Week in Review #43, 2010

October 24, 2010 by Bill Cara Bookmark and Share

[6:35pm ET Sunday] That may have been an important meeting of the G-20 this weekend. The joint communiqué appears somewhat vague, however, so we’ll have to wait to see how markets react before we make our judgment on the matter. But make no mistake; this issue has been front and center for several years now.

As reported on the BBC:

On exchange rate conflict, finance ministers agreed to move more toward market determined exchange rate systems and refrain from competitive devaluation of currencies. Under this agreement, China will find it difficult to resist pressure to appreciate its currency and Japan to publicly devalue the yen. Korean Finance Minister Yoon Jeung-hyun told reporters shortly after the meeting, “The exchange rate dispute will soon be over.”

Washington strongly pressured finance ministers to reach agreement on the currency dispute by proposing to maintain current account imbalances at certain levels as first suggested by Seoul.

The U.S. demanded that current account surpluses or deficits be maintained within 4 percent of GDP. Due to objections from countries with big surpluses such as Germany and China, however, the joint statement failed to set numerical targets, only saying current account imbalances will be corrected by indicative guidelines.

The other major issue facing much of the world is what to do about the fraudulent securitization and sales of mortgage-backed securities. The problem is so massive, probably in the trillions, that class action lawsuits are starting that could lead to the collapse or restructuring of several major banks, including Bank of America (BAC), Citigroup (C), JP Morgan (JPM), Deutsche Bank (DB), Wells Fargo (WFC), and Goldman Sachs (GS).

You wouldn’t know it of course if you had taken a look at the performance this week of many of those banks. WFC +10.7%, GS +4.7%, C +4.1%, DB +3.6% and JPM +1.5% were soaring. The only one to get sued so far was Bank of America – surely not the only offender – which tanked in the market by -4.5% this week.

Maybe it’s just a matter of time before the whole world gets to understand how many hundreds of billions of US Dollars are at stake. The total sums involved are far greater than the original $700 billion Henry Paulson orchestrated Troubled Asset Relief Program (TARP). Of course, when it comes time for the offending banks to repay TARP II, they will be able to repay in wooden nickels.

Speaking of America’s currency problems, I don’t see how the monetary authorities can avoid an ounce of Gold be priced at $2000 or $3000 or $5000 in the future. For the same reason that extremely low interest rates were manufactured by the Fed, causing a negative real return, so too will there be pressure from Congress to keep the forthcoming rise in interest rates behind the inflation curve, which will lead to higher and higher gold prices, in my opinion.

Yes, this week, the price of Gold was hammered down a rather large -$40.50/oz, but I believe that was mostly due to profit-taking ahead of the G-20 meeting in South Korea that ended Saturday. As I say, now the market gets to speak.

So without further adieu, let’s get straight into the details of what happened in the capital markets this week, including the macro-economic data, foreign and domestic equities, bonds, commodities, currencies and precious metals. As I say, you have to get your head around all of it before you can make an effective trading plan.

Global Economics Review

Weekly International Economic Report from Econoday.

Summary: “A plethora of better than expected earnings (but fewer better than anticipated revenues) clashed with worries about world economic growth leaving equity indexes mixed for the week. The Peoples Bank of China grabbed attention away from earnings with a surprise interest rate increase. The buildup to the weekend meeting of the Group of 20 in South Korea and the value of the yen, renminbi and of course the U.S. dollar could not be ignored either. Aside from China, there were little new economic data to divert investors’ attention. The anecdotal evidence presented in the Federal Reserve Beige Book did not provide a road map to QE2 — nor did the voluminous Fed speak during the week. Investors were quixotic — quick to punish companies that did not surpass expectations completely but at the same time, they ignored problems elsewhere… There continues to be a close relationship between the value of the U.S. dollar and equities. When the dollar increases, investors become more risk averse and when the currency declines, it is a sign for a return to risk and investors gobble up shares. For example, a poorly received batch of U.S. technology earnings and the surprise Peoples Bank of China’s 25 basis point interest rate increase to 5.56% led to a flight from riskier assets on Tuesday. The move elevated fears that China’s attempt to slow the pace of domestic economic growth would crimp the global expansion. On Wednesday, however, a relapse in the dollar and a cool response by Asia to China’s monetary policy tightening enticed investors back into stocks.”

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

US Industrial Production for Sept. Following release of the data on 10/18/2010 at 9:15:00 AM ET, Econoday reported, “Industrial production was disappointing in September, declining 0.2%, following a 0.2% gain in August. The September decrease came in notably below analysts’ median projection for a 0.2% advance… By major components, manufacturing dipped 0.2% after a 0.1 uptick in August. Assemblies of motor vehicles & parts, however, provided some lift, rebounding 0.5%, following a 6.3% drop in August. Excluding motor vehicles, manufacturing posted a 0.2% decline in September, following a 0.5% boost the prior month… For other major industry groups, utilities output dropped 1.9% while mining gained 0.7%… On a year-on-year basis, overall industrial production slipped to 5.4% from 6.4% in August… Capacity utilization edged lower to 74.7% from 74.8% in August. Analysts had expected 74.8% for the latest month… The latest production numbers show manufacturing to be on the weak side. However, that may be temporary as a weaker dollar will likely boost exports. Also, the latest Empire State manufacturing survey for October was notably more positive. And durable goods orders excluding transportation picked up recently.”

US Housing Starts for Sept. Following release of the data on 10/19/2010 8:30:00 AM ET, Econoday reported, “Housing starts surprised on the upside while permits went in the other direction. Importantly, the single-family component is the one showing unexpected modest strength. Housing starts in September rose 0.3% after jumping 10.5% the prior month. The September annualized pace of 0.610 million units came in significantly above the market forecast for 0.580 million units and is up 4.1% on a year-ago basis. The boost in September was led by a 4.4% gain in single-family starts, following a 1.4% rise in August. The multifamily component dropped 9.7% after spiking 42.3% in August… By region, the gain in starts was led by a 4.8% boost in the South with the Northeast posting a 2.9% increase. Losing ground were the Midwest, down 8.2%, and the West, down 3.6%… Permits fell back in the latest month, declining 5.6% after rebounding 2.1% in August. Weakness was in the multifamily component which dropped 20.2% after a 9.8% rise the prior month. Single-family permits edged up 0.5% in the latest month after dipping 0.7% in August. Overall permits came in at an annualized rate of 0.539 million units and are down 10.9% on a year-ago basis… Today’s report indicates that housing may have hit its post-tax credits bottom. The multifamily component for starts has been a lot more volatile than usual but the single-family component is somewhat encouraging with two consecutive monthly gains. However, the level remains quite weak.”

US Jobless Claims for Week Ending Oct. 16. Following release of the data on 10/21/2010 at 8:30:00 AM ET, Econoday reported, “A big 13,000 upward revision to the prior week more than cuts in half the 23,000 decline in initial jobless claims for the October 16 week. Still, the results are positive with the four-week average down 4,250 to 458,000, more than 6,000 below the month-ago comparison for its lowest level since July… Continuing claims are at their lowest level of the recovery, down 9,000 in data for the October 9 week for a four-week average of 4.478 million. Improvement here reflects new hiring and, unfortunately, the expiration of benefits as workers fall out of the insured pool. The unemployment rate for insured workers is unchanged at 3.5%… Today’s data are free of distortions and point to incremental improvement in the labor market. There was no initial reaction to the results.”

US Leading Economic Indicators for Sept. Following release of the data on 10/21/2010 10:00:00 AM ET, Econoday reported, “Given the usual boost from the yield spread, the index of leading economic indicators rose 0.3% in September following a downward revised 0.1% gain in August and an upward revised 0.2% gain in July. The trend confirms expectations for mild economic growth in the months ahead… Yet excluding the yield spread, September’s report is mixed. On the plus side, initial jobless claims came down in September and have continued to come down in October. Money supply also gave a big lift and may continue to give one given the Fed’s accommodation plans. Quickening delivery times are the biggest negative followed by a drop in building permits. Consumer expectations, which have been depressed, are also negative… The coincident indicator shows no change for a second month yet, based on the leading indicators, is set to begin showing some growth again. The report is cautious, saying there’s been a little more weakness than strength over the last six months.”

US Philadelphia Fed Survey for October. Following release of the data on 10/21/2010 10:00:00 AM ET, Econoday reported, “The Mid-Atlantic manufacturing sector continues to sputter. The Philly Fed’s new order index, at minus 5.0 in October, continues to show month-to-month contraction though at a slightly slower rate than September’s minus 8.1 or August’s minus 7.1. Contraction in backlog orders is steady, at minus 8.9 vs. the prior months’ minus 8.5 and minus 7.1 before that… Lightness in the pipeline makes manufacturers nervous about inventories. Manufacturing inventories in the region, in contrast to the nation, are coming down fast, at minus 18.6 in October following minus 16.7 in August and minus 11.6 in July. Manufacturers continue to report a lack of pricing power for finished goods with the prices received index down around the 12 level the last three months. Shipments are steady and employment has edged higher the past two months. Yet the decline in orders doesn’t point to future gains for shipments or employment… A positive not to be overlooked is sudden optimism in the six-month outlook where indications for new orders, shipments and employment all just about doubled in strength. The Mid-Atlantic region may be sagging yet the weakness may be isolated and may only be temporary.”

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

US Existing Home Sales for Sept. Before release of the Sept data on 10/25/2010 at 10:00:00 AM ET, Econoday reported, “Existing home sales in August made a moderate comeback, rising 7.6% to a 4.130 million annual rate, up substantially from July’s 3.840 million rate. Gains were broad based across regions. And supply edged down to 11.6 months from a recent high of 12.5 in July. Still inventories are quite bloated.”

US Consumer Confidence for Oct. Before release of the Oct data on 10/26/2010 10:00:00 AM ET, Econoday reported, “The Conference Board’s consumer confidence index fell nearly five points in September to 48.5 for the lowest level since the beginning of the year. And worries still focus on the job market. Those saying jobs are currently hard to get rose four tenths to 46.1% for the largest share since March. Despite recent declines in initial jobless claims, consumers see companies as not engaged in healthy hiring now or down the road. Employment expectations six months out show sharp deterioration. There may not be much improvement in confidence in October. Gasoline prices have firmed and the job picture is showing little net change.”

US Durable Goods Orders for Sept. Before release of the Sept data on 10/27/2010 10:00:00 AM ET, Econoday reported, “”

US New Home Sales for October. Before release of the data on 10/27/2010 10:00:00 AM ET, Econoday reported, “Durable goods orders for August dipped a revised 1.5%, following a 1.2% rebound in July. But the underlying trend is back to positive. Excluding transportation, new durables orders gained a revised 1.7%, following a 2.1% drop in July. This series has risen in three of the last four months and in five of the last seven.”

US Jobless Claims for Week Ending Oct. 23. Before release of the latest data on 10/28/2010 at 8:30:00 AM ET, Econoday reported, “Initial jobless claims fell a sharp 23,000 for the October 16 week to 452,000. But partially offsetting was a big 13,000 upward revision to the prior week. Net, the results were positive with the level a little below market expectations and the four-week average down 4,250 to 458,000.”

US GDP for Q3 advance estimate. Before release of the projected Q3 GDP data on 10/29/2010 at 8:30:00 AM ET, Econoday reported, “GDP growth for the second quarter ended basically with a whimper with the third estimate coming in at 1.7% annualized from 1.6% in the second revision. But weakness for the quarter in exports made a big difference between domestic demand and overall demand. Real final sales to domestic purchasers were up a robust 4.3% while final sales of domestic product (adds in net exports) rose a slim 0.9% annualized. On the inflation front, the GDP price index was up 1.9% annualized.”

US Employment Cost Index for Q3. Before release of the employment cost data on 10/29/2010 8:30:00 AM ET, Econoday reported, “The employment cost index for civilian workers in the second quarter was up 0.5%, compared to a 0.6% rise in the first quarter. Wage & salary pressure was steady at plus 0.4% while benefit costs came down to plus 0.6% versus the first quarter’s 1.1%. Year on year, total costs were at plus 1.8% in the second quarter versus plus 1.7% in the first quarter.”

US Chicago PMI Survey for Oct. Before release of the Oct Chicago PMI data on 10/29/2010 9:45:00 AM ET, Econoday reported, “The Chicago PMI in September jumped to 60.4 from 56.7 in August (breakeven of 50). The higher index number reflected accelerating growth in the economy, at least for businesses in the Chicago area. And we are likely to get another healthy number in October as the September new orders index spiked more than six points to a very strong 61.4.”

US Consumer Sentiment for Oct. Before release of the Oct data on 10/29/2010 at 9:55:00 AM ET, Econoday reported, “The Reuter’s/University of Michigan’s Consumer sentiment index slipped to 67.9 in mid- October from 68.2 for the final reading for September. The big downward movement was in the assessment of current conditions, likely reflecting concern over the job market and slow progress on income. The good news is that the expectations index rebounded moderately. This index is a leading indicator for the overall economy.”

International Equity Markets Review

The 21 equity market indexes we track weekly were mixed this week, with most of the gains made in Europe, the UK, the US and Mexico.

As I wrote recently in this space: “Obviously, the story has been Quantitative Easing and a lower $USD. (But) The $USD is now over-sold, however, and traders are watching for a reversal, probably within a month, that would likely have a quick and sharp impact on markets like Brazil.” That occurred this week as the US Dollar index ($USD) gained +0.56%. As happens when commodity prices are hit, as they were through Thursday, the producer countries like Brazil, Australia and Canada were weak.

Also, mostly due to the raising of bank reserve requirements in China early in the week, most of the indexes in the Asia-Pacific region, save Philippines, were weak. The Philippines PSEi was up +1.7% this week, but down -0.5% a week ago, one of the few at that point. Over the past year, however, the PSEi is up a very impressive +40.4%.

wir_43.1.gif

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

Here is the latest session data for the exchanges of the Americas.

Here is the latest chart for the Brazilian Bovespa stock exchange in Sao Paulo.

Brazilian Bovespa stockcharts.com chart

Here is the latest session data for the Toronto Stock Exchange composite index.

Toronto 300 stockcharts.com chart

Toronto CDNX stockcharts.com chart

Europe

Here is the latest session data for the bourses of Europe.

Here is the latest session data for the London stock exchange FTSE.

FTSE 100 stockcharts.com chart

Here is the latest session data for the German DAX.

DAX stockcharts.com chart

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

CAC 40 stockcharts.com chart

Here is the latest session data for the Swiss market index. Swiss Market Index stockcharts.com chart

Asia-Pacific

Here is the latest session data for the Asia-Pacific stock exchanges.

Here is the latest chart for the Japanese Nikkei 225 index.

Tokyo Nikkei 225 Index stockcharts.com chart

Here is the latest chart for the Singapore index .

Singapore Straits Times Index stockcharts.com chart

Here is the latest chart for the Shanghai Composite index .

Shanghai Composite Index stockcharts.com chart

Here is the latest chart for the Hong Kong Hang Seng index .

Hong Kong Hang Seng stockcharts.com chart

Here is the latest chart for the India BSE 30 index .

Mumbai BSE 30 Sensex Index stockcharts.com chart

Here is the latest chart for the Australian All Ordinaries index .

Sydney All Ordinaries Index stockcharts.com chart

Russia (RTS) stockcharts.com chart

ETFs Review for International equity market

Eleven of the 16 USD-denominated country ETFs I follow were up W/W. But, on Friday there was mixed trading as seven were up. Traders on Friday were focused on possible changes in the currency market arising from agreements at the G-20 conference in South Korea.

This week’s winners were led by Germany (EWG +1.45%) for a second consecutive week. France (EWQ +0.63%) and Russia (RSX +0.61%) were also winners. Most of the lift in the RSX happened on Friday (+0.50%) as metal and oil prices climbed higher on the day.

With the China crack-down on easily bank credit, and the $USD strength, which hurt the oil and metals, the big loser by far was the Brazil EWZ, which plunged -5.35% W/W, which was well ahead of the next biggest loser (Australia EWA -1.97% W/W).

