[11:00am] Is the wind of change blowing through international capital markets? Whether the market Bulls like it or not, it has not been orders from the public that has pushed markets higher. Program traders can take credit for that feat, using Other People’s Money of course.
My computer versus your computers is the new normal.
Maybe you do not realize the extent to which computers have taken control of capital markets trading? The illustrations in the Nov. 19 Izabella Kaminska posting at ft.com/alphaville tell the story, not just in the U.S., but around the world.
http://ftalphaville.ft.com/blog/2009/11/19/83751/a-gold-rush-moment-for-hft
Thirty-four years ago I published an article in Canadian Doctor that typewriters would soon be replaced by computers and readers thought I was joking. Thirty years ago I opined that stock exchange floor traders would be soon replaced by computers and that opinion was not taken seriously. Twenty-six years ago I wrote an article that one day with my computer I would leave the financial center of Toronto to live and work on a remote island to trade against the computers of other traders. Sixteen years ago, I tried to make that move, living on Paradise Island in The Bahamas, but found that telecommunications in the Caribbean were so lacking that my dream was stopped from happening. Today, however, anything is possible, and I have proven it.
Still, there is a huge difference in trading methodologies and performance between computers and humans. The situation today is not the same as IBM’s Big Blue machine beating the chess grandmaster; it’s more like 100,000 Big Blues against 100,000 grandmasters in the same match, and there would be maybe 75,000 winners and 125,000 losers. Besides, many of those machines are here today and gone tomorrow.
Today, the equity market is being driven by computer programs plus a very key ingredient, information, and in particular information that very few of us traders have in our possession, which is knowledge of central bank decisions and the order flow from those traders.
I am not so sure that since early March, the Fed traders haven’t leaked to friends and family that there has been a Dollar policy change. Knowing that single fact in that first week in March, with the $USD at almost 90 (89.62 actually), a chimpanzee could have made a million over the ensuing months.
Goldman Sachs, we know, is no chimp, but in fact has been the 800-pound gorilla on Wall Street ever since Bob Rubin, Henry Paulson and Co moved over to Washington. If Goldman learned in Washington, hypothetically, that the Dollar was going to be taken down from 90 to 75 in nine months, that would have been sufficient knowledge to give birth to hundred million dollar profit days 99 times in 100 and maybe $15 billion in bonuses for the Goldman team. Obviously, performance like that is statistically impossible without help somewhere along the line, so the Goldman team didn’t earn it; the result was a programmed foregone conclusion.
What breaks me up is that before they got to Washington, Goldman was a second-tier investment bank. Then they started parachuting people into the White House, Department of Treasury, Federal Reserve, and many of the important, supposedly “independent”, banker’s banks all over the world. Today, when maybe 35,000 of their team are being given the key to the city, it’s probably just 35 of them in the computer programming department who earned it. That plus the fella who paid the fella to give the tip to the fella inside the computer room at GS to where the Dollar was really headed.
Yes, I think such trading, if it happened, is crooked, and yes, it’s an ongoing daily discussion between non-Goldman pro traders on the Street who believe it. Apparently, the charade will continue – we are even told Goldman is doing ‘God’s work’ – so we grin and bear it. Yes we talk about it constantly because we know that even today the huge majority of Americans and people in economically advanced countries are ignorant of this development. So, as we see it, the more we talk we believe there will eventually be a termination to this farce delivered by legislators in Washington.
So where are we today?
Let’s face it; any public-private partnership is ripe for fraud. Look at the result of the bail-outs. At this point the cost to investors, to taxpayers, and to Main Street, is in the trillions. In another era, in another country, heads would roll. But we have to accept it and try to do the best we can. It's called perseverance.
As to the market, we do know that program trading can go both ways and it will. The question is when.
Since early March, the Dollar has been taken down and equity and commodity prices up. But the Dollar can fall only so far before starting a trade war, and market prices can rise only far before investors and traders make alternative choices. Of course, the unknown in this equation is the amount of new money that central banks are prepared to print, and that fortunately is not endless as even Zimbabwe discovered in April this year.
http://en.wikipedia.org/wiki/Zimbabwean_dollar
I think we are close to the end of the money printing and the induced Bull run in global equities. Central banks are now concerned that further money printing could result in the situation where only physical assets like precious metals are given much value. Equities are just paper, like money. Their prices are typically based on reasonable metrics like per share cash flow, revenues, earnings, dividends, and book value of the corporations. We may not have yet reached the limit to the high prices for equities in this cycle, but we do know that markets are supposed to be discovery mechanisms where the buying and selling must be in balance, rather than just the buying that has gone on since March.
So every Bull run must be followed by a Bear run, to complete the cycle. That’s a necessary process if we are to keep our money in the market.
As the weaker Dollar, not corporate performance, started the 2009 Bull run in equities, it will be a stronger Dollar that brings in the Bear. Since, not having access to key players in Washington, we don’t know when there will be a stronger Dollar; but we are vigilant, looking for evidence. We seek that evidence mostly in the currency markets and in the equity prices of major corporations whose shares are listed on international exchanges and traded in different currencies. We also look closely at Dollar-linked, commodity price sensitive equities, and in the major global equity market indexes, where some prices have reached balloon proportions.
Two weeks ago, I started the Week In Review (WIR) with the simplest advice: “Same parameters [as a week earlier] hold for next week; S&P over 1080, say, is a caution signal for shorts, while, on the other hand, breaking below the early October intra-day low of 1019 means the Bulls should pull in their horns.” One week ago, with the S&P higher at 1093.48, and the S&P, DJIA and NASDAQ gaining W/W by +2.3%, +2.5% and +2.6%, and Europe and India even stronger, I added that while it appeared to be same old, same old, there was a changing picture in the Asia-Pacific markets, especially in Japan. I suggested that might be worth looking into because if the $USD reverses course and gains strength, the loser is first going to be markets that are perceived to be riskier because the economy is worse, the currencies too strong, or the equity market gains greater than what is consistent with economic realities. A stronger Dollar changes all that.
Of course you have to look pretty closely to see a pimple on the elephant. The weekly price chart of the Dollar shows no change whatsoever, but the daily chart is a different matter this week. There was a 2009 low of 74.68 on Monday and a close of 75.61 on Friday.
http://tinyurl.com/24z9zb
Professional traders have at least one eye glued to this action.
Not everybody agrees that the wind of change is upon us. For instance, Bob Doll, Blackrock’s vice chair and manager of what must be trillions, was speaking Friday on Tout TV that the best opportunities for gains are in foreign stocks, which means that either he knows the Weak Dollar policy is still intact or he’s a liar because I do think between Blackrock and Goldman they have a direct line to the Fed, as well as a significant percentage of Congress in their pocket.
But then, you really can’t trust anything these people say anymore. It’s like “No new taxes… except I forgot about Afghanistan, Iraq and maybe Iran, healthcare, social security, the never-ending financial system bail-outs, and all that stuff…” Or how about “Retail Sales Soar”… except they were down -2.6% year-over-year, not counting the taxpayer paid discount inducements on automobiles.
So where do we look for answers?
Maybe we can trust the TED Spread, which seems to be indicating a credit squeeze starting up again, like before Lehman. The T-Bill yield is back to 0.01% and the 2-year Treasury Note dropped in yield this week from 0.80 to 0.72. Longer duration Treasuries were all soaring and yields dropping as well.
Maybe we can trust the sell-off in the Country ETF’s in NY this week.
Definitely the Daily RSI-7’s took a big dip this week for all the US major market indexes, so maybe there is an answer there.
Money flows too are alerting traders that capital is being withdrawn at a faster clip than price charts show. In trader talk, this is called negative divergence, and many analysts have pointed to it.
Please be aware that since the start of the summer every time indicators showed support being broken, there was a subsequent rush back into equities. The question we are asking today is whether that can continue if the $USD starts to gain strength here.
Now, let’s take a look at the details this week.
Global Economics Review
Weekly International Economic Report.
After soaring Monday, most investors took time to digest their gains and take some profits. However, the pull-back was accelerated by some ‘iffy’ economic data from the U.S. — housing starts and industrial production data disappointed and jobless claims did not continue to sink. With little new economic data in Europe, the focus was on U.S. and there was plenty of new information available for investors to consider. In the end, most of Monday’s gains disappeared, leaving most major equity indexes down on the week. And with December and year end looming, many investors are already squaring their positions, especially after the multi-month rally that began in March… While investors look for signals that central banks are cutting back on their supportive activities as a sign of economic recovery, they do so with trepidation — the great unknown is whether the major economies are strong enough to withstand the withdrawal of what has been life support for the past year.
Here are the key US economic reports on last week’s calendar.
