Tuesday, December 28, 2010

Happy New Year!

A Happy New Year to all blog readers and their families!

My advice is not to overdo it during your holiday celebration or on your stock buying. The year ahead in the real world will be better than the year behind but the stock market is another story.

I'll see you back here in 2011.

Monday, December 27, 2010


One very highly regarded technician (name withheld) said:

"I am always surprised by the discussions of the Hindenburg Omen as it fails what is for me the first test of an indicator, robustness. A good indicator or system must, in my view, be insensitive to small changes in
parameters. Any indicator failing that test, and the HO fails it without question, cannot be trusted."

Another also highly regarded technician (Tom McClellan) responded:

"By that same reasoning, a railroad crossing sign would also fail as an indicator due to too many false positive indications. But we still use RR XING signs because of the observation that most car-train encounters occur at points where streets cross tracks. The sign is not the sole determinant that a train is there; we also can use confirming indications like the horn, or like seeing it.

If the HO identifies the preconditions for each and every great decline, crash, or whatever you want to call it, plus has a bunch of extra false indications at times when crashes don't come, I can live with that. I'd rather know, and accept the possibility that it may turn out to be a false positive reading."

MK opines - I love being around really smart people (both of these gents). Critics who said it predicted 10 of the last 3 crashes should attempt to learn how to use technicals properly.

Thursday, December 23, 2010

Inflation food for thought

I think inflation is on the way although it is not yet in the Gubment's figures. Then I saw this post by  Joseph Barbuto in a chat room:

"But keep in mind — the biggest ingredient by cost in a box of Corn Flakes ain’t corn — (not cardboard for the box) it is labor. This is true for many processed products — including food — the biggest input costs are labor."

Good point and I'll certainly agree that there is no inflation in labor costs.  Just ask my accountant when the last time I raised my prices was (hint - never and I started in 2001).

Wednesday, December 22, 2010


The study of the stock market to detect social mood - and vice versa.  From the latest Socionomics Institute release - The Socionomist.
This shows the Dow priced in gold. My forecast remains for higher gold so what will that do to this chart?


The banks are in self preservation mode.  
- Eric Von Baranov

Nothing we did not know and nothing that wasn't dropped like a bag of hammers on Count De Money, er, Henry Paulson back in 2008.  But the stock market changes its mind like a girl changes clothes. (Don't flame me, ladies, its a Katy Perry song).  Check out this chart of the Banks ETF. 
No matter what I think of the market or banks or anything else, this is a resistance breakout following a small pause.

Monday, December 20, 2010

Beware the SLX

Today's column is about the steel sector, its momentum conditions, breakouts and potential upside targets. Since it is not yet on the site I'll have to limit the details but you should see it by 4-4:30 NYT at Barrons.com. Click on my picture to read it (free).

Anyway, they like me to use ETFs whenever possible and there is one you might think is a good one - the Market Vectors Steel Index Fund (SLX). When doing the research, I noticed that the ETF and the Dow Jones Iron and Steel index did not line up. Was it the "iron" part? Nope. That's more of a technicality as just about all components are really iron and steel.

Digging further, I noticed these components of the SLX - Rio Tinto, Vale SA, Cliffs Natural Resources and Foster.  That's three miners and a rail/construction stock (Cliffs does mine iron ore). Rio and Vale alone make up 24% of the index's weight, too.

That does not mean the ETF is useless and it is no more useless than the HGX index is for the housing sector (it contains paper, construction materials and a mortgage stock aside from the homies). You just need to know what you have and not just assume by its name.

You know what happens when you assume? No, you can make an a** of yourself and leave me out of it. What happens is you increase your risk with faulty analysis that may work for a while just to sucker you in to making ever bigger bets. .

Friday, December 17, 2010

Interest rates - the long-term view

I found this chart at multpl.com.

I would not call it a bond bubble but it sure does look as if rates have bottomed to me.

Thursday, December 16, 2010


Channel NFL coach Jim Mora when you say this.  Belgium? Belgium? You gotta be kidding me!

Word this week is that S&P just put Belgium on a negative watch this week.* So they don't have a government in place (for real). But how can this be? It is not one of the PIIGS! We expected Spain after Ireland after Greece. We expect Portugal to be the next domino before Italy. But there is no "B" in PIIGS.

How about this - BPIIGS?  It has BP in it and that company is facing its Gulf spill legal troubles now.

Or BIPIGS? Sort of looks like two little swine.

Now before we panic, we are talking of a ratings cut from AA+ to possibly AA.That is still something you'd put in Grandma's portfolio.

It is not the cut that is the problem. It the fact that it is a country most of us did not consider. We know Greece is already junk. And we kind of knew about Hungary just one level above junk (PIIGSH?)

It's a good thing Turkey, already in junk status, is not in the EU. Rearrange the letters and it is not a very nice word - PIIGSHT.  Although, it does cut to the chase.

* Capital city Brussells, home of the EU, was downgraded in June

Wednesday, December 15, 2010

Hindenburg Schmindenburg

Well, it happened again. The dreaded Hindenburg Omen flashed Tuesday but curiously it went rather unnoticed - except by professionals it would seem.

When it happened in August, it got a lot of people's panties in a bunch. Glenn Beck did a rather lengthy segment on his show (I wrote him to point out some problems with the analysis but never heard back). And self help guru Tony Robbins recorded a YouTube message urging people to sell stocks.  Oy, when non-financial people pick up on something financial "that trick never works" (Rocket J. Squirrel). It is the basis for the Magazine Cover indicator. And it proves that what everyone knows is not worth knowing.

The pros debated the signal today and the biggest issue was the composition of all those new 52-week lows. A lot of them were bond funds, ETFs and worse - inverse ETFs. So did it matter?

Well, maybe not for the signal but perhaps because a sagging bond market is probably not a good thing. Bonds know better than stocks.

And that brings me to today's Barron's Online column where I point out that most of the BRICs are not doing so well lately. Aren't they the engines of global growth? Well, yeah. So what's up with that?

To me, it is another bit of evidence that rose colored glasses lead to disaster.  Of course, you half-full folks would say that the USA is outperforming the so-called engines and that means we are on the mend.

