(CVX: StockChart chart)
(CVX: Billcara2 chart)
(CVX: ADVFN Financial Data)
(CVX: Value Line Report Jun. 11: next one is due Sept. 10)
ExxonMobil [GICS 10, Dow 30, Cara 100]
(XOM: Google Finance file)
(XOM: Yahoo Finance file)
(XOM: StockChart chart)
(XOM: Billcara2 chart)
(XOM: ADVFN Financial Data)
(XOM: Value Line Report Jun. 11: next one is due Sept. 10)
Boeing Co [GICS 20, Dow 30. Cara 100]
(BA: Google Finance file)
(BA: Yahoo Finance file)
(BA: StockChart chart)
(BA: Billcara2 chart)
(BA: ADVFN Financial Data)
(BA: Value Line Report Jun. 18: next one is due Sep. 17)
Travelers Co [GICS 40, Dow 30]
(TRV: Google Finance file)
(TRV: Yahoo Finance file)
(TRV: StockChart chart)
(TRV: Billcara2 chart)
(TRV: ADVFN Financial Data)
(TRV: Value Line Report Jun. 18: next one is due Sep. 17)
AT&T [GICS 50, Dow 30]
(T: Google Finance file)
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Billcara2 chart)
(T: ADVFN Financial Data)
(T: Value Line Report Jun. 25: next one is due Sep. 24)
Verizon [GICS 50, Dow 30]
(VZ: Google Finance file)
(VZ: Yahoo Finance file)
(VZ: StockChart chart)
(VZ: Billcara2 chart)
(VZ: ADVFN Financial Data)
(VZ: Value Line Report Jun. 25: next one is due Sep. 24)
Cisco Systems [GICS 45, Dow 30, Cara 100]
(CSCO: Google Finance file)
(CSCO: Yahoo Finance file)
(CSCO: StockChart chart)
(CSCO: Billcara2 chart)
(CSCO: ADVFN Financial Data)
(CSCO: Value Line Report Jun. 25: next one is due Sep. 24)
Procter & Gamble Co. [GICS 30, Dow 30, Cara 100]
(PG: Google Finance file)
(PG: Yahoo Finance file)
(PG: StockChart chart)
(PG: Billcara2 chart)
(PG: ADVFN Financial Data)
(PG: Value Line Report Jul. 2: next one is due Oct. 1)
Home Depot [GICS 25, Dow 30]
(HD: Google Finance file)
(HD: Yahoo Finance file)
(HD: StockChart chart)
(HD: Billcara2 chart)
(HD: ADVFN Financial Data)
(HD: Value Line Report Jul. 2: next one is due Oct. 1)
Hewlett-Packard [GICS 45, Dow 30]
(HPQ: Google Finance file)
(HPQ: Yahoo Finance file)
(HPQ: StockChart chart)
(HPQ: Billcara2 chart)
(HPQ: ADVFN Financial Data)
(HPQ: Value Line Report Jul. 9: next one is due Oct. 8)
IBM [GICS 45, Dow 30, Cara 100]
(IBM: Google Finance file)
(IBM: Yahoo Finance file)
(IBM: StockChart chart)
(IBM: Billcara2 chart)
(IBM: ADVFN Financial Data)
(IBM: Value Line Report Jul. 9: next one is due Oct. 8)
Intel [GICS 45, Dow 30, Cara 100]
(INTC: Google Finance file)
(INTC: Yahoo Finance file)
(INTC: StockChart chart)
(INTC: Billcara2 chart)
(INTC: ADVFN Financial Data)
(INTC: Value Line Report Jul. 9: next one is due Oct. 8)
Alcoa [GICS 15, Dow 30]
(AA: Google Finance file)
(AA: Yahoo Finance file)
(AA: StockChart chart)
(AA: Billcara2 chart)
(AA: ADVFN Financial Data)
(AA: Value Line Report Jul. 16: next one is due Oct. 15)
Dupont [GICS 15, Dow 30]
(DD: Google Finance file)
(DD: Yahoo Finance file)
(DD: StockChart chart)
(DD: Billcara2 chart)
(DD: ADVFN Financial Data)
(DD: Value Line Report Jul. 16: next one is due Oct. 15)
Merck [GICS 35, Dow 30]
(MRK: Google Finance file)
(MRK: Yahoo Finance file)
(MRK: StockChart chart)
(MRK: Billcara2 chart)
(MRK: ADVFN Financial Data)
(MRK: Value Line Report Jul. 16: next one is due Oct. 15)
Pfizer [GICS 35, Dow 30]
(PFE: Google Finance file)
(PFE: Yahoo Finance file)
(PFE: StockChart chart)
(PFE: Billcara2 chart)
(PFE: ADVFN Financial Data)
(PFE: Value Line Report Jul. 16: next one is due Oct. 15)
General Electric [GICS 20, Dow 30, ex-Cara 100]
(GE: Google Finance file)
(GE: Yahoo Finance file)
(GE: StockChart chart)
(GE: Billcara2 chart)
(GE: ADVFN Financial Data)
(GE: Value Line Report Jul. 23: next one is due Oct. 22)
United Technologies [GICS 20, Dow 30, Cara 100]
(UTX: Google Finance file)
(UTX: Yahoo Finance file)
(UTX: StockChart chart)
(UTX: Billcara2 chart)
(UTX: ADVFN Financial Data)
(UTX: Value Line Report Jul. 23: next one is due Oct. 22)
Caterpillar [GICS 20, Dow 30]
(CAT: Google Finance file)
(CAT: Yahoo Finance file)
(CAT: StockChart chart)
(CAT: Billcara2 chart)
(CAT: ADVFN Financial Data)
(CAT: Value Line Report Jul. 23: next one is due Oct. 22)
Coca Cola [GICS 30, Dow 30, Cara 100]
(KO: Google Finance file)
(KO: Yahoo Finance file)
(KO: StockChart chart)
(KO: Billcara2 chart)
(KO: ADVFN Financial Data)
(KO: Value Line Report Jul 30: next one is due Oct 29)
Kraft Foods [GICS 30, Dow 30]
(KFT: Google Finance file)
(KFT: Yahoo Finance file)
(KFT: StockChart chart)
(KFT: Billcara2 chart)
(KFT: ADVFN Financial Data)
(KFT: Value Line Report Jul 30: next one is due Oct 29)
Wal-Mart [GICS 30, Dow 30, Cara 100]
(WMT: Google Finance file)
(WMT: Yahoo Finance file)
(WMT: StockChart chart)
(WMT: Billcara2 chart)
(WMT: ADVFN Financial Data)
(WMT: Value Line Report Aug 6: next one is due Nov 5)
Disney [GICS 25, Dow 30, Cara 100]
(DIS: Google Finance file)
(DIS: Yahoo Finance file)
(DIS: StockChart chart)
(DIS: Billcara2 chart)
(DIS: ADVFN Financial Data)
(DIS: Value Line Report Aug 13: next one is due Nov 12)
3M Company [GICS 20, Dow 30, Cara US 100 June 25-06]
(MMM: Google Finance file)
(MMM: Yahoo Finance file)
(MMM: StockChart chart)
(MMM: Billcara2 chart)
(MMM: ADVFN Financial Data)
(MMM: Value Line Report Aug 13: next one is due Nov 12)
American Express [GICS 40, Dow 30]
(AXP: Google Finance file)
(AXP: Yahoo Finance file)
(AXP: StockChart chart)
(AXP: Billcara2 chart)
(AXP: ADVFN Financial Data)
(AXP: Value Line Report Aug. 20: next one is due Nov. 19)
Bank of America [GICS 40, Dow 30]
(BAC: Google Finance file)
(BAC: Yahoo Finance file)
(BAC: StockChart chart)
(BAC: Billcara2 chart)
(BAC: ADVFN Financial Data)
(BAC: Value Line Report Aug. 20: next one is due Nov. 19)
JP Morgan [GICS 40, Dow 30]
(JPM: Google Finance file)
(JPM: Yahoo Finance file)
(JPM: StockChart chart)