US Retail Sales. After the release of the data at 8:30am ET, at 11/16, Econoday reported,
“[2] Overall retail sales on a year-ago basis in October improved sharply to down 1.7 percent, from down 6.3 percent in September. Excluding motor vehicles, the year-on-year rate increased to minus 2.6 percent in October from down 5.3 percent the prior month. The significant improvement in October was due both to a drop in the baseline in October 2008 and the rise in October 2009… Based on the core of total less autos and gasoline, sales are sluggish although the components were mixed. Today's report shows the consumer still cautious about spending and should weigh on equities-especially with a significantly below expectations showing by the simultaneously release of Empire State manufacturing… [1] The October jump in overall sales was led by a 7.4 percent rebound in auto sales after a 14.3 percent plunge in September. Excluding motor vehicles, retail sales improved 0.2 percent, following a 0.4 percent rise in September. The latest number was lower than the consensus forecast for a 0.4 percent gain in October. Excluding motor vehicles and gasoline, retail sales increased 0.3 percent, matching September's gain. Gasoline surprisingly was flat in October, following a 0.9 percent increase the month before… Outside autos and gasoline, sales were mixed. On the positive side, the biggest gainers were food services & drinking places, up 1.2 percent; non-store retailers; and miscellaneous store retailers, up 0.9 percent. Two of the biggest losers were those still suffering from the slump in housing. Building materials & garden equipment dropped 2.4 percent while furniture & home furnishings slipped 0.8 percent. Sporting goods, hobby, book, & music store sales fell 1.2 percent…”
What I did here was to print the 2nd para of the Econoday report 1st, etc. I don’t care that Oct was not as bad as Sept, the facts are (i) there was a miss against expectations, (ii) Y/Y the sales are down -2.6% excluding autos, and (iii) immediately after this report was published, the headlines from Reuters, AP and the rest were that retail sales were hot. What absolute drivel. If America is going to get back on track, it has to take the Hollywood make-belief stuff out of New York. There is such a disconnect right now between the nonsense coming out of NY and Washington with the rest of America, the people mired in the real world, that the rest of the world is losing confidence. If America wants a stronger Dollar backing a stronger economy, it ought to start by its financial media and Wall Street reporters sticking to the facts. As it is, things are totally out of control in this regard.
US Producer Price Index. After the release of the data at 8:30am ET, at 11/17, Econoday reported,
“Higher oil prices boosted the headline PPI but the big story is a sharp decline in the core PPI. The overall PPI increased 0.3 percent in October after dropping 0.6 percent the month before. The rebound in October was lower than the consensus forecast for a 0.5 percent boost. The increase in the latest month was led a 1.6 percent boost in energy and a 1.6 percent rise also for food. But at the core level, the PPI rate unexpectedly dropped 0.6, following a 0.1 percent dip in September. The market had expected a 0.1 percent gain for September. The fall at the core level was due mainly to declines in prices for light trucks and passenger cars. The Bureau of Labor Statistics indicated that the core would have been up 0.1 percent in October… Turning to some component detail, the October rise in energy prices was led by gasoline which rose 1.9 percent after declining 5.4 percent the month before… The core rate was pulled down primarily by 5.2 percent drop in light truck prices and a 0.5 percent decline in prices for passenger cars… For the overall PPI, the year-on-year rate rose to minus 1.9 percent from minus 4.7 percent in August (seasonally adjusted). The core rate year-ago pace eased to up 0.7 percent from up 1.8 percent the prior month. On a not seasonally adjusted basis, the year-ago decrease for the headline PPI was 1.9 percent while the core was up 0.7 percent… While finished goods prices were soft at the core level, inflation pressures firmed at earlier stages of production. In October, prices received by manufacturers of intermediate goods moved up 0.3 percent and the crude goods index increased 5.4 percent… Overall, inflation pressures are mixed with end demand keeping most prices soft for core finished goods but food, energy and commodities are maintaining upward pressures. Treasury yields eased just after release of today's report.”
What this report is saying is that there is a severe cost to the weak Dollar policy being followed by the Fed, which is aiding the exporters who, btw, are giving away their products to foreigners whose currencies are now inflated beyond belief. But the American people can read those prices for the necessities like food and energy and weep. Without jobs they cannot even pay for those necessities nevertheless take advantage of that -5.2 percent drop in light truck prices.
US Industrial Production. After the data release at 9:15am ET on 11/17, Econoday reported,
“In October, the industrial sector remained in recovery mode, but slipped to a slower pace. Manufacturing actually edged down. Overall industrial production in October edged up 0.1 percent, following a revised 0.6 percent increase the prior month. October's gain came in below the market forecast for a 0.4 percent rise. However, the manufacturing component declined 0.1 percent, following a revised 0.8 percent jump in September. In the latest month, utilities output rebounded 1.6 percent while mining output dipped 0.2 percent… Within manufacturing, durables fell 0.4 percent after jumping 1.1 percent in September. Motor vehicles and parts slipped 1.7 percent in October after an 8.1 percent boost the prior month. Non-durables advanced 0.2 percent in the latest month, following a 0.7 percent increase in September… Compared to recent months, the change in auto output had a modest effect on the broad aggregates. By special category, overall production excluding motor vehicles was up 0.4 percent for October while manufacturing ex-motor vehicles was down 0.1 percent… Overall capacity utilization in October continued its rise from the historical set in June, posting a gain to 70.7 percent from 70.5 percent in September. The October number matched the consensus forecast… On a year-on-year basis, industrial production in October slipped to minus 7.1 percent from down 6.0 percent the month before… Basically, the recovery continues but likely with a choppy trend. While there is much news yet to come, the initial numbers for the fourth quarter suggest a slower growth rate than in the third quarter.”
Actually growth of +0.1% over the prior month may be technically called growth, but industrial production, despite a crashing US Dollar that provides a home run pitch to exporters, the boys are striking out, down -7.1% Y/Y. Also, if a company closes an unproductive plant, it’s a bonus to the statistic called capacity utilization. Unfortunately that’s not the case for the laid-off workers.
US Consumer Price Index. After the data release at 8:30am ET on 11/18, Econoday reported,
“Consumer price inflation was warmer than expected. Headline consumer price inflation firmed to a 0.3 percent boost after rising 0.2 percent the month before. The market had forecast a 0.2 percent gain. Core CPI inflation was unchanged with a 0.2 percent increase and was above consensus expectations for a 0.1 percent rise. But some of core strength appears to be temporary… First, boosting the headline number was a 1.5 percent jump in energy prices after a 0.6 percent rise in September. Gasoline was up 1.6 percent, following a 1.0 percent increase. Food price inflation was restrained in October with a 0.1 percent rise, following a 0.1 percent dip the month before… The core rate was driven up by vehicle prices for the most part. According to the BLS, the indexes for used cars and trucks and for new vehicles both rose sharply and together they accounted for over 90 percent of the increase in the index for all items less food and energy. The index for new & used vehicles jumped 1.7 percent after a 0.5 percent rise in September. The indexes for airline fares and medical care also increased, by 1.7 percent and 0.4 percent, respectively. Indicating softness in the underlying trend for the core, the shelter index was unchanged and the indexes for apparel and recreation declined… Year-on-year, headline inflation increased to minus 0.2 percent (seasonally adjusted) from down 1.3 percent in September. The core rate was firmed to up 1.7 percent in October from up 1.5 percent in September. On an unadjusted year-ago basis, the headline number was down 0.2 percent in October while the core was up 1.7 percent… Overall, inflation outside of energy likely is not accelerating but neither is it as subdued as the Fed probably prefers. Treasury yields generally firmed on the news despite lower housing starts announced at the same time.”
A week or two ago, I opined that producer and consumer inflation would be seriously impacted at some point by the weak Dollar policy of the US. Wait for it.
US New Housing Starts. After the data release at 8:30am ET on 11/18, Econoday reported,
“Housing activity unexpectedly fell back in October, calling into question the strength of housing recovery. Housing starts in October dropped 10.6 percent, following a revised 1.9 percent gain the month before. October's 0.529 million unit pace of new home groundbreaking came in much lower than the consensus forecast for 0.600 million unit and was down 30.7 percent on a year-ago basis. The decline was led by a 34.6 percent plunge in multifamily starts but the single-family component also slipped-by 6.8 percent… By region, the October drop in starts was led by an 18.8 percent fall in the Northeast. Other Census regions also declined: the Midwest, down 10.6 percent; the South, down 9.6; and the West, down 8.5 percent… Homebuilders appear to be cautious about upcoming new home sales as housing permits in October dropped 4.0 percent after dipping 0.9 percent the month before. October's pace of 0.552 million units annualized was down 24.3 percent on a year-ago basis… October's starts numbers were disappointing and likely reflect concern by homebuilders about the housing market once the first-time homebuyer tax credit was expected to expire at the end of November. That credit has been extended and expanded and we may see some pickup in coming months in the single-family component. Weakness in the multifamily component will still be affected by high vacancy rates but this component is volatile… On the release, equity futures slipped as Treasury yields mostly firmed (but as a result of higher CPI inflation announced at the same time).”
Toll Brothers (TOL) had a bit of a boost a couple weeks ago, carrying the stock to a gain M/M. but Pulte (PHM) and Lennar (LEN) have had a tough 4 weeks. All three were down on the week and on Friday. This report is not looking good for the Housebuilders.
US Jobless Claims for Week Ending Nov 14. Following release of the data at 8:30am ET, at 11/19, Econoday reported,
“Jobless claims continue to come down. Initial claims fell 12,000 in the Nov. 7 week to a level of 502,000 (prior week revised 2,000 higher to 514,000). The four-week average shows the progress that's underway, down 4,500 to 519,750 for the lowest level since last November. Continuing claims extended their long downward trend, falling a very large 139,000 to 5.631 million (Oct. 31 week). Though some of this improvement may reflect new hiring, much of it unfortunately reflects the expiration of benefits. The number receiving extended benefits fell 28,243 to a level of 523,061, while those receiving emergency compensation rose more than 20,000 to 3.52 million (both Oct. 24 week). The unemployment rate of insured workers continues to fall, down another tenth to 4.3 percent and in big contrast to total unemployment which has continued to rise, jumping to 10.2 percent in October. Unemployment remains high but initial jobless claims are definitely improving in what is a big plus for the labor outlook. Though better than expected, today's report is having no initial impact on financials markets.”
Is the US labor market improving? The richest nation on earth now has 3.52 million individuals on emergency compensation, and another 5.89 million on regular unemployment benefits. How many more millions are homeless and wondering about getting through the day nevertheless the week, the month or to the next annual million dollar bonus? Is unemployment really -10.2% or is double that number?
Here are the key US economic reports on next week’s calendar.