No conclusions here. Just food for thought.


Tuesday, December 14, 2010

Deflation - not

From the St Looie Fed (hat tip to the Longwaves chat room)

Does this look like deflation?

The technician in me sees either a bear flag or a dip to the rising trendline. But if prices went up parabolically then more often than not they come down in a mirror image.  That's not there. Therefore, I'm stickin' with commodities and even stocking up on some (I'm not a survivalist wing nut) non-perishable food. You never know.

Gasoline rising

In case you are a city dweller and don't drive, here is a little tidbit from my local village email newsletter about gasoline prices.

The Hess located at 42 Jericho Turnpike offers the lowest gas price per gallon in three categories:
- They offer the lowest regular grade at $3.239.
- They have the lowest plus grade at $3.339.
- And they have the lowest premium grade at $3.439.

Check out your own area and compare to the rest of the country at gasbuddy.com.  Click back to the home page for more intersting stuff - like the heat map.

Is it me or, with the usual exception of Hawaii where everything costs more, does this list look like all the blue states are piled close to the most expensive gasoline places?

And who can explain why Alaska is the number one most expensive state on average?  Isn't that were the oil is? Or do they ship it to Louisiana for refining and then ship it back?  I would not put it past anyone.

Monday, December 13, 2010

Investors don't have a chance

I lamented over this one jusst after it happened so consider this a follow-up.

With trading action like this, regular investors do not have a chance. And now it has a textbook resistance breakout just to rub it in our faces.

Friday, December 10, 2010

The public does not understand bonds

This is from a Casey Research email:

So, what happens to bond prices if interest rates rise? FINRA (the Financial Industry Regulatory Authority) recently asked that question as part of a random survey of 28,000 folks around the country. They were hoping to get a sense of the average person’s level of financial acumen.

The results are in:

“If interest rates rise, what will typically happen to bond prices?”
  • 18% – They will rise
  • 28% – They will fall
  • 5% – They will stay the same
  • 10% – There is no relationship between bond prices and the interest rate
  • 37% – Don’t know
  • 2% – Prefer not to say

And so, out of the entire sample, only 28% actually understand that rising interest rates are like arsenic tea to bonds.
You can fool some of the people all of the time.
- Abraham Lincoln

Thursday, December 9, 2010


When typing the title to this post, I showed my hand-brain disconnect and typed minus. Same letters, interesting meaning.

The conversation about state defaults and municipal bonds failing seems to have died down. Build America bonds, whatever they are (federally subsidized taxable bond sales by states and municipalities), are not part of the tax plan. California's Governer Moonbeam is supposed to be giving citizens a choice of higher taxes or lower spending - sure, I'll pay more or get less!  Blue states, which send in most of the money to DC, are whining about sending more  than they get back yet want to tax the rich more.

Blah, blah, blah.  I turn to tube off as soon as any politician starts with the partisan speak.

You know where we should get out cues? The market. Check this out.

The muni-bond ETF had just what I called it last month - a dead cat bounce. How high will a dead elephant bounce? A dead 800-pound gorilla?

Funny, the market is pure capitalism, isn't it. And it tells us the truth.

Monday, December 6, 2010

Housing peak 2011

This is from Tom McClellan (yes that one). He does a lot of work on offsetting two markets to see relationships, sort of like overlaying the birth rate with recession offset by 9-months. If you can't go out to a fancy restaurant, well, you know.
According to this chart,  housing stocks should peak in the middle of next year. Of course, nowhere near where it was a few years ago.  Believe it or not.

Do these guys get it?

When I first got the email for Delta's private jet service I thought "Are these guys kidding? Do they read the newspaper? Most people can barely afford a regular sardine can seat let alone "only" $27,500 for five hours of private jet time.

Then I thought about it a bit more. Who is the customer for this stuff? Nope, not Joe Sixpack, Joe The Plumber or even Mama Grizzly. It's the super rich and for them there is no recession. So be it. I know I can't hop on a private jet for a comfy ride down to South Beach with the crew. But there are people who can.

So, perhaps Delta does get it. Well, some of Delta anyway. Their marketing people must have been left back a few grades.

First of all, the email was addresses to my 15 year old daughter who, like me and everyone else in the family and  your family, has her own frequent flyer account. OK, so Delta did not scan ages when the created the mailing list. I'll let this one slide.

But they do know how many miles someone a has now and has over a lifetime and my daughter flies to Florida at most twice per year and not always on Delta. There is no way she has anything close to elite business flyer status and the possibility that she'd have legitimate interest in a private jet.

But for you, dear reader, if you've got the time, we've got the beer. Er, I've got the trash and you've got the cash (Joe Jackson - I'm the Man 1979).

Print this out and stuff your favorite stocking - http://deltaprivatejets.com/holidays.asp

Friday, December 3, 2010

Why did the market rally this week?

This is the question everyone asks. Have you ever noticed that the financial media always has an answer?The market rallied because the Fed this and earnings that. An analyst upgraded stock X.

Here is something I used in a presentation I did on dealing with the media (if you are so inclined to be quoted by it).

"Stocks rallied on rising oil prices (economic demand)."
The next day -  "stocks fell on rising oil prices (inflation)"

The NY Times uses the phrase, "all the news that's fit to print."  I cannot remember who said this, and it could have been Mad Magazine, "all the news that fits, we print."

Get the point? Journalists get paid to fill a column so they have to say something.

I was asked by a colleague this week why stocks rallied. Was it a knee jerk reaction or is the economy really on the mend. Let's assume everyone believes the stock market looks forward - which I do. How can something that happens today effect something that moves on events that are expected to happen nine months into the future?  You get that point, too.

Here was my response:

"Stocks rallied because all the supply that supposedly came out this week thanks to economic (Ireland) and geopolitical (Korea) concerns was handily absorbed by demand in the market. It was also an affirmation that the liquidity pump (EU/IMF) would remain open (sentiment).

The market will reflect the real world one day - triggered by the liquidity pump shutting down. Until that happens, stocks are for traders or long-term investors willing to ride out another cyclical bear."

Let me close with another excerpt from my presentation: 

"U.S. stocks will rise next week as Wall Street bets that corporate bellwethers including Citigroup, International Business Machines and Google Inc. will post stronger-than-expected financial results, strategists said."