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

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change EWW 56.81 0.35 0.62% 1.61% 2.53% 6.87% 11.39% 11.37% 4.05% 18.50% EWG 23.84 0.07 0.29% 1.45% 5.07% 8.22% 4.10% 16.58% 8.81% 2.32% EWQ 25.55 0.08 0.31% 0.63% 2.45% 5.67% -4.56% 16.56% 3.69% -5.05% RSX 34.37 0.17 0.50% 0.61% 0.91% 7.27% 5.49% 10.55% -1.38% 7.71% EWJ 10.15 0.08 0.79% 0.10% -0.78% 2.84% 1.60% 7.52% -2.31% 2.32% IFN 38.54 -0.57 -1.46% -0.23% 0.29% 5.50% 23.92% 21.62% 18.40% 25.78% EWH 18.98 0.02 0.11% -0.47% 0.85% 5.68% 18.18% 21.51% 16.87% 15.87% EWS 13.76 0.05 0.36% -0.72% 1.62% 4.40% 17.11% 14.38% 13.53% 24.98% EWT 13.46 0.07 0.52% -0.96% -1.75% 0.45% 0.90% 10.06% 4.99% 9.25% GXC 80.25 -0.47 -0.58% -1.08% 1.94% 5.25% 8.67% 12.90% 10.51% 10.13% EWU 16.94 0.06 0.36% -1.22% -0.18% 1.99% 2.60% 12.33% 2.48% 3.48% ILF 51.56 0.24 0.47% -1.58% -0.19% 5.81% 4.48% 11.99% 6.27% 9.31% EWC 28.59 -0.05 -0.17% -1.69% -1.11% 2.84% 6.20% 9.00% -0.21% 8.83% EWY 54.70 0.72 1.33% -1.69% -1.76% 3.66% 10.84% 13.18% 4.25% 20.30% EWA 24.34 0.14 0.58% -1.97% -2.09% 1.63% 2.61% 16.13% -0.16% -0.29% EWZ 76.10 -0.58 -0.76% -5.35% -3.71% 2.98% -1.41% 10.24% 3.55% 1.26%

Japanese equity market ETF: EWJ

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

Interactive EWJ Monthly data:

Interactive EWJ Weekly data:

Weekly EWJ

Interactive EWJ Daily data:

Daily EWJ

U.K. equity market ETF

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

Interactive EWU Monthly data:

Interactive EWU Weekly data:

Weekly EWU Data

Interactive EWU Daily data:

EWU Daily data: Daily EWU Data

Canada’s equity market

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

Interactive EWC Monthly data:

Interactive EWC Weekly data:

Weekly EWC Data

Interactive EWC Daily data:

Daily EWC Data

Taiwan’s equity market

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

Interactive EWT Monthly data:

Interactive EWT Weekly data:

Interactive EWT Daily data:

Indonesia equity market ETF

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

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

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

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

Interactive IF Monthly data:

Interactive IF Weekly data:

Interactive IF Daily data:

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

Group 1:

(list one)

(list two)

(list three)

Group 2:

(list one)

(list two)

(list three)

US Equity Markets Review

The S&P 500 and Dow 30 were up +0.6% W/W, while the NASDAQ Composite lifted +0.4% this week. Nasdaq stocks were coming off superlative gains the previous week and were consolidating those gains.

What held the Dow 30 and S&P 500 in check a week ago and turned them lose this week were the Financials, which seemed to be pleased with negative market reaction to Treasury Secretary Geithner’s remarks that followed an earlier speech by the Fed Chairman Bernanke that appears to put both of them saying that inflation isn’t such a bad thing. Inflation puts the banks at a relative disadvantage as they deal in Dollar-denominated assets.

The market seems to believe that other countries in the G-20 will demand tighter policies by the US monetary authorities. But let’s not speculate until receiving the communiqué following the meeting in South Korea this weekend. What happened to strengthen the $USD this week might have simply been the mean reversion to an oversold Dollar condition.

For the NASDAQ 100, there were 76 stocks that gained W/W and 24 dropped lower. Whereas a week ago, 16 of the 100 lifted more than +5.0%, this week only four did: e-sales giant Ebay (EBAY +9.31%); China’s biggest ISP and search company Baidu (BIDU +8.74%); US semi-conductor equipment & materials company Lam Research (LRCX +6.09%); and Israel-based security software company Check Point Software (CHKP +6.01%).

The fifteen biggest winners this week in the Nasdaq-100:

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The fifteen biggest losers:

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On the Nasdaq Community website (www.community.nasdaq.com), starting this week, I will be modeling portfolios of my own creation for (i) Nasdaq-100, and (ii) the largest 100 market cap Nasdaq listings of China and Hong Kong based companies. The model is a combination of fundamental and technical analysis.

DJIA ino.com chart

DJIA stockcharts.com chart

NASDAQ Composite ino.com chart

NASDAQ Composite stockcharts.com chart

Here is the list of the ten highest-weighted non-financial stocks in the NASDAQ Composite. Put them in a watchlist (see Google Finance Portfolio) and watch them like a hawk:

AAPL MSFT GOOG QCOM RIMM CSCO INTC ORCL GILD EBAY

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

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

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

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

Monthly Nasdaq Composite Data

Monthly S&P 500 Data

Monthly Dow 30 Data

Monthly Russell 2000 Data

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

Weekly Nasdaq Composite Data

Weekly S&P 500 Data

Weekly Dow 30 Data

Weekly Russell 2000 Data

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

Daily Nasdaq Composite Data

Daily S&P 500 Data

Daily Dow 30 Data

Daily Russell 2000 Data

Dow 30 Stocks Review

This week, once again 20 of the 30 Dow stocks closed higher W/W as the index gained +0.63% to 11133. On Friday there were 14 winners and 16 losers of which American Express (AXP) dropped -3.1% on Friday.

On the week, the weakest two Dow 30 stocks were Bank of America (BAC -4.51%) and Alcoa (AA -3.12%). The BAC got sued by the Fed, which I have never seen them do before.

The top five stocks were Coca-Cola (KO +2.79%), Travelers (TRV +2.74%), Intel (INTC +2.64%), Home Depot (HD +2.54%), and Exxon (XOM +1.76%). HD was particularly strong until Friday.

Overall, the relative volume (vs 3-month and 12-month averages) was improved because of the positive earnings performance this week. The one negative in these reports seems to be weakness on the top line for some of the companies.

Table 16: Dow 30 List

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change KO 61.61 0.14 0.23% 2.79% 3.70% 5.10% 8.01% 13.55% 13.44% 13.78% TRV 55.10 0.12 0.22% 2.74% 4.34% 3.73% 10.62% 11.79% 2.44% 6.58% INTC 19.83 0.07 0.35% 2.64% 1.59% 2.11% -5.03% -8.95% -17.34% -1.44% HD 31.48 -0.33 -1.04% 2.54% -1.29% -0.51% 9.80% 11.55% -11.87% 17.81% XOM 66.34 0.02 0.03% 1.76% 3.04% 7.43% -4.06% 11.72% -3.24% -10.88% BA 71.26 -0.24 -0.34% 1.64% 2.93% 10.31% 26.84% 7.00% -5.73% 39.53% JPM 37.70 0.00 0.00% 1.48% -4.10% -5.16% -12.02% -4.19% -15.74% -17.52% MMM 90.44 -0.11 -0.12% 1.46% 1.44% 4.00% 8.94% 6.71% 5.10% 14.79% MCD 78.55 0.11 0.14% 1.38% 3.22% 4.59% 25.12% 10.01% 10.59% 32.02% WMT 54.06 0.03 0.06% 1.33% -0.64% -0.04% -0.31% 6.29% -0.79% 7.09% UTX 74.94 -0.03 -0.04% 1.13% 2.78% 4.81% 4.62% 7.78% -1.95% 13.72% CVX 84.55 0.30 0.36% 1.12% 0.73% 5.53% 6.94% 15.13% 4.13% 9.39% PG 63.40 -0.11 -0.17% 1.02% 2.49% 2.86% 3.73% 3.31% -0.30% 9.07% KFT 31.90 0.08 0.25% 0.79% 3.14% -0.16% 16.30% 8.95% 5.66% 17.67% CSCO 23.48 0.22 0.95% 0.51% 4.45% 6.29% -4.90% 0.90% -14.06% -2.89% MRK 37.10 0.00 0.00% 0.41% 0.51% -0.64% 0.24% 5.46% 9.86% 12.87% JNJ 63.81 -0.18 -0.28% 0.38% 0.92% 2.69% -1.35% 11.91% -1.50% 4.71% DD 46.83 -0.30 -0.64% 0.34% 0.36% 2.74% 36.69% 24.12% 18.65% 37.53% DIS 34.97 0.29 0.84% 0.26% 1.33% 4.14% 9.04% 4.11% -4.92% 18.78% HPQ 42.87 0.47 1.11% 0.12% 4.18% 4.61% -18.27% -6.95% -19.58% -11.28% T 28.29 -0.05 -0.18% -0.14% 0.25% -1.01% -1.01% 10.90% 7.69% 8.39% AXP 39.03 -1.24 -3.08% -0.15% 2.74% -9.51% -4.62% -9.63% -16.55% 7.11% MSFT 25.38 -0.04 -0.16% -0.63% 3.30% 2.46% -18.00% -1.78% -19.15% -4.55% IBM 139.67 -0.16 -0.11% -0.99% 0.59% 4.15% 5.45% 9.57% 8.16% 13.84% VZ 32.09 -0.43 -1.32% -1.05% -2.25% -1.69% -3.58% 18.85% 9.60% 10.58% PFE 17.50 -0.13 -0.74% -1.41% 0.23% 0.57% -7.55% 18.16% 6.19% -0.34% GE 16.06 -0.04 -0.25% -1.47% -6.19% -3.60% 3.95% 5.59% -15.25% 4.69% CAT 78.33 -0.56 -0.71% -1.78% -2.54% -1.76% 33.78% 15.19% 16.03% 33.35% AA 12.72 -0.06 -0.47% -3.12% -1.32% 4.26% -23.60% 17.56% -8.16% -9.40% BAC 11.44 0.08 0.70% -4.51% -13.20% -15.88% -27.09% -16.25% -38.30% -30.75% You can do this table yourself by entering the following string into the Summaries window at http://www.investertech.com and then clicking on the link for Performance.

Here are the links to interactive Dow charts from Investertech.com that I broke into groups of ten, which you can add technical indicators for as well.

(list one)

(list two)

(list three)

For those of you who are relatively new at trading, or to this blog, why not pull the ten (10) Cara 100 companies out of the DJIA 30 list, and study the links for just these stocks? Keep a hard copy of the Value Line quarterly report plus a record of the Daily-Weekly-Monthly RSI-7 technical indicator. Study up on what the RSI is so you know it and have confidence that it is just like a football game yardstick that shows you how much risk your team is facing when trying to score points.

The Cara 100 high-quality company list has the following ten DJIA components:

Wal-Mart (WMT), Disney (DIS), Johnson & Johnson (JNJ), McDonalds (MCD), Exxon (XOM), Boeing (BA), Procter & Gamble (PG), IBM (IBM), Intel (INTC), and United Technologies (UTX)

There is no rocket science to these high-quality companies. In your typical week, you shopped at Wal-Mart and along the aisles, mostly the personal consumer products were from Procter & Gamble, except for maybe the baby powder from Johnson & Johnson. On the way there, you may have filled-up at an Exxon gas station, and on the way home, maybe you stopped for a Big Mac or a salad at McDonalds. Overhead, you watched airplanes from Boeing. If you were in a high-rise building, you probably rode in an Otis elevator from United Technologies. Maybe you no longer have an IBM PC, but you do know the company, and your present PC is likely powered by Intel. Every parent’s kids want you to take them to Disney… All in all, this is just life we’re talking about here. If you are alive, you know these companies like your children. You probably even see more of them… So, just quickly read those Value Line reports – one per company every 13 weeks – and keep an eye on the RSI (momentum) and MACD (trend)… Those guys on Wall Street may be worth a gazillion dollars, but they didn’t do it the way you and I have to do it. So, stop listening to their stories that financial engineering and out-sourcing is what’s making America strong. That is such a crock. Instead, live life, use common sense, do only what you understand, feel comfortable, and you’ll be surprised at how quickly you can take control and free yourself of the shackles of HB&B.

This paragraph continues to run because, over time, it works.

Value Line Report(s) this past Friday

This week in the quarter yearly WIR 4- 17-30-43 series, Value Line reported on three DJIA components, all of them Industrials: General Electric (GE), United Technologies (UTX) and Caterpillar (CAT). Only United Technologies is a Cara 100 company.

As General Electric is tending to stabilize now, we are going to discuss it more. The issues with GE Capital still are serious in our eyes, but I’ll give you a heads-up here that over the next year, two and three, I believe GE will outperform its peer group.

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. 22: next one is due Jan. 21)

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. 22: next one is due Jan. 21)

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. 22: next one is due Jan. 21)

Here are my notes from WIR #17, WIR #30, and WIR #43 from 2009 and WIR #4 and #17 from 2010 re United Technologies and Caterpillar: I will continue to downplay General Electric (GE) discussion other than to say the company still has work to do in cleaning up its balance sheet. Selling control of NBC was a good start. I’d like to see them hive off GE capital too. I have never lost confidence in Jeff Immelt although I don’t put him on the pedestal I do for several other CEO’s.

For study purposes, here is what I wrote about these companies in WIR #17-2009 (April 26):

The two Industrial sector companies, United Technologies and Caterpillar, ran into the same economic problems caused by the credit market squeeze in September 2008: pullback in spending followed by inventory glut. Being closely linked to the woes of the global economy, both companies have a challenging operating environment, but that’s not to say they are not high quality ones. They are. Based on various metrics and impressions, I happen to think United Technologies is the superior one; however, I do like both…

Here are my notes from WIR #30, July 26, 2009:

…On a comparative basis, Caterpillar clearly had the superior price performance over the past three months, mostly in the past few weeks. The reason was, as explained here through-out, was on account of the Great Reflation play as the Fed (and other central banks as well) has printed a lot of money to spur economic growth. The $USD has dropped as a result, which has boosted commodity prices, which in turn has aided the commodity-price sensitive sectors like Energy, Basic Materials and Capital Goods Industrials and Transports industries of which Caterpillar is a leader.

In my previous analysis, I blew it. The following low reached almost 30, but I opined that I would have waited until 27-28. You cannot and will not be right all the time. In my case, I was too negative, and completely overlooked the Great Reflation play. CAT had a blow-out 13-week performance of +24.9%.

UTX stock has lifted +5.8% in the past 13 weeks, closing 52.23. The stock hit interim short-term cycle lows of 47.34 and 49.00, which is well over the price that I said would attract me (42-44), so I was wrong on this one too; but not nearly so bad as CAT…

Here are my notes from WIR #43, October 25, 2009:

…Where does one begin when the financial world has gone crazy? … As you can see from my words above, I think highly of these two companies. I’d like to own them; but I am not going to over-pay. United Technologies has been a long-time Cara 100 favorite of mine for all the reasons that I like quality. Caterpillar too would make that list except for the one weakness that the balance sheet is not as strong as I’d like to see for a company whose operations are so highly correlated to the global economy and affected by currency fluctuations. Even at that, I have often said that CAT is almost in my top group.

There is a big difference however – these days at least – in a company financial position and operating results and the reportage in mainstream media. Seldom do you see such nonsense as the media is presently spewing regarding corporate results as we have today. After the CAT quarterly report was released, it seemed like Hollywood screenwriters got into the act, and I felt compelled to write it up in the blog Wednesday morning after the stock had hit a high of 61 and change the day before and everybody was repeating the mantra “CAT just crushed earnings”:

The average PE for CAT is in the low teens, and it seldom goes above 20 (but is now double its average and traders are excited). But there is a lot more to this than meets the eye. Independent traders are confounded because prices are moving on pure b.s. Fourteen weeks ago (7/14), when Value Line created its report on CAT, the price was $31.93. Today the price was $59.81 when I last checked. That’s a gain of +87.3% in a quarter. This week VL will update their CAT report. Interestingly, in their last report, the analyst had just downgraded the technical outlook rating to a “5” (lowest) and a couple weeks earlier had downgraded CAT’s fundamental timeliness rating to a “5” (lowest). He wrote in the report published July 24: “We advise investors to stay on the sideline… we are cautiously optimistic quarterly sales will soon hit bottom… the company is slashing costs and endeavoring to preserve cash… reducing production runs, shortening work weeks, laying off workers, (etc)…”

On that basis, and I happen to believe that Value Line has fairly good analysts and a good track record over the years, there was no reason for the recent moonshot in the CAT price. Wall St analysts agreed with the VL report. Thirteen weeks ago, 14 rated the company a Hold, 4 a Buy/Strong Buy and 5 an Underperform/Sell. The overall rating was about 3 on a scale of 5. Last week it was 2.8 (a very weak hold).

