[12:44pm] Thinly traded markets. Three and a half days of trading this week and many traders on holiday for this week and next.
When all was said and done this week, the scoreboard reads: (i) Bonds down, (ii) all international equities up, (iii) Tech remaining strongest; (iv) Crude Oil, Metals, and Precious Metals (except Gold for some reason) very strong, and (v) weak Yen and Pound against a strong Loonie, but where the USD and Euro called it a draw.
Really, nothing else happened. Oh, some will point to an S&P 500 close above the 1120 resistance level, but we have already said that you can ignore that if (i) there is not any confirmation for about three straight days, and (ii) volume is anemic. So, don’t give it another thought.
As to the volume issue, here is this week’s volume plus in brackets the 60-day Moving average for volume:
S&P: 9.809 billion (20.865 bil);
DJIA: 1.876 billion (5.129 bil);
NASDAQ: 5.749 billion (10.448 bil).
For Wednesday (vs 60-d MA) volume:
S&P: 984.4 million (3.889 billion);
DJIA: 194.1 million (810.7 million);
NASDAQ: 632.6 million (2.001 billion).
Enough said.
Now let’s look into the details of the capital markets for this week.
Global Economics Review
Weekly International Economic Report from Econoday.
Here are the key US economic reports from last week’s calendar.
US GDP Estimate. Following release of the data at 8:30pm on 12/22, Econoday reported, “The recovery is not as strong as earlier believed. Real GDP growth for the third quarter was revised downward to an annualized 2.2 percent from the prior estimate of 2.8 percent. The market consensus had expected a 2.7 percent gain for the latest estimate. The revisions were primarily due to lower estimates for inventories. Also revised lower were government purchases, nonresidential fixed investment, residential fixed investment, and personal consumption. Net exports were revised up. Final sales were revised down to 1.5 percent from an annualized 1.9 percent… On the inflation front, the GDPI price index was bumped down to a 0.4 percent annualized pace from last month's estimate of 0.5 percent and compared to the market forecast of 0.5 percent… The numbers are a little old at this point but forward momentum was not as strong as earlier believed. The report likely will be negative on equities in thinly traded markets.”
US Existing Home Sales Data for November. Following release of the data at 10:00am ET, at 12/22, Econoday reported, “Existing home sales pivoted steeply higher in November and October in what will prove a striking feature of graphs on the housing sector. Existing home sales, showing strength across all regions, jumped 7.4 percent in November on top of October's record 9.9 percent surge. The year-on-year rate is up 44 percent. The annual sales rate is 6.54 million split between single-family homes, at 5.77 million for a plus 42 percent year-on-year rate, and condos, at an annual 770,000 for a 60 percent gain. Strong sales and slow construction are draining supply which is at 6.5 months for the lowest rate in 3-1/2 years. Prices are leveling as the median price ended a long run of monthly declines, up 0.2 percent to $172,600. The year-on-year rate continues to improve, at minus 4.3 percent in November… The report, compiled by the National Association of Realtors, estimates that government credits will add a very strong total of 4.4 million sales by June. Based on the expiration of the latest round of credits, the report sees sales slowing this month and into February before picking up in March and April as buyers rush to meet the deadlines. They also warn that mortgage rates, which are at record lows, will likely rise in the months ahead as the Fed unwinds its purchases of mortgage-backed securities… The housing sector is offering clear evidence of how much government programs can affect the economy. Today's results will boost expectations for a second month of similar strength in the new home sales report, to be posted tomorrow. Reaction to today's report is limited but stocks did pop higher.”
US Personal Income and Outlays data for November. After the data release at 8:30am ET on 12/23, Econoday reported, “Fundamentals for the consumer sector improved in part in November despite high unemployment. Personal income was up-including for the critical wages & salaries component. Personal income in November posted a gain of 0.4 percent, following a rise of 0.3 percent the month before. The consensus had forecast an increase of 0.5 percent for overall personal income. The important wages and salaries component advanced 0.3 percent after a 0.1 percent increase in October… Keeping in line with earlier reported gains in retail sales and motor vehicles sales, personal consumption jumped a healthy 0.5 percent, following a 0.6 percent increase in October. The November number fell just short of the market projection for a 0.6 percent surge in PCEs. The boost in November was led by non-durables, which jumped 1.5 percent after a 0.3 percent gain in October. Durables in November rose 1.1 percent while services were unchanged… Inflation eased in November. Headline PCE price inflation slowed to 0.2 percent from 0.3 percent in October. In contrast, core PCE inflation eased to no change in November from up 0.2 percent the prior month. The consensus had forecast a 0.1 percent core increase… Year on year, personal income growth for November came in at minus 0.3 percent, improved from minus 1.0 percent in October. Year-ago headline PCE inflation increased to plus 1.5 percent from plus 0.1 percent in October. Year-ago core PCE inflation was unchanged at up 1.4 percent in November…
Today's report is very close to expectations for key series and normally would have little impact on most markets. But trading is thin and traders could focus on any given highlight-meaning anything could happen even though there should be little impact. On the release, however, Treasury yields eased incrementally, apparently liking the marginally better-than-expected inflation numbers.”US New Home Sales for November. Following the data release at 10:00am ET on 12/23, Econoday reported, “Just when it appeared housing indications were lining up together, new home sales take a giant tumble. New home sales plunged 11 percent in November to a 355,000 annual rate that is 60,000 below low estimates! The hit includes downward revisions of 42,000 to the prior two months… The slowdown in starts wasn't enough to keep down November's supply which at 7.9 months is up from 7.2 months in October. Still, supply apart from the sales rate is well down, at only 235,000 units for the lowest since 1971. This report does however confirm a leveling in prices with the median price up 3.8 percent in the month to $217,400 for a marginal year-on-year decline of only 1.9 percent… This report contrasts sharply with yesterday's sales data on existing homes that showed an enormous second-month of strength. But the extension and expansion of home-buyer credits, credits which first ended in November, will help underpin optimism and boost talk that today's report is an outlier. Stocks moved lower in immediate reaction to today's results.”