- uh, fellas, if they expect them to be better then they won't be better than expected.

Thursday, December 2, 2010

Another reason for higher interest rates

This was posted by Boris Simonder in a pro chat room this morning.

The Eurozone bail-out fund will issue bonds next month to provide emergency loans to indebted nations.

The European Financial Stability Facility is expected to raise between €5bn and €8bn in bonds in a triple A rated deal,which will be the first bond issued by the Eurozone as one entity, to fund aid to Ireland.

Bankers expect the bonds will price between 50 to 90 basis points over German Bunds. However, German investors have warned that the bonds could “crowd out” the German Bund market, which saw the first signs of stress this week from the Eurozone crisis.

One hedge fund manager said: “Why would you buy German Bunds, if you can get extra spread on another bond that is risk-free?


Wednesday, December 1, 2010


You make the call.

Oh billions of dollars (euros), is there nothing you can't fix?
- Jon Stewart (The Daily Show, c 2008)


My wife will kill me for writing this but ever since gold backed off 1440 she has been on my case to sell her baubles. When it dropped to 1330 she was in "I told you so" mode.

But as we watch the stock market rally out of its correction today, gold is once again spitting distance to 1400. Another example of how you can find sentiment analysis everywhere (she is not a finance person).

I'll say it again, gold is heading to 1500 before I have to worry about my next forecast.

To infinity......and beyond!
- Buzz Lightyear

Monday, November 29, 2010

Kick save and a beauty

Sportscaster Marv Albert used to say that during NY Rangers games when the goalie made a particularly nice save. The Dow cratered at the open on the Ireland bailout but came clawing back in the afternoon. The S&P 500 actually went into the green in the final hour before easing back into the red. And the trannies went green and stayed green. Al Gore would be so proud.

The point? The stock market remains incredibly resilient in the face of bad news. One day, the piper will appear and he will be pissed about not getting paid for so long. But until that day, stocks do not equal reality. Angela and Co. kept the EU liquidity pumps open and they don't even have a helicopter.   Liquidity does equal rising stock prices.

Tuesday, November 23, 2010

Non-market musings

Sorry, gang, this is another of my philosophical musings based on what is happening in real life.  If you just want market comments, you will have to wait until after Thanksgiving.

Yes, everyone likes to put out a seasonal blog post on giving thanks and sharing what the holiday means to them. Some don't even talk about buying the day before Thanksgiving and selling the following Monday.   :-)

I work in a home office most of the time and as you can imagine life creeps into the business day. Of course, the business day does it fair share of encroachment on life, too, such as writing an article after dinner and before Monday Night Football kicks off - while the kids need shuttling to after-school activities.  Today, I had to hang around the house while workers installed new shower doors in the bathroom.

So, I am in earshot, trying to catch up on emails and following up on presentations. Planning for future events and marketing initiatives is a full time job by itself.

After a few hours of trying to tune out the drilling and banging emanating from the bathroom, something amazing started to happen. Several of the seeds I had sown weeks, months and even years ago suddenly came back to me as live opportunities.

The guy I have been after for possibly four years on a firm-wide research deal passed my latest proposal off to an underling who contacted me to get started.

An organization with tens of thousands of members wants an article for their magazine.

Two different organizations added me to their list of guest bloggers.

No contracts yet but I got a healthy dose of encouragement. Keep plugging. Some days absolutely suck and maybe one quarter of the time I feel like I am moving backwards let alone merely stuck in the mud. But as someone said - maybe it was even a cartoon I saw years ago - if your don't ask, you don't get. The NY lottery says, "you have to be in it to win it."

Keep yourself in it. Keep asking. Keep working and something will happen. It may not be exactly what you planned but opportunities are everywhere - under rocks, behind trees and sometimes at the bottom of a steaming pile of poo.

What's the alternative? Giving up? Whining about the economy? Blaming someone else?

I'll close with this quote from a technical analysis chat room posted by my favorite re-tweeter Alex Spiroglou:

"I've missed more than 9000 shots in my career.
I've lost almost 300 games.
26 times, I've been trusted to take the game winning shot and missed.
I've failed over and over and over again in my life.
And that is why I succeed."
- Michael Jordan

A Happy Thanksgiving to all!

Monday, November 22, 2010

Not Peaceful Uneasy Feeling

'cause I gotta peaceful easy feeling
and I know you won't let me down
'cause I'm already standing
on the ground
- The Eagles (1972)

Ireland won't take it then they will. But uh-oh, now Portugal and Spain are waiting. Will there be enough money? How much money is there in the EU, anyway?

Charles Payne wrote this morning:

"When it's our turn where will the bailout come from? I know India would like to pick up the pieces at fire sale prices, look how much they overpay for the assets of their former colonial master. China can't wait to take a victory lap on our carcass, and Brazil would samba through the night to get a piece of the action as well. But, the thing is, combined all the hot economies of the world couldn't bail out the United States"

In other words, there is not enough money on the planet to get the job done. So why oh why is the dollar rallying? Is it still the safe haven?All that posturing out there to replace it as reserve currency seems to be a lot of hot air.

This airport scanning/groping thing is really worrisome, too. Does the government really think it knows best? And do scanners pick up bombs shoved where the sun don't shine? Or even plastic explosives?   They sure do pick up urine bags on bladder cancer survivors.  Watch out! The terrorist will pee on you!

They seem to be doing their best to squash business at every turn, from taxes to regulations, all in the name of recovery and/or safety.

I am torn between believing in the power of the USA to wake up and fix things (hence the world still beating a path to our door) and blind politicians who cannot see what is happening.

Let gold come down to my buy stop.

Friday, November 19, 2010


I am in Orlando today to speak at the Advisors MoneyShow.  Every February, I am down here to speak at the "regular" MoneyShow and there are usually 3000 attendees. For the Advisor show,they tell me 800 people signed up and only 300 are here.  It makes senses that individuals would swamp advisors at these things but 10 to one?   Sad.