So, what’s happening here? Yesterday at the open, the stock gapped from 58 (over-bought) to a nose-bleeding height of 61.

Why? The sales guidance for 2009 is $32-33 billion, but even VL had it estimated at $35 bil in their 7/24 report. And sales for 2008 were $51.234 billion. Earnings were a surprise at $0.64, but they were also $1.39 in the comparable year earlier quarter.

Right at the pre-market peak in hype, Reuters ran a headline story: “Will cash-rich CAT bankroll cash-poor suppliers?” Do you believe that garbage? CAT has been desperately trying to conserve cash, and their balance sheet is rated only A (not A+ or A++) and the Safety rating is only a “3” because the cash on hand equals only the accounts payable. In fact the company’s quick assets (cash and receivables — the one’s they have difficulty collecting) are $20 bil and the current liabilities are $22 bil. So CAT is hardly a cash-rich company, and their sales have plummeted because the economy is in crisis and their distributors are going out of business left, right and center.

So, what the heck is going on here? This is all about Stimulus 2.0. If you want to buy the risk, go ahead. As for CAT and others like it, I’ll pass thank you.

Look closely at the VL report dated Oct 23 (but clearly written ten days earlier, which irks me btw because there is no reason it cannot go from the analyst direct to the market without first being seen by goodness knows how many people). The projected next five year annual rates of growth for sales, cash flow and earnings are one-third those of the past five years. Nothing, I believe, has a greater impact on sustainable share prices that momentum of growth in these three metrics. So where’s the beef? Then, projected earnings for this year AND next combined are about half the actual earnings for 2008. Sales for 2009 and 2010 combined are projected at $67 bil vs 2008 sales at $51.3 bil. Truly, how can people get excited and be talking “blow-out” earnings, and using words like “crushed”. 2009 earnings are projected to come in at $0.95, which is a far cry from 2008 when earnings were $5.71. The current December quarter, they are projected to be $0.53 vs the comparable quarter at $1.13. Like, where is the beef here?

Just because the Wall Street scriptwriters are telling you things are great doesn’t mean they are. Prices, simply, are escalating and people are excited – just like the condo owners were in Miami in 2005 after stunning price gains over 2004, which followed stunning price increases over 2003, etc. Where are they now? I said in the summer of 2005 that books would be written about that sordid affair and I held CNBC accountable. It’s happening all over again. If there was a factual basis for these price increases, I would be holding positions. Unfortunately I have to manage risk.

Last night at a party everybody was talking up the market. One fellow says he bought Citi at 94 cents and sold it a couple weeks later for 3 something, making $500,000 in his personal account, and now that he is a genius he says he absolutely knows the market is going higher. I asked him what his picks were and the answer was “All of them. Buy them all. They are all going higher, and I got a $100,000 (wager) that says I’m right.” So I asked what if he’s wrong, and he replied “In that case my $100,000 turns to $5,000… so big deal.” He was drunk in more ways than one.

Another friend who is also a construction worker and who also bought Citi down near the low dropped by yesterday to ask me what he should do with it. I was surprised he was still holding it, and mentioned his $1.00 cost base. No, he says, he paid $1.04 for 100,000 shares and was thinking of selling a week ago at $5. Now the price has been sliding, down to $4.46, he wanted my counsel. “Sell now” I said and “go to cash, and after C crashes, buy another $100,000 worth, and no matter what happens to it, you cleared a quarter million (it’s tax free in Bahamas). There will be lots of quality opportunities that are less risky.” Ok he says, he’ll do that, and then proceeds to tell me he also bought at Australian bank at the same time at 10 and its now 80. The mind boggles. I figured maybe he should be working with me or me with him. I just have a different kind of hard hat.

My mind just had a flash-back to the 1970’s when a friend who was a commodities broker was telling me he was making a killing in pork bellies. I really didn’t know back then what a pork belly was, but it wasn’t long after that this guy was no longer a commodities broker.

There are extreme cycles at times and we are going through one. The money has moved from the taxpayer’s account to Humungous Bank & Broker (HB&B) and through their books to their proprietary trading desks and those of their friends and best clients. Regrettably, that money never made it to the loan department despite the no-brainer profit set-up from the Fed. So, it went into the market with a little bit kept in reserve to pay off the script writers and talking heads. I don’t know what’s grown faster, the prices or the hype?

Nothing much changes at every extreme cycle top. People who don’t know gamble. They can’t stay out of the action. It’s in their blood. They couldn’t care less whether Caterpillar is CAT or 0228 or the stock is $40 or $60. Pick a number.

…The skinny on United Tech is a little easier to comprehend. Extremely strong balance sheet is being used to ramp up the dividend and buy in the stock. The metrics always look better. No brainer. Paulson pulled that one after he became Treasury Secretary. I called it Paulson’s Folly because when he told Wall Street to do the same thing when the share prices were at their peak. When these banks, names you now know have failed, were spending over $10 billion to buy in their shares at record high prices, I asked in this blog if anybody with common sense really believed that was a good thing.

What goes around comes around.

With UTX, the financials and operating results are better that Caterpillar’s. But, there too the projected next five year annual rates of growth for sales, cash flow and earnings are a fraction of those of the past five years – unless of course you believe that every one in China was going to buy an elevator…

Notes for WIR#4 Jan 24, 2010

Here are the charts for CAT ($54.25 1/22 close; down -$3.35 10/23 close; down -5.82% in qtr):
At 1/22, the RSI-7 for the Monthly/Weekly/Daily for CAT is 58.5 (falling; bearish) / 40.6 (falling; bearish) / 22.6 (has fallen to Accumulation Zone consideration).

At 10/23, the RSI-7 for the Monthly/Weekly/Daily was 66.5 (presently bull) / 76.1 (a bull with a nosebleed) / 63.2 (down sharply after so-called “blow-out earnings).

Our automated RSI-7 signal system gave a Weekly-based SELL Alert @ $54.25 on 1/22. But, since the Daily hit the Accumulation Zone and closed Friday with a 22.6 RSI-7, I would hesitate selling if there is any attempt by international metals stocks to rally early this coming week [based on presumed Quantitative Easing]. I think the easing will come early if equity markets look like they will crater early in Monday morning in Europe, or if not then there could be small selling though the President’s State of the Union address on Wed. night…

If the selling continues through the week, CAT’s RSI-7 could drop to the teens or lower before there is a bounce. Watch the RSI-7 on Silver bullion and the Silverminer stocks for indication of a bounce. But any bounce is expected to be a small, short one.

Deleveraging of financial assets takes the speculation out of stocks like the metal miners.

As for Value Line, the analyst David Reimer, raised the Timeliness from 4 (bad) to 3 (average) on 11/06 and the Technical from 3 (average) to a 2 (good) on 10/30. From this report dated 1/22, but clearly written well before as the price is shown as $62.24 but closed 1/22 at $54.25, I don’t see what positives he saw. Obviously with a price of $54.25, the risk is lower.

So, when you read any report from an analyst always be sure to note the date and price change.

Frankly, I see nothing in this report that would help me trade the stock. The analyst has had to retract some statements re earnings and revenue expectations, so he clearly knows that long-term oriented investor/traders are not going to have any confidence in what he writes, so he can opine whatever he wants about a 3- to 5-year Total Return potential being ok. In fact, despite his “positive” notes, the Annual TR has been dropped from a hi-lo of 22%-10% on the previous quarterly report to just 17%-6% for this one. Given that he shows a Dividend Yield of +2.7%, he’s obviously saying that the low expectation is for a minimal capital growth through rising share price. I don’t disagree; I just think the analyst ought to not be so hype-oriented as to conclude his report with, “We believe that a rising share price is beginning to attract more investors with a year-ahead view, as opposed to those looking further out”. Oh, really?

Notes for WIR#17 Apr 25, 2010

Here are the charts for UTX ($76.47 4/23 vs $69.08 1/22 close; up +10.7% over qtr):

At 4/23, the RSI-7 for the Monthly/Weekly/Daily for UTX has moved to 79.8 (and rising) / 80.4 (a big week this was) / 71.2 (Thurs and Fri came off after that incredible move on Wednesday) vs the values on 1/22, which had been 73.5 (still elevated) / 55.1 (falling) / 30.1 (falling rapidly).

Our automated RSI-7 signal system noted a Monthly and Weekly SELL Alert back in January, but the UTX has kept powering north. There had been a Daily-based Accumulation Zone @ $69.08 on 1/22, but I ignored it, thinking the stock would move lower. I decided to go with the SELL Alert given on the Weekly on 1/22 @ $69.08, saying “this is no time to be brave, regardless of what bullish analysts might opine.”

The Value Line analyst, Erik Manning, indicates an anticipated 2012-2014 Annualized Total Return (Dividends and Capital Growth) in a hi-lo range of 16%-10%, which, given a solid dividend of well over +2.0%, is not so hot.

Today, I am not considering any Buys in UTX. The Monthly and Weekly RSI-7 numbers are just too extreme at the high end. I’d wait until the anticipated intermediate-term Bear phase takes the stock to a Daily/Weekly Buy Alert level before thinking about venturing into new positions.

It now appears that 2008 revenue levels will not be achieved again until 2012, and that earnings per share in 2008 will possibly be surpassed in 2011. The latter is happening because cash flow is being used to buy back the stock.

The VL analyst opines only average performance here for the foreseeable future. I agree. More to the point; I’d be concerned about capital safety, not because of the company, but because of the state of the broad equity market.

Here are the charts for CAT ($68.78 4/23 vs $54.25 1/22 close; up +26.8% in qtr):

At 4/23, the RSI-7 for the Monthly/Weekly/Daily for CAT is 73.9 (back to the danger zone) / 81.2 (bullish extreme) / 74.8 (simply too high).

At 1/22, the RSI-7 for the Monthly/Weekly/Daily for CAT is 58.5 (falling; bearish) / 40.6 (falling; bearish) / 22.6 (has fallen to Accumulation Zone consideration). At the 1/23 review in the WIR, I stated that my automated RSI-7 signal system gave “a Weekly-based SELL Alert @ $54.25 on 1/22. But, since the Daily hit the Accumulation Zone and closed Friday with a 22.6 RSI-7, I would hesitate selling if there is any attempt by international metals stocks to rally early this coming week [based on presumed Quantitative Easing]. I think the easing will come early if equity markets look like they will crater early in Monday morning in Europe”.

As we see from the table and chart at the beginning of this WIR, the Fed was pumping then and these stocks began to soar a week or so later. It was be nice to get that call. Maybe we will just have to study the weekly Fed reports more closely!

2008 revenues will likely not be reached again until 2013! Same for EPS. The VL analyst says that potential Total Return (TR) is less than average, citing a 3-5 year hi-lo of 17%-6%. At the low end, you need to factor in today’s dividend yield of +2% and figure that’s not much of a capital return on investment. Too much risk here, for the moment. In fact, I think as soon as the Fed starts cleaning up its balance sheet by offloading dubious quality assets, there will be a broad market smack down and this is one stock that doesn’t have enough going for it to hold off the Bear attack. If there is a capex issue with major corporations, and there may be if interest rates start to lift, which would negatively impact Internal Rate of Return budgets for long term projects, then companies in the heavy equipment business like Caterpillar are going to suffer. That’s not to say this company has not done an excellent job cleaning up inventory and distribution channel issues, and so forth; it’s just not got enough going for it to sustain higher share prices during a broad market pullback or any double dip to economic recovery should that occur.

Here are the charts for GE ($19.07 4/23 vs $16.11 1/22 close; up +18.4% over qtr):

At 4/23, the RSI-7 for the Monthly/Weekly/Daily for GE is 63.4 (rising) / 85.4 (bullish extreme) / 61.0 (down for the past week).

Our automated RSI-7 signal system last noted a BUY Alert a long time ago @ $11.95 on 7/23/2009, with no change since then. Most recently there was a SELL Alert on the Daily data @ $18.97 on 4/16. Obviously on the Weekly data, GE is in the Distribution Zone.

VL raised the Technical (6 month rating) from a ‘4’ to a ‘3’ on 4/16, which was the day I got a SELL Alert on the Daily data. We’ll have to see how these two fare over the next month or two.

VL analyst Orly Seidman gives a hi-lo 3-5 year projected annualized Total Return (TR) of 32%-18%. With the issues still to be resolved at GE Capital, maybe the potential risk of capital loss is elevated as well. Yes, the balance sheet appears to have improved over the past two years, and as I see it the management team there is excellent, albeit a little too bullish all the time. The Return on Equity and profit margins, however, fell so much, and the risks increased so much with GE Capital, I simply had to remove GE from the Cara 100 a while back. If the directors would agree to hive off the Financial Services interests, like they did the NBC holding, I’d likely put GE back into the Cara 100 as one of the world’s great manufacturing companies.

But, I don’t trade it as it’s too hard to know when the Fed is going to pump or withdraw liquidity in the system. GE CEO Jeff Immelt would know, however, as he sits on the Board of the all-important Fed Bank of New York, which employs the 400-plus traders who run the $2.35 trillion hedge fund.

I also don’t like not being in or close to the GE boardroom the times the Board is discussing the dividend, which at some point may double. That would soar the stock overnight. As an outsider, I don’t like the odds of beating insiders. They hold what GE themselves refer to as “The Unfair Advantage”.

So, while I am back to looking at GE again, I’ll stay away from the stock for now, knowing there could be things happening there that would attract my interest sometime in the future.

Notes for WIR#30 July 25, 2010

Best these three stocks were avoided as I recommended in the previous quarterly write-up.

UTX was $76.47 on 4/23 but hit a high of just $77.08 a couple days later, falling to a low of $62.88 before closing 7/23 at $70.90. From the July 1 low, UTX has moved in 15 sessions up +11.4% and now has a Monthly/Weekly/Daily RSI-7 of 60.4/57.9/73.9. The Daily RSI-7 is high, so traders would be wrong to chase the stock here.

In the previous WIR, I stated: “The VL analyst for UTX opines only average performance here for the foreseeable future. I agree. More to the point; I’d be concerned about capital safety, not because of the company, but because of the state of the broad equity market.”

Clearly, you could have bought the UTX ($76.47 on 4/23) in the following quarter as low as $62.88, so I made a good call.

CAT was $68.78 on 4/23 but hit a high of just $72.83 a couple days later, falling to a low of $54.89 before closing 7/23 at $69.31. From the July 1 low, CAT has moved in 15 sessions up +19.4% and now has a Monthly/Weekly/Daily RSI-7 of 68.1/64.1/75.0. The Daily RSI-7 is very high, so traders would be wrong to chase the stock here.

In the previous WIR, I stated: “That’s not to say CAT has not done an excellent job cleaning up inventory and distribution channel issues, and so forth; it’s just not got enough going for it to sustain higher share prices during a broad market pullback or any double dip to economic recovery should that occur.”

You could have bought the CAT ($68.78 on 4/23) in the following quarter as low as $54.89, so I made another good call.

Re: GE, in the previous WIR I stated: “So, while I am back to looking at GE again, I’ll stay away from the stock for now, knowing there could be things happening there that would attract my interest sometime in the future.”

GE was $19.07 on 4/23 and hit a high of just $19.70 a couple days later, falling to a low of $13.75 on July 2 before closing 7/23 at $15.71. You could have bought the GE ($19.07 on 4/23) in the following quarter as low as $13.75, so this too was a good call.