(JPM: Billcara2 chart)
(JPM: ADVFN Financial Data)
(JPM: Value Line Report Aug. 20: next one is due Nov. 19)
Microsoft [GICS 45, Dow 30]
(MSFT: Google Finance file)
(MSFT: Yahoo Finance file)
(MSFT: StockChart chart)
(MSFT: Billcara2 chart)
(MSFT: ADVFN Financial Data)
(MSFT: Value Line Report Aug. 20: next one is due Nov. 19)
Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Google Finance file)
(JNJ: Yahoo Finance file)
(JNJ: StockChart chart)
(JNJ: Billcara2 chart)
(JNJ: ADVFN Financial Data)
(JNJ: Value Line Report Aug 27: next one is due Nov 26)
Sector ETF Summary for the US equity market
The tables I show are for eleven GICS Sector Index Funds (ETF’s), including two for Technology (XLK and SMH), for a total of ten GICS sectors. They cover the full spectrum of the US equity market.
This week, thanks to Friday’s winning day where all 10 sectors lifted a lot, there were two sectors that actually had gains W/W. The rest of the week therefore was a disaster for the Bulls.
But, it’s still summer vacation for many people. Trading volume is still down.
We are all waiting for something to break, and we are not at all certain it happened on Friday.
Table 1: Cara ETF List is sorted by price performance Week over Week (W/W), i.e. 1W%N.
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
You can do this table yourself by entering the following string into the Summary window at Investertech.com and then clicking on the link for Performance.
SPY XLE XLB XLI XLY XLP IYH XLF XLK SMH IYZ XLU .
You can also add more 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.
You can use this tool to set up watchlist charts by industry group and sub-groups.
Here’s the SPY Monthly, Weekly and Daily data charts:
SPY Monthly data: 
SPY Weekly data: 
SPY Daily data: 
10 (energy: XLE) 
15 (basic materials: XLB) 
20 (industrial: XLI) 
25 (consumer discretionary: XLY) 
30 (consumer staples: XLP) 
35 (healthcare: IYH) 
40 (financial: XLF) 
45 (technology, semiconductor: SMH) 
50 (telecom: IYZ) 
55 (utilities: XLU) 
Individual Sector ETF Review
Sector 10 (energy: XLE, IYE, VDE, OIH, PBW and IXC)
Here’s the XLE Monthly, Weekly and Daily data charts:
XLE Monthly data: 
XLE Weekly data: 
XLE Daily data:
Table 2: Senior oil & gas equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Crude Oil ($WTIC +$1.35/bbl +1.83% W/W) closed higher at $75.17/bbl. A week ago there was a loss of -$1.78/bbl.
The Oiler stocks ETF (XLE -0.17% W/W) was 4th best sector performer, losing just 9 cents, closing at 52.10. A week earlier, the loss was -2.17% and the week before that the loss was -4.12%.
Do the Bulls have something to grasp onto here or is this still much ado about nothing, where the Friday lift of +2.60% for XLE can be ignored? After all, the Crude Oil price gained more on Friday (+2.47%) than W/W, which was just +1.83%.
Again, I wouldn’t read too much into this, and so I’m not going to spend much time discussing probabilities since, with volumes down so much, all we have are possibilities.
Oil & Gas Exploration & Production -Canada
Sector 15 (basic materials: IYM, XLB, IGE and VAW)
Here’s the XLB Monthly, Weekly and Daily data charts:
XLB Monthly data:
XLB Weekly data:
Table 3: Senior Basic Materials:
XLB Daily data:
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The Basic Materials (XLB) sector ETF was up +2.99% on Friday, but down -035% this week, closing at 31.38, a loss of 11 cents.
A week ago here I wrote, ‘Is the economy slowing or weakening? If it’s slowing, as I believe, then Basic Materials ought not be lifting…’
As I say; it’s summer and don’t take it too seriously. But summer’s almost over, so do keep your eyes open.
There were some big moves here on Friday. Maybe some shorts got squeezed.
I’m not going to think much of it.
Sector 20 (industrial: IYJ, XLI, VIS, and IYT)
Here’s the XLI Monthly, Weekly and Daily data charts:
XLI Monthly data: 
XLI Weekly data: 
XLI Daily data:
Table 4: Senior capital goods makers and transportation:
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The Industrials ETF (XLI) lost -1.47% this week, which was double the loss of a week ago, to close at 28.74.
ABB (ABB +0.7%) gained a bit, but the rest were hit pretty good this week. This was the worst performing sector. When the big American industrial corporations are having share prices cut back, the Bulls cannot be too happy.
Caterpillar (CAT -4.30 to $65.90) was awful despite a gain of +3.1% on Friday.
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
Sector 25 (consumer discretionary: XLY, IYC and VCR)
Here’s the XLY Monthly, Weekly and Daily data charts:
XLY Monthly data: 
XLY Weekly data: 
XLY Daily data:
Table 5: Senior consumer discretionary equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Consumer Discretionary (XLY -0.65% W/W) closed lower at 30.69 and all of them seemed to be weak, although the ones with the heavy short interest were down most despite a squeeze on Friday.
Brunswick Corp (BC) for instance had a pop of +3.3% on Friday, but still ended the week down -9.6%.
Sector 30 (consumer staples: XLP, VDC, RTH and IYK)
Here's the XLP Monthly, Weekly and Daily data charts:
XLP Monthly data: 
XLP Weekly data: 
XLP Daily data:
Table 6: Senior consumer staples equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Consumer Staples (XLP) lost -0.15% W/W to close at $26.69, which was a very small loss of 4 cents. XLP was 3rd best sector, behind leader XLU (utilities) and then IYZ (telecom), which happen to be the three highest dividend yielding sectors. But they were still down on the week, which is a strong point in favor of my conclusion that traders still have not made a decision, bullish or bearish.