The Peabody Hotel is hyooge (that's huge with an affect). I still cannot figure out where things are and what is their fascination with ducks? Strange. Across the street is the convention center and it is the biggest building I have ever seen - not in height but in end to end length. Someone told me one mile across. Maybe but it is huge-er than huge.

Back in this hotel, it feels empty. I walked around yesterday afternoon and barely saw a soul. So much for a recovery in this business.

So when I saw my bill for an overnight stay, my jaw dropped. It was disgusting - special rate of 239 for the room, state sales tax, county convention tax, convention surcharge and then a "resort" fee. Up to $287 for the sleep.  I did not use the resort, did not see the free coffee and still have seen the ducks they parade around the lobby. OK, I used the free internet but at that rate it better be included.

And try to grab a bagel and coffee. I could grab a coffee and overpriced pastry. Or I could sit down at a restaurant for a full meal. I enjoyed my stay in a Marriott Courtyard better.

Ducks aside, it is no wonder advisors stayed home.

Wednesday, November 17, 2010

Inflation in Id

The Wizard of Id
by Parker and Hart

Is this in the CPI? Or is it considered to be food and therefore not "core."


They call him Flipper, Flipper, faster than lightning,
No-one you see, is smarter than he,
And we know Flipper, lives in a world full of wonder,
Flying there-under, under the sea!

- from the 1964 TV show "Flipper" (a dolphin)

What other reason could there be for such demand for the General Motors IPO this week? They already raised the offering price range. And now they've raised the number of shares to make this the biggest IPO of all time - bigger than the monster one in China!

Do you buy shares because GM makes great cars? (I own a Chevy Traverse and am quite happy with it). Do you buy because the economy is on the mend?

Or do you buy because of the buzz allowing you to flip your shares on day one and get out of Dodge? Oh wait, that's a Chrysler brand.

But it's all moot anyway because Average Joe won't be able to play, anyway.

Tuesday, November 16, 2010


I see a lot of headlines today about the weak euro boosting the dollar. Problems in Europe have resurfaced, not that they ever went away, and global jitters are back in general. But look at this chart:

This is the Euro index (E) - a basket of currencies vs. the euro just like the US dollar index (DX) is a basket vs. the greenback. But E is not the opposite of DX. And they do not pay homage to each other in the same way.

In English, DX is half weighted to the euro but E is only 1/3 weighted to the dollar and just about the same weight to sterling.

So, to say the dollar is getting boosted by the euro is not quite right. The E index is flat on the day as I write this and even spent a good chunk of the  European day in the black.

Monday, November 15, 2010

Retail and GM

Retail data was good today and the stock market responded with a rally. Unfortunately, retail itself did not. Yes, some superstars such as AZO stayed firm in nosebleed territory. ODP was up big but after a crappy 2010 who cares?

The point is that one sector sparked the rally but it did not participate in it. Seems strange to me.

This week, Government Motors will IPO back to General Motors and my skin tingles with antic.................

........pation (Got that Brad and Janet?)

Coincidence or not - the biggest retail gainers today are the above mentioned AutoZone, Pep Boys and Genuine Parts - auto parts retailers, all.  Are they telling us something about GM quality?

I have no idea why used auto dealer KMX is soaring.

Friday, November 12, 2010

Wild Week

A lot of bombs dropped this week on Wall Street and we can begin by just digging in.

Boeing suffered a big problem with its brand new product and tanked
Apple broke its trendline
Gold and Silver bonked big time
Oil had a fake trading range breakout
Cisco kid was NOT a friend of mine (name that group) but Juniper (direct competitor) sure did like it.
Bonds of several ilks broke down 
And, of course, China, which was to blame for only the oil slick above

On the plus side, the PIIGS were flying on Friday as the EU backstopped them.

Wednesday, November 10, 2010

Yield Wave

While I wish the "Yield Wave" were the name of a new analytical technique I discovered it is more mundane - and negative.

In today's Barron's Online column, I talk about the wild ride all markets took Tuesday and what it means going forward. Towards the bottom of the piece I talk about Treasuries and how the long bond has been trending lower for several weeks.

It was no secret that the long end and short end of the curve looked different with the short yield chart heading down, down, down, the middle holding its ground and the long yield moving higher.Today, before the Fed said it would basically do what it said it would do last week - buy billions (use a Carl Sagan accent) of dollars worth of Treasuries - the 10-year yield had a tentative inverted head-and-shoulders breakout. It already had a breakout and test of a falling trendline so this was more evidence that the bond rally was over.

Then I talked about the wave spreading over the short-end, too, with the five-year sporting a bullish RSI divergence (did not say that last part in the column) and the two-year edging higher all week.

The yield curve is on the move even though it does not look like much on an actual yield curve chart just yet.

All of you bond market spread junkies are encouraged to chime in with your take.

Tuesday, November 9, 2010

US a manipulator?

Is this why the Fed and Treasury are playing this game?

From MarketWatch:

The U.S. has been after China to loosen the peg on Yuan against the Dollar.  So far, China has committed only to a gradual devaluation of the currency into wider free-exchange bands.  That may take too long, and this move to print money to buy up assets may force China to unload currency in that peg.  Even if China holds on to its Dollar horde, the impact may be the same.  Where this becomes a conundrum is that China would likely unload Treasury securities along the way and it would likely buy even fewer Treasuries as a percentage of its Central Bank assets ahead.  That would imply that China could keep selling and large portions of the money freshly printed just went to buy up the debt held by China.

The FOMC wants inflation a bit closer to its 2% implied target, far higher than what has been seen.  With the FOMC keeping short-term rates low at near-zero and with the Treasury increasing its balance sheet by buying Treasuries, this forces investors into risk-based assets.  If you can magically get inflation to 2% and short-term and intermediate-term Treasury rates are so low, what does that do to real returns on an inflation-adjusted basis?  Yep, negative real rates of return

Fed Forcing China's Commodities Buying Binge?

From Phil Flynn, energy guy at www.pfgbest.com

How will the Chinese get even with us for our dollar printing ways? Well the easy answer is to just buy more commodities. The hot money is pouring in as the dollar gets wacked and commodities take off again.

Hedge funds bullish positions in oil hit a 4 year high as they have no other choice but to react to the bullish actions of the Fed. No one should blame speculators for driving up prices because the Fed gave the hedge funds no choice.