US Durable Goods Orders for November. After the data release at 8:30am ET on 12/24, Econoday reported, “Boeing orders slipped in November but the rest of durables orders look good. New orders for durable goods in November rebounded 0.2 percent after a 0.6 percent decline in October. The boost in November came in below the consensus forecast for a 0.5 percent increase. Excluding the transportation component, new durables orders posted a 2.0 percent gain, following a 0.7 percent drop in October. The weakness in transportation was a huge drop in civilian aircraft orders… The November rebound in new orders was broad-based outside of transportation. Sizeable gains were seen in communication equipment, up 4.0 percent, computers & electronics, up 3.7 percent; machinery, up 3.5 percent; and electrical equipment, up 3.2 percent. Also posting gains were primary metals and fabricated metals… Transportation fell 5.5 percent after slipping 0.2 percent in October. Within transportation, non-defense aircraft dropped 32.6 percent in November; defense aircraft fell 3.2 percent; and motor vehicles slipped 0.2 percent… The outlook for capital goods spending is improving at the core level-although it may be foreign spending more than domestic investment. However, headline new orders for non-defense capital goods fell 1.9 percent in November after an increase of 0.8 percent the previous month. The weakness was in the volatile aircraft component. Excluding aircraft, new orders for non-defense capital goods rebounded 2.9 percent after a 2.0 percent dip in October. These numbers reflect orders from both foreign and U.S. businesses… Year-on-year, overall new orders for durable goods improved to minus 7.8 percent in November from minus 11.7 percent the month before. Excluding transportation, new durables orders increased to minus 6.9 percent from down 10.5 percent in October… Overall, today's durables report shows manufacturing still on a gradual uptrend. Growth in this sector is leading the economy but at a moderate pace… Equities might be disappointed in the shortfall from expectation other than jobless claims fell more sharply than projected. Equities will likely rise on that report. However, Treasury yields were marginally lower on the two releases.”
US Jobless Claims for the week ending 12/19. After the data release at 8:30am ET on 12/24, Econoday reported, “The brightest spot on the economic calendar continues to be initial jobless claims which fell a very substantial 28,000 in the Dec. 19 week to 452,000 -- a dip that the Labor Department describes as a part of "long-term trend" of improvement. The four-week average continues to come down, now at 465,250 for a 2,750 decrease. Continuing claims also continue to come down, 127,000 lower in the Dec. 12 week to 5.076 million. Trends for both initial and continuing claims show sizable improvement from November in what will raise talk of a possible gain for December payrolls.”
Here are the key US economic reports from next week’s calendar.
US Consumer Confidence. Prior to release of the data at 10:00am on 12/29, Econoday reported, “The Conference Board's consumer confidence index in November rose slightly to 49.5 from 48.7 the prior month but still disappointing compared to the recent high of 54.5 in August. The expectations index has come down in recent months while the present situation index remains near record lows.”
US Chicago Purching Managers Index for December. Prior to the release of the data at 9:45am ET, at 12/30, Econoday reported, “The Chicago PMI rose nearly 2 points in November to 56.1 to indicate a month-to-month increase in the pace of overall business activity in the area. New orders rose 1.4 points to a very strong 62.8, a plus-60 level that, because of its strength, will be hard to match in the coming months. Prices paid showed a mild month-to-month increase at 52.6.”
US Jobless Claims for the week ending 12/26. Prior to the data release at 8:30am ET on 12/31, Econoday reported, “Initial jobless claims fell a very substantial 28,000 in the December 19 week to 452,000 -- a dip that the Labor Department described as a part of "long-term trend" of improvement. Continuing claims also continued to come down, dropping 127,000 in the December 12 week to 5.076 million.”
International Equity Markets Review
Prices everywhere were higher. It is after all the festive season. Everyone was bearing gifts.
Below are 16 country index chart links from StockCharts.com (with their formal approval btw). 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.
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
The charts/tables here are based on more than 3 and ½ days data, so while the indication is for weak markets, they were actually fairly strong.
I added links at the bottom of this section to the Indonesia Fund (IF) because it happens to be the #1 performer of any country fund this year, at least that I can find. If commodity markets weaken, and China and India equities drop, I believe this index-related closed end fund will also have to drop. Actually, IF is actively managed by Credit Suisse, so if their managers stick to indexing to the local market, then if, as and when the other factors come into play the IF price will also drop.
The Jakarta Stock Exchange can be monitored at ADVFN.com.
http://www.advfn.com/p.php?pid=countrysum&cid=12
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:
U.K. equity market ETF
Here is the Indonesia Fund (IF) equity market ETF Monthly, Weekly and Daily data charts:
IF Summary from Yahoo Finance:
IF Summary from Google Finance:
IF chart from StockCharts.com:
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 had a high this week of 1126.48 and a low of 1105.31. These are higher prices than a week ago, but the significant lower volume leads me to dismiss any inference.
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.
Among the DJIA components this week, 16 were higher and 12 lower and 2 were flat. Not much different from a week earlier.
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.
I will have to say that I continue to run the paragraph above because, in the long run, it works. Every few long-term cycles, possibly once in ten or 12 years or so, the equity markets fall under the control of interventionist parties that operate with different objectives than most traders. These parties, including central banks, are backed by trillions of dollars, so until their objectives are met or defeated, the market will behave strangely. That makes it difficult for us because central banks and most sovereign wealth funds are using taxpayer money, which seems to be an endless source.