Dog days; let’s not think more than it is.
Sector 35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)
Here’s the IYH Monthly, Weekly and Daily data charts:
IYH Monthly data: 
IYH Weekly data: 
IYH Daily data:
Table 7: Senior healthcare equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The healthcare sector (IYH -0.51% W/W to 58.99) was a middle of the pack runner this week, up from 3rd worst performer a week ago.
There was some discussion about Celgene (CELG -3.4%) and Medtronics (MDT -6.5%), but not enough to cause me to look further.
Sector 40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)
Here’s the XLF Monthly, Weekly and Daily data charts:
XLF Monthly data: 
XLF Weekly data: 
XLF Daily data:
Table 8: Senior financial company equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The Financials (XLF -0.72%) closed at $13.73, losing just a dime, but 3rd worst sector performer. That’s not likely to be the case if a new Bull phase is coming into markets. But the +2.16% gain on Friday, 3rd best after Basic Materials (XLB) and Energy (XLE) was possibly impressive to the perma-bulls.
I don’t think the Bulls cared too much about this week’s big winners though: Scotiabank (BNS +1.9% W/W because of Friday’s +3.3% gain); UBS (UBS +1.7% W/W because of Friday’s gain of +2.1%); and TD Bank (TD +1.2% W/W because of Friday’s gain of +4.4%) were uninspiring. Goldman Sachs (GS) on the other hand lost a whopping -5.73% W/W including a big loss of -1.45% on Friday.
If you truly believe that this week brought in a new Bull phase, then you never heard of GS.
A week ago I concluded this section with the remark: “I’m watching Goldman Sachs (GS), as one of my tells, but I don’t see any real developments happening there, yet.”
Maybe the loss is actually pointing the market south. Cisco (CSCO -6.4% W/W with only a small gain of +0.5% on Friday) is another tell. Despite Friday, the short-run thinking Bulls cannot be exhilarated.
Daily charts of electronic brokers and exchanges
Weekly charts of electronic brokers and exchanges
Sector 45 (technology: IGM, IGV, IGW, XLK, VGT, IYW, IGN, IXN, MTK and SMH)
A week ago the Tech groups were mostly winners. “Dead cat bounce?” I remarked.
This week there were problems in the Tech sector ETF (XLK -1.45% W/W to close at 21.04) and the Semiconductors ETF was crunched (SMH -2.58% W/W despite a +1.44% gain on Friday, to close at 25.31). A week ago these ETF’s gained, but I said, “(They) reversed a dreadful week. But was the reversal enough?” Apparently not.
Cisco (CSCO -6.4% W/W with only a small gain of +0.5% on Friday) is a tell, and the Bulls don’t like listening.
People are asking me what I think of Research In Motion (RIMM -5.6% W/W including a loss of -1.8% on Friday). I think the stock represents good value here. Near the end of April, there was a large Wall Street push on Motorola (MOT) and the Droid phones, and then Apple (AAPL) introduced a new and exciting product line. Following that several countries in the Middle East and East Asia regions that have serious political issues from insurgents have demanded that RIM turn over codes to crack the privacy of BlackBerry products, and that shot the stock down even more.
These issues are resolvable. The user-to-user privacy is a feature of RIM, but nobody apparently is prevented from using very powerful encryption technology with programmed mobile devices. This is an internet issue. It’s just a problem largely for RIM because the BB is an easy to purchase off-the-shelf product that works everywhere. In time, there will be rules affecting all telecom device manufacturers equally.
The Droid phone issue is mostly marketing, and RIM can effectively fight that battle.
The war could still be lost, I think, if RIM fails to deliver a big screen product w/voice, something like the iPad from Apple. I’d switch in a heartbeat. The tens of thousands of Apple applications (or whatever) are never going to be used by me. RIM can deliver everything I need in a personal communications device, at an affordable price. The only question remains is will they before I too move to Apple. Right now I’m in both camps, but not for long. It’s now or never for RIM.
I think RIM will do it and stay the leader in their smart personal mobile device space. I do think the stock is good value, but with a shorter-term time horizon, I’d probably wait a month or two. The Monthly RSI-7 charts show the price is susceptible to even more selling. But the Weekly and Daily RSI-7 is presently 26.1 and 209 respectively, so most of the selling has already occurred. In the bigger picture, RIMM at $45.99 is pretty close to the low price ($40.48) of the 2007-2008 Bear market, and takes us back to 2006!
Monthly chart:
Weekly chart:
Daily chart:
Here’s the SMH Monthly, Weekly and Daily data charts:
SMH Monthly data: 
SMH Weekly data: 
SMH Daily data:
Here’s the XLK Monthly, Weekly and Daily data charts:
XLK Monthly data: 
XLK Weekly data: 
XLK Daily data: 
Table 9: Senior technology equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Sector 50 (telecom: IYZ, VOX and IXP)
The Telecom sector (IYZ) gained +0.25% W/W to 20.11, which was a gain of 5 cents this week, which followed the 3 cent gain the previous week.
The winners were Deutsche Telecom (DB +3.8%) although, finally, DT was a loser on Friday (-1.3%).
AT&T (T +1.9%) and Verizon (VZ +1.6%) were winners this week.
Table 14: Telecom
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Here’s the IYZ Monthly, Weekly and Daily data charts:
IYZ Monthly data: 
IYZ Weekly data: 
IYZ Daily data:
The Utilities sector ETF (XLU +2.20%) closed up at 30.14, which made it the #1 sector performer this week. The lift started a week ago Friday when it was the only sector winner on that day (+0.26%).
Table 12: US Utilities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Sector 55 (utilities: IDU, XLU, and VPU)
Here’s the XLU Monthly, Weekly and Daily data charts:
XLU Monthly data: 
XLU Weekly data: 
XLU Daily data:
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 FPL NGG PCG PEG SO TRP
For study purposes, there is a good mix of electric (AEP, D, DUK, FE, FPL and SO), gas (NGG, TRP) and diversified (ED, EXC, PCG, PEG) utilities.