From the July 1 low, GE has now moved in 14 sessions up +14.3% and has a Monthly/Weekly/Daily RSI-7 of 47.3/49.7/70.5. The Daily RSI-7 is high, so traders should not expect the stock to soar here, but it may lift some more, and may lead the Summer Rally. In fact of these three, I like GE the best moving forward for the next three to six months and also out for the next two to three years.

Going out to 2013-2015, the Value Line analyst projects a lo-hi Annualized Total Return (TR), which includes dividends and capital gains, of 30% to 40%. That would be quite impressive, but I agree with the rationale, i.e., changing momentum re top- and bottom-line growth. The balance sheet is improving, liabilities are being quickly reduced, a higher dividend was just declared, the share buy-back program was extended, and the non-core assets are being dealt. Book value per share is clearly on the rise. By sometime in 2013, the stock will likely trade in the $40 to $45 range based on a 19x PE of $2.25 (my estimate). By buying low (presently $15.71), supplemented by put writes, a three-year triple is possible.

I think that 3x share performance would be impossible for the UTX and CAT. In fact, if you look at VL’s next 5-year projections for each company compared to the past 5-year data for per share revenues, cash flow, earnings, dividends and book value, the UTX and CAT are going in the wrong direction.

I just happen to think that once the long-term cycle bottom has been reached, probably later this year, the sailing aboard the good ship GE will be remarkably pleasant and profitable.

Notes for WIR#43 October 24, 2010

Here are the charts for UTX: http://billcara2.com/tkchart/tkchart.asp?stkname=UTX&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=UTX&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=UTX&ind=rsi&wt=0

Here are the charts for CAT:

http://billcara2.com/tkchart/tkchart.asp?stkname=CAT&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=CAT&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=CAT&ind=rsi&wt=0

Here are the charts for GE:
http://billcara2.com/tkchart/tkchart.asp?stkname=GE&ind=rsi&wt=3
http://billcara2.com/tkchart/tkchart.asp?stkname=GE&ind=rsi&wt=1
http://billcara2.com/tkchart/tkchart.asp?stkname=GE&ind=rsi&wt=0

These are interesting charts in that the Caterpillar ran out of steam a month ago after a powerful rally since early March 2009. The other three pull-backs in CAT over this stretch – May-June 2009, Jan 2010 and May 2010 – all had declines from the peak of about -25%. So far, the market is down just -3.5% from the high of $81.20. My crystal ball, then, says with the Monthly RSI-7 at 71.3 and ready to fall through 70, the Weekly RSI-7 at 65.0 and falling and the Daily at 43.3 and falling, the greatest probability for future price trend is down and the loss could be severe.

Interestingly, the United Technologies stock (UTX) has M-W-D RSI-7 of 63.6, 71.7 and 72.9 and for the most part rising, so there appears to be a little steam left in this one. At least we have to wait to see the Monthly and Weekly RSI-7 roll-over before turning bearish.

The one that could lead a near-term rally, as Generals usually do, but is more likely to just stagnate here, is General Electric (GE), which has M-W-D RSI-7 of 50.0 (and negative), 49.3 (and negative) and 32.0, which has recently tumbled down close to a potential bounce area.

When Value Line produced the analytical and informational reports on these companies, dated Oct 22, the closing price that day on Oct 12 was much higher (see brackets) for GE and CAT and lower for UTX. That puts important metrics like Dividend Yield potentially out of whack from what you read in the report. In this case, because the prices have fallen, the yields are higher.

For these three stocks the one with the superior annual Total Return (TR) potential going out to 2013-15 is General Electric at $16.06 ($17.19 on Oct 12) because the analyst anticipates a high-low in that time of 45-30, which would result in a TR range of 29%-17%.

Over the same time frame, the Caterpillar at $78.33 ($79.34) has an anticipated annual TR ranging from 14% to just 4% based on a hi-lo of 125-85, and the United Technologies at $74.94 ($72.98) ranging from 16% to 10% based on a hi-lo of 116-100.

From the VL reports, I see that for GE, the Return on Equity has fallen a lot down to about 10%, although that % is expected to grow to maybe 16% in the next couple years. This is one reason (i.e., inadequate ROE) that I dropped GE from the Cara 100 a couple years ago. Another was the dividend cut. But I see that the Q3 dividend has moved to $0.12 from $0.10 – still a far cry from the once regular $0.31 per quarter and growing.

Now if the dividend moves to $0.52 for 2011 as VL suggests, and the stock price falls a bit, the GE will be an acceptable dividend play. You can help this along by buying the stock along with a put write that lowers your cost base. In fact I see the effective yield moving higher into the future, so GE is really an attractive stock once again.

GE’s Q3 earnings were recently reported at $0.29/share, up a penny from the street expectation, and up +32% over the Prior Year’s quarter. Book value is a solid $11.60/share too, so that’s another plus. Finally, the company recently spent $3.0 billion to acquire Dresser Inc, a global energy infrastructure tech and services provider, which is a positive.

As I opined above, you certainly don’t have to chase the stock here, as I see the big picture.

For the VL report on United Technologies, I see that Q3 earnings was recently reported at $1.30 vs an expected $1.28, up +13% over the Prior Year’s Quarter. Pratt & Whitney jet engine company of the aerospace division has been flying. But alas the revenue growth is disappointing over all. The recent quarter came in with revenues at $13.52 billion vs an expected $13.93 billion, so the earnings lift have come via cost cutting and jobs. Forward earnings too are being guided less than what the street expects today.

So, while the stock is in a bullish pattern still, I’d certainly not chase it. The stock will come back to you if you give it time.

As for Caterpillar, this is one well-hyped company. These people affirm their higher revenues and earnings guidance about twice a week. (Joking.) But the management did perform this quarter for sure.

Full-year earnings are now guided at $3.80-$4.00 vs the VL estimate of $3.50, and revenues of $41-$42 billion vs the VL estimate of $40.5 billion.

As part of the hype, the company’s $820 million acquisition of Electric Motive Diesel company is likely management says to push earnings and revenues for 2012 into the $8-$10/share area (quite a spread), with revenues up at $55-$60 billion.

I don’t care for the stock price at this level ($78.33). I have been wrong on the CAT before though I’m wondering how many lives it really has.

Next week we get to look at Cara 100 company Coca-Cola (KO) and at Travelers Insurance (TRV), the Citi spin-off made on a timely basis.

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

Coca Cola [GICS 30, Dow 30, Cara 100]
(KO: Google Finance file)
(KO: Yahoo Finance file)
(KO: StockChart chart)
(KO: Billcara2 chart)
(KO: ADVFN Financial Data)
(KO: Value Line Report Jul 30: next one is due Oct 29)

Kraft Foods [GICS 30, Dow 30]
(KFT: Google Finance file)
(KFT: Yahoo Finance file)
(KFT: StockChart chart)
(KFT: Billcara2 chart)
(KFT: ADVFN Financial Data)
(KFT: Value Line Report Jul 30: next one is due Oct 29)

Wal-Mart [GICS 30, Dow 30, Cara 100]
(WMT: Google Finance file)
(WMT: Yahoo Finance file)
(WMT: StockChart chart)
(WMT: Billcara2 chart)
(WMT: ADVFN Financial Data)
(WMT: Value Line Report Aug 6: next one is due Nov 5)

Disney [GICS 25, Dow 30, Cara 100]
(DIS: Google Finance file)
(DIS: Yahoo Finance file)
(DIS: StockChart chart)
(DIS: Billcara2 chart)
(DIS: ADVFN Financial Data)
(DIS: Value Line Report Aug 13: next one is due Nov 12)

3M Company [GICS 20, Dow 30, Cara US 100 June 25-06]
(MMM: Google Finance file)
(MMM: Yahoo Finance file)
(MMM: StockChart chart)
(MMM: Billcara2 chart)
(MMM: ADVFN Financial Data)
(MMM: Value Line Report Aug 13: next one is due Nov 12)

American Express [GICS 40, Dow 30]
(AXP: Google Finance file)
(AXP: Yahoo Finance file)
(AXP: StockChart chart)
(AXP: Billcara2 chart)
(AXP: ADVFN Financial Data)
(AXP: Value Line Report Aug. 20: next one is due Nov. 19)

Bank of America [GICS 40, Dow 30]
(BAC: Google Finance file)
(BAC: Yahoo Finance file)
(BAC: StockChart chart)
(BAC: Billcara2 chart)
(BAC: ADVFN Financial Data)
(BAC: Value Line Report Aug. 20: next one is due Nov. 19)

JP Morgan [GICS 40, Dow 30]
(JPM: Google Finance file)
(JPM: Yahoo Finance file)
(JPM: StockChart chart)
(JPM: Billcara2 chart)
(JPM: ADVFN Financial Data)
(JPM: Value Line Report Aug. 20: next one is due Nov. 19)

Microsoft [GICS 45, Dow 30]
(MSFT: Google Finance file)
(MSFT: Yahoo Finance file)
(MSFT: StockChart chart)
(MSFT: Billcara2 chart)
(MSFT: ADVFN Financial Data)
(MSFT: Value Line Report Aug. 20: next one is due Nov. 19)

Johnson & Johnson [GICS 35, Dow 30, Cara 100]
(JNJ: Google Finance file)
(JNJ: Yahoo Finance file)
(JNJ: StockChart chart)
(JNJ: Billcara2 chart)
(JNJ: ADVFN Financial Data)
(JNJ: Value Line Report Aug 27: next one is due Nov 26)

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. 3: next one is due Dec. 3)

Chevron Corp [GICS 10, Dow 30]
(CVX: Google Finance file)
(CVX: Yahoo Finance file)
(CVX: StockChart chart)
(CVX: Billcara2 chart)
(CVX: ADVFN Financial Data)
(CVX: Value Line Report Sept. 10: next one is due Dec. 10)

ExxonMobil [GICS 10, Dow 30, Cara 100]
(XOM: Google Finance file)
(XOM: Yahoo Finance file)
(XOM: StockChart chart)
(XOM: Billcara2 chart)
(XOM: ADVFN Financial Data)
(XOM: Value Line Report Sept. 10: next one is due Dec. 10)

Boeing Co [GICS 20, Dow 30. Cara 100]
(BA: Google Finance file)
(BA: Yahoo Finance file)
(BA: StockChart chart)
(BA: Billcara2 chart)
(BA: ADVFN Financial Data)
(BA: Value Line Report Sep. 17: next one is due Dec. 17)

Travelers Co [GICS 40, Dow 30]
(TRV: Google Finance file)
(TRV: Yahoo Finance file)
(TRV: StockChart chart)
(TRV: Billcara2 chart)
(TRV: ADVFN Financial Data)
(TRV: Value Line Report Sep. 17: next one is due Dec. 17)

AT&T [GICS 50, Dow 30]
(T: Google Finance file)
(T: Yahoo Finance file)
(T: StockChart chart)
(T: Billcara2 chart)
(T: ADVFN Financial Data)
(T: Value Line Report Sept. 24: 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. 24: next one is due Dec. 24)

Cisco Systems [GICS 45, Dow 30, Cara 100]
(CSCO: Google Finance file)
(CSCO: Yahoo Finance file)
(CSCO: StockChart chart)
(CSCO: Billcara2 chart)
(CSCO: ADVFN Financial Data)
(CSCO: Value Line Report Sept. 24: 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. 1: 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. 1: next one is due Dec. 31)

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. 8: next one is due Jan. 7)

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. 8: next one is due Jan. 7)

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. 8: next one is due Jan. 7)

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. 15: next one is due Jan. 14)

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. 15: next one is due Jan. 14)

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. 15: next one is due Jan. 14)

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. 15: next one is due Jan. 14)

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. 22: next one is due Jan. 21)

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. 22: next one is due Jan. 21)

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. 22: next one is due Jan. 21)

Sector ETF Summary for the US equity market

The tables I show are for eleven GICS Sector Index Funds (ETF’s), including two for Technology (XLK and SMH), for a total of ten GICS sectors. They cover the full spectrum of the US equity market.

This week, 8 of the 10 sectors put in higher prices Week over Week with only Basic Materials (XLB -0.87%) and Utilities (XLU -0.09%) taking losses, and most or all of that caused on Friday as XLB got hit -0.72% and XLU -0.65%.

Financials (XLF), having dropped -2.41% the previous week, which was the worst performing sector, was this week’s big winner, up +1.74%. This was mostly to do with the currency market’s move into US Dollars and the pressure that put on the US treasury market.

Traders are now focused on announcements from this weekend’s G-20 currency meetings in South Korea.

Table 1: Cara ETF List is sorted by price performance Week over Week (W/W), i.e. 1W%N. Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change XLF 14.60 -0.01 -0.07% 1.74% -0.68% 0.00% -0.61% 1.04% -12.73% -4.70% XLI 32.48 -0.01 -0.03% 0.78% 0.90% 3.31% 14.69% 10.18% -1.34% 19.59% XLY 34.96 0.19 0.55% 0.72% 1.75% 3.74% 16.53% 12.41% -1.91% 23.27% XLP 28.81 0.10 0.35% 0.70% 2.20% 2.75% 8.02% 7.10% 2.53% 9.42% SPY 118.35 0.22 0.19% 0.55% 1.55% 3.07% 4.43% 8.12% -2.21% 8.25% SMH 28.50 0.36 1.28% 0.18% 0.60% 3.49% 0.32% 0.56% -5.75% 9.95% XLE 59.30 0.39 0.66% 0.15% 1.61% 7.29% 0.83% 10.76% -2.19% -0.25% IYZ 21.93 0.07 0.32% 0.14% 0.27% 1.01% 6.72% 10.53% 6.61% 19.51% IYH 64.52 0.06 0.09% 0.09% 1.13% 1.64% -0.25% 10.05% 0.31% 8.44% XLK 24.11 0.07 0.29% 0.08% 3.43% 4.28% 3.61% 9.39% 0.37% 12.72% XLU 31.87 -0.21 -0.65% -0.09% 0.06% 1.30% 2.54% 4.73% 4.94% 6.52% XLB 34.29 -0.25 -0.72% -0.87% 0.15% 2.79% 0.79% 9.48% -1.18% 6.52%

You can do this table yourself by entering the following string into the Summary window at Investertech.com and then clicking on the link for Performance.

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

You can also add more ETFs – up to 30 in total. For a list of components to many ETFs, go to the AMEX.com and NYSE.com web sites, and click on ETFs.

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

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

SPY Monthly data: SPY Monthly Data

SPY Weekly data: SPY Weekly Data

SPY Daily data: SPY Daily Data

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

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

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

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

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

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

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

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

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

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

Individual Sector ETF Review

Sector 10 (energy: XLE, IYE, VDE, OIH, PBW and IXC)

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

XLE Monthly data: XLE Monthly Data

XLE Weekly data: XLE Weekly Data

XLE Daily data: XLE Daily Data

Table 2: Senior oil & gas equities

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change SLB 67.77 3.46 5.38% 5.07% 6.62% 11.76% 0.98% 10.55% -0.60% -1.21% XOM 66.34 0.02 0.03% 1.76% 3.04% 7.43% -4.06% 11.72% -3.24% -10.88% CVX 84.55 0.30 0.36% 1.12% 0.73% 5.53% 6.94% 15.13% 4.13% 9.39% TOT 54.40 -0.04 -0.07% -0.87% 1.30% 6.08% -17.43% 11.18% -4.63% -14.99% APA 101.30 -1.67 -1.62% -2.73% -0.23% 3.23% -4.32% 13.46% -6.41% -0.76% RIG 65.24 0.17 0.26% -2.74% 3.59% 8.62% -24.82% 39.79% -27.74% -29.66% PTR 125.29 0.06 0.05% -2.77% 1.07% 8.75% 2.32% 9.73% 6.63% -5.11% CEO 204.33 -1.19 -0.58% -2.82% -2.52% 7.57% 26.66% 22.20% 15.96% 28.05% IMO 38.04 0.11 0.29% -2.84% -3.08% 1.33% -3.57% -2.98% -10.13% -8.89% CNQ 35.76 0.08 0.22% -3.87% -4.74% 8.07% -3.04% 1.65% -8.21% -1.70% SU 32.62 -0.18 -0.55% -4.95% -5.75% 3.92% -11.26% 1.65% -3.63% -12.71% PBR 31.90 -0.11 -0.34% -6.97% -8.02% -8.65% -34.50% -12.07% -26.58% -36.63%

The Oiler stocks ETF (XLE) lifted +0.15% W/W to close at 59.30. There was a gain on Friday of +0.66%, pulling XLE to the plus side, and that was on account of Friday’s strength in the Crude Oil contracts.