The good news is that governments need the public to participate in capital markets. Without our capital, the global financial system would collapse. So, sooner or later – and I suspect pretty soon – the Mr. Market will regain control, and the risks will (start to) normalize.
I will add that this is a long-term process, which may take another three to five years to come full circle.
Value Line Report(s) this past Friday
This week, Value Line reported on the two DJIA components that represent America’s Ma Bell: AT&T (T) and Verizon (VZ), neither of which is a Cara 100 company based on financial strength, management, returns on equity, profit margins, and so forth. These are not bad companies; they are just of little interest to me. I review them in order to study the economy, and other prices, like the telecom group, bonds and interest rates, and other high dividend yielders like the Utilities. As you know, prices don’t trade in a vacuum, and these stocks give you a part of the bigger picture. But I will reiterate: these are not bad companies, particularly for income oriented accounts.
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)
Always before I study a company, I take a quick look at the Monthly-Weekly- and Daily charts:
For AT&T (T):
http://billcara2.com/tkchart/tkchart.asp?stkname=T&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=T&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=T&ind=rsi&wt=0
For T ($28.10 12/24 WIR #52), the RSI-7 for the Monthly/Weekly/Daily is now 56.0 / 69.4 / 68.8. At 9/25 WIR #39 with the price at $26.96, the RSI-7 for the Monthly/Weekly/Daily was 47.4 / 64.7 / 59.7 and rising. Thirteen weeks prior to that, at WIR #26 on 6/26 with the price at $24.82, the RSI-7 for T was 32.2 / 49.1 / 63.1. In the past 13 weeks, the price lifted +$1.14 (+4.2%). Over 26 weeks, the price lifted +$3.28 (+13.2%).
For Verizon (VZ):
http://billcara2.com/tkchart/tkchart.asp?stkname=VZ&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=VZ&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=VZ&ind=rsi&wt=0
For VZ ($33.36 12/24 WIR #52), the RSI-7 for the Monthly/Weekly/Daily is now 59.7, 71.4 and 66.5. At 9/25 WIR #39 with the price at $29.94, the RSI-7 for the Monthly/Weekly/Daily was 40.6, 43.4 and 43.1 and falling. Thirteen weeks prior to that, at WIR #26 on 6/26 with the price at $30.99, the RSI-7 was 44.8 / 60.7 / 73.0. In the past 13 weeks, the price lifted +$3.42 (+11.4%). Over 26 weeks, the price lifted +$2.37 (+7.6%).
As proof of concept, here is what I published and opined 26 weeks ago in WIR #26: “The RSI-7 for the Monthly/Weekly/Daily for T is 32.2 / 49.1 / 63.1 vs the RSI-7 for VZ at 44.8 / 60.7 / 73.0, which could indicate that VZ has gotten ahead of the pack, and maybe due for a sharper correction.”
Then for WIR #39, I stated: “The price of VZ today (9/25) is $29.94. On 6/26, VZ closed at $30.99. The loss was -3.34%. The price of T today (9/25) is $26.96. On 6/26, T closed at $24.82. The gain was +8.62%... The difference over 13 weeks was a net gain of +11.96% had you (or I) shorted VZ against a purchase of T. That is about a +50% annual return… All that does is confirm that RSI-7 can be a helpful tool in a trader’s toolkit.”
Let’s review the details:
From WIR # 26:
With T at $24.82 and VZ at $30.99, I wrote: …As for me, I wouldn’t buy them (they lack the quality I’m looking for), but a series of put writes in a Bull phase ought to work out pretty well.
As for the Value Line analysis of AT&T, they lowered the Timeliness and Technical to 3 and 4 respectively in the past 4 weeks, but did the same for Verizon this week. That might cause some extra selling in VZ.
The T is trading at 24.82 and the report was written at 24.22 when the dividend yield was 6.9%. That’s very high and likely secure despite the relatively high payout ratio.
The T dividend will likely be $1.64 this year, up a tad from 1.60 in 2008, and likely not going to be more than about 1.68 in 2010.
Only mobile is selling well, but the company has a strong offering of wireless.
I can see more cost-cutting here, which means higher productivity. So, I’m not as negative as I usually am. It’s just not prime time for T to shoot higher.
(For VZ) the RSI-7 for the Monthly/Weekly/Daily is 44.8 / 60.7 / 73.0 vs the RSI-7 for T at 32.2 / 49.1 / 63.1.
So after the next short-term pull-back, of these two stocks, I’d be writing puts in T as by then the RSI-7 across the three time horizons would be lower, meaning my risk is less.
The Value Line report was written at 29.54 and the stock is now 30.99, which was the #1 performer in the DJIA index this week. In fact, T was #3.
The dividend yield is about 6.0%, and the dividend is likely to increase from 1.78 in 2008 to 1.87 this year and maybe 1.95 in 2010.
Just like T, the high dividend protects the stock price on the downside as the cash flows of these companies are relatively stable.
Like T, the earnings of VZ are not exciting in terms of growth, but they are fairly stable.
One more leg down on the Daily charts and the stock will be looking very good for long-run positioning. I’d not buy the stock due to it’s lacking the quality I need, but I would consider writing a series of puts after every short-term price pull-back.
From WIR # 39:
In addition to being accurate on the T vs VZ opinion, I would have cleaned up on the put writes as well.
Today, without checking in with Pierre Brodeur, who needed some time off to deal with one of life’s unfortunate but always present personal situations, or Pascal Willain, I pretty much feel the same. There is no reason to run away from these stocks. Revenues, earnings and cash flow, and dividends, are all likely to increase for both companies for 2010.