US Existing Home Sales. Ahead of the release of the data at 10:00am ET, at 11/23, Econoday reported, “Existing home sales in September spiked 9.4 percent to a 5.57 million annual rate. Existing home sales have been on a healthy uptrend in recent months, showing gains in five of the last six months. Recent numbers have been boosted by the clock ticking down on tax credits for first time home buyers with closing required by November. Tax credits have been extended and expanded but we are likely to see an easing in sales as there are not as many in the eligibility pool for these tax credits as in earlier months. And rising unemployment is weighing on other potential buyers.”
US GDP Estimate Revision. Ahead of the release of the data at 8:30am ET, at 11/24, Econoday reported, “GDP for the third quarter in the advance estimate came in stronger than expected with a 3.5 percent gain, following a 0.7 percent dip in the prior quarter. The third quarter boost was the first positive GDP number since a 1.5 percent increase for the second quarter of 2008. Cash for clunkers did add substantially to third quarter growth as motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change. Inflation is still subdued as the GDP price index edged up 0.8 percent, following no change in the second quarter. Looking ahead, more recent monthly numbers indicate a downward revision to third quarter growth—including negatives from monthly international trade and business inventories.”
US Consumer Confidence Index. Prior to the data release at 10:00am ET on 11/24, Econoday reported, “The Conference Board's consumer confidence index for October fell more than 5-1/2 points to 47.7 in October. The assessment of current conditions was alarming, at 20.7 for a nearly 2-1/2 point decline and the lowest reading yet of the cycle. The big concern was jobs. The expectations component also fell, down 8 points to 65.7. The drop in expectations was led by a fall in the proportion expecting higher income in coming months and by a larger share seeing a decrease in income.”
US Durable Goods Orders. Prior to the data release at 8:30am ET on 11/25, Econoday reported, “Durable goods orders in September rebounded a revised 1.4 percent, after a 2.7 percent drop in August. Excluding the transportation component, new durables orders posted a revised 1.2 percent boost, following a downwardly revised 0.5 percent dip. The rebound in new orders was led by machinery and transportation equipment. Weakness was seen in electrical equipment, computers & electronics, and “all other” durables.”
US Personal Income and Outlays data. Prior to the data release at 8:30am ET on 11/25, Econoday reported, “Personal income in September was unchanged, following a 0.1 percent gain in August. But worse yet, the wages and salaries component declined 0.2 percent after rising 0.2 percent in August. With cash-for-clunkers having expired in August, consumer spending in September fell significantly on a plunge in motor vehicle sales. Personal consumption expenditures dropped 0.5 percent after a 1.4 percent surge in August. The headline PCE price index eased a little to a 0.1 percent increase, following a 0.3 percent jump in August. Core PCE inflation was steady with a 0.1 percent boost in September. Looking ahead, we should see improvement in most numbers in October. The wages & salaries components should rebound as average weekly earnings were up 0.3 percent for October. Spending also should make a nice comeback as both retail sales and unit new motor vehicles rebounded in October. Inflation, however, should be up as the headline CPI rose 0.3 percent in October while the core CPI increased 0.2 percent.”
US Jobless Claims for Week Ending Nov 21. Following release of the data at 8:30am ET, at 11/25, Econoday reported, “Initial jobless claims were unchanged in the November 14 week at 505,000. The four-week average fell 6,500 to 514,000, down for a convincing 11th straight week. Continuing claims, down 39,000 to 5.611 million in the November 7 week, extended what is an even longer run. The expiration of benefits, however, clouds the significance of this reading.”
US Consumer Sentiment. Prior to the data release at 9:55am ET on 11/25, Econoday reported, “The Reuter's/University of Michigan's Consumer sentiment index for early November fell back a very steep 4.6 points to a very weak 66.0. Weakness was split between current conditions and the outlook. The retreat in confidence was tied to the still contracting jobs market.”
US New Home Sales. Prior to the data release at 10:00am ET on 11/25, Econoday reported, “New home sales in September fell 3.6 percent to a much lower-than-expected annual rate of 402,000. Supply on the market was steady and still elevated with months’ unchanged at 7.5 months. However, it was a notable improvement from earlier in the year and especially against the year-ago level of 10.9 months. Apparently, the likely reason that existing home sales did well in September but not new home sales is that homebuilders were trying to keep sales prices up while those in existing home have been more willing on price concessions. The median price of new homes rose 2.5 percent in the latest month to $204,800.”
For those Americans who do have a home and a job, Thanksgiving has taken on additional meaning this year.
Econoday’s reports, with charts, are informative, concise, and objective. I believe they teach and provide input that can be used in trading decisions. When I think it is important, I add comments, but for the most part, Econoday does an exceptionally fine job. Here is a plug for Cynthia Parker at Econoday:
http://www.econoday.com/clients/mam/index.html
International Equity Markets Review
International equity indexes in the world were mixed this week. Japan continued to be extremely weak, but Shanghai was still lifting on the recently reported strong economic data.
There are many political events and economic reports that are causing cross currents, with potential for boosting the US Dollar. Economic weakness in Japan, UK and Europe has become evident.
There are 16 country index charts from StockCharts.com (with their formal approval btw) because I think it is important to be watching these markets move through a trend juncture together, and in relation to currency and commodity strength or weakness. With the Drupal platform well in place, we can expand these tables if you wish.
Here is the latest session data for the exchanges of the Americas.
Here is the latest chart for the Brazilian Bovespa stock exchange in Sao Paulo.
Brazilian Bovespa stockcharts.com chart
Here is the latest session data for the Toronto Stock Exchange composite index.
Toronto 300 stockcharts.com chart
Toronto CDNX stockcharts.com chart
Europe
Here is the latest session data for the bourses of Europe.
Here is the latest session data for the London stock exchange FTSE.
FTSE 100 stockcharts.com chart
Here is the latest session data for the German DAX.
Here is the latest session data for the French CAC 40.
Here is the latest session data for the Milan Italy stock exchange MIBTEL.
Italian Milan Index stockcharts.com chart
Here is the latest session data for the Swiss market index. Swiss Market Index stockcharts.com chart
Asia-Pacific
Here is the latest session data for the Asia-Pacific stock exchanges.
Here is the latest chart for the Japanese Nikkei 225 index.
Tokyo Nikkei 225 Index stockcharts.com chart
Here is the latest chart for the Singapore index .
Singapore Straits Times Index stockcharts.com chart
Here is the latest chart for the Shanghai Composite index .
Shanghai Composite Index stockcharts.com chart
Here is the latest chart for the Hong Kong Hang Seng index .
Hong Kong Hang Seng stockcharts.com chart
Here is the latest chart for the India BSE 30 index .
Mumbai BSE 30 Sensex Index stockcharts.com chart
Here is the latest chart for the Australian All Ordinaries index .
Sydney All Ordinaries Index stockcharts.com chart
Russia (RTS) stockcharts.com chart
International equity market ETFs Review
Nine of the 11 country ETFs I track were down W/W, with Australia (EWA -3.36%) being the worst of these, and Russia (RSX +1.59%) and Brazil (EWZ +0.17%) being the only winners.
Russia was up +6.38% a week earlier, so traders will be interested to see if that kind of strength would persist in a natural resources strong economy in the face of a rising $USD.
With the average daily turnover in global foreign exchange markets estimated at $4.0 trillion according to the Bank for International Settlements, it should not be shocking that international equity prices rise and fall quickly.
We are watching the trading in shares of Deutsche Bank and Hong Kong and Shanghai Bank (HSBC) in the U.S. versus their domestic markets, which appears to be a Dollar play.
Table 13: International equities via an ETF perspective (in $USD)
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
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:
Here are the links to interactive charts from Billcara2.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
The S&P 500 has been backing and filling for about five or six weeks, with only a small bias to the upside. It appears to me that money flows are increasingly negative for most stocks and that fewer are now carrying the load when the S&P advances.
As stated a week ago; technically, flatness in a rising market sets up a flag pattern that must be watched. Without doubt, the charts still show a series of higher lows and highs, so as we opined two weeks ago with the S&P at 1069, the next step up the ladder had better be above the October S&P high of 1101.36. But the move a week ago took the S&P up to 1093.48, and this week there was a 1091.38 close.
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 BillCara2.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.
Table 14: Dow 30 List
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Here are the links to interactive Dow charts from Billcara2.com that I broke into groups of ten, which you can add technical indicators for as well.
(list one)
(list two)
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.
Value Line Report(s) this past Friday
This week, Value Line reported on four DJIA components: American Express (AXP), Bank of America (BAC), JP Morgan (JPM), and Microsoft (MSFT). I usually joke that Microsoft, with its embedded customer base and revenue stream from its ubiquitous products, is the strongest bank of them all. None, however, are Cara 100 companies, although with its financial strength, sound management, and peer group leading operating metrics, Microsoft could be. In any case, I prefer Google (GOOG), which I think ought to be one of the DJIA 30 components.
As stated three months ago when looking over this list of Value Line analyzed companies, I have no doubt that Bank of America and JP Morgan have seriously affected their goodwill based on the goings-on this decade.
In any case, let’s look over these four important components of the DJIA index.
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 Nov. 22: next one is due Feb. 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 Nov. 22: next one is due Feb. 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 Nov. 22: next one is due Feb. 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 Nov. 22: next one is due Feb. 19)
The Value Line analysts are not very encouraging. Here is what they had to say about each company: August 21, 2009
American Express:
American Express Company continues to go through challenging times… Amex repaid the $3.4 billion given to it, for preferred shares, under the U.S. Treasury Department’s Capital Purchase Program. We remain upbeat about the company’s 3- to 5-year operating performance. At the stock’s current quotation, price-recovery potential looks appealing.I dislike the use of the word repaid as it infers a loan. Preferred shares were sold, so the term should be they were repurchased. These companies did so in order to avoid the government’s conditions of the share acquisition. Pure and simple, this is posturing by capitalists to avoid discussion that govt in America had to take control of the private sector, i.e., socialism. The fact that Value Line has helped sell this notion that America has remained true to its capital roots makes me ill. Like it or not, the people bailed out these financial companies because they were deemed too big to fail. The US capital markets are not free, and they have not been for many generations, but the financial publishing industry continues to sell that notion to a stupid populace who is getting screwed left, right and center.