The Chinese have no choice either as the Fed action may force them into another commodity buying binge. The Chinese are already stockpiling oil and panic buying in cotton and other commodities may start to take the place of buying US debt.

Monday, November 8, 2010

Gold is the real deal

Everyone is talking about the weak dollar and strong commodities relationship but there is more to the gold rally than money falling from helicopters.

To wit: this is gold priced in euros - the major component of the US dollar index. That is a short-term upside breakout in a long-term bull market. Dollar schmollar. Gold is going to 1500, next.

To infinity....and beyond!

Friday, November 5, 2010

It's the liquidity, stupid

(With no apologies to Clinton campaign strategist James Carville)

It's the massive deficits that are bullish not fibonacci ratios as such babble.
- Larry Williams, trader extraordinaire (and really generous guy)

The Church of What's Working Now

The question is, "what changed in the mid-1990s that made this indicator work? Not the bull market/bear market change. 
Interestingly, it was the last time the Republicans swept into power. It was also the end of a bond market bear.

Your thoughts?

Wednesday, November 3, 2010

Social Media and Scams

This may not have to do with your portfolio but it does have to do with your wallet. Last month, we got a call from detective with Westchester County police asking to speak with my 15-year old daughter. Why?, we asked.

We are trying to reach XXX (my 18-year old son), he said.

Again, why?

"He was involved with a missing gun and we need to ask him some questions."

But why didn't the detective just ask for my son directly? Clearly, this was a scam and when pressed for details the scammers hung up.

Fact - our daughter spends a lot of time in Westchester with her friends. So how did this scammer know the few facts he did know? We think it was Facebook. After all, my kids are FB friends and the list the same high school. My daughter lists her friends and a good chunk of them are from Westchester.

Getting my point? Your personal info is out there for anyone to piece together. I admit to tracking down some old high school friends using news and clues found on the web although I have never scammed them.

Then just today my mom gets a call. In gravely voice, "hello Grandma, it me, your granddaughter and I got into an accident.


I was with my friend from Florida. (Fact - we lived in Florida a few years ago).

"Who is this? XXX?

Yes, its me XXX. (Mistake - my mom offered up my daughter's real name).

Anyway, since my mom is savvy enough, she realized it was a scam but a friend of hers fell for a similar ruse several weeks earlier. Her son was actually in Europe so it was possible he really did need money wired "right away."

I love Facebook and use LinkedIn often. I am also very wary about posting personal information - including where I might be taking a vacation - and anything that might come back to bite me later - such as photos from that party in college. The Internet is forever.

PS- We called the local police who basically said to be careful. Then we called the Westchester police who at least admitted there was little to do and that it was not the first time they've heard about it.

PPS - Be wary of unknown people trying to "friend" you. We heard of a jilted boyfriend getting into the girl's account and friending everyone to try to squeeze our some information.

Tuesday, November 2, 2010

CNBCee ya later!

Uh oh! Viewership is down.


The article ends with this:

"The decline could suggest that investors are turning to rival networks including Bloomberg TV and Fox Business Network. In addition, stock related video content on the Internet has gotten better over the years...."

I don't believe that. Retail is gone, goodbye, kaput, farblungen.

This dovetails with my posts that retail stock trading has jumped the shark (August 2009).

Quote of the Day

This is feeling to me increasingly like 2007 when I knew a disaster was building but we all had to chase the last 4%.

-  Mike Anderegg (from a chat room)

Monday, November 1, 2010


Here is a chart of the milk futures contract I mentioned in today's column.  Note it has been rallying since early 2009 after falling during the bear.
Take that cheeseheads!

Sunday, October 31, 2010


From Jeanette Schwarz Young at the NYBOT - Here is a good question for you to ponder; if there is no inflation, well not enough to increase social security payments, why is it that health insurance costs are appreciating about 18%? Which one is wrong, they can’t both be correct.

Funny how grain, cotton and palladium prices are soaring on our no-inflation environment.

Friday, October 29, 2010

A Snoozer

If things end up where they are (its noon) then the market will notch its seventh consecutive doji candle Open and close at the same price). One doji means uncertainty. Two is a pretty good signal something is up, as in "in the works."  But seven?

Think of volatility. When it gets very low you can bet the market will do something to make it high and that cycle repeats. Seven flat days is as low in volatility as we can get these days so watch out next week when we finally find out who will be in Washington and how much stimulus the Fed will fling from the helicopter. 

Maybe my VXX will do something for a change besides lose money.

Thursday, October 28, 2010

Rare Earth ETF

Rare earth metals have been the news about a week when all of the sudden a new ETF is coming. These metals are hard to find in mass quantities and are used in many applications. Of course, China is hoarding them as they seem to be doing with everything (including our debt, but I digress). Valuations of penny stocks in the industry necessarily soar on ETF news but so does the odds of the craze reaching its zenith.

 Call it jumping the shark.

Investors buying this thing may view it another way

Wednesday, October 27, 2010

I am past retirement age somewhere

The retirement age in France was raised from 62 to 65 and of course they rioted. Maybe they can move to Turkey and get on the gov't dole at 45.  Look what the specter of a European migration to higher retirement ages did to the Turkish stock market (via an ETF):
Australia is at 67. Their currency is hot. And they avoided a good chunk of the financial crisis. 

The more I read about Oz, the more I want to check them out in person. Vegemite, anyone?

Tuesday, October 26, 2010


We're bankrupt but who cares? Pass the fritos.

Long Wave

Many of you are familiar with the Kondratieff or Long Wave. It is based on an economic cycle of roughly 50-60 years.

Here is an observation from Eric Von Baranov of the Kondratyev Theory Letters (yes, there are as many spellings of this as there are for Khadafi).

Classic Long Wave theory has assumed a liberal bias during the Upgrade and a conservative bias during the down grade.  While simplistic these trends tend to hold true.  Certainly Obama is more liberal than Bush II.  Yet Obama is taking heat from the liberals in his party for not pursuing Gay and other liberal issues. 

Interesting stuff. What it suggests is that we are in an up-wave now coming off the depression low.