Going forward, say for 2010, the dividend yields are likely going to be 6.23% ($1.68/$26.96) for T and 6.44% ($1.93/29.94) for VZ. These are exceptional yields for companies rated A+ and “1” for Safety by Value Line.
If you plan to hold them for five years, you must be aware that the dividend will be increased every year, and the share price to also expand. I think you can be assured of receiving a total return of at least 17% or 18% annually, which is the lowest estimate by Value Line. In other words, your capital would about double in five years. Compare that to the 5-year Treasury note that is presently yielding +2.372% per year, and will pay back only the principal amount. The difference is an annual loss of almost 15% or 16%. It makes no sense to me whatsoever that traders would price in so much risk in these two telco operators. Invest in the stocks.
As to the Value Line reports, I have already admitted these are my two least favorite companies. So please don’t ask me to read into them further. There is just one thing I’d like you to look at: the little box on the left side of the page about one-third from the bottom, which is the annual 5-year projected growth rates for revenues, cash flow, earnings, dividends and book value. If you are prepared to assume a bit more risk, as you will in the Cara 100 companies, you will find much better growth in high quality companies.
The next Value Line report for these two companies is slated for Christmas Eve day or the one before that. I wouldn’t expect a Christmas present if you buy these two stocks today, but if you find a Buy Alert between now and then, or you start a put write program in the Accumulation Zone, I think you would be a happy Santa.
For WIR #52:
As you can see, I believed that in the past quarter if there was a strong pull-back, there would be an opportunity for more put writes.
VZ in three days from Dec 14 dropped from a high of $34.13 to $32.36, and since recovered +$1.00. There was also pull-backs in Oct and again to begin Nov. So there were opportunities to add premium from put writes while understanding that had the price dropped further you would have been required to buy the stock – but do so at low-risk, fire-sale prices. This is your job as a trader.
T offered an even bigger opportunity for effective put writes because after WIR #36, the price dropped to a low of $25.00 before lifting to $28.36, then down to about $27.10 about two weeks ago before closing at $28.10.
The point is not that you or I would likely ever hit those highs and lows, but that there are sudden moves in quite stable high quality stocks like T and VZ, and that if you follow the dance, and are prepared to buy in at lower than average prices because you’d be happy with the longer-term annualized Total Return (TR), the extra premium plus the high dividend and a modestly rising share price will make you happy and successful.
For the near future, Value Line analysts for both T and VZ have raised their Technical ratings from 4 to 3 on 12/25. The text states the ratings were lowered, but Value Line, like everybody, has typos. As a floor trader who I was complaining to one day because he didn’t get the reported price I bid told me bluntly, we trade the actual price, not the price that the media publishes. I accept that.
But do I think that T and VZ should be raised for Technical Timing? No; the Weekly and Daily RSI-7’s for these two stocks are close to 70. I like the timing prospects when the RSI-7’s are in the 25-35 range for stocks like T and VZ. In December, the Daily RSI-7 did get down there for T but not quite for VZ.
So, without a chance to sell down as far as I’d like to see, I believe these two stocks are pricy at the moment, and likely to five much better entry opportunities in 1Q2010, possibly in mid-January.
The income from dividends is high. T will likely pay out $1.72 in 2010 and VZ $1.95. That means the dividend yields are close to 6%. These dividends will likely increase from +3 to +5% annually, which puts upward pressure on the share price as well. If you can buy the stocks at lower prices, the dividend yield will be higher still, and if you write some puts at lower strike prices to take in premium, you are adding to your income. If you stick with the program, the +14% to +20% annual Total Returns projected by Value Line are reasonable.
These two are not Grandpa and Grandma’s telephone companies any more. They are much less wired and now mostly wireless. With your Blackberry’s and iPhones, these two telco service giants operate the command and control centers of our universe. They’ll be around when your kids and mine become Grandpa’s and Grandma’s.
They may not be my favorite stocks, but they employ combined well over 500,000 Americans, which puts food on the table and a roof over many heads, so I’m sure they are the favorites of lots of you. If you can do a +20% annual Total Return with stocks of this caliber, there are many of you who ought to try.
The Dow 30 Company links in chronological order of the upcoming reports.
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)
Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Google Finance file)
(JNJ: Yahoo Finance file)
(JNJ: StockChart chart)
(JNJ: Billcara2 chart)
(JNJ: ADVFN Financial Data)
(JNJ: Value Line Report Nov 27: next one is due Feb 26)
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 Dec. 4: next one is due Mar. 5)
Chevron Corp [GICS 10, Dow 30]
(CVX: Google Finance file)
(CVX: Yahoo Finance file)
(CVX: StockChart chart)
(CVX: Billcara2 chart)
(CVX: ADVFN Financial Data)
(CVX: Value Line Report Dec. 11: next one is due Mar. 12)
ExxonMobil [GICS 10, Dow 30, Cara 100]
(XOM: Google Finance file)
(XOM: Yahoo Finance file)
(XOM: StockChart chart)
(XOM: Billcara2 chart)
(XOM: ADVFN Financial Data)
(XOM: Value Line Report Dec. 11: next one is due Mar. 12)
Boeing Co [GICS 20, Dow 30. Cara 100]
(BA: Google Finance file)
(BA: Yahoo Finance file)
(BA: StockChart chart)
(BA: Billcara2 chart)
(BA: ADVFN Financial Data)
(BA: Value Line Report Dec. 18: next one is due Mar. 19)
AT&T [GICS 50, Dow 30]
(T: Google Finance file)
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Billcara2 chart)
(T: ADVFN Financial Data)
(T: Value Line Report Dec. 24: next one is due Mar. 26)
Verizon [GICS 50, Dow 30]
(VZ: Google Finance file)
(VZ: Yahoo Finance file)
(VZ: StockChart chart)
(VZ: Billcara2 chart)
(VZ: ADVFN Financial Data)
(VZ: Value Line Report Dec. 24: next one is due Mar. 26)
Sector ETF Summary for the US equity market
This being a holiday week, there are differences in the way data is calculated, so I won’t get into the numbers. Actually, I don’t have time to provide accurate calculations for 3½ days.