Bonds & Yields Review
Table 10: US Treasury Yields
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 0.12 | 0.13 | 0.13 | 0.13 |
| 6 Month | 0.17 | 0.18 | 0.17 | 0.19 |
| 2 Year | 0.56 | 0.52 | 0.49 | 0.61 |
| 3 Year | 0.82 | 0.75 | 0.77 | 0.93 |
| 5 Year | 1.49 | 1.37 | 1.45 | 1.69 |
| 10 Year | 2.64 | 2.48 | 2.61 | 2.99 |
| 30 Year | 3.69 | 3.51 | 3.66 | 4.07 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 0.49 | 0.50 | 0.54 | 0.66 |
| 2yr AAA | 0.42 | 0.45 | 0.47 | 0.67 |
| 2yr A | 0.72 | 0.76 | 0.74 | 1.03 |
| 5yr AAA | 1.14 | 1.14 | 1.25 | 1.33 |
| 5yr AA | 1.23 | 1.22 | 1.32 | 1.44 |
| 5yr A | 1.52 | 1.57 | 1.63 | 2.13 |
| 10yr AAA | 2.60 | 2.67 | 2.76 | 2.65 |
| 10yr AA | 2.45 | 2.48 | 2.62 | 2.77 |
| 10yr A | 2.53 | 2.56 | 2.55 | 3.33 |
| 20yr AAA | 3.75 | 4.08 | 3.93 | 4.58 |
| 20yr AA | 3.78 | 4.10 | 3.95 | 4.99 |
| 20yr A | 4.93 | 4.78 | 4.45 | 4.99 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 1.28 | 1.22 | 1.19 | 1.35 |
| 2yr A | 1.48 | 1.44 | 1.44 | 1.56 |
| 5yr AAA | 1.67 | 1.60 | 1.66 | 2.14 |
| 5yr AA | 2.23 | 2.11 | 2.12 | 2.41 |
| 5yr A | 2.94 | 2.83 | 2.84 | 3.14 |
| 10yr AAA | 2.86 | 2.75 | 2.86 | N/A |
| 10yr AA | 3.93 | 3.79 | 3.73 | 4.04 |
| 10yr A | 4.27 | 4.07 | 4.11 | 4.31 |
| 20yr AAA | N/A | N/A | N/A | N/A |
| 20yr AA | N/A | N/A | N/A | N/A |
| 20yr A | 5.73 | 5.70 | 5.79 | 6.29 |
A week ago I wrote in this space: “US Treasury bonds have had a solid four bullish weeks. The moves have been so extreme that some economists, like Wharton professor Jeremy Siegel for instance, are calling this a “mad rush” and a “bond bubble”… The 20-year TLT ended the week with a gain of +3.67% W/W to close at 1006.04. The gain on the prior week was +2.19% and on the Friday before that was +1.09%, so this has been a most impressive eleven session run, leading to angst among equity Bulls.”
I said that I agreed with Siegel on this particular debate. As you recall, David Rosenberg thinks bond yields are going much lower, meaning bond prices are going to soar to loftier heights. I don’t accept that. The economy of the world may not be running at optimal pace, but it is not a colossal disaster either.
Where I was, in Toronto on Saturday there were at least a million or two people (literally) out at the Cdn National Exhibition, Harbourfront, the Buskerville happening at St. Lawrence Market, Eaton Centre, Distillery district and Greektown. I know because my wife and I were at all of them over a 10-hour period. Hot day; crowds everywhere; happiness in the air. No depression in Toronto and maybe David Rosenberg, in Toronto, saw it too.
This week, the yields for the 2-, 5-, 10- and 30-year Treasuries told the story that bonds really did not sell off that much, so short sellers beware.
The 5-, 10-, and 30-year yields were up just +4, +3 and +3 basis points on the week. That’s hardly a short-seller’s dream.
The important story was in the 2-year Treasuries where the yield jumped +7 bp, which is more, admittedly, but most likely hot money coming out of stocks earlier in the week.
I wouldn’t make too big a deal of this.
The 20-year Treasury Bond ETF (TLT -0.65%) dropped to 105.35; but it was just 102.29 two Friday’s ago! So, the Big Reversal story may play to a loser’s audience. Besides, the US Dollar ($USD -0.02% Friday and -0.16% W/W) did not move down that much. Should it reverse and head higher this coming week, which would keep it on trend, the TLT will recover that loss and move higher.
If you are an equity Bull, you ought to be praying for TLT and the $USD to fall a lot! Until that happens, you need to maintain control over your buying impulse.
Here is the $USB 30-year Treasury Bond chart.
Interest rates and bond yields.
Interactive Daily data charts:
Interactive Chart of Interest rates and bond yields.
US Bond Funds -- Interactive Monthly Data Charts SHY Monthly data series chart:
IEF Monthly data series chart:
TLT Monthly data series chart:
AGG Monthly data series chart:
LQD Monthly data series chart:
TIP Monthly data series chart:
US Bond Funds -- Interactive Weekly Data Charts SHY Weekly data series chart:
IEF Weekly data series chart:
TLT Weekly data series chart:
AGG Weekly data series chart:
LQD Weekly data series chart:
TIP Weekly data series chart:
US Bond Funds -- Interactive Daily Data Charts
SHY Daily data series chart:
IEF Daily data series chart:
TLT Daily data series chart:
AGG Daily data series chart:
LQD Daily data series chart:
TIP Daily data series chart:
Table 11: Interest-sensitive securities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Commodities Review
This week, commodity prices ($CRB) gained +0.10% W/W to close at 267.27. On the Friday there was a gain of +1.22% that explains it.
Until Friday’s gain the commodities had suffered some big losses over fifteen (15) sessions, so bullish traders would be wise to see if Friday’s gains are sustainable.
The 50-day Moving Average of $CRB (265.21) has been below the 200-d MA (269.96) since late May – meaning less concern about inflation and a leaning toward deflation (although let’s not get too extreme about terminology here) – but the index level now at 267.27 is now above the 50-d MA. Unless and until the current price is above the 200-d MA I believe that Bonds are winning.
If $CRB falls below both the 50- and 200-day MA’s, technical analysts would call it a Bear for commodities and a Bull for bonds.
This knowledge can help you decide how to trade because being on the right side of trade is half the battle. Cyclic timing, of course, is most of the rest.
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
Interactive Chart of Weekly CRB Commodities Index:
Interactive Chart of Daily CRB Commodities Index:
Oil Review
This week, the $WTIC gained +$1.35/bbl (+1.83% W/W) to close at 75.17/bbl.
I have been watching Crude Oil and Precious Metals prices if, as, and when the Oilers (2nd last) and Goldbugs (last) depart the dance floor, the Bull party is over. So far our risk models are fairly benign. But it wouldn’t take much for sellers to come into the market to put the Bear into action.
For $WTIC, the 50-day MA is now 76.89, down again W/W from 77.25, after being up from 77.08, 76.62, 75.46, 74.96 and 74.84, after being down from 75.59, 76.32, 77.20, 78.00, 78.85, 79.72, 80.36, 81.36, 82.43 (after changing course from), 82.82, 82.74, 82.10, 81.05, 79.99, 78.84, 78.30, 78.39, 78.32, 77.86, 77.23, 76.44, and 76.20 over the prior weeks. So there seems to be a bearish tone.