Monday, October 25, 2010

Bad Comedy

Warning! Philosophical blog post. Read at your own risk (no politics, however)

I went out Saturday night with my wife and a couple we have not seen in many months even though they live around the corner. After a rather good meal at an Afghani restaurant we went next door to another restaurant that started a comedy club in their attic (or that's what it seemed to be).  The roster of comedians, and I use that term loosely, was less than high caliber. George Carlin would have kicked their butts from heaven.

Anyway, after suffering through countless poopy jokes and humor that might have had a chance in a frat house, the headliner, and I use that term loosely, too, said that no matter how the comedy was it took our minds off our problems for a little while.

So where am I going with this? This is going to be one of my rah rah, human spirit posts where we the people can and will pull ourselves up from dust. We may have been asleep at the switch while things went awry but we are now working hard to bring ourselves out of it.

I am talking about the individual level, not the government. The comedians that night bombed but they were working really hard on stage. You could see it in their eyes that they were not phoning it in even as the audience was getting ready to hurl vegetables at them. The sweat flowed but they kept plugging.

No, they did not succeed this time and neither did we over the past few years. But they kept trying and one day, likely with the help of someone who could actually write a joke, they will find their way.

Basically, I am saying the economy will recover and the Western world is not going to implode. The movie ad now making its rounds showing China owning the failed USA in 20 years is not going to happen.

I cannot reveal more now but I have a column coming out next week in MarketWatch showing a technical reason why we are not going to disappear.

We had to hit rock bottom before we started to make the changes needed to recover.

Friday, October 22, 2010

More confusion

So outdoor apparel maker Columbia Sportsware gets clocked on some earnings/outlook disappointment.
It hit resistance days ago so that wasn't it. Bear market behavior? Could be but when you look at Netflix (NFLX) and Chipotle Mexican Grill (CMG) on their earnings this week you'd think bull market behavior was just getting its March 2009 kick-off.

The market seems to be splintering into jocks and nerds. The jocks, like Netflix, are loved. The nerds get wedgies.

Thursday, October 21, 2010

A fish story

There are times - far more than I'd like - when I get it wrong. It happens, I learn, I move on.  Anyone who says they get it right all the time is a liar.

But this week I did get it right and made zero money. I had a buy trigger on EBAY on a pullback. The stock broke resistance last week and due to its big move I wanted to let it cool off. A dip down to test the breakout was the way to go and I set the trigger in the newsletter at 25.10.

As you can see, it took off without me and worse, without my subscribers. All for a lousy three cents.

Since the newsletter is daily, not intraday, I had to set a firm trigger. Traders might say they saw momentum shift on 10-minute charts with a volume surge right at the low and could have bought. Be honest - would you seen something near the low of the day to tip you off?

In retrospect, perhaps the trigger was too conservative. It did not seem that way Tuesday when the market bonked as there was a chance it would keep going lower. It did not seem that way Wednedsay when the market was up big and this stock just sat.

With the benefit of hindsight, I see a rather beefy rebound from the lows Tuesday but again, who really would have had the nerve to step in to buy a stock Wednesday that was left in the dust?

As they say in the locker room - @#$%^

Wednesday, October 20, 2010

Rebound City

Turnin', turnin' love keeps a-burnin'
like a fire in my heart when we're apart,
but when we're back together,
you keep changin' like the weather.
Whoops! Now up and down like a yo-yo.
Just like a yo-yo.
- The Osmond Brothers (1971)

Got that yo-you feeling in the stock market? How about in the dollar?

Stocks got hammered Tuesday but it was time for some religion as I said in today's Barron's Online column. And now let's talk about China. Monday, I wrote a column touting China as a good place to be - money wise - albeit a short-term overbought place. Then they go ahead and raise interest rates sending Chinese stocks here reeling.

It is a good thing I am getting numb to the market throwing eggs at me the day after I write something. But the long-term analysis trumped the short-term knee jerk and most things China rebounded fully. A few stocks I mentioned Monday even hit new 52-week highs today.

I won't break my arm patting myself on the back. I was two weeks and a big move early on calling for the dollar bounce. And the long awaited selloff in gold went just far enough to stop me out even though I think 1500 is coming.

And need I say I can't break away,
you control every little thing I do.
I used to be a swinger,
until you wrapped me 'round your finger....
Just like a yo-yo

But let's retreat into the only market that makes perfect sense. Two-year yields hit another new all-time low.

I used the word "kerfuffle" in the previous post. When the liquidity pump stops pumping, try "degringolade" on for size.

Look that one up in your Funk & Wagnall's
- Dick Martin

You trade this one!

Apparently, there was a kerfuffle in the health care sector.

Tuesday, October 19, 2010


No, not American jobs but Apple's Steve Jobs. Look at this pic and tell me you are not a bit concerned.
This is not the look of good health.

Monday, October 18, 2010

Not so Delicate China

Today's column is on the Chinese stock market and as they said about the country, the giant awakened from its slumbers on the charts.

Yes, things are a bit overheated short-term. And yes, some of the leaders, like Baidu, sport insane trailing P./E ratios. Yet, it looks as if the market will shrug off its bearish reversal following seven days up and nearly a 12% gain to the overnight peak.

Check out the GXC ETF. A new high even though the home market - China - was down overnight.

Sign of the Times

I belong to Costco and never got around to getting off their email list. Look what they sent me today:

For a mere 35 benjamins, you can keep your family of four alive in your Montana cabin while the country descends into chaos. Does it come with dehydrated water to replace what will no longer be served up by Poland Spring?

Friday, October 15, 2010

Dow down "only" 50

Today's action exposes the major flaw in the Dow Jones Industrial Average, other than it really being about half industrial stocks. The Dow is price weighted and that means the higher the stock price the more influence it has. For example, the highest priced three stocks are down about 0.5% today on average. The lowest priced three stocks are down 5% at one point before AA came back.

Overall the Dow is down less than 0.5%. This masks the damage done to the banks and part bank GE.

One more reason not to look at the Dow when assessing market trends.

Thursday, October 14, 2010

Investors are stupid

That's basically what the technical analyst's Satan said. He thinks that just because the masses cannot time the market that it cannot be done. Considering there are a little more than 1000 CMTs (chartered market technicians - TA's CFAs) in the world perhaps Burton Malkiel needs to attend a few meetings.