On Wednesday, there were 7 rising sectors and 3 (telco, healthcare and financial) that fell.
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 for when %K is above the %D and rising to stay with your price a bit. And, if you are at a decision point, it’s time to consider selling or taking other defensive action when the %K crosses down through %D. Let the force be with you.
These charts show the numbers and the lines, so it’s not rocket science to follow.
Previously I gave a list of five components of the DJIA index that I said were important and have been in large scale distribution. Take a look at the chart with 9-period Stochastics (%K and %D) added to the RSI-7. The arithmetic is similar, but the STO is more sensitive.
http://billcara2.com/tkchart/tkchart.asp?stkname=IBM,BAC,GE,INTC,JPM&ind...
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) rallied +$3.63/bbl (+4.88%) this week, which followed a lift of +3.43% a week ago. Accordingly, the Energy ETF (XLE) lifted from 56.15 to 57.54.
A week ago I wrote in this space, “Analysts had been calling it over-sold. In any event, XLE was this week’s top performer among the 10 sector indexes”.
In Table 2, ECA has not been fully adjusted for a split where the gas and oil interests were put into separate companies. Once again, I will try to make a change in the table to replace Encana (ECA) with Canadian Natural Resources (CNQ). So little time; so much to do.
http://finance.yahoo.com/q?s=eca
http://finance.yahoo.com/q?s=cnq
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) lifted from 31.99 to 33.15.
Sector 20 (industrial: IYJ, XLI, VIS, and IYT)
Here’s the XLI Monthly, Weekly and Daily data charts:
XLI Monthly data: 
XLI Weekly data: 
XLI Daily data:
Table 4: Senior capital goods makers and transportation:
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
The Industrials ETF (XLI) lifted from 27.85 to 28.14.
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) lifted from 29.61 to 30.16.
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) lifted from 26.24 to 26.58.
Please note that Perdigao (PDA) merged with Sadia Foods (SDA) and changed its name/symbol to BRF Brasil Foods and the ticker is BRFS (not PDA).
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) lifted from 63.62 to 64.37.
Healthcare reform legislation in the U.S. has received an historic vote, but there are millions of Americans who are demanding that their elected representatives in Washington be subjected to the same quality and cost.
As most of you know, I am one of those people who have lived under the two systems of health insurance. I rebelled when universal health insurance was mandated in Canada in the 1960’s. But after a few years, I came around to see the benefit. I am now a strong supporter. But, and this is the critical issue: I think the legislation being voted on today is rotten to the core, and the entire political exercise is exposing the corruption in Washington that exists between lobbyists and lawmakers. When all is said and done, books will be written on this matter, and I believe the American public will see that over $1 trillion was spent lobbying to create a piece of legislation that will create oligopoly power for those corporations that invested in structuring the “reformed” system.
I believe that in the form it’s in at this point, there is a health tax that will break the back of the US economy within 20 years. The tragedy is that all the reform that was needed up front to resolve maybe 90 percent of the problem was a universal catastrophic health insurance plan.
I won’t say more here because I have no dog in that fight.
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) lifted from 14.22 to 14.40.
You know, the truth is that most banks (and bank services) are not even needed today. I believe that 2010 will unveil a whole new round of trouble in the banking industry as the people find ways to circumvent costs that are unnecessary, and as bankers with phony assets on their books are forced to write them down or off.
Yes, I have said there will be more stability in the broad market because there is less likely to be shocks like Lehman Brothers. Now the bankers and the government Finance Ministers and Central Bankers around the world are understanding of the problems and can deal with them. But, to me, all that means is that the painful deleveraging process that must carry on is going to be drawn out over time.
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), from 22.33 a week ago to 22.80, and Semi-conductors (SMH), from 27.07 to 27.65, were very strong this week.
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) lifted from 19.80 to 20.12.
I looked over the Value Line analysis of Verizon (VZ $33.23) and AT&T (T +28.04) this week.
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:
The Utilities sector ETF (XLU) dropped from 31.35 to 31.25, which I guess is the lonely loser W/W, despite a bit of a gain on Wednesday.