The 200-d MA is at 77.94, down a tad from 78.09, 78.18, 78.21, 78.15, and 78.04, but still higher than the previous 77.85, 77.62, 77.54, 77.45, 77.26, 77.08, 77.06, 77.01, 76.98 and 76.99 of the past 15 weeks. But six weeks of a falling 200-d MA plus a 50-d MA that is newly falling is a bearish picture.
If, as and when the US Dollar starts to fall, I expect the price of Crude Oil to lift a tad. The economy may be soft; but there is no indication yet that it hit the wall like 2007 and 2008.
Here is the e-miNY Dec-07 Crude Oil chart.
Interactive Chart of Weekly Crude Oil:
Interactive Chart of Daily Crude Oil:
Gold & Precious Metals Review
As you recall from this space a week ago, I stated: “I do anticipate a weaker Dollar early this week and a run-up in Gold and Silver prices”. That did happen. But, Goldbugs seem to be getting ahead of themselves here, and ought to be careful, especially if the US Dollar firms up.
This week, $GOLD lifted +$10.20/oz (+0.83%) to close at $1237.90/oz. A week ago the gain was +$12.30/oz (+1.01%). With the bullion up less than +2.0%, the Goldminers ($XAU) have lifted +6.7% in the past two weeks. Moreover; in the week before that, when bullion had a lost of almost -2%, the stocks gained almost +1%.
As stated here a week ago,
…the goldbugs continue to be ecstatic and calling for $1350 in short order. Their newsletters are carrying hour by hour claims that the key international monetary authorities and broker-dealers that have been in cahoots have now been discovered as fraudsters and will soon be rounded up and imprisoned – that is if they don’t manage to murder their opposition in the meantime. The nonsense has reached extreme proportions… What are they going to say when prices roll over and slide down the other side of the bull-bear cycle? …What is getting clearer to me is that $GOLD is fighting headwinds. The $USB and $USD are lifting at the same time as $GOLD, and since this is only likely to happen when conditions are such that the economy is strong and perhaps too strong so that inflation is starting up, which is not happening today, I say it’s either bond or gold prices that have to sink, and because the oil price has headed south, which usually precedes gold, I say that gold price weakness is the more likely in the near term… Gold is a tiny market compared to oil and especially bonds. In fact it’s an after-thought to the big players in those huge markets, particularly when there is little inflation in the US, Europe and Japan and most of the gold price action seems to be driven by speculators who are caught up in the manipulation stories that currently flood the airwaves.
At the present price of the gold future ($1240), goldmining companies can make a lot of money – huge cash flow – enough to get them thinking about take-overs, which is usually dilutive, which scares the shareholders. Only competent managers who are M&A savvy should be supported here at this point in the cycle, particularly for the larger cap companies.
A week ago I was short and then right before the close a week ago Friday I went long. Then after the pop a couple hours later I went back to cash. I love to take profits, and if at the same time I size up the risks of capital loss being above average, I will get out early and that’s what happened. But, I never look back. I know too many greedy goldbugs who have been slaughtered like pigs over the years. Whatever you do, you need to manage risk above all else.
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...
The $GOLD 50-day Moving Average is now at 1210.65, up an iota from last week’s 1210.51, and flat with the prior week’s 1211.51, which was down an iota from the then previous 1211.57, and close to the previous 1216.50, and 1219.45. So, really, nothing much has happened recently with the 50-day MA. But, we are now in choppy waters.
The 200d MA is 1161.60, up from 1154.27, 1150.21, 1146.80, 1143.96, 1139.77, 1134.55, 1130.70, 1125.25, 1119.06, 1112.07, 1104.93, 1099.37, 1092.95, 1086.98, 1079.82, 1073.77, 1067.77, 1062.17, 1056.79, 1051.39, 1047.82, 1044.22, 1040.67, 1036.71, 1031.61, 1026.87, and 1022.57 over the past 27 weeks. This is bullish, as it should be for the longer-term picture.
Interactive Chart of Weekly Gold EOD Continuous Contract Index:
Interactive Chart of Daily Gold EOD Continuous Contract Index:
Interactive chart of recent trading for the Gold Bullion index.
Spot silver chart for the week
$SILVER gained +$1.07/oz this week to close at $19.06, bi-passing the 18’s. That was quite a launch, and I had predicted it. I wrote in this space,
This week, after Silver moved back up a bit, I returned to a 60% weighting in 2x inverse Silver, meaning I was short a lot. Then after Silver collapsed on Friday, I sold down to a 1% short position, taking profits again.
I also went long right at the close on that Friday and made more profit before moving back out to an undecided position, where I stand today.
Recently I wrote this:
A successful trader’s motto: There is never a problem taking profits. We have to live or die by that. Obviously I have no plan on the latter, so I’ll take that profit whenever it comes, and my analysis shows a likely reversal… (adding a week ago) … These are volatile markets. That remark was the reversal coming a week ago that I correctly called. Then after Silver made another run-up, I went back in, and then as I just said I took profits again, believing that maybe the silver price will bounce up for a couple days… In any case, these are not markets for amateurs. You need to be glued to monitors all day every day and your finger has to be primed and ready to hit the buy/sell button at a moment’s notice. There is no room for emotion because there will always be mistakes; but in the end good traders will win. I’d just prefer to trade once a month or quarter year than once a day. I really dislike markets that are as volatile as they are today.
I’ll leave last week’s lesson here as well:
If you are predisposed to try these (precious metals) markets, I find the following chart helpful.
When $SILVER sells off against $GOLD, it means that precious metals prices are under pressure, and that’s when I want to be short. When, however, you see the $SILVER:$GOLD line headed up, as it was a week ago, that means traders are bidding precious metals prices higher, and you want to be out of the shorts and possibly into long positions if you think there might be legs to the move. Well, I didn’t so I went short again for a couple days and exploited the subsequent down move in the $SILVER:$GOLD line, which is still showing itself going south. However, enough is enough, so I took profits on Friday, but did not go long, preferring to enjoy my weekend without worrying about this crazy market.
Experienced traders know that extreme volatility is a sign of a market reversal, so they hold positions, long or short, for a shorter than usual period. Depending on how I see the risks, my hold time could be hours.
http://stockcharts.com/charts/gallery.html?s=$silver
http://tinyurl.com/y8k8ud4
For $SILVER, the 50d MA is now 18.26, which has been choppy through 18.24, 18.21, 18.25, and 18.18, which had been trending down several weeks from 18.30, 18.38, 18.39, and 18.41, after lifting for many weeks: 18.37, 18.33, 18.27, 18.16, 18.07, 17.98, 17.87, 17.63, 17.44, 17.18, 16.91, 16.73 and 16.68. As I have written in this space, “so, the market is choppy and dangerous here.”