On Friday, the West Texas Intermediate Crude ($WTIC) lifted +1.40% to push the contract to a weekly gain of just +0.07%, closing at 81.69/bbl.

So, the oil market was weak until Friday. There had been a loss of -$1.41 (-1.70%) on the previous Friday as well.

The big loser this week, for the third week in a row, was PetroBrazil (PBR -7.0%). PBR is now down -13.0% over three weeks.

Big Oil USA was higher as Exxon (XOM +1.8%) and Chevron (CHV +1.1% W/W) had gains. Schlumberger (SLB +5.1%) was very strong. The Canadian oilers Suncor and Cdn Natural Resources (SU and CNQ) dropped -5.0% and -3.9% respectively.

Integrated Oil & Gas – Canada

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 Monthly Data

XLB Weekly data:

XLB Weekly Data
XLB Daily Data

Table 3: Senior Basic Materials:
XLB Daily data:

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change RTP 62.17 -0.61 -0.97% 6.11% 6.31% 11.44% 10.96% 28.74% 2.44% 36.19% DOW 30.20 -0.32 -1.05% 2.62% 0.57% 7.59% 3.50% 13.36% -0.26% 14.13% MT 34.54 -0.18 -0.52% -0.60% -0.83% 3.79% -28.10% 7.13% -18.27% -10.98% VALE 32.07 -0.03 -0.09% -0.83% -0.34% 6.76% 6.02% 17.09% -0.93% 17.90% TS 41.55 0.17 0.41% -0.98% 0.92% 8.94% -6.27% 5.22% 2.11% 2.77% BHP 80.91 0.10 0.12% -1.82% -0.80% 6.53% 1.68% 14.12% 3.02% 9.37% FBR 16.67 -0.46 -2.69% -2.40% -3.86% -2.91% -28.58% 7.06% -24.71% 0.00% TCK 44.30 -0.10 -0.23% -2.49% -0.45% 12.61% 18.32% 26.32% 0.75% 32.08% AA 12.72 -0.06 -0.47% -3.12% -1.32% 4.26% -23.60% 17.56% -8.16% -9.40% NUE 37.88 -0.01 -0.03% -3.49% -5.11% 0.64% -20.74% -4.51% -16.32% -14.26% PKX 107.76 0.22 0.20% -3.66% -10.30% -2.80% -20.60% -0.60% -9.35% -4.95% GGB 12.36 -0.02 -0.16% -6.79% -7.35% -7.76% -29.33% -15.98% -26.82% -28.35%

A week ago in this space, I noted: “If, as and when the $USD starts to lift, this sector will likely under-perform.” Well, this week, the $USD did lift and the XLB dropped -0.87% to 34.29, which was the worst performing sector.

The hardest hit group was the goldminers (ouch!). Last ones off the dance floor as usual, or just a reflection of a mean reverting $USD play as the G-20 gathered in South Korea? I wish I knew.

Still, the loss this week was less than the gain the prior week. XLB may have pulled back enough to consolidate at this level before moving higher. That may be wishful thinking or it may in fact be the result of a weaker US Dollar policy of the US with acquiescence from its G-20 partners, players who know that the world economy will remain in trouble if the US economy cannot or does not continue to improve asap.

The big winner here was Rio Tinto (RTP +6.1%), which was a replay of a week ago. The big loser was Brazil’s Gerdau Steel (GGB -6.8%), which depends on exports to China, which in turn had a central bank tightening this week. Another loser was China neighbor South Korea’s Posco Steel (PKX -3.7%). PKX dropped -6.9% a week ago.

The US steel giant Nucor (NUE -3.5% W/W) was also a big loser.

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

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

XLI Monthly data: XLI Monthly Data

XLI Weekly data: XLI Weekly Data

XLI Daily data: XLI Daily Data

Table 4: Senior capital goods makers and transportation:

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change ERJ 28.42 0.06 0.21% 4.22% -0.73% -1.08% 22.34% 19.41% 18.61% 19.21% HON 47.26 0.59 1.26% 1.66% 3.30% 6.30% 17.13% 10.78% -0.38% 22.66% BA 71.26 -0.24 -0.34% 1.64% 2.93% 10.31% 26.84% 7.00% -5.73% 39.53% MMM 90.44 -0.11 -0.12% 1.46% 1.44% 4.00% 8.94% 6.71% 5.10% 14.79% UTX 74.94 -0.03 -0.04% 1.13% 2.78% 4.81% 4.62% 7.78% -1.95% 13.72% UPS 69.83 0.24 0.34% 0.75% 3.41% 3.81% 20.02% 10.58% 2.30% 22.29% ABB 22.37 -0.32 -1.41% 0.27% 2.66% 5.97% 13.90% 14.31% 8.22% 3.47% FDX 88.86 0.29 0.33% -0.85% 0.19% 5.50% 6.48% 13.15% -3.11% 12.54% GE 16.06 -0.04 -0.25% -1.47% -6.19% -3.60% 3.95% 5.59% -15.25% 4.69% CAT 78.33 -0.56 -0.71% -1.78% -2.54% -1.76% 33.78% 15.19% 16.03% 33.35% TXT 20.95 -0.01 -0.05% -2.60% -3.10% 1.01% 10.03% 3.61% -13.54% 6.67% FLR 49.47 -0.46 -0.92% -4.63% -6.06% 1.14% 7.52% 7.50% -6.85% -2.31%

The Industrials ETF (XLI) gained +0.78% W/W closing at 32.48, which made it the weekly second best sector performer.

The winner was the Brazilian aircraft manufacturer Embraer (ERJ +4.2%), while engineering and construction giant Fluor Corp (FLR -4.6%) took a sizable loss.

Embraer (ERJ) was down -4.8% a week ago, so the move higher this week only smoothed out the loss.

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

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

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

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

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

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

XLY Monthly data: XLY Monthly Data

XLY Weekly data: XLY Weekly Data

XLY Daily data: XLY Daily Data

Table 5: Senior consumer discretionary equities

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change EBAY 28.07 0.88 3.24% 9.31% 14.06% 13.46% 17.45% 34.05% 13.28% 17.10% TTM 27.95 0.30 1.08% 2.91% 4.72% 15.16% 55.02% 48.35% 39.54% 138.89% CCL 40.14 0.21 0.53% 2.06% -0.35% 6.22% 25.20% 19.22% -3.51% 21.60% WHR 85.56 0.01 0.01% 1.39% 3.37% 8.08% 4.41% -0.74% -15.39% 16.34% BBBY 44.02 0.00 0.00% 0.87% 2.68% 0.69% 12.79% 15.02% -7.03% 20.37% LVS 38.78 0.80 2.11% 0.28% 3.97% 14.97% 133.33% 54.69% 58.74% 130.56% TM 71.70 0.08 0.11% 0.27% 0.89% -1.86% -15.73% 1.36% -7.12% -10.25% DIS 34.97 0.29 0.84% 0.26% 1.33% 4.14% 9.04% 4.11% -4.92% 18.78% NKE 81.92 -0.19 -0.23% -0.10% -0.15% 2.95% 25.36% 14.48% 4.72% 25.66% BC 15.91 0.21 1.34% -0.62% 0.57% 10.03% 18.73% 13.48% -11.17% 34.04% TGT 53.87 -0.34 -0.63% -0.85% -0.61% -2.14% 10.96% 4.68% -6.48% 8.85% JCP 32.55 0.13 0.40% -3.90% 0.18% 27.40% 19.85% 32.00% 2.84% -11.36%

Often when the Financials are strong (#1 sector performer this week), so too is the Consumer Discretionary sector. This week Consumer Discretionary (XLY) gained +0.72% W/W to close at 34.96, which is not much, but was good enough for 3rd best sector performer on the week. Also, there was a gain of +0.73% on the previous Friday, so the six-day gain was good.

JC Penny (JCP) gained +4.3% a week ago, but this week dropped -3.9%. JCP is up +27.4% over 4 weeks.

Ebay (EBAY +4.4% W/W) was the strongest a week ago and was again this week (+9.3% W/W including a big gain of +3.2% on Friday, a tough day for most stocks.

India’s Tata Motors (TTM +2.9% W/W) was also a winner 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 Monthly Data

XLP Weekly data: XLP Weekly Data

XLP Daily data: XLP Daily Data

Table 6: Senior consumer staples equities

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change WFMI 39.89 1.59 4.15% 4.15% 15.39% 7.61% 43.23% 6.77% -0.92% 18.02% SBUX 28.49 1.20 4.40% 3.45% 9.28% 9.03% 23.60% 13.28% 4.55% 37.90% KO 61.61 0.14 0.23% 2.79% 3.70% 5.10% 8.01% 13.55% 13.44% 13.78% DEO 73.74 -0.52 -0.70% 2.25% 4.15% 5.95% 6.15% 7.46% 4.92% 14.08% WMT 54.06 0.03 0.06% 1.33% -0.64% -0.04% -0.31% 6.29% -0.79% 7.09% PG 63.40 -0.11 -0.17% 1.02% 2.49% 2.86% 3.73% 3.31% -0.30% 9.07% KFT 31.90 0.08 0.25% 0.79% 3.14% -0.16% 16.30% 8.95% 5.66% 17.67% ABV 140.88 1.19 0.85% 0.53% 6.20% 17.56% 34.39% 28.47% 43.59% 47.16% KMB 66.56 -0.30 -0.45% 0.27% 0.17% 0.77% 3.56% 5.72% 7.15% 5.50% KR 21.80 0.05 0.23% -0.95% 2.40% -1.31% 6.45% 6.71% -7.94% -8.94% WAG 34.07 -0.03 -0.09% -1.47% 0.26% 12.22% -8.66% 15.84% -5.52% -13.72% PEP 65.01 -0.17 -0.26% -2.50% -1.13% -1.69% 6.16% 1.25% 0.39% 5.71%

Consumer Staples (XLP) gained +0.70% W/W to 28.81, which was the #4 sector performer, following a week where it had been #2. A week ago I remarked: “…very good considering XLP is a defensive sector that almost always underperforms when the $USD is soft as it was this week except for Friday.

The big winner a week ago was Ambev (ABV), which lifted +6.17%. This week ABV was up +5.6%. Starbucks (SBUX) was also up +3.5% this week and +5.6% the previous week, so it has been a big winner this month.

Last week’s big winner, Whole Foods (WFMI), which gained +10.8%, was also this week’s winner with a gain of +4.2%. WFMI had been flat Mon-Thurs.

The leading loser this week was Pepsi (PEP -2.50% W/W), which had a terrible 2 weeks and 4 weeks in the market.

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

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

IYH Monthly data: IYH Monthly Data

IYH Weekly data: IYH Weekly Data

IYH Daily data: IYH Daily Data

Table 7: Senior healthcare equities

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change MDT 35.75 0.27 0.76% 7.39% 6.88% 5.64% -18.56% -2.77% -19.03% -3.98% BAX 51.12 0.05 0.10% 4.84% 3.99% 6.46% -12.30% 18.20% -0.02% -8.04% GILD 39.11 0.01 0.03% 3.66% 7.65% 7.00% -9.68% 15.78% -3.65% -12.31% UNH 37.26 0.77 2.11% 3.56% 8.47% 4.28% 18.17% 20.19% 22.32% 44.92% BIIB 58.75 0.44 0.75% 1.89% 2.01% 4.13% 9.53% 4.59% 12.92% 24.39% MYGN 19.67 -0.12 -0.61% 1.71% 16.05% 19.94% -26.22% 35.75% -12.50% -24.17% AMGN 57.55 -0.07 -0.12% 1.48% 2.06% 2.18% -0.29% 7.95% -1.05% 1.23% CELG 58.74 0.03 0.05% 0.91% 1.57% 0.48% 5.38% 12.23% 0.14% 5.06% MRK 37.10 0.00 0.00% 0.41% 0.51% -0.64% 0.24% 5.46% 9.86% 12.87% JNJ 63.81 -0.18 -0.28% 0.38% 0.92% 2.69% -1.35% 11.91% -1.50% 4.71% GENZ 72.45 0.49 0.68% 0.36% -0.41% 1.19% 46.81% 33.75% 35.57% 36.85% WLP 57.54 0.91 1.61% -0.42% 4.60% 1.50% -3.70% 9.68% -1.49% 25.03% NVO 100.24 0.08 0.08% -0.46% -0.12% 4.32% 52.71% 16.57% 25.38% 53.25% BMY 26.96 -0.15 -0.55% -0.88% -0.74% -2.39% 5.19% 8.14% 10.31% 20.04% PFE 17.50 -0.13 -0.74% -1.41% 0.23% 0.57% -7.55% 18.16% 6.19% -0.34% NVS 58.12 -0.86 -1.46% -1.52% -0.09% 1.01% 10.47% 17.27% 11.47% 11.34% AET 31.20 -0.19 -0.61% -1.70% 1.66% 0.84% -5.45% 10.36% 1.46% 21.78% GSK 40.27 -0.23 -0.57% -3.03% -3.34% -0.49% -6.28% 9.85% 4.30% -3.06%

The healthcare sector (IYH) was flat all week until Friday where it gained +0.09% on the day and on the week, closing Friday at 64.52.

GlaxoSmithKline (GSK -3.0% W/W) has been the worst performer in this sector over 2- and 4-weeks.

The big winner this week was Medtronics (MDT +7.4%), while Baxter (BAX +4.8% W/W) was also strong.

A week ago I noted: “This is a sector that should be driven by earnings and other fundamental metrics, but when the market starts looking tired there are corporate take-overs that usually come forward… You know, the longer you are trading in the market, the more you realize that really big money behind the scenes is the push-pull driver of most prices – even more than corporate metrics – but you have to dismiss the negatives and deal with it. That’s why trading pro’s must “go with the flow” and close their eyes to logic.”

Sector 40 (financial: IYG, IYF, XLF, VFH, IXG, VNQ, RWR, IYR, and ICF)

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

XLF Monthly data: XLF Monthly Data

XLF Weekly data: XLF Weekly Data

XLF Daily data: XLF Daily Data

Table 8: Senior financial company equities

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change WFC 26.11 0.08 0.31% 10.73% 0.62% 2.03% -4.43% -4.67% -22.25% -13.46% GS 157.76 -1.54 -0.97% 4.69% 3.34% 7.12% -8.85% 7.65% -0.81% -14.12% C 4.1100 0.0400 0.98% 4.05% -1.91% 5.38% 20.88% 0.49% -15.61% -7.85% DB 58.69 0.35 0.60% 3.56% 3.95% 5.35% -19.86% -8.68% -19.19% -27.19% JPM 37.70 0.00 0.00% 1.48% -4.10% -5.16% -12.02% -4.19% -15.74% -17.52% UBS 17.93 -0.17 -0.94% 0.79% 1.47% 0.67% 11.92% 20.01% 11.78% -5.18% HBC 52.21 -0.34 -0.65% -0.13% -0.48% -0.76% -10.48% 4.67% -0.99% -10.01% IBN 51.18 -0.45 -0.87% -0.21% -0.64% 3.94% 32.04% 31.30% 18.97% 30.10% TD 72.96 -0.48 -0.65% -0.65% -1.27% 0.50% 15.98% 6.60% -5.05% 16.59% RY 54.30 -1.06 -1.91% -0.97% 0.28% 4.22% 0.15% 8.56% -11.98% 0.59% BNS 53.19 -0.68 -1.26% -1.26% -1.50% 1.12% 13.56% 10.35% 2.47% 19.15% MS 24.52 -0.08 -0.33% -2.00% -3.16% -2.50% -20.67% -8.47% -23.13% -31.39% BBD 21.30 -0.03 -0.14% -3.09% -1.89% 10.48% -4.61% 20.20% 16.58% -1.57% CS 42.00 -0.63 -1.48% -4.20% -4.59% -5.49% -19.22% -0.31% -13.70% -28.02% BAC 11.44 0.08 0.70% -4.51% -13.20% -15.88% -27.09% -16.25% -38.30% -30.75% HDB 176.45 -1.36 -0.76% -4.58% -5.76% -4.18% 32.21% 15.46% 17.71% 47.12%

The Financials (XLF) had a best sector performing week, up +1.74% to 14.60. A week ago, the picture was something quite different as I reported: “(XLF had a) really tough week, dropping -2.41% to close at 14.35. There was a big loss of -1.75% on Friday after the Fed acknowledged that QE II was on the way, which would lift interest rates and squeeze bank profit margins. There is also a growing concern among traders that the Fed will soon require the banks to write down or write off fully real estate assets that are not marketable. Inflation will raise the prices of some properties, but not all.”