The idea that the masses think one way just at the wrong time is the basis for sentiment analysis and a whole body of technical knowledge.

But, the 10th edition of "A Random Walk Down Wall Street" is coming out now. Talk about timing!  Come out of the closet, Burtie.
Sorry, you'll have to wade through a few ads to see Steve Forbes' interview with the guy.

Aye Phone

Verizon users may get their wish. I know that my son - an Apple phreak - is the only member of the family on AT&T and would be a whole lot cheaper if he could join our Verizon family plan.

Check this graphic out from Slate.com on when it might happen:

Funny - both stocks look similar since the July low although we can make a bear flag argument of the ghost of Ma Bell.

Tuesday, October 12, 2010

Quantitative Sleazing

I had this on my Facebook page last week after the jobs report.

A quote from Charles Payne (from Fox Business - one of my favorite commentators)

"Today's jobs report is so awful its got traders giddy about the prospects of an avalanche of cash coming into the system (think QE2)."

Today, the Fed indicated that more easing is on the way in the short term. And stocks went up again. So far, it is a muted reaction. Perhaps all of this was already priced in days ago (as in last week) and this is just a little diversion on an otherwise boring day.

Whatever it is, the piper is running up a mighty big bill.

Waiting for Godot, er, the Fed

It's 2:08 here in NY and volume is pitiful. On track to be less than pre-labor day...

...unless we get a Fed bombshell.  Updates after they speak. The market hopes it will be from the helicopters.

Monday, October 11, 2010

Take an analyst to lunch

If you have ever wanted to corner a "name" on Wall Street to pick his/her brain on the markets here is your chance. It will cost you but I believe it is tax deductible.


Last year, lunch with Robert Prechter fetched 7 grand!  This year, the pickings are much, much more attractively priced.

Robin Griffeths in London is still 300 bucks. You will make that back many times over.
Stan Weinstein in Ft. Lauderdale - ditto
Peter Eliades in San Francisco - her might even play some piano as you chat

John Roque in NY - you may not know the name but you should
Louise Yamada in NY - legend
Steve Leuthold - legend
John Bollinger - legend

Get your company to pay and call it an investment in education. You cannot go wrong.

Disclosure - no compensation for me


Today is a pseudo holiday and some of the markets here (stocks, commodities) are open and some are closed (bonds and most forex). Why? The banks take the day off.

So, action, for lack of a better term, is slight and I've got little in the way if insights for you here. I'd like to talk about Friday's commodities rally but that will be in this evening's column. Or it may be in tomorrow's as the editing staff is thin today.

If you have not already done so, sign up for my free chart of the day at www.quicktakespro.com. Today's was a long-term view of the old CRB index and it was hot. Jim Rogers, the bow tie wearing investor who looks like Wayne Rogers from MASH, loves ags more than gold!

Thursday, October 7, 2010

Same old

When I have nothing to say, my lips are sealed.
Say something once, why say it again?
Psycho Killer, Qu'est-ce que c'est?

- Talking Heads 1977

Yeah, gold scored a one-day reversal. It was about time as it hit my target 1350 (plus it was overbought, overhyped and in a seasonally weak period). I for one would love to pick up a few more ounces are 1275. But otherwise, there was nothing new under the sun.

Nothing new? That's right. The two-year Treasury yield dipped again to a fresh record low.

Aren't you tired of reading this from me day in and day out?

fa fa fa fa fa fa fa fa fa fa better
Run run run run run run away

That David Byrne can sure write lyrics.

Wednesday, October 6, 2010

Tweet tweet bonk

First to fall over when the atmosphere is less than perfect
Your sensibilities are shaken by the slightest defect
You live you life like a canary in a coalmine
You get so dizzy even walking in a straight line
- Canary in a Coalmine (The Police)

The MoMo stocks walked in a straight line. This is a weekly chart of F5 Networks - a superstar in the rally and one with nary a hiccup like dozens of others.

That is a weekly reversal although the week is not yet over. Down over 11% today alone.

Tuesday, October 5, 2010

Go Figure

I usually can figure out why the market makes its daily moves. Today, the Bank of Japan was at it again as they dropped rates from just about zero to absolute zero but this time the yen went up. The dollar tanked. Commodities zoomed. This one, I do not get.

The 2-year Treasury rate stayed at its record low. Gold just about hit my 1350 target (see Facebook side bar --> for more).

For what? Japan said it was going to work on its economy? After 21 years, NOW they mean it?

Dear readers - you tell me what is happening. Technically, we have no choice but to see a price breakout across the board. True, volume was its usual stinky self but I am out of objective technical arguments.Something is wrong and I just cannot figure it out.

Let's crank up the comments machine. I know how many visits this blog gets so let's share the mental wealth.

Friday, October 1, 2010

Wake up Maggie

Wake up Maggie I think I got something to say to you
It's late September and I really should be back at school
I know I keep you amused but I feel I'm being used
Oh Maggie I couldn't have tried any more
You lured me away from home just to save you from being alone
You stole my heart and that's what really hurt

The morning sun when it's in your face really shows your age
But that don't worry me none in my eyes you're everything
I laughed at all of your jokes my love you didn't need to coax
Oh, Maggie I couldn't have tried any more
- Maggie Mae
- Rod Stewart 1971

So, is that the stock market or what? The seductress for a young man. He knows it is not good for him but he cannot help himself. He buys those stocks after the open no matter what the news - good or bad. But unlike more traditional sentiment treatments, where stocks are resilient in the face of bad stuff, this time the market is going nowhere.

A lot of people are crowing about the new bull market and I've seen the term melt-up use. "If you are not long, you are wrong!" Rod Stewart continues....

You made a first-class fool out of me
But I'm as blind as a fool can be
You stole my heart but I love you anyway

Or as we bears might sing from something a little more contemporary - Wake me up, when September's ends (Green Day). 

Thursday, September 30, 2010


Still offering a no-strings, spam-free emailed chart of the day. Sign up at the website www.quicktakespro.com.

Wednesday, September 29, 2010

How do you know....

....when the market is starting its collapse?