The long-term 200d MA is 17.79, up a tad from 17.76, 17.72, 17.69 and 17.67, which had been flat a week after rising through 17.65, 17.60, 17.58, 17.55, 17.48, 17.39, 17.29, 17.21, 17.12, 17.02, 16.89, 16.77, 16.64, 16.52, 16.41, 16.31, 16.24, 16.20, 16.16, 16.10, 16.03, 15.97, 15.92, 15.85, 15.75, and 15.65 over 31 weeks.
Interactive Chart of Weekly Silver EOD Continuous Contract Index:
Interactive Chart of Daily Silver EOD Continuous Contract Index:
Interactive chart of the Silver Bullion index.
$PLAT was up +$19.00/oz this week (+1.26% W/W) to close at $1532.00/oz. But, nothing much has happened over the past several weeks.
http://stockcharts.com/charts/gallery.html?s=$plat
http://tinyurl.com/ydwz4pn
The 50d MA for $PLAT is now at 1539.80, which is close to the recent 1543.98, 1543.34, 1545.42 and 1538.56. But previous to that, prices have been higher for a while: 1551.60, 1568.68, 1587.48, 1604.03, 1622.75, 1637.61, 1650.20, 1660.39, 1665.23, 1674.45, 1675.26, after being up from 1660.80, 1645.40, 1625.31, 1602.51, 1585.00, 1566.10, 1562.59, 1560.08, 1548.60, 1533.68, 1520.40, 1511.07, 1506.31, 1502.04, 1493.90, and 1480.91 earlier. Choppy here too.
The 200d MA is at 1560.98, up from 1556.92, 1552.32, 1547.60, 1542.04, 1537.08, 1531.60, 1525.92, 1522.18, 1517.28, 1509.86, 1501.49, 1494.49, 1488.49, 1481.61, 1473.21, 1460.14, 1447.70, 1432.87, 1418.16, 1405.15, 1392.10, 1381.91, 1373.75, 1363.46, 1352.15, 1341.01, 1331.42, 1323.04, 1312.58, 1305.30 and 1297.81 the prior 31 weeks.
I don’t trade plat or pall, but I study them as part of the precious metals trading I do.
Spot platinum chart for the week
Interactive Chart of Weekly Platinum EOD Continuous Contract Index:
Interactive Chart of Daily Platinum EOD Continuous Contract Index:
Interactive chart of the Platinum metal index.
This week $PALL gained +28.45/oz (+5.97% W/W) to close at $504.65. A week ago the price jumped +8.40/oz (+1.76% W/W) and I commented that “it’s still down in two weeks from $496.05.” Four weeks ago, PALL closed the week at $501.95, so, despite the big gains over the past two weeks, nothing much has happened here either over the month of August.
http://stockcharts.com/charts/gallery.html?s=$pall
http://tinyurl.com/yenr5rj
The 50d MA is now at 473.33, up from 469.81, 465.88, 463.75, 457.94, after having been down from 462.29, 469.13, 475.45, 484.03, 494.39, 499.22, 501.83, 504.71, 505.32, and 508.14, which was the peak of a run through 506.75, 499.60, 488.39, 478.78, 464.32, 454.12, 446.09, 443.42, 440.44, 434.95, 426.04, 417.55, 411.14, 406.81, 402.56, 396.97, and 390.10 in the past 31 weeks.
The 200d MA is at 453.57, up from 448.95, 445.59, 442.17, 438.72, 434.15, 430.44, 427.04, 424.11, 420.43, 415.78, 411.11, 407.11, 403.59, 398.52, 393.30, 387.78, 379.68, 373.49, 365.65, 358.56, 351.84, 346.02, 341.03, 335.30, 329.51, 323.93, 319.10, 314.77, 310.11, 305.19, and 300.58 in the past 30 weeks.
The current price (504.65) is well above both the 50-day and 200-day MA, which is bullish, but the gap is closing. More choppy markets ahead.
Spot palladium chart for the week
Interactive Chart of Weekly Palladium EOD Continuous Contract Index:
Interactive Chart of Daily Palladium EOD Continuous Contract Index:
Interactive chart of the Palladium metal index.
This week, $COPPER gained +$7.30 (+2.20%) to close at 338.45. Friday’s gain was +1.77%.
http://stockcharts.com/charts/gallery.html?s=$copper
http://tinyurl.com/ybgnb7f
For $COPPER, the 50d MA is at 315.96, up from 312.68, 307.48, 305.06, 301.92, 299.94, which had been down a tad from 300.94, 303.75, 307.34, 313.12, 318.97, 325.25, 332.51, 335.44, 338.10, 342.14, 344.15, 344.89 after rising through a few months: 343.42, 337.92, 332.21, 328.97, 327.03, 327.29, 327.56, 326.24, 323.80, 322.54, and 322.07.
The 200d MA is at 322.84, which is up from 322.00, 321.10, 320.32, 319.22, 318.20, 317.36, 316.73, 316.34, 316.12, 315.83, 315.54, 315.70, 315.28, 314.54, 313.94, 312.26, 310.48, 307.73, 304.50, 301.31, 297.89, 294.81, 292.15, 289.30, 286.09, 282.70, 279.88, 277.48, 274.89, 272.75, and 269.97 in the 31 previous weeks.
The price is bullish, but to be called a Bull market in copper at this point, the 50-day MA must be rising and also above a rising 200-day MA, which it hasn’t managed to do yet.
For those who are keen to study the industrial metals like copper, aluminum and zinc, why not look at the Powershares DBB, which trades on the NYSE.
http://finance.google.com/finance?q=NYSE:DBB
Freeport McMoRan (FCX) dropped -$0.17 (-0.24% W/W) to close at $71.20. But it had dropped to $66.66 this week. None of that is bullish.
Interactive Chart of Weekly Copper EOD Continuous Contract Index:
Interactive Chart of Daily Copper EOD Continuous Contract Index:
Interactive chart of the Copper metal index.
Table 12: Senior gold equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The goldminer indexes and ETF’s picked up more lost ground this week as the $XAU lifted +3.37% to 184.14; the GDX moved up +4.02% to 53.34; and Canada’s XGD gained +3.77% to 24.47. A week earlier, the $XAU lifted +3.32% to 178.13; the GDX moved up +3.10% to 51.28; and Canada’s XGD gained +3.97% to 23.58. So, the goldbugs qare happy.
A week ago I remarked in this space:
Kinross Gold (KGC +2.1% W/W to $15.48) seems to be a laggard. I purchased a +12% portfolio weighting at $15.26, projecting a $16.20 price, but traders are hesitant with the dilution involved in a recent acquisition. In fact, KGC has significantly underperformed the $XAU since mid-March, really breaking down in late June. I think the pessimism is over-done, and I intend to be a long-term player in this one, but I’m also not known for having much patience.
After watching it trade in a most confusing and unsettling pattern, I decided enough was enough and sold it for, I think, $15.26, maybe $15.32. I know I wasn’t pleased a day or so later as Geoff, who manages our conservative, longer-term oriented positions held out for the $16.20 price objective, selling for $16.30+ as I recall.