As for American Express, I am not a Buy-and-Hold investor, so I could give a rat’s you know what about whether Value Line thinks the 3 to 5 year operating performance may be up-beat, and given that the shares have lifted from a bottom in March of just $9.70 to the report price of $31.51 or today’s price of $32.85 (a gain of +238.7%) in five and a half months, I could care less about the VL opinion “At the stock’s current quotation, price-recovery potential looks appealing.” You know why they didn’t tell us at the beginning of March or the beginning of June something like that? It’s pure and simple; they like you and I had no clue. They were not in the room with Geithner, Bernanke, Dimon and the boys from Goldman Sachs. If they had been, they wouldn’t be writing this crapola; they’d be scamming $100 million a day trading against you and me, like the guys I just mentioned, the Humungous Bank & Broker (HB&B) oligarchists.
Yes, the company continues to go through challenging times. That why this mega-large cap stock soared +239% in under six months. Now, if Amex is good or real lucky, their two year (2009 and 2010) earnings will equal 2008, and 2008 was down about -30% from 2007.
What a professional analyst would have done with this report is show us some analysis of account delinquencies and write-downs, and maybe how this company would have fared without a taxpayer supported Fed bending over backwards to this company at ridiculously low rates that they turn around and stick to solid customers at humungous rates if god forbid somebody might not pay off the entire charges within 30 days. Without the taxpayer and customers who don’t pay off 100% of their charges every month, this company would be toast. Anyway, Value Line’s Frederick L. Harris III “remains upbeat”… Earth to Freddie, earth to Freddie, where are you?
Bank of America:
Bank of America’s June-quarter performance would have been much weaker absent unusual items… The company’s early-stage consumer loan delinquencies seem to be stabilizing, but its credit costs probably will remain high in the second half and in
2010… Bank of America faces a tough second half in other respects… The recovery pace should pick up by late 2010… Bank of America shares, ranked unfavorably for Timeliness, are best suited for patient investors, since a full earnings rebound will take time. Our estimates don’t yet reflect repayment of the preferred stock sold to the government last fall, which is currently under discussion and likely to proceed in stages in 2010.
Once again, this is a repurchase, not a repayment. They didn’t borrow money. They were bankrupt and the taxpayer had to rescue them with an equity injection they need to raise other equity, which they needed to maintain minimum regulatory reserves, which they still don’t have if they recognized the true losses in their real property asset backed loan holdings. Tell me, what is being learned today by young Americans. They get fed this crapola from bankers they have been brought up by caring parents to have a high regard for. But it’s nothing but crapola and Value Line ought to be ashamed for misrepresenting the facts. The facts are that Bank of America at the time didn’t have a financial covenant sufficient to permit them to borrow the capital they needed to avoid a run on the bank and certain bankruptcy.
Anyway, the shares have soared from $2.50 in early March to $15.85, the date of this VL report, or $17.46 (did you blink?) as at the Friday close. Yes, BAC has gained +10.2% in just the last seven sessions and +598.4% since early March, just five and a half months ago. Any day now UBS ought to be upgrading the rating to Strong Buy to thank the IRS.
Sorry, I can’t get excited about what these bankers and analysts are writing about one another. With these phenomenal gains in recent months, the new recommendation is downright deceitful: “Bank of America shares… are best suited for patient investors”. Trapped; that’s where they want you to be. Hold the risk that you bought recently from them. Wait for a couple years, get discouraged, and then sell them back your BAC shares the next time they feel ready to move it higher.
My how history changes. Ken Lewis must be feeling like a King. The VL analyst is reporting that “The profit contributions from recent acquisitions (Countrywide and Merrill Lynch) should increase” – I suppose in late 2010, if I read this right. Hey, what happened to the story that Bernanke and Paulson threatened Lewis if he refused to close the Merrill Lynch deal? It’s amazing that what’s really important in America gets swept under the carpet while the players diddle the public with nonsense.
JP Morgan:
JPMorgan Chase repaid the $25 billion of preferred stock sold to the government last fall. The move reduced June-quarter earnings per share by $0.27. Excluding the unusual items, results, though decent, may not be quite as strong in the next couple of quarters… The weak economic climate probably will also further dampen demand for commercial loans and depress credit card charge volume, which we think will restrain revenue growth. And in the corporate business line, the $820 million of treasury trading gains and $150 million gain on the sale of MasterCard shares in the June period probably won’t repeat— though neither will the costs of repaying the preferred… In all, we still look for 2009 share net in the $1.50-$1.70 range… Although we are optimistic regarding JPMorgan’s long-term prospects, the stock price has strengthened recently, leaving the issue with less-than average appreciation potential to 2012-2014. And the issue isn’t timely.
There we go again; that word repaid. But now we are discovering that the payback or repurchase, which is what really happened, was a tax write-off, as the “expense” cost the company 27 cents per share, which on 4 billion shares, was over $1 billion. Was that the loss on the warrants? How did that square with the trading gains on that cool $25 billion investment by the taxpayer they apparently didn’t need because the full year’s earnings were still 84 cents after tax on 4 billion shares. And that’s after paying staff bonuses of how many billions?
Who really knows what happened here. Jamie Dimon runs this company, and he’s by far the most influential director of the New York Fed. If Barney Frank’s committee really cared about what was happening there, he’s summon Dimon to give testimony in the House, without giving the list of soft-ball questions in advance.
The money behind this bank, and behind Goldman Sachs, is the same money behind the President – this one, the last one and the ones before that. Now even almost President Al Gore is hooked into the Goldman Sachs crowd. Amazing isn’t it.
How can anybody analyze this stuff when nobody except a handful of people really knows what’s going on? You can’t. We have returned to the days when – whisper whisper – my well-connected friend told me to buy the stock. It’s not right and we all know it.
Final point, the Value Line analyst’s final comment, “And the issue isn’t timely.” Hmm. I see VL raised the rating for Timeliness (which is apparently Fundamental Timeliness as opposed to Technical Timing) on April 10, and the Technical Timing on August 21 (Friday), so what pray tell is Ms Brophy referring to?
Microsoft:
Broad economic trends will likely continue being a factor in Microsoft’s performance… Revenue growth may well be modest for the year… Cost control should work to support profitability… Microsoft shares are neutrally ranked for Timeliness.
Pretty uninspired work, I’d say. There’s more of that “this recession appears to be nearing an end” kind of perspective where things might improve, but then again, maybe not… Nobody knows, and hence nobody wants to put some hard recommendation in print. They’ll gang up on TV and say it – on the days the market indexes have been booming – but not so much otherwise.
The one thing I found noteworthy in the data shown by Value Line was overlooked by the analyst. In the past siz months, from 12/31/08 through 6/30/09, the current ratio (current assets less current liabilities) has improved enormously. In fact the quick ratio (cash+marketable securities+receivables divided by current liabilities) has soared. No mention by the VL analyst however.
http://en.wikipedia.org/wiki/Current_ratio
http://en.wikipedia.org/wiki/Quick_ratio
Rather than listen to nonsense spewed by Talking Heads, I highly recommend going back to the basics of investing and trading. That’s what I did with my Lessons from the Trader Wizard book. As football coaches know, if the team can’t block and tackle, they can’t win many games. Sure, they’ll win a couple on Hail Mary type plays, but believe me; you cannot understand the nuances of trading, of reading chart patterns and making important decisions, unless you have a well-rounded understanding of the basics. What you are being fed by Wall Street today, and ever since they decided that proprietary trading was more important to them (ie, their personal bonuses) than selling bonds and stocks, and making loans, is part of a dummying down process. You are being told to follow pied pipers, and when you do, you may win once or twice and then you’re dead. And if you really think Goldman Sachs cares an iota about the clients they rip for $100 million a day, forget it.
You have to learn the basics so that you get to understand and monitor the right information in several high quality corporations, continuous through the years, through thick and thin, recognizing that everybody goes through the bad times, whether it’s Procter & Gamble, Wal-Mart, IBM, Exxon, Intel, Johnson & Johnson, McDonalds, or others I have listed.
If you have enough time to study just a dozen of these companies, you will quickly realize that following the ones that lose money often, change CEO’s often, struggle to match the metrics of their peer group, and so forth, are not the companies you have time for. So, why bother? Just because a Wall Street analyst thinks the prospects of a dog are going to improve, if it’s not a pony, it will never turn out to be a pony. Nothing against pet dogs, but you know what I am saying. Why for instance would anybody – other than a few insiders – have any interest in Sears Holdings Corp (SHLD)? Six or seven years ago, some financial engineers took control of a beaten up retailer that once had a great name. They took the stock from about $25 to almost $200 over about four years. Then the stock dropped back to $25 before there was short covering. The store operations are being unwound. Is this the kind of thing you have time for? I have a lot of time for a US universe that covers 150 companies, but not for ones like this.
I often write about some of these companies in order to draw you out. If people don’t communicate, they can’t learn. Simple as that.
The charts show me the following Monthly-Weekly-Daily RSI-7 numbers for:
AXP: 60.3 73.2 69.6 (recent pump job, ready to give a Sell Alert id the Weekly-Daily falls below 70.)