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 | 0.02 | 0.03 | 0.02 | 0.01 |
| 6 Month | 0.16 | 0.16 | 0.14 | 0.13 |
| 2 Year | 0.95 | 0.92 | 0.75 | 0.67 |
| 3 Year | 1.54 | 1.49 | 1.26 | 1.20 |
| 5 Year | 2.53 | 2.48 | 2.21 | 2.09 |
| 10 Year | 3.80 | 3.75 | 3.48 | 3.30 |
| 30 Year | 4.67 | 4.61 | 4.42 | 4.25 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 0.71 | 0.79 | 0.80 | 0.77 |
| 2yr AAA | 0.81 | 0.72 | 0.74 | 0.63 |
| 2yr A | 1.33 | 1.46 | 1.42 | 1.07 |
| 5yr AAA | 1.50 | 1.58 | 1.55 | 1.63 |
| 5yr AA | 1.79 | 1.70 | 1.71 | 1.66 |
| 5yr A | 2.35 | 1.96 | 1.77 | 1.79 |
| 10yr AAA | 3.16 | 3.17 | 3.02 | 2.90 |
| 10yr AA | 3.11 | 3.16 | 3.05 | 3.08 |
| 10yr A | 3.08 | 3.15 | 3.39 | 3.69 |
| 20yr AAA | 4.52 | 4.51 | 4.54 | 4.40 |
| 20yr AA | 4.55 | 4.24 | 4.28 | 4.91 |
| 20yr A | 5.15 | 4.88 | 4.84 | 5.10 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 1.56 | 1.56 | 1.33 | 1.34 |
| 2yr A | 1.84 | 1.85 | 1.63 | 1.77 |
| 5yr AAA | 2.87 | 3.02 | 2.87 | 2.77 |
| 5yr AA | 3.31 | 3.40 | 3.16 | 3.34 |
| 5yr A | 3.39 | 3.43 | 3.25 | 3.47 |
| 10yr AAA | 3.51 | 3.53 | 3.40 | 3.30 |
| 10yr AA | 4.77 | 4.80 | 4.35 | 4.31 |
| 10yr A | 4.66 | 4.67 | 4.54 | 4.45 |
| 20yr AAA | 5.51 | 5.46 | 5.21 | 5.41 |
| 20yr AA | 5.35 | 5.43 | 5.17 | 5.31 |
| 20yr A | 6.45 | 6.40 | 6.15 | 6.35 |
The 20-year US bond (TLT) dropped hard from 92.79 to 90.65 as yields popped, with the 30-year now at 4.67% (up from 4.46%), the 10-year at 3.80% (up from 3.54%), the 5-year at 2.53% (up from 2.27%), and the 2-year at 0.95% (up from 0.79%).
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. What happens when the banks are forced to borrow at much higher true rates? What happens to the private sector owners of this debt?
I have been saying, repeatedly, and again here a week ago, “This situation will end badly, although that scenario might take a year or two to fully play out. Unless the economy collapses into a severe double dip recession or a depression, the long-term risk is to be holding bonds as ultimately rates will have to lift to stabilize debt and equity markets.”
I have also opined that, “…if the rates do move slowly higher in the near term, there will be pressure down on equity prices, which may hurt temporarily, but the longer-term picture could look better unless rates rally to a high enough level that forces more foreclosures before the economy has been proven to be on the rebound.”
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 down W/W from $1.10 to $1.05) and Freddie (FRE down W/W from $1.30 to $1.26) were soft. There are deals being worked in Washington as this government has no qualms about the socialist optics.
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
$CRB is now at 280.92, up +1.73% from 276.14.
Prices are still lower than in October.
As I opined a week ago, “Nothing much is happening here until the $USD sorts out its direction. It looks very much to me that the $USD is headed further north and these commodities will remain under pressure.”
Yes, I think there is more room for the USD to lift.
The 50d MA for $CRB has moved 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 to 269.18 to 271.42 to 273.07 to 274.64 to 275.26 over the past 14 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 to 247.04 to 248.86 to 250.42 to 252.13 to 253.42 over 17 weeks.
As I have opined, “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”.
The $CRB started to drop four weeks ago, but lifted a week ago as Crude Oil moved up +3.43% on the week, and then again this week as Crude Oil moved up a further +4.88%.
Although I use the $CRB (Reuters/Jeffries Index), principally because it’s the oldest, there are many commodity indexes: http://www.crbtrader.com/crbindex/ • Astmax Commodity Index(AMCI) • Commin Commodity Index • Dow Jones-AIG Commodity Index • Goldman Sachs Commodity Index • Reuters/Jefferies CRB Index • Rogers International Commodity Index • Standard & Poor's Commodity Index • NCDEX Commodity Index • Deutsche Bank Liquid Commodity Index (DBLCI) • UBS Bloomberg Constant Maturity Commodity Index (CMCI)
Here is a link to an article that discusses the major ones that have been around for a while: http://www.rogersrawmaterials.com/overviewandanalysis.PDF
Here is a current price summary of the heaviest weighted commodities contracts: http://money.cnn.com/data/commodities/
These indexes change their component weightings perhaps annually or even monthly, for example: http://www.seekingalpha.com/article/43586-the-new-generation-of-diversif... http://tinyurl.com/a5myfj
Interactive Chart of Weekly CRB Commodities Index:
Interactive Chart of Daily CRB Commodities Index:
Oil Review
The Crude Oil price ($WTIC) had been under pressure, dropping -$5.52/bbl over three weeks to close at 71.95 two weeks ago. A week ago, $WTIC lifted +2.47/bbl (+3.43%) to close at 74.42. This week, there was an additional move +$3.63/bbl (+4.88%) to 78.05.
The Energy ETF (XLE) lifted from 56.15 to 57.54 W/W. Wednesday saw a gain of +0.79% for XLE and +1.80% for $WTIC.
For $WTIC, the 50-day MA is now at 77.13, up from 77.00, 76.70, 76.33, 75.63, 75.20, 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 16 weeks.
The 200-d MA is at 67.13, up from 66.54, 65.79, 65.04, 64.11, 63.38, 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 16 weeks.
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.
As a general rule, if you are looking to be a trader of Crude Oil, when you see the $WTIC:$USD RSI-7 bottom below 30 and start to rise, you want to be a buyer of Oil and seller of Dollars. When this indicator peaks above 70 and starts falling, you want to sell Oil and buy US Dollars.
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
This week, $GOLD dropped -$7.20 (-0.65%) to close at $1105.30. A gain of +$13.70/oz on the previous Friday helped set up this week’s loss while all the other precious metals gained on the week.
This week there was a high of $1119.90 down from the previous week’s high of $1142.00, which was down from $1169.10, the week before that and of the record high of $1226.40 the week before that.
The low this week was $1075.00, down from the prior week’s low of $1095.30.