These things happen as traders each use different tools, have different time frames, and so forth. In my case, I only took on KGC in the Junior Gold portfolio accounts because the previous price drop was, I believed, well overdone as analysts seemed unhappy with such a large purchase and dilution of a very green property in Africa. I went in for the trade and it was there, but I didn’t wait for it.
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
LIHR IAG EGO RGLD GOLD TSE_AGI GSS NG NGD AEM
Here are the key Silver miners and the SLV ETF: SLV SIL SVM CDE HL PAAS SSRI SLW MGN
Here are the Weekly and Daily Data charts of the indexes:
Interactive Chart of Weekly US Goldminers Index:
Interactive Chart of Daily US Goldminers Index:
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 Daily data:
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:
Interactive Chart of XGD Daily data:
Forex Review
The $USD is a trade-weighted US Dollar index, we used to call the Morgan Dollar.
As commodities are priced in $USD you need to study forex price trends and cycles.
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.
The ETF that tracks the G-10 currencies is the Powershares DBV. http://tinyurl.com/ltxpk4
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 150-some) 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:
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.
Here are some of the charts I keep on a screen AT ALL TIMES, which one can access via the link under the stock name beside the ticker symbol:
US Dollar to Cdn Dollar:
http://www.advfn.com/p.php?pid=fxcharts&symbol=FX^USDCAD&period=1&freq=3
Note the immediate reaction at 10:00am ET on Friday, where the US Dollar collapsed against the Cdn Dollar.
Then note the same thing on every other chart.
US Dollar to Aussie Dollar:
http://www.advfn.com/p.php?pid=fxcharts&symbol=FX^USDAUD&period=1&freq=4
UK Pound Sterling to US Dollar:
http://www.advfn.com/p.php?pid=fxcharts&symbol=FX%5eGBPUSD&period=1&freq=3
For the sake of making a point about the 10:00am ET sell-off of the US Dollar, I reversed this chart to show USD:GBP rather than the GBP:USD, which is the contract that forex traders trade. I do the same for the Euro and US Dollar the one following.
Euro to US Dollar:
http://www.advfn.com/p.php?pid=fxcharts&symbol=FX%5eEURUSD&period=1&freq=3
If you are new to this; think about it that in any pair, if the latest trend line is up, the first ticker is the one that is rising. So EURUSD, which is the way the contract is traded, the trend line is up, meaning 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.
For instance, when the US Dollar is headed sharply down against most of the rest in unison, as happened shortly after 10:00am ET on Friday, and on other occasions in the past month in the following chart, you are likely to see an immediate pop to equity prices. Also, when the Dollar soars rapidly, equity prices tend to drop quickly.
There is no magic to this; but it does require time and focus to keep track of the charts and be able to use the information effectively as and when you are making trading decisions. As I say repeatedly, equity and bond prices flow higher or lower depending on the prevailing forces, such as currencies, interest rates, macro-economic data, corporate (micro-economic) data, and quantitative and technical analysis of the data, including price series data.
The shorter the time horizon you trade in – minutes, hours, days, weeks, months or years – the more you have to focus on currency trends and technical indicators. HB&B algorithmic traders know this and hence program their trading systems to try to fool you. Sometimes, especially at key points when emotions are running high, these idiots do in fact work with illegal forces, supported by the mainstream media, to publish disinformation. Some of us believe that may have happened in the Intel situation at 10am ET on Friday. We cannot prove it, but the evidence is there in private and confidential trading records that the SEC can in fact prove.
Because these apparently contrived situations repeat themselves over the years and decades, those of us who are independent pro traders are put into the position of making allegations of cheating. We don’t get sued because then we would enjoy the right of lawful discovery and we could prove what we believe the SEC knows or is able to determine beyond a shadow of a doubt. Then we could clean up the system and make it fair for all to use.
As it is, we trade knowing we do so at a disadvantage. Do many bank CEO’s get paid tens of millions of dollars annually because they added shareholder value? NOT. They get paid that much because they have sustained the fraud.
What I’m saying here is nothing more than what tens of thousands of independent pro traders believe. There’s nothing new in this.
Remember, when on the Street, I was the one who built out and operated the top floor offices of the Toronto Exchange tower; I do not believe my colleagues who ran the big firms then (and now) were guided by the moral compass I follow.
I see examples of this problem EVERY DAY. You don’t need to be an expert to see what’s going on, but experience does help provide the insights. For instance in this weekend’s Financial Post there is a fluff piece I read. Here it is and see if you see what I see.
http://www.financialpost.com/Investor+worried+about+potential+double+recession+Canada/3453800/story.html
Dear Nancy Woods: I read all about the possibility of a "double-dip" recession. They have said that Canada's economy is improving. As an investor, how would I be affected and should I be worried? Scared SuzyDear SS: A recession is defined as two consecutive quarters of negative growth in the economy. A "double dip" is a recession has been completed and followed by a weak recovery, possibly leading back into another recession. The fear is that if a second recession happens relatively soon after the first it will be a longer and deeper recession that will make a recovery more difficult.
- Nancy Woods is an Associate Portfolio Manager and Investment Advisor with RBC Dominion Securities Inc. You can send your questions to her at…
Financial Post - Saturday, Aug. 28, 2010
Is Nancy Woods really employed by RBC to make trading decisions for clients or to use her media contacts and communication skills to do marketing that brings in clients for the professionals who actually do the trading, i.e., is she a so-called investment adviser with a license to sell securities, working out of a branch office or is she a licensed portfolio manager as the bio clearly represents? I don’t know.
Trust me, I don’t know Nancy Woods from Sally Smith or Judy Jones, and I may in fact be wrong on this matter, but I know enough about this industry to believe that HB&B is a serial liar, creating presumptions in people who don’t do their own due diligence.
All I’m saying here is that because I have the experience, I read the media and the market differently than the average person. I don’t let it play me.
This week the so-called trade-weighted US Dollar index ($USD) dropped -0.16% to close at 82.92. There was a tiny loss on Friday. The price kept snugly under the 50-day Moving Average for the past four days. I’m neutral for now, awaiting Monday’s market signs.
http://stockcharts.com/charts/gallery.html?s=$usd
http://tinyurl.com/y9c3sr4
The 50-day MA of the $USD is now at 83.13, down from 83.42, 83.96, 84.48, 85.04, 85.48, 85.68 and 85.68, which peaked from 85.46, 85.04, 84.52, 84.04, 83.41, 82.91, 82.24, 81.67, 81.21, 80.90, 80.72, 80.61, 80.48, 80.19, 79.89, 79.48, 79.23, 78.99, 78.69, 78.25, 77.85, 77.30, 76.87, and 76.52, in the past 31 weeks. The falling 50-d MA is now fairly close to the current price (82.92), and as I pointed out in this space a week ago, “there will likely be resistance there”.