BAC: 50.7 78.0 69.4 (another recent pump job but with the Weekly RSI-7 hanging in a sideways pattern and the Daily almost back up to 70, the stock needs to sidetrack here (ie, buy time) or else correct a bit, otherwise, if it keeps rallying, it’s going to crash.)
JPM: 63.7 79.1 68.5 (same picture as BAC except that the Weekly RSI-7 is still in rally mode. Don’t ignore the possibility that the inside promoters would not pump, buy puts, and stop the bid, causing the stock to fall well back where they will add to positions and start the cycle over again.)
MFST: 59.5 68.4 70.5 (the Daily is in the same boat as the other three. Interesting eh? The Weekly though has sidetracked before a recent move higher, almost to 70. The Monthly seems to be aimless at this point.)
Obviously the Weekly RSI-7’s for JPM and BAC show the biggest over-sold picture, but there could be another few days of pumping action that could see the Daily RSI-7 lift higher. The Fed might have to help more for that though.
I don’t feel comfortable at this point in really even commenting because I think that Wall Street, not just Humungous Bank & Broker (HB&B), but their friends in the buy side asset management business at the top end are in on the same pumping action. China on Wednesday might have scared them. The start of this week certainly did. It’s just a matter of time before the public realize that beating easily beatable earnings estimates is nothing to sock away your pension money for. They will look at the actual PE multiples and realize they have been seduced into a shell game. Once the selling starts, the big guys will have an exit strategy. It probably won’t be pretty for the average trader.
I say that, but in fact I am not sure a crash will happen. It just happens often enough for me to say, oh my, where is the rat catcher? This time around, I plan to write it up.
September is when volatility picks up. That’s when things get really interesting, I think.
Now fast forward to Nov. 20:
To study these companies; after re-reading my previous notes along with the recent Value Line studies, I put the following up-to-date charts on my screen:
http://billcara2.com/tkchart/tkchart.asp?stkname=AXP&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=AXP&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=AXP&ind=rsi&wt=0
http://billcara2.com/tkchart/tkchart.asp?stkname=BAC&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=BAC&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=BAC&ind=rsi&wt=0
http://billcara2.com/tkchart/tkchart.asp?stkname=JPM&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=JPM&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=JPM&ind=rsi&wt=0
http://billcara2.com/tkchart/tkchart.asp?stkname=MSFT&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=MSFT&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=MSFT&ind=rsi&wt=0
The performance over the past three months are illuminating. The stock of the true banks, Bank of America and JP Morgan, which had been oversold back on August 21, lost -7.8% and -2.7% respectively this quarter, while at the same time, the stock for American Express and Microsoft has gained +24.6% and +21.3% respectively.
The charts show me the following Monthly-Weekly-Daily RSI-7 numbers for Nov. 20 (versus Aug. 21 in brackets):
AXP [$40.93]: 72.2 83.4 66.7 (60.3 73.2 69.6 with Aug 21 price at $32.85)
BAC [$16.09]: 48.1 52.0 55.2 (50.7 78.0 69.4 with Aug 21 price at $17.46)
JPM [$42.46]: 60.0 48.6 36.8 (63.7 79.1 68.5 with Aug 21 price at $43.66)
MFST [$29.62]: 76.0 86.2 62.7 (59.5 68.4 70.5 with Aug 21 price at $24.41)
MSFT and AXP both gave short-term Sell Alerts this week. The Weekly RSI-7’s for both are in the mid to high 80’s, which is extremely hot. I suspect that should the market continue this week’s selling well into next week and the next, these two stocks would give intermediate-term sell signals. But what has been happening since July this year is that every time one of these stocks, and quite a few like them, gives a Sell Alert the price is supported right at the rising trendline, shooting the stocks to higher prices. I believe this is the impact of programmed trading. Computers and not human beings are in control of these stocks, as well as the others that are acting the same. This has been a controlled market. What must be concerning the Interventionists (i.e., the 400+ Fed Open Market Committee traders) is a potential roadblock in the form of stiff regulatory reform legislation in Congress.
In terms of what the Value Line analysts are reporting about these companies; this is what I picked up:
American Express (AXP): The 2009 Credit Card Accountability, Responsibility and Disclosure (CARD) Act will put some pressure on the company, but not much. Traders continue to buy the stock higher even though the operating performance and financial strength ratings have dropped, and there is no share buy-backs program or dividend increase in place. Meanwhile, the economy is crushing the big spenders and the bad debts are soaring. 2010 earnings are expected to be better than 2008 0r 2009, but not as good as any year going back to 2002. Seems to be the perfect, i.e. unexplainable, scenario for a stock that has risen +24.6% this past quarter and is the top performer for the year in the DJIA 30. I think there are too many balance sheet items under the heading “Other” to make me wonder what’s really going on here. But something definitely is. I’m not going near the stock.
Bank of America (BAC): What a disaster earnings have been in 2008 and 2009, and we all wonder what they would really be like had (i) the taxpayer not bailed out this company, (ii) the Fed not dropped interest rates to zero, and (iii) management not kept hidden all the dirty laundry in the form of worthless holdings. But CEO Ken Lewis is on the way out, and maybe that’s the reason VL raised their Timeliness and Technical ratings to a 3 and a 1 recently. In retirement one would hope that Lewis makes a gazillion dollars writing a book on what did in fact happen between him, Paulson, Geithner, Bernanke and Thain. I’d read that book (note I didn’t say buy it). The stock is up from a low this year of $2.50 to a current $16.09 and even that is well off its recent high. That makes sense; if 2010 is a good year, the earnings ought to be back to the 1993 level. Wow, how do you even comment? Liar loans at ridiculously low rates, followed by stripped houses where the appliances were shipped in convoys into Mexico by the occupants of those houses who then foreclosed… It is just so mind-boggling that the same management, the same regulators, and the same investment bankers are in place today. Nothing has changed. The Bank of American Taxpayers have paid for this disgrace, and will be paying for probably another generation. Anyway, Value Line thinks investors can achieve Total Returns of between +13% and +26% annually through 2014. All they need to do is find the same people who have been buying AXP. Definitely, I’m not going near the stock.
JP Morgan (JPM): The stock has tripled off the lows in March and yet still has not resolved its Credit Default Swap problem. Pathetic return on assets and pathetic return on equity, plus 2010 earnings that hopefully get back to 2004-2005 levels. Dividend cut to 5 cents a quarter… but Value Line says it will be restored “once unemployment stops rising and loan losses moderate”. Wow, straight out of a BAC press release because a professional analyst couldn’t be that bad I don’t think. All in all, other than his inside the Fed of New York boardroom seat, what is Jamie Dimon doing to live up to the self-hype and admiration he continues to bestow on the world. I don’t get it. Definitely, I’m not going near the stock.
Microsoft (MSFT): Key words in the Value Line study: “… it remains an open question as to when spending patterns are to begin their advance.” I think most Americans are asking themselves the same question, as in “Can we get to the end of the month without being a dollar short?” But you know, Microsoft revenues and earnings are down, but not that bad. Dividends are increasing nicely every year. New and improved versions of old products are being rolled out every year. A balance sheet rated A++. Management that has played the Yahoo card right, I think. Assets that have been properly accounted for. Share buy-backs. Great returns on equity and excellent profit margins. If it were not for Google (GOOG) being in the Cara 100, this company would be. But, just like Walmart (WMT), Microsoft seems to be a company most investors don’t like, or like enough. I like it. Would I buy it here right now, no. The stock has had a run. The market has had a run. Time for a break. For many conservative accounts though, MSFT would fit if the timing is right.
The Dow 30 Company links in chronological order of the upcoming reports.
Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Google Finance file)
(JNJ: Yahoo Finance fle)
(JNJ: StockChart chart)
(JNJ: Billcara2 chart)
(JNJ: ADVFN Financial Data)
(JNJ: Value Line Report Aug 29: next one is due Nov 27)
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 Sept. 4: next one is due Dec. 4)
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 Sept. 11: next one is due Dec. 11)
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 Sept. 11: next one is due Dec. 11)
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 Sept. 18: next one is due Dec. 18)
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 Sept. 25: next one is due Dec. 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 Sept. 25: next one is due Dec. 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 Oct. 2: next one is due Dec. 31)
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 Oct. 2: next one is due Dec. 31)
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 Oct. 9: next one is due Jan. 8)
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 Oct. 9: next one is due Jan. 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 Oct. 9: next one is due Jan. 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 Oct. 9: next one is due Jan. 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 Oct. 16: next one is due Jan. 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 Oct. 16: next one is due Jan. 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 Oct. 16: next one is due Jan. 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 Oct. 16: next one is due Jan. 15)
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 Oct. 23: next one is due Jan. 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 Oct. 23: next one is due Jan. 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 Oct 30: next one is due Jan 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 Oct 30: next one is due Jan 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 Nov 6: next one is due Feb 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 Nov. 13: next one is due Feb. 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 Nov. 13: next one is due Feb. 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 Nov. 22: next one is due Feb. 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 Nov. 22: next one is due Feb. 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 Nov. 22: next one is due Feb. 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 Nov. 22: next one is due Feb. 19)
Sector ETF Summary for the US equity market
This week, there were just 4 rising sectors out of 10. The same was true on Friday.
Telecom (IYZ +1.95%), Healthcare (IYH +1.61%), Basic Materials (XLB +1.34%) and Consumer Staples (XLP +0.64%) were the sectors that lifted. Energy (XLE -1.17%) and Consumer Discretionary (XLY -1.14%) were weakest.
The S&P 500, NASDAQ and Russell 2000 small caps were down -.0.19%, -1.01% and -0.27% W/W while the DJIA actually lifted +0.47% thanks to a Friday strengthening in Merck (MRK) and Pfizer (PFE).