Let’s wait to see the outcome of the G-20 meetings this weekend before we start guessing the impact on equity markets, particularly for the banks.

Really interesting is how Bank of America (BAC) has been getting whacked.

A week ago I wrote in this space: “Over the past 4/13/26 weeks, BAC is down -10.6%/-22.2%/-38.5%… Horrible. The problem here is that the Fed can juice these stocks, either by QE, which goes to the banks for purchasing any stocks they want, or directly via open market operations. By the time you see the gain, those bandits are already selling, taking the profits from their clients… Nothing has changed on Wall Street except the bankers are presently more desperate and will stoop pretty low to pick up wooden nickels.”

Well these bankers spend most of the time with their ear to the ground, and I guess somebody leaked that the Fed was about to sue Bank of America because the stock was down a further -4.51% this week.

Tell me, does intercepting the tom-tom beat of a native American drum constitute RICO fraud?

A week ago, when the big US bank stocks got hammered, led by Wells Fargo (WFC -9.1%), there had been worries about inflation – the kind that Terrific Timmy Geithner said should not concern us – but this week deflation seemed to be on everybody’s lips at the G-20, and so the $USD bumped and so did the big US banks led by, what else, Wells Fargo (WFC +10.7%). That’s the company that claimed in a Congressional hearing to be American first and banker second. I guess they like a deflating America.

A week ago I remarked that: “There are some banks I do like presently on a fundamentals basis: Banco Santander (STD) and HSBC (HBC). Have a look.” The problem is that we still have to guess as to how financially strong any of these banks really are.

That would be like trading the Nasdaq-100 without having a clue as to whether Apple (AAPL, which is 21% of the $NDX weighting) has products that might break down. Investing/trading is all about confidence.

But, if my arm is twisted, I suppose the STD and HBC are ok.

Goldman Sachs (GS +4.7% W/W) had a good week – the Fed decided to sue BAC – and is now up all of +7.1% over 4 weeks. At least it’s up. Although the price needs to consolidate for a week or so at this level if it is going higher, it is up to about a 6-month high and could be a leader moving forward. I doubt we’ll see the low 130’s of June for many months, maybe years.

There are a lot of traders in the market today that will go to cash if GS starts to break down, given that the Goldman bankers seem to know pretty much everything we don’t.

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)

The Tech sector ETF (XLK) gained just two cents W/W (+0.08%) to close at 24.11. A week earlier, it was the best performing sector. Even on a tough market day on Friday a week ago, the XLK jumped +1.69%, so the consolidation was needed. There was a gain of +0.29% this Friday.

Meanwhile, the semi-conductors pulled the rabbit out of the hat on Friday with a gain on the day of +1.28% for a gain on the week of just +0.18%, closing at 28.50. Friday’s chip gainers were lead by National Semi (NSM +2.7%), STMicroelectronics (STM +2.7%), Atmel (ATML +2.6%), Novellus Systems (NVLS +2.6%), United Micro (UMC +2.3%), and Broadcom (BRCM +2.1%). Not a bad day.

Daily charts of these six winners this week:
http://billcara2.com/tkchart/tkchart.asp?stkname=nsm,stm,atml,nvls,umc,b…

Weekly charts:
http://billcara2.com/tkchart/tkchart.asp?stkname=nsm,stm,atml,nvls,umc,b…

There was a gain of +0.85% on the previous Friday too. I feel that if the market is going to continue to lift here, this group must move higher as well.

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

SMH Monthly data: SMH Monthly Data

SMH Weekly data: SMH Weekly Data

SMH Daily data: SMH Daily Data

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

XLK Monthly data: XLK Monthly Data

XLK Weekly data: XLK Weekly Data

XLK Daily data: XLK Daily Data

Table 9: Senior technology equities

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change CTSH 67.96 0.88 1.31% 2.12% 5.86% 5.82% 45.21% 25.62% 26.58% 66.28% GOOG 612.53 0.54 0.09% 1.84% 14.20% 16.17% -2.27% 26.34% 11.97% 10.55% EMC 21.44 0.08 0.37% 1.66% 7.90% -0.92% 19.78% 7.90% 8.06% 23.72% RIMM 49.03 -0.07 -0.14% 0.70% -0.67% 0.33% -25.63% -10.14% -31.33% -27.36% DELL 14.59 -0.01 -0.07% 0.69% 6.57% 15.34% 0.34% 8.88% -16.44% -5.44% FSLR 145.55 0.48 0.33% 0.68% 5.76% -1.05% 7.45% 5.72% 8.67% -6.75% CSCO 23.48 0.22 0.95% 0.51% 4.45% 6.29% -4.90% 0.90% -14.06% -2.89% ADBE 28.21 0.51 1.84% 0.46% 4.52% 4.95% -23.94% -1.29% -21.57% -19.79% SAP 53.15 0.64 1.22% 0.40% 3.49% 6.90% 12.82% 10.73% 8.54% 2.59% ORCL 28.99 0.17 0.59% 0.31% 3.54% 7.53% 16.66% 19.25% 10.48% 30.64% HPQ 42.87 0.47 1.11% 0.12% 4.18% 4.61% -18.27% -6.95% -19.58% -11.28% JNPR 31.94 0.25 0.79% 0.00% 1.49% 7.25% 17.51% 16.53% 7.54% 13.18% INFY 67.96 0.54 0.80% -0.95% -2.20% 1.61% 19.73% 13.34% 9.19% 41.14% IBM 139.67 -0.16 -0.11% -0.99% 0.59% 4.15% 5.45% 9.57% 8.16% 13.84% QCOM 44.18 0.20 0.45% -1.36% -1.30% -0.83% -5.88% 12.96% 12.33% 7.55% AAPL 307.47 -2.05 -0.66% -2.31% 4.56% 5.18% 43.67% 18.71% 15.39% 49.84% STP 8.700 0.310 3.69% -7.64% -3.87% -8.42% -49.51% -20.84% -37.77% -39.33%

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change STM 8.130 0.210 2.65% 3.30% 8.26% 5.86% -12.49% -6.44% -22.13% -11.92% INTC 19.83 0.07 0.35% 2.64% 1.59% 2.11% -5.03% -8.95% -17.34% -1.44% TSM 10.60 0.19 1.83% 2.51% 2.32% 6.21% -8.46% 2.12% -3.37% 4.13% NVLS 27.60 0.69 2.56% 1.73% 7.06% 3.95% 16.46% 1.81% -0.22% 19.58% ADI 32.01 0.61 1.94% 1.07% -1.02% 3.69% 1.07% 4.57% 5.23% 16.10% MU 7.690 0.190 2.53% 1.05% 1.32% 6.81% -29.12% -9.95% -29.64% 1.18% NSM 13.17 0.34 2.65% 1.00% 1.07% 3.62% -14.15% -9.11% -13.47% -7.19% AMAT 12.13 0.23 1.93% 0.92% 2.62% 4.30% -15.17% -2.57% -15.59% -8.31% KLAC 35.99 0.09 0.25% 0.90% 4.47% 7.59% -2.52% 16.74% 4.47% 0.03% LSI 4.6900 0.0900 1.96% 0.64% 3.08% 4.92% -22.86% -3.50% -28.07% -14.10% LLTC 30.91 0.51 1.68% 0.55% -0.16% -1.59% -0.10% -2.98% -0.16% 13.51% TER 11.45 0.17 1.51% 0.44% 4.57% 3.62% 4.47% 12.92% -12.33% 14.39% TXN 28.66 0.44 1.56% -0.21% -0.24% 6.42% 10.19% 13.33% 8.15% 20.02% BRCM 37.55 0.78 2.12% -0.48% 5.06% 10.87% 16.47% 0.00% 5.63% 22.19% ALTR 29.46 0.32 1.10% -1.21% 0.41% 1.20% 28.09% 3.37% 10.34% 38.44% ATML 8.150 0.210 2.64% -2.86% -1.45% 5.03% 68.39% 54.94% 39.79% 95.44% UMC 2.7000 0.0600 2.27% -2.88% -6.57% 0.00% -31.30% -14.29% -30.23% -26.23% AMD 6.890 0.000 0.00% -3.23% -2.27% 0.73% -28.97% -9.46% -30.12% 18.18% XLNX 25.20 0.03 0.12% -4.83% -3.37% -5.05% -0.71% -12.44% -8.43% 7.65% SNDK 36.99 -0.13 -0.35% -5.66% -6.40% 3.18% 21.72% -14.18% -12.39% 61.88%

Sector 50 (telecom: IYZ, VOX and IXP)

This week, the telecom sector (IYZ) gained +0.14% W/W because of Friday’s gain of +0.32%, closing at 21.93. That was a 3 cent gain for the second consecutive week.

The big winner here again was Siemens AG (SI +2.5%) which followed the gain of +5.7% a week ago. This stock has enjoyed an exceptionally strong 7 or 8 weeks.

The big losers were MICC Communications (MICC -4.6%) and China Mobile (CHL -3.0%). Verizon (VZ -1.05%) and AT&T (T -0.14%) were also soft.

Table 14: Telecom

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change SI 116.17 -0.17 -0.15% 2.46% 8.29% 8.61% 23.19% 18.44% 20.62% 16.02% AMX 57.56 0.37 0.65% 2.17% 3.94% 8.79% 17.93% 12.33% 12.73% 21.23% NOK 11.06 -0.22 -1.95% 1.65% 2.12% 9.94% -17.15% 20.61% -14.86% -16.97% FTE 23.20 0.03 0.13% 0.13% 3.66% 6.37% -10.46% 20.46% 1.49% -15.27% DCM 16.66 0.05 0.30% -0.06% -0.95% -2.97% 17.82% 5.91% 2.78% 13.41% T 28.29 -0.05 -0.18% -0.14% 0.25% -1.01% -1.01% 10.90% 7.69% 8.39% VZ 32.09 -0.43 -1.32% -1.05% -2.25% -1.69% -3.58% 18.85% 9.60% 10.58% TEF 80.61 0.58 0.72% -1.10% 2.64% 8.20% -5.88% 25.76% 17.85% -7.14% VOD 26.42 0.03 0.11% -1.86% 2.09% 2.84% 13.93% 15.98% 14.08% 14.57% CHL 52.07 -0.38 -0.72% -2.98% -1.94% 0.08% 10.55% 2.20% 2.80% 5.26% MICC 94.47 1.11 1.19% -4.62% -4.31% -5.53% 21.02% 2.67% 2.21% 34.80%

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

IYZ Monthly data: IYZ Monthly Data

IYZ Weekly data: IYZ Weekly Data

IYZ Daily data: IYZ Daily Data

The Utilities sector ETF (XLU) dropped -0.65% on Friday to lose -0.09% W/W, closing at 31.87, just three cents.

American Electric Power (AEP) was up +2.1% W/W but big losses on Friday to FirstEnergy (FE) and Exelon (EXC) took those stocks down -3.6% and -2.7% this week. One has to wonder when, if ever, some of these utilities are going to recover former highs.

http://billcara2.com/tkchart/tkchart.asp?stkname=aep,fe,exc&wt=1&ind=rsi

Table 12: US Utilities

Sorted by 1-Week Price Performance. Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change AEP 36.70 -0.20 -0.54% 2.11% 1.41% 0.55% 5.04% 2.54% 8.00% 17.29% SO 38.32 0.19 0.50% 1.70% 1.62% 2.21% 15.25% 7.49% 10.91% 15.14% PCG 47.66 0.31 0.65% 1.62% 1.88% 4.02% 7.10% 8.49% 10.17% 12.30% DUK 17.78 -0.04 -0.22% 1.08% 0.79% -1.17% 4.77% 3.98% 9.69% 9.82% ED 49.12 0.24 0.49% 1.07% 1.76% 0.68% 8.24% 6.74% 8.67% 17.57% NGG 46.35 -0.29 -0.62% 1.05% 2.03% 7.39% -15.30% 21.11% -7.78% -6.83% PEG 33.25 -0.55 -1.63% 0.00% -0.78% 1.16% -1.13% -1.31% 7.02% 7.61% D 44.51 -0.23 -0.51% -0.07% -0.38% 0.63% 14.25% 5.42% 7.64% 25.42% TRP 37.55 -0.45 -1.18% -0.84% -0.82% 0.59% 8.46% 6.28% 0.89% 17.34% EXC 42.00 -1.52 -3.49% -2.67% -2.78% -2.28% -14.08% 0.48% -3.78% -17.39% FE 37.52 -1.81 -4.60% -3.62% -2.47% -1.52% -19.78% -2.37% 0.48% -19.40%

Sector 55 (utilities: IDU, XLU, and VPU)

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

XLU Monthly data: XLU Monthly Data

XLU Weekly data: XLU Weekly Data

XLU Daily data: XLU Daily Data

http://investertech.com/markets/mkview.asp?qte=ss&ty=tk&qt=AEP+D+DUK+ED+…

Here is the list of North American Utilities that I follow:

AEP D DUK ED EXC FE FPL NGG PCG PEG SO TRP

For study purposes, there is a good mix of electric (AEP, D, DUK, FE, FPL and SO), gas (NGG, TRP) and diversified (ED, EXC, PCG, PEG) utilities.

Bonds & Yields Review

Table 10: US Treasury Yields

US Treasury Bonds Maturity Yield Yesterday Last Week Last Month 3 Month 0.10 0.11 0.11 0.14 6 Month 0.16 0.16 0.16 0.18 2 Year 0.36 0.35 0.36 0.43 3 Year 0.53 0.53 0.55 0.68 5 Year 1.15 1.13 1.19 1.32 10 Year 2.56 2.54 2.56 2.56 30 Year 3.93 3.96 3.98 3.75 Municipal Bonds Maturity Yield Yesterday Last Week Last Month 2yr AA 0.78 0.67 0.66 0.61 2yr AAA 0.69 0.62 0.66 0.57 2yr A 1.08 1.17 1.21 0.92 5yr AAA 1.49 1.23 1.41 1.14 5yr AA 1.51 1.36 1.44 1.26 5yr A 2.07 2.20 1.92 1.85 10yr AAA 2.67 2.46 2.60 2.56 10yr AA 2.64 2.53 2.60 2.62 10yr A 2.40 2.54 2.36 3.01 20yr AAA 4.34 4.29 4.25 3.69 20yr AA 4.07 4.02 3.98 3.89 20yr A 4.38 4.38 4.43 4.49 Corporate Bonds Maturity Yield Yesterday Last Week Last Month 2yr AA 0.93 0.94 0.99 0.98 2yr A 1.11 1.12 1.13 1.13 5yr AAA 1.54 1.52 1.50 1.77 5yr AA 1.99 1.97 2.03 2.06 5yr A 2.58 2.58 2.64 2.65 10yr AAA 2.86 2.85 2.89 2.69 10yr AA 4.16 4.22 4.26 4.06 10yr A 3.97 4.00 3.93 4.09 20yr AAA N/A N/A N/A N/A 20yr AA 4.20 4.20 4.18 N/A 20yr A 5.52 5.51 5.72 5.86

This week, the yields for the 5- and 30-year Treasuries dropped -4 and -5 basis points respectively as the bonds found a bid. There was very little movement at all on the 2- and 10-year Treasuries or on the 3-month T-Bills.