The 200-day MA is 81.18, up from 80.99, 80.83, 80.68, 80.55, 80.40, 80.25, 80.09, 79.90, 79.68, 79.48, 79.29, 79.05, 78.88, 78.69, 78.49, 78.33, 78.21, 78.16, 78.14, 78.13, 78.11, 78.09, 78.06, 78.04, 78.05, and 78.10, 78.16, 78.24, 78.37, 78.53, and 78.69 of the past 31 weeks.
I have a hunch next week will be interesting, but the trading will get choppier as we get into post-Labour Day trading.
Interactive Chart of Daily US US Dollar Index:
This week the Euro contract gained just +0.19% W/W to close at 127.32.
The action is very quiet, and the current price, like for the $USD, is very close to the 50-day MA.
http://stockcharts.com/charts/gallery.html?s=$xeu
http://tinyurl.com/ydekjtk
The 50d MA for the Euro futures are now at 127.62, up from 127.21, 126.38, 125.68, 124.85, 124.21, 124.03, which had been down from 124.34, 124.85, 125.92, 127.18, 128.29, 129.69, 130.75, 132.16, 133.39, 134.42, 135.10, 135.49, 135.80, 136.14, 136.82, 137.48, 138.51, 139.22, 139.99, 140.67, 141.79, 142.85, 144.18, 145.26, and 146.18 over 31 weeks.
The 200d MA is at 134.35, down from 134.91, 135.39, 135.89, 136.32, 136.76, 137.19, 137.66, 138.08, 138.64, 139.16, 139.65, 140.21, 140.62, 141.09, 141.57, 141.96, 142.29, 142.48, 142.62, 142.73, 142.86, 142.95, 143.10, 143.22, 143.28, 143.27, 143.26, 143.20, 143.06, and 142.86 over the past 30 weeks. Still a bit on the bearish side.
Interactive Chart of Weekly Euro Dollar Index, priced in USD:
Interactive Chart of Daily Euro Dollar Index, priced in USD:
The Pound contract dropped a small -0.12% W/W to close at 155.13.
http://stockcharts.com/charts/gallery.html?s=$xbp
http://tinyurl.com/yasdzc2
The 50d MA of the Pound is at 153.87, up from 153.11, 152.04, 150.92, 149.41, 148.32, 147.89, after it had fallen through 147.86, 148.00, 148.28, 148.79, 149.28, 149.73, 150.06, 150.83, 151.46, 151.77, 152.18, 152.55, 152.84, 153.42, 154.30, 155.25, 156.41, 157.30, 158.19, 159.34, 160.25, 160.98, 161.89, 162.71, and 163.25 over the past 31 weeks.
The 200d MA is 154.94, down from 155.20, 155.41, 155.60, 155.69, 155.78, 155.95, 156.15, 156.38, 156.75, 157.13, 157.49, 157.97, 158.35, 158.88, 159.48, 159.91, 160.27, 160.52, 160.74, 161.01, 161.28, 161.54, 161.85, 162.13, 162.34, 162.39, 162.34, 162.21, and 161.97 over the previous 29 weeks.
Weekly British Pound Index:
Daily British Pound Index:
Weekly Japanese Yen Index:
This week, the Yen had a gain of +0.74% to close at 116.75.
The Yen too was quiet. This week the Yen gained +0.37% to close at 117.18.
The Yen’s 50-day MA is now 114.84, which is up from 113.97, 113.20, 112.46, 111.94, 111.29, 110.66, 109.90, 109.35, 108.80, 108.42, 108.13, 107.97, 10 8.07, 108.08, and 108.19, which had reversed from 108.67, 108.98, 109.36, 109.82, 110.12, 110.54, 110.74, 110.67, 110.44, 110.27 and 110.14 over the previous 27 weeks.
The 200-day MA is now at 111.12, rising from 110.94, 110.78, 110.59, 110.45, 110.38, 110.30, 110.23, 110.14, 110.06, 109.99, 109.92, 109.84, 109.77, 109.60, 109.49, 109.43, 109.40, 109.42, 109.37 and 109.29 the previous 20 weeks.
That’s bullish, which you would expect when the carry trade is reversing and traders are afraid of taking on too much risk.
Daily Japanese Yen Index:
This week was also quiet for the Cdn Loonie, which dropped -0.35% W/W to close at 95.03. There had been a bigger loss through Thursday, but on Friday the Loonie gained +0.51% on the day as forex markets got shook up between 10:00am ET and 10:30, following the beginning of the Bernanke speech at the Fed-sponsored meeting in Wyoming.
http://stockcharts.com/charts/gallery.html?s=$cdw
http://tinyurl.com/ycx58us
The Loonie 50-day MA is now at 96.14, down from 96.39, 96.30, and 96.21, after hitting a cycle low at 95.80, and 95.81 after dropping through 95.92, 96.41, 96.88, 97.20, 97.42, 97.63, 97.85, and 98.48, after rising through 98.34, 98.17, 97.82, 97.19, 96.63, 96.10, 95.97, 95.87, 95.59 and 95.36 the previous 24 weeks.
The 200d MA is at 96.25, up a tad from 96.23, 96.15, 96.11, 96.08, 96.06, 96.00, 95.85, 95.80, 95.68, 95.53, 95.43, 95.35, 95.23, 95.10, 94.93, 94.64, 94.30, 93.97, 93.67, 93.48, 93.29, 93.10, 92.88, 92.60, 92.38, 92.16, 91.86, 91.55 and 91.25 over the previous 28 weeks.
The current price (95.03) is now below the 50-day and 200-day Moving averages, which is bearish. A Bearish Loonie is not positive for the Bulls who believe in higher precious metal prices.
Weekly Canadian Dollar Index:
Daily Canadian Dollar Index:
Here is the China Yuan (CNY) chart.
Wrap-up:
The weather in Toronto since I got here on July 21 has been spectacular. People are saying they haven’t seen it this nice in many years. I’m not rushing to return to Bahamas.
For me, this is important family time. Besides, like most people who will be back hard at it after Labor Day, we’ll be doing the same, lining up a marketing program, our first. Because I’m pushing the Junior Gold, I might even be persuaded to stay through to the Cambridge Junior Resources Show at the Metro Toronto Convention Centre Sept 25-26. There will be at least 200 companies represented, mostly precious metals based. It would be good to get around to meet the people, which I missed doing a year ago. We’ll take it one week at a time though.
This week I have to conclude that I’m neutral. Bond yields, crude oil prices, currency markets and international equity markets really haven’t pushed me in one direction or the other. Our risk models point to a benign environment, and equity trading volumes are still down.
I’ve been looking out at hundreds of sailboats thinking… no, I’d rather be doing this WIR.
Enjoy the rest of your weekend.
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