Here’s the SPY Monthly, Weekly and Daily data charts:
SPY Monthly data: 
SPY Weekly data: 
SPY Daily data: 
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.
Table 1: Cara ETF List is sorted by price performance Week over Week (W/W), i.e. 1W%N.
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
You can do this table yourself by entering the following string into the Summary window at Billcara2.com and then clicking on the link for Performance.
SPY XLE XLB XLI XLY XLP IYH XLF XLK SMH IYZ XLU .
You can also add more 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.
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
For these charts, at points in time when I think that market conditions might be changing, I’ll switch from RSI-7 to the more sensitive (but similarly constructed) indicator called Stochastics. These charts include the %K (fast) and %D (slow) stochastics. It will pay you to look at times when %K is above the %D and rising to stay with your price a bit. Let the force be with you. And when the %K crosses down through %D, it’s time to consider selling or taking other defensive action.
These charts show the numbers and the lines, so it’s not rocket science to follow.
In the US equity market review, I gave a list of five components of the DJIA index that I said were important and have been in large scale distribution. I showed you the chart. Take a look at the same chart, but with 9-period Stochastics (%K and %D) added to the RSI-7 chart. The arithmetic is similar, but the STO is more sensitive.
http://billcara2.com/tkchart/tkchart.asp?stkname=IBM,BAC,GE,INTC,JPM&ind...
This week nine of the ten sector ETF’s fell. Tech (XLK +0.99%) was up. On Friday, they were all down.
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 |
The Crude Oil price ($WTIC) gained -$0.44/bbl (+0.57%) to close at 77.47. A week ago, Crude dropped -$0.40.
Three weeks ago the price was $77.00. Do you recall me writing, “No change, but oh so much talk about peak oil now, and prices soon to soar above $100, so get in now yada yada… (Three) weeks ago Goldman Sachs raised their outlook for Oil to $85. Meanwhile there are analysts with big name firms who are shocked that $WTIC is above $60. It’s a riot to watch Tout TV bring out the same old, same old faces every time they try to stir things up… It’s called making the news.”
Once again, the oiler stocks moved against the Crude price. This week as Crude was lifting, albeit a tad, the Energy sector ETF (XLE -1.17%) dropped to close at 56.60. A week ago, XLE lifted +0.33% W/W to 57.27 but was still the week’s worst sector performer, and would have suffered a loss had it not been for the hype on that Friday that pushed it up +0.66%, as the price of Crude Oil dropped -0.80% on the day.
Exxon (XOM +2.6%) and Canada’s Suncor (SU +1.5%) were two that lifted but most oilers were down this week. The worst on my list were Canada’s EnCana (ECA -5.0%), Transocean (RIG -4.0%) and Schlumberger (SLB -3.3%).
As I opined here two weeks ago, “The charts are not bearish, so I would not short this sector of the market. Some like Chevron (CVX) and EOG (EOG) look toppy. But, for direction, I’d look to the $USD and if it pulls back, what that might do to the energy stocks in China and Brazil.”
No opinion at this time because traders at Goldman Sachs can still make their $85 Crude Oil a reality. I believe much depends on the price of the $USD as well as the strength of the US economy versus that of UK, Europe and Japan. Goldman could change their opinion, of course.
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 sector (XLB +1.34% W/W to 32.44) was the 3rd best performer, and was up +4.30% a week ago and +4.60% the week before that, virtually entirely on recent weakness in the $USD.
A I opined a week ago, “But the performance over five (now six) weeks is marginal, and traders are watching to see what a stronger $USD might do to these stocks.”
There were some nice gains this week in Teck Corp (TCK +8.4%), with base metals and coal, and Votorantim (VCP +5.3%), with pulp and paper operations.
Dow Chemical (DOW -1.9%) was a loser, but mostly as a correction to the previous week’s gain of +14.8%.
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 |
Industrials (XLI -0.15% to 27.46) dropped just 4 cents W/W.
There seems to be rotation within the sector, but until there is a pronounced strength in the $USD, I don’t expect the whole sector to fall. There are many strong companies here that do not rely at all on consumer spending, and they have been fortified by the economic stimulus packages spent in most countries.
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 -1.14% to 28.69) was second worst sector performer this week after being second best a week ago. Maybe the message is sinking in that the US consumer is unable to spend.
There were many losers here that we will be watching: Ebay (EBAY -4.0%), JC Penny (JCP -5.7%), Brunswick Corp (BC -5.9%), and Whirlpool (WHR -6.2%) were very weak and ought to be hurt by a credit system tightening as indicated this week.
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 +0.64% W/W to 26.89) was higher again.
Walmart (WMT +2.0% to 54.28) has broken out to the upside.
Whole Foods (WFMI -4.1%) was weak.
If the broad market pulls back, based on a stronger $USD, the Staples sector is one of the relatively safer plays.
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 +1.61% to 61.73) was up again because of the Big Pharma companies like Merck (MRK +10.2%), Bristol Myers (BMY +5.5%) and Pfizer (PFE +4.4%).
The health insurers stumbled as the Senate prepares to reject a plan approved in the House. The Aetna (AET -3.5%), United Health (UNH -1.8%) and Wellpoint (WLP -0.5%) were the weakest stocks on my health sector monitor this week.
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 |
Financials (XLF -0.41% to 14.60) was down marginally this week. There was a loss of -0.61% on Friday.
Two weeks ago I opined, “The banks, despite my rant, have charts that are looking ok.”
Many of the big winners a week ago were losers this week as it appears there is some doubt about the regulatory rule changes to come. Goldman Sachs (GS -3.8%), Credit Suisse (CS -4.9%) and UBS (UBS -6.0%) were hit. Citi (C +3.7%) managed to lift.
I remarked here two weeks ago, “The charge card companies don’t though. American Express (AXP), Master Card (MA) and Visa (V) appear to have finished a strong Bull run, or close to it.”
Then, a week ago, MA and V were flat, but AXP jumped +8.4%. I have started to question the extreme strength in AXP at this point. The stock was up +1.4% W/W but has soared +17.5% over just four weeks. Value Line and I reviewed AXP this week.
http://billcara2.com/tkchart/tkchart.asp?stkname=axp,ma,v&wt=1&ind=rsi
http://billcara2.com/tkchart/tkchart.asp?stkname=axp,ma,v&wt=0&ind=rsi
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)
Tech (XLK -0.96% to 21.69) and Semi-conductors (SMH -2.37% to 25.58) were down this week after soaring +3.1% and +4.8% respectively a week ago.
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)
Telecom (IYZ +1.95% to 18.33) was the strongest sector on the board, although Verizon (VZ +1.0%) and AT&T (T -0.9%) were mixed. Again this week, bonds were up [TLT gained +1.28% W/W, which provided a measure of support.
Here’s the IYZ Monthly, Weekly and Daily data charts:
IYZ Monthly data: 
IYZ Weekly data: 
IYZ Daily data:
Sector 55 (utilities: IDU, XLU, and VPU)
Here’s the XLU Monthly, Weekly and Daily data charts:
XLU Monthly data: 
XLU Weekly data: 
XLU Daily data:
Utilities (XLU -0.37% to 29.25) was down a tad. But this sector remains uninteresting to me.
As I wrote in this space two weeks ago, “The only utility I need right now is time off”.
http://billcara2.com/markets/mkview.asp?qte=ss&ty=tk&qt=AEP+D+DUK+ED+EXC...
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.
Table 12: US Utilities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Bonds & Yields Review
Table 10: US Treasury Yields
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 0.01 | 0.01 | 0.03 | 0.04 |
| 6 Month | 0.11 | 0.11 | 0.15 | 0.15 |
| 2 Year | 0.72 | 0.70 | 0.80 | 0.95 |
| 3 Year | 1.24 | 1.21 | 1.34 | 1.49 |
| 5 Year | 2.18 | 2.15 | 2.25 | 2.34 |
| 10 Year | 3.36 | 3.34 | 3.42 | 3.39 |
| 30 Year | 4.29 | 4.28 | 4.35 | 4.21 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 0.89 | 0.96 | 0.88 | 0.97 |
| 2yr AAA | 0.91 | 0.97 | 0.86 | 0.94 |
| 2yr A | 1.01 | 0.95 | 1.25 | 1.43 |
| 5yr AAA | 1.66 | 1.71 | 1.78 | 1.90 |
| 5yr AA | 1.68 | 1.72 | 1.83 | 1.93 |
| 5yr A | 1.77 | 1.80 | 2.05 | 2.19 |
| 10yr AAA | 3.06 | 3.06 | 3.08 | 2.95 |
| 10yr AA | 3.15 | 3.13 | 3.24 | 3.23 |
| 10yr A | 3.49 | 3.45 | 3.63 | 3.91 |
| 20yr AAA | 4.42 | 4.44 | 4.60 | 4.30 |
| 20yr AA | 4.04 | 4.48 | 4.32 | 4.25 |
| 20yr A | 4.97 | 5.09 | 4.94 | 4.73 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 1.38 | 1.37 | 1.38 | 1.59 |
| 2yr A | 1.76 | 1.78 | 1.84 | 2.20 |
| 5yr AAA | 2.71 | 2.75 | 2.80 | 3.05 |
| 5yr AA | 3.36 | 3.36 | 3.42 | 3.42 |
| 5yr A | 3.52 | 3.52 | 3.59 | 3.78 |
| 10yr AAA | 3.39 | 3.33 | 3.53 | 3.61 |
| 10yr AA | 4.62 | 4.67 | 4.51 | 4.93 |
| 10yr A | 4.53 | 4.47 | 4.68 | 4.75 |
| 20yr AAA | 5.38 | 5.39 | 5.12 | 4.99 |
| 20yr AA | 5.28 | 5.29 | 5.02 | 4.90 |
| 20yr A | 6.32 | 6.33 | 6.06 | 5.93 |
The 20-year US bond (TLT +1.28% W/W to 95.12) was up, and has been up about +1.8% over six sessions.