A week ago, the 20-year Treasury Bond ETF plunged as traders rushed to equities (TLT –3.79% W/W) and the TLT dropped to 100.27, including a loss that Friday of -1.22%. But this week, the TLT rallied +1.11% to 101.38, including a gain of +0.68% on Friday.

A week ago, Fed chairman Bernanke mentioned that inflation was so low that the bigger fear was deflation. That comment dropped the inflation-protected treasury bonds (TIP) -0.64% on the Friday, closing at 111.50; but this week Treasury Secretary Geithner spoke up and the bonds gained in price. TIPs closed up +0.28% W/W at 111.81.

With all the meetings and speeches going on this month, it’s hard to make heads or tails of the bond market.

Here is the $USB 30-year Treasury Bond chart.

Interest rates and bond yields.

TNX0X Weekly Data

IRX0X Weekly Data

Interactive Daily data charts:

TNX0X Daily Data

IRX0X Daily Data

Interactive Chart of Interest rates and bond yields.

US Bond Funds — Interactive Monthly Data Charts SHY Monthly data series chart:

US Bond Funds - Monthly Data For SHY

IEF Monthly data series chart:

US Bond Funds - Monthly Data For IEF

TLT Monthly data series chart:

US Bond Funds - Monthly Data For TLT

AGG Monthly data series chart:

US Bond Funds - Monthly Data For AGG

LQD Monthly data series chart:

US Bond Funds - Monthly Data For LQD

TIP Monthly data series chart:

US Bond Funds - Monthly Data For TIP

US Bond Funds — Interactive Weekly Data Charts SHY Weekly data series chart:

US Bond Funds - Weekly Data For SHY

IEF Weekly data series chart:

US Bond Funds - Weekly Data For IEF

TLT Weekly data series chart:

US Bond Funds - Weekly Data For TLT

AGG Weekly data series chart:

US Bond Funds - Weekly Data For AGG

LQD Weekly data series chart:

US Bond Funds - Weekly Data For LQD

TIP Weekly data series chart:

US Bond Funds - Weekly Data For TIP

US Bond Funds — Interactive Daily Data Charts

SHY Daily data series chart:

US Bond Funds - Daily Data For SHY

IEF Daily data series chart:

US Bond Funds - Daily Data For IEF

TLT Daily data series chart:

US Bond Funds - Daily Data For TLT

AGG Daily data series chart:

US Bond Funds - Daily Data For AGG

LQD Daily data series chart:

US Bond Funds - Daily Data For LQD

TIP Daily data series chart:

US Bond Funds - Daily Data For TIP

Table 11: Interest-sensitive securities

Sorted by 1-Week Price Performance. Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change DRE 12.38 0.19 1.56% 3.25% 2.31% 3.77% 2.23% 8.69% -8.43% 1.98% EQR 50.83 -0.68 -1.32% 1.76% 4.52% 3.19% 52.19% 13.16% 16.18% 74.31% TLT 101.38 0.68 0.68% 1.11% -2.73% -2.05% 12.88% 0.53% 12.11% 5.97% NLY 18.19 -0.09 -0.49% 1.06% 2.71% -1.14% 4.48% 2.88% 5.45% 3.71% AGG 108.50 0.05 0.05% 0.44% -0.29% 0.33% 5.02% 0.82% 3.96% 3.86% TIP 111.81 0.03 0.03% 0.28% 0.24% 2.85% 7.33% 5.59% 6.82% 8.12% IEF 99.02 0.03 0.03% 0.23% -0.96% 0.75% 11.48% 3.37% 10.23% 8.03% SHY 84.46 -0.02 -0.02% 0.07% 0.01% 0.14% 1.67% 0.38% 1.38% 0.63% AVB 110.08 -0.40 -0.36% 0.03% 4.08% 2.97% 35.57% 7.15% 11.14% 49.50%

Commodities Review

After a large loss on the previous Friday (-1.29%), commodity prices ($CRB) continued soft all week until Friday, when there was a gain of +0.68% on the day, closing at 297.23, up +0.40% W/W.

All week the US Dollar was rising, until Friday when doubts of a further rally settled in and traders decided to await the G-20 communique before placing bets.

A week ago I sensed a possible reaction: “There had been a Point & Figure “Triple Top Breakout” 9for $CRB) on Sept 27. That was the result of the US Dollar getting softer, and this week there was more softness. Many traders are looking for the pop in the Dollar that started on Friday to continue. I am still undecided as to the trend reversal in the Dollar here, although I think that if it didn’t start on Friday, it will not be long.”

Ouch; the rally was more than I had anticipated. The market is nervous. Monday and Tuesday will be key.

The 50-day and 200-day Moving Averages for the $CRB at 280.37 and 270.89 respectively are still below the current price of 297.23, and the 50-d is above the 200-d MA, so it all still looks bullish to me.

But it all depends on the US Dollar at this point.

Although I use the $CRB (Reuters/Jeffries Index), principally because it’s the oldest, there are many commodity indexes: http://www.crbtrader.com/crbindex/ • Astmax Commodity Index(AMCI) • Commin Commodity Index • Dow Jones-AIG Commodity Index • Goldman Sachs Commodity Index • Reuters/Jefferies CRB Index • Rogers International Commodity Index • Standard & Poor’s Commodity Index • NCDEX Commodity Index • Deutsche Bank Liquid Commodity Index (DBLCI) • UBS Bloomberg Constant Maturity Commodity Index (CMCI)

Here is a link to an article that discusses the major ones that have been around for a while: http://www.rogersrawmaterials.com/overviewandanalysis.PDF

Here is a current price summary of the heaviest weighted commodities contracts: http://money.cnn.com/data/commodities/

These indexes change their component weightings perhaps annually or even monthly, for example: http://www.seekingalpha.com/article/43586-the-new-generation-of-diversif… http://tinyurl.com/a5myfj

$CRB Index

Open Futures Contracts

Interactive Chart of Weekly CRB Commodities Index:

CRB Commodities Index - Weekly Chart

Interactive Chart of Daily CRB Commodities Index:

CRB Commodities Index - Daily Chart

Oil Review

A week ago, the $WTIC dropped -$1.26/bbl (-1.52% W/W) to close at 81.63. This week there were more losses during the week until Friday, when traders started to buy risk, bidding the $WTIC higher by +1.40% on the day, leaving the index with a small gain of +0.07% W/W, which translates to six cents a barrel.

For $WTIC, the 50-day MA is now up this week to 77.48 from 77.26 and 77.16 and rising.

The 200-d MA is down a tad this week to 78.23 from 78.25, but still up from 78.15 two weeks ago.

As I pointed out a week ago, the narrow and flat-lining 200-d MA and 50-d MA is still a technically undecided picture. But, as I also pointed out in this space five weeks ago with oil in the mid-70’s: “With currencies presently at war, the oil market could be on the edge.” By that I mean that if the G-20 were to permit the US to weaken its Dollar, but permit China to stay linked to the Dollar at the same time, there could be a pop in the oil price.

We need to wait to see what the G-20 has decided. Of course, it would be nice to know at the same time their friends and families are told.

Here is the e-miNY Dec-07 Crude Oil chart.

Interactive Chart of Weekly Crude Oil:

Crude Oil- Weekly Chart

Interactive Chart of Daily Crude Oil:

Crude Oil- Daily Chart

Gold & Precious Metals Review

The week was painful for me being long gold and goldminers as the price of $GOLD plunged -$40.50 (-2.96% W/W), closing at 1328.10, lower than the previous week’s low. So the fact that the previous week had a gain of +$21.40/oz (+1.59%) W/W, and the loss over two weeks is not bad, it’s still painful.

I suppose I could rationalize that the price had been over-bought and in need of a pull-back in order to relieve the pressure from sellers who might have dumped a lot had the price kept soaring.

The loss was due to the reversal in the over-sold $USD, which I had been anticipating. What I didn’t expect was the magnitude in the pull-back.

At this point, it’s a matter of awaiting action from the G-20, one way or the other. I still find it hard to accept that these countries would not work out an agreement to stabilize currency prices because not doing so will make the capital markets even more unstable than they’ve been.

The low for $GOLD this week was 1315.50 on Friday. The higher was 1374.80. Lower high; lower low. Bearish.

But we’ve still seen lower prices this month and the jury is still out. Let’s wait a couple days for the verdict.

A week ago I wrote in this space:

Yes, these are high-risk times, but you need to take advantage. I believe that even if $GOLD pops further to say $1350, and then falls back, the drop will be short and relatively shallow if you call a quick loss of -12% or more a small one. But, it’s the longer term outlook I find very promising. Governments around the world are unable to stop spending and the added debt leads to central bankers having to print more money. As the quantity of money falls behind the incremental value of the global economy, and interest rates stay well below long-term norms, the price of $GOLD will rise… Early this week I could see that buyers wanted to take the market even higher. The pull-back was too brief to fully consolidate a base, so I call this move a high-risk buy. I think we might soon see $1350 or a tad higher, but then the over-bought conditions would be ripe for a more significant reversal. All this depends on how the currency market plays out… A week ago I stated: “It’s the present I am concerned about… Once the short-term picture works out, taking time to work through an over-bought condition, I think the gold market will go on a tear. I wouldn’t stay short overnight.

The issue with gold is not just the US Dollar.

To repeat what I stated here five weeks ago:

What we’re seeing is that the world is now in agreement that gold is money. With so many problems with the US Dollar, the Yen and the Euro, it would not surprise me to see Gold become the world’s de facto reserve currency with all other currencies priced relative to an ounce of gold. That way we have an honest market. Today, the so-called Morgan Dollar ($USD) is just an outdated index that is only of academic interest. The component weightings no longer make any sense. But, Gold has meaning to people in every country and they will buy and sell it based on the strengths, weaknesses, opportunities and threats to their own wealth and investment circumstances.

http://investertech.com/tkchart/tkchart.asp?stkname=gld&cht=Tech+Chart&p…

http://investertech.com/tkchart/tkchart.asp?stkname=gld&cht=Tech+Chart&p…

http://investertech.com/tkchart/tkchart.asp?stkname=gld&cht=Tech+Chart&p…

The $GOLD 50-day Moving Average is now at 1285.69, up from 1272.15 and from 1254.42 in just two weeks, and up quite a bit from the 1217.98 of just five weeks ago. A little pull-back to relieve the pressure of a too-hot market is normal.

The 200d MA is 1193.73, up from 1188.25 and from 1181.57, and up from 1168.33 in five weeks.

If you are a newbie to gold trading, you might want to review the info package put together by Stockhouse. Here are the links:

Gold As An Investment
http://www.stockhousefeatures.com/precious-metals/index.php/2010/09/gold…

Silver 101
http://www.stockhousefeatures.com/precious-metals/index.php/2010/09/silv…

Is Silver Money? (Revisited)
http://www.stockhousefeatures.com/precious-metals/index.php/2010/09/is-s…

History of Silver Mining
http://www.stockhousefeatures.com/precious-metals/index.php/2010/09/hist…

Palladium 101
http://www.stockhousefeatures.com/precious-metals/index.php/2010/09/pall…

Platinum 101
http://www.stockhousefeatures.com/precious-metals/index.php/2010/09/plat…

Basics of Silver Investing: Chapter 1
http://www.stockhousefeatures.com/precious-metals/index.php/2010/09/basi…

Basics of Silver Investing: Chapter 2 – Silver ETFs
http://www.stockhousefeatures.com/precious-metals/index.php/2010/09/chap…

Basics of Silver Investing: Chapter 3 – Physical Silver
http://www.stockhousefeatures.com/precious-metals/index.php/2010/09/chap…

Spot gold chart for the week

Interactive Chart of Weekly Gold EOD Continuous Contract Index:

GOLD EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Gold EOD Continuous Contract Index:

GOLD EOD Continuous Contract Index- Daily Chart

Interactive chart of recent trading for the Gold Bullion index.

Spot silver chart for the week

Interactive daily data

This week $SILVER had a loss of -$1.02 (-4.20% W/W) to close at 23.27. Just a week earlier, there had been a gain of +$1.07/oz (+4.61%). Tic toc. But the week before last also saw a gain of +$1.12 (+5.07%), so over three weeks it is true that $SILVER is still quite bullish.

Five weeks ago, $SILVER closed at $20.74. I wrote: “A week ago I reported: “I’m mostly in cash and didn’t do much if any trades this week.” I definitely got active this week. If you do, keep a close eye on AGQ and GDXJ.” I watched it sink this week, moving fully out of the GDXJ a few days too late.

http://stockcharts.com/charts/gallery.html?s=$silver
http://tinyurl.com/y8k8ud4

For $SILVER, the 50d MA is now 20.96, up in a week from 20.41, which is up in five weeks from 18.67. That’s bullish.

The long-term 200d MA is 18.53, up from 18.38, which is up in five weeks from 17.90, which is also bullish.

So, why do I feel so “down”?

Six weeks ago I opined: “Whatever direction the PM’s take, I do anticipate $SILVER will be the leader of $GOLD.” This week, $SILVER plunged -4.20% while $GOLD dropped -2.96%. That’s not good, but at least it was expected in a pull-back. Now we have to look for a reversal led by $SILVER on the way up, if the precious metals are to rally here.

Interactive Chart of Weekly Silver EOD Continuous Contract Index:

SILVER EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Silver EOD Continuous Contract Index:

SILVER EOD Continuous Contract Index- Daily Chart

Interactive chart of the Silver Bullion index.

$PLAT dropped -$21.00 (-1.24% W/W) this week to close at 1674.00. A week ago there was a loss of -$11.00/oz.

http://stockcharts.com/charts/gallery.html?s=$plat
http://tinyurl.com/ydwz4pn

The 50d MA for $PLAT is now at 1608.92, up from 1595.15, and from 1583.68, which is well up from 1544.14 on Sept 19. That’s still bullish.

The 200d MA is at 1594.37, up from 1591.16, and from 1585.55, which is well up from 1568.94 on Sept 19. That’s also still bullish.

I don’t trade plat or pall, but I study them as part of the precious metals trading I do.

Spot platinum chart for the week

Interactive Chart of Weekly Platinum EOD Continuous Contract Index:

PLAT EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Platinum EOD Continuous Contract Index:

PLAT EOD Continuous Contract Index- Daily Chart

Interactive chart of the Platinum metal index.

This week, $PALL dropped -$15.25/oz to close at 586.30.

http://stockcharts.com/charts/gallery.html?s=$pall
http://tinyurl.com/yenr5rj

The 50d MA is now at 540.15, up from 530.21, and from 523.30, which is well up from 491.63 on Sept 19. That’s still bullish.

The 200d MA is at 487.84, up from 483.58, and from 479.38, which is up from 464.83 on Sept 19. Again, that’s bullish still.

As I opined two weeks ago in this space: “I do anticipate further upside in the near-term, but then a stronger $USD would likely snuff out an over-bought condition.” It’s coming – likely in a week or two, maybe three.

It happened in two weeks.

Spot palladium chart for the week

Interactive Chart of Weekly Palladium EOD Continuous Contract Index:

PALL EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Palladium EOD Continuous Contract Index:

PALL EOD Continuous Contract Index- Daily Chart

Interactive chart of the Palladium metal index.

This week, $COPPER dropped -$4.20/lb (-1.09%) to close at 379.70, down from 383.90. A week earlier, $COPPER had gained +$6.45 and the week before that there was a gain of +$8.40/lb, so this week’s loss has been small in comparison.

As I stated in this space two weeks ago: “$COPPER continues to lift well in excess of my expectations, but then again the US Dollar has fallen more quickly than I had figured.” A week ago I added: “I still see that lower price happening – sometime after the US Dollar rebounds. The $USD remains quite oversold at this point, which implies that $COPPER is quite over-bought.”

But, you know, the US economy is actually stronger than many believe – there is just a shift in place where the average person is feeling the pinch. That is a support for copper prices. Still, we’ll have to see how the $USD goes before making any more forecasts.

http://stockcharts.com/charts/gallery.html?s=$copper
http://tinyurl.com/ybgnb7f

For $COPPER, the 50d MA is at 355.25, up in a week from 350.46, and from 345.99, and well up from 329.55 on Sept 19.