So there has been a weakening.
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 goldminer indexes dropped between -5.2% and -5.7% two weeks ago and between -2.2% and -3.2% one week ago. But this week there were gains of +0.7% to +3.0% in the three major Goldminer indexes/ETFs.
The $GOLD 50day Moving Average is now at 1114.57, up from 1111.87, which had been down for the first time in 16 weeks from 1115.20, 1090.65, 1071.64, 1054.68, 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.
The 200d MA is 989.68, up from 986.14, 981.18, 976.68, 971.46, 965.22, 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 16 weeks.
Three weeks ago I wrote in this space, “Do you know there are analysts who now say the gold price will never drop below the 50day MA of just seven weeks ago, which is well above its current 200d MA? That’s what I call enthusiasm. As for me, I prefer to see the completion of a whole bull-bear cycle before making any such comment.”
From a high of $1226.40 to a low of $1075.00 in just 13 sessions is proof of concept I’d say.
I have been prepared to write some puts (i.e, take a bullish stand) for the Goldminers for a few days until I see how things work out after the new year. But, if there is a broad market sell-off, it will likely come with a stronger $USD and weaker $GOLD price, which would send the Goldminer stocks tumbling.
This all depends on how the broad market acts in the first week or two of 2010.
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 +$0.22 (+1.28%) W/W to close at 17.47.
http://stockcharts.com/charts/gallery.html?s=$silver
http://tinyurl.com/y8k8ud4
For $SILVER, the 50d MA is now 17.68, down from 17.73, which had been unchanged the prior week from 17.73, but after a constant bullish lift through 17.60, 17.38, 17.23, 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 over the previous 15 weeks.
The 200d MA is 15.22, up from 15.13, 15.02, 14.92, 14.81, 14.67, 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 17 weeks.
A light trading week this week has not changed my opinions on $SILVER. I think the market wants to see the extent of a correction and the level of support that will set in.
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 +$39.50/oz (+2.76%) to close at 1471.70.
http://stockcharts.com/charts/gallery.html?s=$plat
http://tinyurl.com/ydwz4pn
The 50d MA is now at 1407.64, up from 1401.22, 1388.35, 1374.14, 1359.13, 1349.19, 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 17 weeks.
The 200d MA is at 1258.83, up from 1251.30, 1241.71, 1232.61, 1222.77, 1214.53, 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 17 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 soared +$21.75 (+5.91%) to close at 389.65/oz. Just like $SILVER, $PLAT and $COPPER, the $PALL lifted this week, once again, against the rising $USD, but this time the gains were large.
http://stockcharts.com/charts/gallery.html?s=$pall
http://tinyurl.com/yenr5rj
The 50d MA is now at 355.73, up from 352.75, 346.92, 339.54, 331.45, 325.68, 317.97, 312.52, 308.23, 302.88, 296.70, 291.16, 285.68, 281.86, 276.38, and from 265.26, over 15 weeks.
The 200d MA is at 281.30, up from 277.92, 273.64, 269.41, 265.31, 262.12, 257.83, 253.98, 250.40, 246.85, 243.24, 239.52, 236.04, 233.16, 230.00, and from 227.13, over 15 weeks.
Spot palladium chart for the week
Interactive Chart of Weekly Palladium EOD Continuous Contract Index:
Interactive Chart of Daily Palladium EOD Continuous Contract Index:
Interactive chart of the Palladium metal index.
This week, $COPPER gained +$15.40 (+4.91%) to close at 329.25.
http://stockcharts.com/charts/gallery.html?s=$copper
http://tinyurl.com/ybgnb7f
For $COPPER, the 50d MA is at 308.00, up from 305.08, 301.29, 297.33, 292.98, 290.68, 288.35, 287.14, 286.42, 284.45, 282.60, 281.84, 278.85, 274.24, 271.42, 265.26, 260.53, and 254.56 over the prior 17 weeks, which, like the precious metals, is a long-running bullish picture.
The 200d MA is at 255.93, up from 252.82, 249.01, 244.92, 240.53, 237.35, 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 17 weeks.
The Freeport-McMoran chart may be helpful in figuring out where $COPPER might be headed: http://tinyurl.com/yahpodo
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 $XAU (+2.98%), GDX (+1.45%) and XGD (+0.71%) were all up this week after being hammered down for a couple weeks.
For the past two weeks, the $XAU (-3.13% and -5.23%), GDX (-3.20% and -5.06%) and XGD (-2.19% and -5.33%) were all down sharply.
I have built a tradable universe of about 100 mining and metals candidates for an exchange listed fund we hope we can get listed in March 2010.
At the Cara Bahamas 2010 Conference in mid-January, the CTA mining team will present a short list of 15 gold and silver companies of various stages of development from exploration up to mid-level producers.
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
The $USD has had a remarkable turn. But the gain this week was only +0.13% to 77.85.
http://stockcharts.com/charts/gallery.html?s=$usd
http://tinyurl.com/y9c3sr4
The 50-day MA of the $USD is now at 75.85, up from 75.69, and 75.63 a week earlier, but down from 75.71, 75.88, 76.00, 76.20, 76.52, 76.74, 77.00, 77.36, 77.58, 77.84, 78.04, 78.37, 78.76, 79.00, 79.20, 79.43, and 79.58 over the previous 17 weeks.
The 200-day MA is 79.34, down from 79.55, 79.84, 80.13, 80.43, 80.65, 80.91, 81.15, 81.38, 81.57, 81.75, 81.88, 81.98, 82.13, 82.38, 82.62, 82.83, 83.04, 83.23 and 83.40 over the past 19 weeks.
The action this week was not between the USD and Euro but with the Cdn Loonie, British Pound and Japanese Yen.