Treasury yields dropped on the 30-year (from 4.29 to 4.23 up to 4.40, then down to 4.35 and now back to 4.29); and the 10-year (from 3.49 to 3.38 up to 3.50, then down to 3.42 and now to 3.36); while the 5-year yield has continued to fall (from 2.44 to 2.31 to 2.29 to 2.25 and now to 2.18).
The T-bill yield moved from 0.01% to 0.03% and back this week to 0.01%, whereas the two-year bill yield has dropped from 0.84 to 0.80 to 0.72.
These markets are remarkably well managed, bearing little relationship to the real world or the real market. But there is a concern that yields are falling too quickly for there not to be Bear and Lehman-like problems ahead.
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.
This chart is stunning to long-term observers of the debt markets. Obviously, the banks are being favored.
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 |
Fannie (FNM) and Freddie (FRE) were virtually unchanged on the week. It would not surprise me to hear some deals are going on behind the scenes there.
http://billcara2.com/tkchart/tkchart.asp?stkname=FNM,FRE&ind=rsi&wt=0
Consumer Finance -USA -- Interactive Weekly Data Charts
Mortgage Finance -USA -- Interactive Daily Data Charts
Commodities Review
A week ago, with a lower $USD, traders were surprised that $CRB did not gain. In fact, it dropped -0.12%, and -0.35% a week ago, and -3.55% the previous week, plus a loss of -0.78% on the Friday before that. I typically moves like that when the $USD is rallying. So this week, when the $USD jumped +0.50% W/W the $CRB gained +2.03%. Curious. And on Friday, when the $USD soared +0.43% on the day, $CRB moved up again. So, what’s going on here? Independent traders want to know.
$CRB is now at 274.58. Four weeks ago it was over $280. So, it should either revert to that level or higher or else the $USD ought to be rallying even more here. We are, I believe, at an important juncture here where Bulls and Bears must figure out who is going to take the lead.
The 50d MA for $CRB is up from 254.03 to 255.79 to 256.46 to 257.45 to 258.07 to 259.73 to 261.44 to 263.04 to 265.03 to 267.44 over the past nine weeks, so the trend continues north, for now.
The 200-day MA has moved from 233.50 to 233.82 to 234.05 to 234.99 to 235.75 to 236.57 to 237.70 to 238.60 to 240.00 to 241.36 to 242.66 to 243.99 to 245.38 over twelve weeks.
Rising MA’s for the $CRB is basically the only time that the monetary authorities get concerned. At some point, maybe not for a while yet, but at some point, the trend in the $CRB will have to start falling or else the Fed will have to start lifting rates.
Although I use the $CRB (Reuters/Jeffries Index), principally because it’s the oldest, there are many commodity indexes: http://www.crbtrader.com/crbindex/ • Astmax Commodity Index(AMCI) • Commin Commodity Index • Dow Jones-AIG Commodity Index • Goldman Sachs Commodity Index • Reuters/Jefferies CRB Index • Rogers International Commodity Index • Standard & Poor's Commodity Index • NCDEX Commodity Index • Deutsche Bank Liquid Commodity Index (DBLCI) • UBS Bloomberg Constant Maturity Commodity Index (CMCI)
Here is a link to an article that discusses the major ones that have been around for a while: http://www.rogersrawmaterials.com/overviewandanalysis.PDF
Here is a current price summary of the heaviest weighted commodities contracts: http://money.cnn.com/data/commodities/
These indexes change their component weightings perhaps annually or even monthly, for example: http://www.seekingalpha.com/article/43586-the-new-generation-of-diversif... http://tinyurl.com/a5myfj
Interactive Chart of Weekly CRB Commodities Index:
Interactive Chart of Daily CRB Commodities Index:
Oil Review
Crude Oil ($WTIC +$0.44/bbl +0.57% to close at 77.47) was marginally higher.
Traders heard the hype, with Goldman Sachs calling for $85 oil a few weeks ago, but the recent inventory build is up because the economy is not gaining the expected traction, and maybe there are insufficient floating tankers to hide the excess production while waiting for trumped up prices. As there are attempts to create speculative demand, and Goldman has called for higher prices, I would concerned about taking positions long or short until the market gives a better indication.
I still think we’ll see a new trading range for $WTIC of say 60-70.
For $WTIC, the 50-day MA is now at 75.20, up from 74.36, 73.43, 72.81, 72.08, 71.11, 70.62, 70.20, 69.86, 69.14, 68.25, and 68.16, the prior eleven weeks.
The 200-d MA is at 63.38, up from 62.42, 61.52, 60.63, 59.75, 58.88, 57.22, 56.68, 56.06, 55.16, 54.86 and 57.96, and the prior eleven weeks.
Four weeks ago, when $WTIC closed at 80.50 (hitting a high of 82.00), I wrote, “The comparative strength chart $WTIC:$USD shows a Distribution Zone in the RSI-7 at 72.9. It usually peaks at 75-90 but lasts in the DZ about a month or two only. So with this indicator, you can watch the peak oil price soon drop off… It’s just a matter of when the $USD starts to lift.”
You can go to StockCharts.com, gallery, insert: $WTIC:$USD and then at the bottom to chart attributes and put the settings to solid line and the RSI to 7. When you see the RSI-7 bottom below 30 and start to rise, you want to be a buyer of Oil and seller of Dollars, as happened last in the first week and last week of Sept.
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
$GOLD continues to push higher. That’s a quote from a week ago, but still applies, even as the $USD lifted this week. Yes, $GOLD lifted +$31.30 (+2.80%) to close at a new high of 1150.50.
Kinda makes a trader feel the $USD will never rally. But that short Dollar is a very crowded trade. One wonders how long that situation can go on.
A week ago, I stated here that “The most reasoned approach to understanding gold prices came this week in a brief interview between an incompetent Bloomberg anchor and the world’s top authority on gold, Canada’s Pierre Lassonde… Pierre broke the issue down to simple fundamentals: (i) the decision by the central bank of India was a seminal event in the gold market, probably leading to purchases by other central banks, causing a shift in total demand from jewelery fabrication, which was the leading demand item over the past 25 years, in favor of investment hoarding, (ii) the hoarding of bullion by global investors of all types is removing much gold supply, (iii) there has been no major gold discovery in 15 years, (iv) production has dropped between -1% and -2% annually for the past 7 or 8 years, and (v) competitive fiat money devaluation being practiced by the major governments is lifting the price.”
I added some comments, “As you know I am a long-run Gold Bull. Like Pierre Lassonde and another associate Rob McEwen, I think the current cycle will go maybe 7 or 8 years, and gold will reach incredible prices – I have talked about $2500 to $5000 – and these prices will endure despite price cycles for the $USD that will rise as well as fall. That’s because all governments are spending more than they are taking in from fiscal/tax revenue. Elected representatives get elected and re-elected when they give people the easy button… Will there ever be a balanced budget in the United States again? Maybe not in my life-time or yours. It shouldn’t be that way but it is… I won’t continue on this, but there is a need for social equity. There is a need for gold… Economists like Roubini and politicians like many of the present leadership notwithstanding, there is no practical limit to the price of gold. It will continue to rise as long as honest, hard working people want to protect the wealth they have earned from their labor and their improvement to the land.”
http://billcara2.com/tkchart/tkchart.asp?stkname=gld&cht=Tech+Chart&px=3...
http://billcara2.com/tkchart/tkchart.asp?stkname=gld&cht=Tech+Chart&px=1...
http://billcara2.com/tkchart/tkchart.asp?stkname=gld&cht=Tech+Chart&px=0...
The $GOLD 50day Moving Average is now at 1054.68, up from 1039.95, 1025.60, 1011.83, 1001.95, 991.04, 981.39, 971.37, 966.19, 958.67, 949.82, 940.53, and 939.29 going back over the prior twelve weeks.
The 200d MA is 965.22, up from 959.26, 954.19, 948.59, 943.16, 938.18, 933.48, 928.70, 924.41, 918.51, 913.32, 903.20, and 897.84 over the prior eleven weeks.
I added a small cap junior miner this week despite my concern for a higher Dollar.
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 +$1.08 or +6.20% W/W to close at 18.50.
$SILVER has been on a Bull run since July with a series of higher highs and higher lows… 12.45, 14.10, 13.17, 15.19, 13.49, 17.66, 15.73, 18.08, 16.11, and now 18.83 on Wednesday. So the $SILVER contract has now set a new high.
http://stockcharts.com/charts/gallery.html?s=$silver
http://tinyurl.com/y8k8ud4
For $SILVER, the 50d MA is now 17.23, up from 17.03, 16.81, 16.52, 16.27, 15.96, 15.64, 15.27, 15.00, 14.64, 14.24, 14.02, and 13.87 the previous twelve weeks.
The 200d MA is 14.67, up from 14.53, 14.40, 14.25, 14.11, 13.95, 13.78, 13.61, 13.47, 13.29, 13.12, 12.98, and 12.83 the previous twelve weeks.
$SILVER did have its break-out, so now it’s blue sky until the $USD starts to boom and that may not happen soon, if at all.
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.
This week, $PLAT gained +$53.20/oz (+3.83%) to close at 1442.40. A week ago, $PLAT was up +$40.70, so this metal is white hot.
http://stockcharts.com/charts/gallery.html?s=$plat
http://tinyurl.com/ydwz4pn
The 50d MA is now at 1349.19, up from 1333.47, 1320.83, 1310.13, 1301.52, 1290.59, 1280.92, 1267.58, 1251.02, 1238.81, 1218.89, 1210.77, and 1204.82 over the past twelve weeks.