The 200d MA is at 330.84, up in a week from 329.92, and from 328.71, and up a tad from 325.15 of Sept 19.

As stated since late July, “the copper price is bullish. This pattern is in a Bull market at this point because the price is above a rising 50-day MA and 200-day MA”.

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

We have also been following Freeport McMoran (FCX), which dropped this week by -4.08% to close at $94.05. There was a closing high of $98.05 two weeks ago and an intra-day high of 100.34 then. A week ago I opined in this space: “Be wary of a Dollar rebound though. The past month FCX has been over 75 on the RSI-7.”

wir_43.4.gif

Interactive Daily data

Interactive Weekly data

Interactive Chart of Weekly Copper EOD Continuous Contract Index:

COPPER EOD Continuous Contract Index - Weekly Chart

Interactive Chart of Daily Copper EOD Continuous Contract Index:

COPPER EOD Continuous Contract Index- Daily Chart

Interactive chart of the Copper metal index.

Table 12: Senior gold equities

Sorted by 1-Week Price Performance Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change NG 9.570 0.560 6.22% 1.06% 3.46% 10.13% 51.42% 51.18% 26.25% 89.50% LIHR 39.25 -0.14 -0.36% 0.15% 3.43% 5.97% 28.35% 15.00% 62.80% 69.40% HMY 11.25 0.30 2.74% 0.00% -2.00% -1.49% 7.35% 12.73% 20.97% 0.72% CDE 19.70 0.18 0.92% -1.35% -0.76% 0.46% 5.12% 31.42% 20.27% -15.92% BVN 50.35 0.92 1.86% -1.54% 4.20% 20.31% 44.06% 26.63% 61.48% 34.81% IAG 17.37 0.35 2.06% -2.09% -1.14% -0.91% 7.75% 5.66% 10.78% 24.52% PAAS 30.53 0.73 2.45% -2.46% 2.18% 4.30% 23.50% 31.31% 18.66% 32.16% GFI 15.33 0.19 1.25% -2.79% -2.17% 1.79% 12.56% 17.20% 18.84% 8.11% AU 45.89 0.38 0.83% -2.96% -2.34% 1.44% 8.85% 14.67% 17.67% 5.66% AEM 70.31 0.87 1.25% -3.13% -3.13% 1.57% 25.08% 21.81% 16.64% 1.62% NEM 59.37 0.15 0.25% -4.06% -5.60% -6.36% 22.54% 0.61% 13.22% 30.43% ABX 45.97 0.52 1.14% -4.21% -5.35% -0.86% 13.82% 8.86% 14.44% 21.20% HL 6.700 0.110 1.67% -4.15% 0.15% 7.20% 3.55% 38.43% 14.92% 39.29% GDX 54.89 0.61 1.12% -4.39% -4.21% -1.40% 15.05% 11.66% 15.90% 16.81% SSRI 23.16 0.47 2.07% -4.57% 5.32% 14.43% 1.76% 43.05% 20.69% 13.70% GDXJ 33.94 0.49 1.46% -4.80% -3.28% 0.53% 41.71% 29.39% 22.13% 0.00% AUY 10.71 0.05 0.47% -4.97% -7.19% -3.51% -9.16% 12.26% 5.10% -10.45% SLW 26.22 0.48 1.86% -5.34% -1.54% -1.43% 66.05% 39.25% 50.60% 87.42% GG 42.04 0.17 0.41% -5.42% -4.56% -4.04% 3.34% 3.57% 5.60% 3.17% SVM 8.700 -0.010 -0.11% -6.05% 2.72% 3.69% 25.72% 35.73% 17.41% 56.76% KGC 17.60 0.08 0.46% -7.47% -7.37% -7.37% -6.78% 7.78% -2.49% -18.93% EGO 16.78 0.27 1.64% -7.80% -9.49% -8.05% 14.23% 4.68% 20.55% 40.89% ANV 23.11 0.65 2.89% -9.44% -12.99% -15.96% 44.71% 41.52% 36.10% 132.49% UXG 4.9300 0.1300 2.71% -9.54% -3.71% -1.20% 90.35% 5.79% 58.01% 64.33%

It was a tough week for those traders who were long goldminers.

This week the $XAU goldminer index dropped -4.48% to 196.82. Interestingly, the 50-day MA of 191.68 showed some support. There was a low this week of 193.91.

The GDX ETF closed at 54.89, down -4.39% W/W from 57.71. Canada’s XGD fell -3.38% to 24.27.

For the gold miners and developers, New Gold (NG +1.1%) managed a gain after having a big week a week ago. There was a gain on Friday of +6.2%. But mostly the news was bad for those who are bullish on gold.

A big winner recently, US Gold (UXG -9.5%) took back a lot of gains. So did many others. Even heavyweights like Goldcorp (GG -5.4%) and Silver Wheaton (SLW -5.3%) gave back a lot this week. Of course, the SLW was up +4.0% W/W a week ago.

At this point, the bold bulls must decide whether they want to hold the metal and the stocks through bursts of buying in the US Dollar or whether they believe this cycle has topped and prices are going lower. As for me, I think prices are going higher, probably through to February, but I did comment that a -12% interim pull-back would not surprise me.

Let’s take it day to day.

To watch the moves in precious metal miners, you will have to monitor the individual stock charts, preferably in real-time, as follows: NEM ABX AU GFI GG HMY AUY KGC BVN

Interactive Daily data

Interactive Weekly data

LIHR IAG EGO RGLD GOLD TSE_AGI GSS NG NGD AEM

Interactive Daily data

Interactive Weekly data

Here are the key Silver miners and the SLV ETF: SLV SIL SVM CDE HL PAAS SSRI SLW MGN

Interactive Daily data

Interactive Weekly data

Here are the Weekly and Daily Data charts of the indexes:

Interactive Chart of Weekly US Goldminers Index:

Weekly US Goldminers Index - Weekly Chart

Interactive Chart of Daily US Goldminers Index:

Daily US Goldminers Index - Daily Chart

The US goldminer share trust ETF trades under the ticker symbol GDX.

Here are the US Goldminer ETF (GDX) index Weekly and Daily data charts:

GDX Weekly data:

GDX Weekly Data Chart

GDX Daily data:

GDX Daily Data Chart

The Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF trades under the ticker symbol TSE:XGD.

Just like GDX on the AMEX, you can trade XGD on Toronto. Canadian Dollar fluctuations will impact XGD vs GDX.

Here are the Weekly and Daily data charts for the TSX Goldshares (XGD) index:

Interactive Chart of XGD Weekly data:

XGD Weekly Data Chart

Interactive Chart of XGD Daily data:

XGD Daily Data Chart

Forex Review

The $USD is a trade-weighted US Dollar index, we used to call the Morgan Dollar.

As commodities are priced in $USD you need to study forex price trends and cycles.

The Forex market is a four trillion dollar a day marketplace, which dwarfs the size of the stock and bond markets. In this market, the Euro/USD is the highest volume trader, and London is the center of the universe.

The current value of $USD is a mean value of rate fluctuations of six world currencies (Japanese yen, Euro, British pound, Canadian dollar, Swiss franc and Swedish krona) that each trade against the USD. The Euro is by far the biggest component.

I don’t understand why the Yuan is not a factor, or the Mexican peso or Brazilian real, and why the krona is so important, but admitting it shows my ignorance. Recently I opined that the $USD no longer meets the needs of a globalized world with respect to a reserve currency benchmark. I have suggested that Gold may be the de facto benchmark.

The ETF that tracks the G-10 currencies is the Powershares DBV. http://tinyurl.com/ltxpk4

Regarding currencies, I find the ADVFN.com service (with inexpensive real-time price feed) to be quite useful. I have set up a monitor (one of 150-some tickers) for currencies, which you can do as well.

Click on: http://www.advfn.com/p.php?pid=m_tools

Into the window for stocks, enter the following string:

FX:EURUSD, FX:AUDUSD, FX:GBPUSD, FX:EURGBP, FX:EURCHF, FX:EURCAD, FX:USDCAD, FX:EURJPY, FX:USDJPY, FX:AUDJPY, FX:EURAUD

When you call up the stocks, you’ll see they are interactive, which means they update in real-time (if you paid the $10/mo for this data) or 15-20-minute delayed prices (free), and can be displayed with indicators and overlays.

Here are some of the Daily data charts I keep on a screen AT ALL TIMES, which, after logging on, one can access via the link under the stock name beside the ticker symbol:

On Tuesday this week, right after news of the tightening action by the Peoples Bank of China, the US Dollar strengthened, closing much higher on the day, putting pressure on equity and commodity prices.

US Dollar to Cdn Dollar:
http://www.advfn.com/p.php?pid=fxcharts&symbol=FX^USDCAD&period=1&freq=3

wir_43.5.gif

US Dollar to Aussie Dollar:
http://www.advfn.com/p.php?pid=fxcharts&symbol=FX^USDAUD&period=1&freq=4

wir_43.6.gif

UK Pound Sterling to US Dollar:
http://www.advfn.com/p.php?pid=fxcharts&symbol=FX%5eGBPUSD&period=1&freq=3

wir_43.7.gif

Euro to US Dollar:
http://www.advfn.com/p.php?pid=fxcharts&symbol=FX%5eEURUSD&period=1&freq=3

wir_43.8.gif

You can see from the weekly chart of the DJIA, that when the $USD soared on Tuesday the Dow 30 dropped pretty hard.

wir_43.9.gif

If you are new to examining currency pairs charts; think about it that in any pair where the latest trend line is rising, the first ticker is the one that is strong. So EURUSD, which is the way the contract is traded, when the trend line is up, the Euro is in rally mode against the US Dollar.

The symbol USD in any pair is the denomination versus $USD, which is the trade-weighted US Dollar index (i.e., multiple currencies as described above).

A chart of the Euro vs Dollar (i.e., EURUSD) with an overlay of currencies (GBP, AUD and CAD in this case) will show you if, as, and the point when, currencies are impacting capital markets. We are looking for commonality in trend direction of the currencies in their trading against the US Dollar.

The so-called trade-weighted US Dollar index ($USD) this week gained +0.56% to close at 77.47.

http://stockcharts.com/charts/gallery.html?s=$usd
http://tinyurl.com/y9c3sr4

The 50-day MA of the $USD is now at 80.34, down sharply from 80.78, and from 81.14, and down from 82.28 on Sept 19. Although the action of the past week or so has shown Dollar strength, the trend is still bearish.

The 200-day MA is 81.85, flat in a week from 81.85, down a bit from 81.87 the week earlier, and a bit higher than 81.72 on Sept 19.

Here is the table of currencies trading against the US Dollar:

wir_43.10.gif

Weekly US Dollar Index - Weekly Chart

Interactive Chart of Daily US US Dollar Index:

Daily US Dollar Index - Weekly Chart

The Euro was a losewr this week.

Despite a gain (+0.04%) on Friday, this week the Euro contract dropped -0.33% W/W to close at 139.26. Denominated in US Dollars, that’s 1.3926.

The current level is still much higher than the 50-day MA (132.62) and 200-day MA (131.87). Just five weeks ago, the Euro closed at 130.55, and that week there was a gain of almost +3%. I reported at the time: “(This) is a huge move, facilitated of course by the Bank of Japan’s intervention to weaken the Yen, but not make the $USD so strong as to turtle the equity market. This week’s action was caused by the People’s Bank of China. There is always intervention that affects this market in a big way, and since over $4 trillion in currencies are traded every day, there is a huge implication for all other parts of the capital market.

http://stockcharts.com/charts/gallery.html?s=$xeu
http://tinyurl.com/ydekjtk

The 50d MA for the Euro futures are now at 132.62, well up from 131.79 a week ago and from 128.81 on Sept 19.

The 200d MA is at 131.87, down a bit from 131.99 a week ago, and from 132.86 on Sept 19.

Interactive Chart of Weekly Euro Dollar Index, priced in USD:

Weekly Euro Dollar Index - Priced in USD

Interactive Chart of Daily Euro Dollar Index, priced in USD:

Daily Euro Dollar Index - Priced in USD

The Pound contract plunged -1.90% W/W to close at 156.79. There was a loss of -0.17% on the previous Friday and -0.18% this Friday.

http://stockcharts.com/charts/gallery.html?s=$xbp
http://tinyurl.com/yasdzc2

The 50d MA of the Pound is at 156.54, fairly flat in the past two weeks with 156.55 and 156.47, but up from 155.11 on Sept 19.

The 200d MA is 153.63, down a tad from 153.70 and from 153.72 the week before that, and down a bit from 154.10 on Sept 19.

Weekly British Pound Index:

Weekly British Pound - Weekly Chart

Daily British Pound Index:

Daily British Pound Index - Daily Chart

Weekly Japanese Yen Index:

This week, the Yen gained +0.07% to close at 122.90 viz the Dollar.

The Yen’s 50-day MA is now 119.35, up from 118.73 in a week and from 118.10 the previous week, and up in five weeks from 116.56.

The 200-day MA is now at 112.79, up this week from 112.42, and from 112.08 the week before, and up from 111.51 in five weeks.

Weekly Japanese Yen - Weekly Chart

Daily Japanese Yen Index:

Daily Japanese Yen Index - Daily Chart

The Cdn Loonie has fallen off from trading at par with the US Dollar a couple weeks ago. This week the Loonie fell -1.49% to 97.36 American, but still up in five weeks from 96.96.

http://stockcharts.com/charts/gallery.html?s=$cdw
http://tinyurl.com/ycx58us

A week ago on Thursday, the Loonie traded above par with the US Dollar, hitting a high of 100.10.

The 50-day MA is now at 96.90, up this week from 96.81, and up in 5 weeks from 96.24.

The 200d MA is at 96.71, up a tad this week from 96.67, and still almost flat with the 50day MA.

Weekly Canadian Dollar Index:

Weekly Canadian Dollar - Weekly Chart

Daily Canadian Dollar Index:

Daily Canadian Dollar Index - Daily Chart

Here is the China Yuan (CNY) chart.

Wrap-up:

I had hoped to submit my first article tomorrow to the NASDAQ Community, but haven’t felt well today and also had several hours of computer problems earlier in the day that slowed me down, so I might not start it for Monday morning as planned. We’ll see how I feel in the morning.

I agreed to write this weekly column on investing and trading for their website that has apparently 2.5 million monthly unique visitors. You might even find me on Twitter as they have 100,000 followers. I’m going to develop a couple portfolios of NASDAQ-listed stocks using a simple fundamental-technical model for the Buys and my simple little RSI-7 system for the Sells although I’ll probably throw in some Stochastics and MACD. I’ll keep it simple though – end of Friday prices on the Buys and a Twittered announcement of the Sells.

I’m going to model the Nasdaq-100 stocks and the China-Hong Kong Nasdaq 100 largest market cap stocks. I’ll hold 20 in the portfolio, using extra cash to buy the index ETF when my technical tools determine a bullish pattern, and either going to cash or an inverse ETF in a bear phase.

I will graph the results and write up the companies briefly whose stocks we have selected for seeking alpha.

I’ll also write up a précis of the Week In Review, which means I’ll have to publish early Monday morning. Given that I’m not up to it this weekend, I may start Tuesday and also edit some of the material from the WIR.

This will be a portfolio with real money in it – hey we’re in the performance game – so let’s get serious. It’s always easy to quit when the going gets tough, but that’s when the tough get going. I’m up for the challenge.

In any case, I always do what I can do, and no more.

The Cara Trading Advisors firm has been restructured this week so that now I will be trading only the performance fee based Concept Gold accounts for accredited investors and the fixed fee Select accounts ($50,000 minimum and $100,000 maximum) for non-accredited investors. There’s a little organizing work to do, but I’m almost there. Finally.

Enjoy your weekend – what’s left of it.

Finally – a shout out to my son who is going to celebrate his 33rd birthday this Tuesday. Those of you who met him at the Cara Bahamas 2010 Conference in Freeport this January know I’m awfully proud. I still intend to post some photos of Will and Fiona’s Caitlin. Precious, but not metal.

And the Gold market opened a few minutes ago, with a bump in the price. I needed that. Let the good times roll.

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