Holy Frijole 2!

Somebody tell me what the news was.  TRH had some marginal news yesterday but this is crazy!  Perhap no real Japan hit to the bottom line? I know I picked a few in my column after the quake but ....

Ah, to have billions to spread around on dead cats.

Holy Frijole!

Did Ma Bell just cure cancer?

I get that the market liked the prospect of an ATT and T-Mobile combination but this is ridiculous. Verizon is flying, too. Just about everyone except Sprint is looking better.

Did you see today's "Chart of the Day" email?  American Tower just broke out, too.  Will someone call TheStreet.com for me? Apparently, everyone is on a buying spree so why not financial newsies?

More Shark Jumping?

Just got this in a Financial Advisor magazine email : Scottrade To Launch Low-Cost ETFs

Scottrade is launching a family of low-cost ETFs on Wednesday that are based on Morningstar’s domestic equity indexes, according to the company. The ETFs will be offered to Scottrade account holders, including advisors using Scottrade Advisor Services, with zero commissions, according to the company.

Basically, we have a retail stock broker now offering exclusive ETFs to their customers. First of all, imagine the lack of liquidity, even though Scottrade has more than two million accounts. And what happens if Scottrade goes down in that helicopter their CEO likes to ride in their commercials?

That is too big of a leap of faith to save a small percentage of return.  The ETF mania just took another step closer to the edge.

Stock Proctology

A few years ago, a colleague who happened to be and still is very bearish on the stock market in the big picture and not worrying about the rally since last year, was often quoted on a site called Capitalstool.com. He was not entirely pleased about that.

The site offers market opinion and satire but I am certainly not an avid follower. I just happened to remember a spoof on Alan Greenspan merging him with my pal from a previous blog post Alfred E. Newman. Here is the composite -->

What I like most about their site is their slogan: "We don't know and neither do they"

That about sums it up. Funny how we are all collectively still *dumping* on Alan Greenspan. You can determine if it is deservedly so.

Consider this a diversion. I am not taking trading advice from a guy going by the name Dr. Stool even if he does have as many as 23 active followers.

Coffee

It may not be gold or oil but a lot of people would take the bus instead of missing their morning cuppa joe.

What me Worry (about oil)?

For all those who delighted in Mad Magazine growing up and are now trying to decipher the markets, this is for you. Our pal Alfred E. Newman, does not have a care in the world. And now apparently neither do oil traders.

This is a chart of OVX, a.k.a. the oil VIX and it measures volatility in the oil market. However, it is different from the stocks VIX in that extreme highs do not necessarily mean fear in the oil market and a contrarian signal to buy. Check out the labels and note when things started to move up.

What I glean from this is that high oil prices are the new normal and everyone is getting used to it. That the headlines today say that stocks rallied as oil fears abated tells me that when the next shock comes - and it will in Yemen, Syria, Jordan or (shudder) Saudi Arabia - that people will not be ready for it.

Survey results - late

"Life is what happens to you while you're busy making other plans."
- John Lennon 


I was surprised to see such a high percentage of people voting that the correction was over last week and it was time to buy. Of course, the sample size was rather small. But what is significant is that readers of this blog likely share my rather dour view of stocks. Therefore, the fact that many of you were outright bullish should have some meaning in terms of overall sentiment out there.

Banks Bonk

Fed frees the financials to raise dividends and buy back shares. Stocks go up.....and then give most of it up. And today, when the entire market gapped up, banks were right in there......for a while.

Today's Barron's Online column was entitled Banks Pass Tests but Stocks Stay Stressed . Apparently, the market did not care too much, except for a knee jerk open Friday and Monday, for the news. Check this chart of Citi, which announced its first (trivial) dividend in a long time and a reverse split.

They jumped for the one cent dividend and then realized something was wrong. That is a rather massive bearish outside-day reversal.  Pick a bank and odds are it has a crappy chart like this.

Shoot the yen and the US dollar dies?

I am not smart enough to know all the ways that meddling in the market fails so I am not going to comment on the G-7 and their attempt to stifle the yen's rise. However, sticking purely with the charts, you would expect a rush to sell yen to push up the prices of currencies used to sell it. Aussie, Euro, Swissie, Loonie and even the Swedish Krona are all higher this morning.

But the US greenback is lower. Either the US forget to get in there to sell yen and buy dollars or the dollar is really in lousy shape.

Yes, I understand that if all the other currencies are being bought vs. the yen then they go up and in comparison the dollar falls. But this does not feel right. The dollar index is closing in on its November 2010 low and has already broken a MONTHLY triangle to the downside.

Excuse me, Mr. Bernanake, did you see this?  Mas oro, por favor.

Admin

Still more time to take the one question survey.  I understand the bias will match mine otherwise you would not be reading this blog but take it anyway ---->

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A 10-11% correction takes the market to the November low.

If you have a different scenario, please let us know by commenting on this blog post.

Perspective

This is the broad based TOPIX index in Japan. Support is very close but I would not expect a "V" bottom. This is a monthly chart but weekly RSI is NOT oversold. Daily is.