The 200d MA is at 1214.53, up from 1202.86, 1192.79, 1182.34, 1173.49, 1163.36, 1151.74, 1140.09, 1128.78, 1116.00, 1104.08, 1094.46, and 1083.99 the previous twelve weeks and from 1074.29 and 1063.85 the two weeks before that.
I don’t trade plat or pall, but I study them as part of the precious metals study.
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 +$7.65 (+2.14%) to close at 365.70/oz. Just like the rally in $PLAT and $SILVER, these are major moves. Bubble trouble?
http://stockcharts.com/charts/gallery.html?s=$pall
http://tinyurl.com/yenr5rj
The 50d MA is now at 325.68, up from 317.97, 312.52, 308.23, 302.88, 296.70, 291.16, 285.68, 281.86, 276.38, and from 265.26 ten weeks ago.
The 200d MA is at 262.12, up from 257.83, 253.98, 250.40, 246.85, 243.24, 239.52, 236.04, 233.16, 230.00, and from 227.13 ten weeks ago.
Spot palladium chart for the week
Interactive Chart of Weekly Palladium EOD Continuous Contract Index:
Interactive Chart of Daily Palladium EOD Continuous Contract Index:
Interactive chart of the Palladium metal index.
$COPPER contracts had a gain of +13.45 W/W (+4.48%) to close at 313.40.
http://stockcharts.com/charts/gallery.html?s=$copper
http://tinyurl.com/ybgnb7f
For $COPPER, the 50d MA is at 290.68, up from 288.35, 287.14, 286.42, 284.45, 282.60, 281.84, 278.85, 274.24, 271.42, 265.26, 260.53, 254.56 and 195.92 over the prior thirteen weeks, which is still a bullish picture.
The 200d MA is at 237.35, up from 233.29, 229.64, 225.91, 222.21, 218.48, 214.69, 210.99, 207.75, 204.45, 201.43, 198.85, and from 195.92 the prior twelve weeks.
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
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 Goldminers were once again somewhat less ecstatic this week, but strong nonetheless: $XAU (+1.82%), GDX (+2.09%) and XGD (+2.89%), bolstered with $GOLD futures that hit a high of $1152.80 and $SILVER at $18.83 on Wednesday.
Goldcorp (GG) and Kinross Gold (KGC) were actually down this week.
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 WGW 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 U.S. Goldminers Index:
Interactive Chart of Daily U.S. Goldminers Index:
The U.S. goldminer share trust ETF trades under the ticker symbol GDX.
Here are the U.S. Goldminer ETF (GDX) index Weekly and Daily data charts:
GDX Weekly data:
GDX Daily data:
The Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF trades under the ticker symbol TSE:XGD.
Just like GDX on the AMEX, you can trade XGD on Toronto.
Here are the Weekly and Daily data charts for the TSX Goldshares (XGD) index:
Interactive Chart of XGD Weekly data:
Interactive Chart of XGD Daily data:
Forex Review
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 three to four trillion dollar marketplace every day, which dwarfs the size of the stock and bond markets. In this market, the Euro/USD is the highest volume trader.
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 ETF that tracks the G-10 currencies is the Powershares DBV. http://tinyurl.com/ltxpk4
This week, the $USD gained +0.50% W/W to close at 75.61. I have been bullish on the Dollar, but there is not much appetite for Dollars around the world, with traders believing that Bernanke/Geithner are playing one tune and working another script in the background.
http://stockcharts.com/charts/gallery.html?s=$usd
http://tinyurl.com/y9c3sr4
The 50-day MA of the $USD is now at 76.00, down from 76.20, 76.52, 76.74, 77.00, 77.36, 77.58, 77.84, 78.04, 78.37, 78.76, 79.00, 79.20, 79.43, and 79.58 over the past 14 weeks.
The 200-day MA is 80.65, down from 80.91, 81.15, 81.38, 81.57, 81.75, 81.88, 81.98, 82.13, 82.38, 82.62, 82.83, 83.04, 83.23 and 83.40 over the past 14 weeks.
Interactive Chart of Daily U.S. U.S. Dollar Index:
This week, the Euro contracts ($XEU) dropped -0.30% to close at 148.62.
I noted a week ago, “The Euro has been on a Bull run since June. There was a short-term cycle low of 146.32 a week ago on Tuesday. The most recent high of 150.41, set 15 sessions ago, must now be taken out or else I believe the $USD will start its own Bull run.”
This week the high was just 150.14, while the low was 148.11. It could now be headed lower.
http://stockcharts.com/charts/gallery.html?s=$xeu
http://tinyurl.com/ydekjtk
The 50d MA for the Euro futures are now at 148.04, up from 147.62, 146.95, 146.44, 145.83, 145.03, 144.52, 143.95, 143.54, 142.86, 142.13, and 141.75, eleven weeks ago.
The 200d MA is at 139.51, up from 139.00, 138.53, 138.09, 137.70, 137.38, 137.16, 137.01, 136.73, 136.26, 135.78, 134.98, 134.59 and 134.25 over the past thirteen weeks.
Interactive Chart of Weekly Euro Dollar Index, priced in USD:
Interactive Chart of Daily Euro Dollar Index, priced in USD:
Thanks to a loss of -0.91% on Friday, the Pound lost -0.92% W/W against the USD to close at 165.08, down from 166.65.
http://stockcharts.com/charts/gallery.html?s=$xbp
http://tinyurl.com/yasdzc2
The 50d MA is at 163.36, which is close to 163.20, 162.80, 162.64, 162.71, 162.69, 163.59, 164.09, 164.61, and 164.75 over the previous eight weeks.
The 200d MA is now at 157.41, up from 156.86, 156.26, 155.64, 155.22, 154.83, 154.45, 154.22, 154.02, 153.66, 153.35, and 153.02, and continuing to lift.
The Pound, the Euro and the Yen were all down against the Dollar through Thursday a week ago, and then again this week.
Weekly British Pound Index:
Daily British Pound Index:
Weekly Japanese Yen Index:
The Japanese Yen contracts ($XJY) were up +0.93% W/W to close at 112.54.
http://stockcharts.com/charts/gallery.html?s=$xjy
http://tinyurl.com/yd2fzv4
The Yen’s 50-day MA is now 110.77, up from 110.42, 110.07, 109.63, 109.25, 108.66, 108.07, 107.35, 106.84, 106.56, 106.17, 105.77, 105.43, and 105.11 over the past 13 weeks.
The 200-day MA is now 105.83, virtually unchanged in the past few weeks (as we wrote here a week ago) from 105.80, 105.81, 105.84, 105.89, 105.85, 105.83, 105.82, 105.78, 105.73, 105.63, 105.54, 105.43 and 105.43. This appears to be an artificial market.
Daily Japanese Yen Index:
A week ago, the Canadian Dollar rocketed +2.06% to close at 95.05 but this week the Loonie dropped -1.65% to close at 93.48.
As I opined here two weeks ago: “If the cycle high cannot match the 97.69 of mid Oct, and should it on the other hand drop below the most recent cycle low of 92.16, then I strongly believe the Loonie will no longer be a soaring Eagle, and $GOLD itself will be a little tarnished.”
http://stockcharts.com/charts/gallery.html?s=$cdw
http://tinyurl.com/ycx58us
The Loonie 50-day MA is now at 94.19, up from 94.00, 93.59, 93.44, 93.23, 92.83, 92.47, 92.23, 92.05, 91.60, and 90.86 ten weeks ago, and up from 84.57 just 24 weeks ago.
The 200d MA is at 88.04, up from 87.70, 87.37, 87.03, 86.74, 86.45, 86.07, 85.77, 85.48, 85.15, and 84.84 over the past ten weeks.
Trading forex is a dicey game, but the price trends and cycles must be studied nonetheless as they serve as confirmations -- or anomalies -- of other prices… In the latter case, with an anomaly, the relationship needs to be studied further.
A week ago I commented, “So far, it has been the Dollar down and other currencies and $GOLD up. But for how much longer?” We may have experienced the start of a turn this week.
Weekly Canadian Dollar Index:
Daily Canadian Dollar Index:
Here is the China Yuan (CNY) chart.
Wrap-up:
If the Fed can buy most of the US Treasuries – even when they don’t want to but as they must do to keep capital flowing into the equity market to try to save some key US banks – then they can also use part of their $2 trillion hedge fund to prop up certain equities. Time will tell, possibly, now that there is a likelihood of having the Fed audited, but I believe the Fed has been very active in equity markets, and that is not being done either to stabilize the equity market or to stabilize the $USD. It actually hurts the latter. I don’t know it is going on, of course, but I surmise it and worry that friends of the Fed are being helped – albeit illegally.
This is the problem when capital markets lack transparency and regulators become active market participants – there is a growing cynicism. The independent pro traders are noting circumstances in the markets that are most unusual – the time since early September has been unbelievable in this regard – and these traders are telling their friends and clients, and they in turn are passing the word to others. What is happening is that angry people are taking their message to their elected representatives, and now, finally, some of these politicians have turned their frustration and venom against Tim Geithner. I expect more of that because the problems will get worse, and the public will absolutely scream as soon as the Bear attacks equity prices. People on fixed incomes are hurting too because interest rates, and hence returns, have fallen to incredibly low levels. Many of these people no longer have the financial wherewithal to pay their bills. So life in America is not pleasant right now and could soon be getting worse.
Meanwhile, it seems that the Fed is doing all it can to quiet the growing mob. Traders who need free capital markets to earn a living are growing upset at that too. The problem is that always the cover-up is worse than the crime.
Sorry to be late with this WIR, but I have been writing in terrible pain from stomach cramps. I need to get back to bed.