Interactive Chart of Daily U.S. U.S. Dollar Index:
This week, the Euro contracts ($XEU) gained +0.06% against the USD to close at 143.55. The $USD also lifted a bit.
http://stockcharts.com/charts/gallery.html?s=$xeu
http://tinyurl.com/ydekjtk
The 50d MA for the Euro futures are now at 148.07, down from 148.49, 148.70, but up from 148.59, 148.29, 148.04, 147.62, 146.95, 146.44, 145.83, 145.03, 144.52, 143.95, 143.54, 142.86, 142.13, and 141.75, over 17 weeks.
The 200d MA is at 141.78, up from 141.47, 141.00, 140.50, 139.93, 139.51, 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 18 weeks.
Interactive Chart of Weekly Euro Dollar Index, priced in USD:
Interactive Chart of Daily Euro Dollar Index, priced in USD:
The Pound has been dropping like a stone :-) after losing -1.20% to 159.49 this week and -0.66% the previous week.
After the prior week’s loss, I wrote here, “But as to the Pound, it is likely to come off further. There are incredible real estate related credit market issues remaining in that country. Royal Bank of Scotland and Lloyds Bank are not even close to being out of the woods.”
http://stockcharts.com/charts/gallery.html?s=$xbp
http://tinyurl.com/yasdzc2
The 50d MA of the Pound is at 164.45, which is close to 164.38, 164.10, 163.75, 163.44, 163.36, 163.20, 162.80, 162.64, 162.71, 162.69, 163.59, 164.09, 164.61, and 164.75 over the previous 13 weeks, most of which have been rising, but not significantly so.
The 200d MA is now at 159.83, up from 159.40, 158.86, 158.38, 157.82, 157.41, 156.86, 156.26, 155.64, 155.22, 154.83, 154.45, 154.22, 154.02, 153.66, 153.35, and 153.02, and continuing to lift.
Weekly British Pound Index:
Daily British Pound Index:
Weekly Japanese Yen Index:
Three weeks ago here, I reported: “This week, the Japanese monetary authorities started to put their foot down. The Yen dropped -4.18% to 110.46. The drop on Friday alone was -2.47%. These are major moves.” Then a week later, I stated, “This week, the Yen gained +1.59% despite a loss of -0.87% on Friday. The close was 112.22. This puts pressure back on the Japanese monetary authorities to buy Dollars.”
A week ago, I added, “They must be listening. This week the Yen lost -1.50% against the USD to close at 110.54”.
This week the Yen dropped a further -1.10% to close at 109.32.
http://stockcharts.com/charts/gallery.html?s=$xjy
http://tinyurl.com/yd2fzv4
The Yen’s 50-day MA is now 111.40, down from 111.58, 111.66, but up from 111.53, 111.08, 110.77, 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 previous 17 weeks.
The 200-day MA is now 106.70, up from 106.55, 106.31, 106.07, 105.91, 105.83, 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. But, as I opined here a week ago, “Should the current price drop, the 200-week MA will begin to drop in a couple weeks.”
Daily Japanese Yen Index:
The Canadian Dollar aka Loonie, gained +1.48% to 95.19.
A week earlier the Loonie lost -0.56% to close at 93.80, but I noted, “There was a gain of +0.47% on Friday though.” So, the past 4½ days have been very strong.
http://stockcharts.com/charts/gallery.html?s=$cdw
http://tinyurl.com/ycx58us
The Loonie 50-day MA is now at 94.60, down from 94.76. I had noted a week ago the 50-d MA was “barely up from 94.75, 94.51, 94.31, 94.19, 94.00, 93.59, 93.44, 93.23, 92.83, 92.47, 92.23, 92.05, 91.60, and 90.86 over 14 weeks, and up from 84.57 just 28 weeks ago”.
The 200d MA is at 89.82, up from 89.48, 89.07, 88.69, 88.32, 88.04, 87.70, 87.37, 87.03, 86.74, 86.45, 86.07, 85.77, 85.48, 85.15, and 84.84 over the past 15 weeks.
Trading forex is a dicey game, and there are charlatans all around who would sucker the unwary into their seminars, where they sell dubious services. But, for knowledgeable traders, 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.
Weekly Canadian Dollar Index:
Daily Canadian Dollar Index:
Here is the China Yuan (CNY) chart.
Wrap-up:
Have a great week ahead. The holidays and then the Cara 2010 Conference are coming up.
I have been cutting back my hours over the past couple weeks. I had been thinking of spending New Year’s Eve in Ft. Lauderdale, but now will likely spend a couple days there in the first week of January. This year, we have been invited to party on at Paradise Island literally beneath the cruise ships, then after a brief nap, we’ll take the boat over to the Prince George Wharf at about 5am and walk up a block to catch the serious part of New Year’s Junkanoo Parade. If you have not seen this seven or eight hour spectacle, indigenous to The Bahamas, you must. Thousands upon thousands of participants competing for group prizes, many of them very small children, dancing all through the night dressed in the most glorious costumes. It’s really something to watch.
http://en.wikipedia.org/wiki/Junkanoo
http://images.google.bs/images?hl=en&rlz=1C1CHMB_enBS321BS321&q=bahamas+...
http://www.youtube.com/watch?v=ivzHj-08Rjw
The parade continues non-stop all through the night. Two years ago, I was invited to the US Embassy New Year’s Eve Junkanoo party at a rooftop restaurant on Bay Street. I just had to leave at 8:30am before the eventual winners Valley Boys had come through.
As to the market in the upcoming week, I’m not expecting much to transpire except maybe a bit softer for the final tax loss sales. So, party on but keep close to your monitor the week after.