Bottom line - this might be a good place to watch once things return to some degree of economic normal. And that is said with respect for the human beings who will not return to normal in the devastated areas of Japan.

Where the rubber meets....the floor

Some of the news stories in the wake of the Japan earthquake/tsunami were about other markets besides oil, stocks and bonds. How about rubber? The TOCOM (Tokyo Commodities Exchange) is a rather active place and one of its big losers was rubber.

I could not quickly find a continuous contract but this March contract makes the point (yes, I know March in not the front month anymore but it has the longest history).

OK, we get why it cratered Monday. No auto production, lower demand for rubber. But look when this think peaked - Feb 21. How did rubber traders know the earthquake was coming? I know wheat traders keep track of weather but do rubber traders keep track of tectonic pressure buildups?

The day it started to fall was Feb 22 - the day Libya made itself known again. That is the same day stocks tanked, too. And oil shot higher. But rubber fell? Well, there was a reason:

Dateline 22 February: Key Tokyo rubber futures tumbled on Tuesday, pulled lower with a Shanghai market slide on concerns about demand from China, the world’s top rubber consumer.

OK, makes sense. But the next day  Shanghai turned around and never looked back. Rubber kept on falling.

Other than to point out just how nuts the markets are, the subtle takeaway is that another industrial commodity is heading lower no matter what else seems to be happening in other markets.

Another reason to fear bonds

Uber bond fund manager Bill Gross made the headlines this week as he supposedly dumped all his Treasury holdings. Given the importance of Treasuries to all other US debt, it is a bit like running a zoo and removing all the mammals.

Anyway, here is a chart posted by Matt Blackman in a TA chat room I frequent:

 

 Maybe this is why Gross did it..

Total Market Breakdown

The title is more sensational than it probably should be but since I don;t have tiger blood and Adonis DNA I have to try harder.

This is the Total Market ETF (a change of pace brought to my attention by Matt Blackman). Big price move under the trendline on big volume.

It is a breakdown and it is the total market ETF so I speak the truth.

The Four Horsemen

Last summer, when it looked like the market was rolling over in the wake of the flash crash, I was watching the Four Horsemen of the Market - XLK, XLF, XHB and RTH - tech, financials, homies and retail. If they broke down the market would go with them.

As you know, nothing broke down and we are 30% higher. Today's Barron's Online column was about the market's pattern and it featured two of the four horsemen - retail and tech. Here are the other two:

 

Still in a rising channel but on-balance volume is not keeping up.

Holding support but on-balance volume is worse.

At some point, Cisco is going to be of value. This monthly chart makes the case for 17.

 

Not shown is monthly stochastics at very low levels and looking for an upside crossover. 

Strange and stranger

Today, both oil and gold stocks came out of the gate with gains and fresh new highs. But stocks scooted up to a 74 point gain on the Dow.  Hmmm. Oil did back off its peak

But then stocks crater to a triple digit loss and gold and oil don;t do much. Stranger.

But gold and oil are still up with nice gains yet oil and gas stocks are much lower. Stranger.

I have no answer for you here. This market - all markets - are in flux and given all that has happened in the past two weeks flux to me means topping.

Socionomically Speaking - $5 gas

Today's theory is that stock markets tell us the social mood. A falling market forecasts problems and the worse the bear the worse the reaction - war being the ultimate expression of foul social mood.

Some would say people get mad and then the market falls. The folks at the Socionomics Institute say just the opposite. Therefore, looking at the Saudi index as we have over the past few days makes me think all is not well there. And if all is not well then oil may not be well and $5 gas is not such a stretch.

So, here we have the Turkey ETF. Looks pretty ugly and if the theory holds then there may be some problems looming. Technically, we can make a case for a bounce to the averages but the death cross seems pretty good on this particular chart. It is not so good in domestic markets these day.

How about the Middle East ETF?

That is pretty yoogli, too. It does not bode well for peace although a dozen percent decline in socionomic terms is only a minor signal.  Let's just wait for the القط الميت bounce.

Volume matters again!

Yay! A technical analysis tool worked again!

While I may be overly giddy about this one it is nice to see volume call the shots again. Monday, as stocks rose, volume was puny.

What, you say? According to the chart it was up there with last week's levels. But as is sometimes the case, the daily close does not tell the story. I am a bit too tired right now to re-post the chart that was in this morning's Quick Takes Pro but a huge chunk of that volume was reported after the close. Call it late or a quirk of my data system (eSignal) but volume during the intraday rally was low.

Don't believe me? Chart any of the major market ETFs (DIA, SPY, MDY, QQQQ, IWM) and you will see puny volume Monday followed by big volume Tuesday. Volume kept me comfortably doubting the rebound rally off the Libya lows of last week.

...you can put that in your pipe and smoke it, Mr. Busybody Holmes!
-  from Sherlock Holmes

Saudi two days later

I don't have an actual Bloomberg machine and don't ask how the color scheme changed. But this is the Saudi index two days later - OUCH!  Day of Rage coming March 11.

Saudi readers, MidEast readers - please tell us what is going in these markets!