Silly question since there is no collapse? Or perhaps silly because there will not be one?

Again, I ask how do you know? Who knew on that day in October 2007 that we just saw a high in stocks that would last at least two years?

I get the feeling that gold is starting such a move - only to the upside. It has been too strong and too resilient in the face of some fierce arguments that it is a bubble or that the GLD ETF is self propagating or that it cannot possibly grow any more. Or that it costs too much to hold. Or that it has not use other than to hold. Or that there is deflation.

Yet day after day it moves higher.

And bonds are not budging. And the two-year yield is still near record lows. And the yen has nearly come all the way back from the abyss of silly government intervention.

So I ask again, how do you know?

I don't. I just have a feeling that something somewhere is going to spook the herd and the Dow will drop 1000 points.

The good news is that it will scare the pants off everyone and set the stage for the real bottom.

Sentiment quote of the day

Ma and Pa are not the first stage or even boosters of a bull move--more like the thrusters when this thing is already in orbit.

- ewave@cox.net (why doesn't everyone attach their names to their email addresses?)

Tuesday, September 28, 2010

Hussman's view

John Hussman's view:

Presently, our valuations measures suggest clear overvaluation (our estimated 10-year total return for the S&P 500, based on a variety of models including the operating earnings model presented a few weeks ago, is only about 5%-5.4% annually), market action is strenuously overbought, market internals are relatively positive, but economic pressures are still negative, and sentiment is once again bullish enough to define an "overvalued, overbought, overbullish" condition.
Real or photoshop?
Who cares? Technical analysis geeks need a laugh, too.  This one made its viral way to me from parts unknown.

Monday, September 27, 2010

This is messed up

If you think the stock market is rigged here are a few charts to stoke your fires:

Arena Pharma - This sector is always jumping on news or lack thereof. This one had FDA stuff pending and then it was not granted. Ouch!

Satyam Computer - This one was an Internet darling from India way back when. Supposedly, management liked the auditing reports but a few days later they say they would delist US-based shares. Doh!

Adobe Systems - Jumps on news Apple will let them in on the iPhone gravy train and then they release their numbers. How is the small investor supposed to cope? Not stop orders. Options? How about cash at zero percent. At least you won't lose.

Strike that. (Fiat) Cash is trash.

Friday, September 24, 2010

Jackie Gleason, CMT

...And away we go!

Jackie Gleason's tag line applies to the mood on Wall Street today. After a breakout and test, the S&P 500 is back in rally mode, at least as of 11am NYT Friday. Why? Not durables goods orders although it was better than expected.

It was Germany, where they breathed a sigh of relief that Europe's backstop was not facing a near-term  growth slowdown. One report on business sentiment unexpectedly rose in September.

This just reinforces the idea that multinational companies here - the ones driving the rally - are doing OK while the rest of the US economy flounders. It is the difference between the stock market and the economy. Domestic unemployment does not matter - for now.

The tanking dollar does not alter that theory. After all, it helps our multinationals export their wares.

So, I should be bullish? The tape is up, that is for sure. But there is something about gold being at record highs with no inflation. And even though bonds may have taken a little hit today, the 2-year yield broke down to record lows this week.

Stocks may seem healthy but other, smarter markets say otherwise.

Thursday, September 23, 2010

Test Time

For the minions cheering the upside breakout of the S&P 500's trading range, today was either the best thing that could have happened or the worry that will keep them up all night tonight.

With today's roller coaster ending on a down note the index is now testing Monday's breakout. What is spookier is that the afternoon low was just about the same as the morning gap down low. In other words, all that good news that got juices flowing dried up.

I still think that the correct patter for the summer was a rising wedge not a trading range (see Wednesday's Barron's Online column). Or, just put up a NYSE composite chart to see.

So, do you buy 'em on this pullback or do you panic if and when prices go below the breakout point seen Monday? In the words of Bill O'Reilly, "you make the call."

Wednesday, September 22, 2010


Today's column talks about the breakout in the S&P 500, the breakout 10 days ago in the NDX and the lack of breakout in many other indices. It also covers a bit on sentiment with no hard conclusions other than the fear we say in August is completely gone.

Just wanted to give the nod to two of my sources that did not make it into the column.

Jason Goepfert of Sentimentrader.com said that the AAII data is not that reliable and short interest is not good too. He did say mutual fund cash levels were very low but that many funds are constrained to keep it that way. Therefore, he does not see an exuberant market.

Todd Salamone at Schaeffer's Investment Research said that hedge funds have been underweighted stocks for a while and are just now accumulating. Again, no frothiness.

Subjectively, I don't read a whole lot from fundamental types that do not say the recovery is at least plodding along and companies are making plenty of money.

Then again, that does not include Peter Schiff, to whom I had the pleasure of speaking a few occasions. Too bad I could not vote in the Connecticut primary for US Senator.


My Monday Barron's Online column is at the top of both the most read and most emailed lists for the day at the Barrons.com site and I wonder it if was the title that drew in so many people. As it reads now - with sub-head -  it is:

Signs of a Recovery May be Found in Charts
Big gains in many commodity prices suggest that happy days could be here for U.S. economy.

What I submitted for editing was:

Rumblings of Recovery
A breakout in an old favorite commodities index suggests cyclical stock strength is real.

Now, my editors have a much better sense of titles and headlines than I do. But Mikey the Bear still likes gold.

Tuesday, September 21, 2010

Fed Fake Out

The market thumbed its nose at the housing data this morning but the real fun happened after the Fed said it was ready to do more to get the economy moving.  How buying bonds creates jobs is above my little technical analysis keppie but bulls, or was it fools, rushed in. I looked at a chart of the Dow intraday and it looked spooky - as in ready to haunt the greedy.

Was it an ingenious bit of financial engineering by Goldman and pals (yeah, I said it) to suck in retail so they could get out? After all, everyone say the resistance breakout in the market yesterday and even I had to relinquish the growling.

But the more this continues, and there is little outside of common sense that says it won't, the hard the fall will be, I am convinced.

Check this chart:
Adobe got slammed after hours for a weak forecast even though earnings were good. And only a few weeks ago it was sent to the moon with good news. The falling part was vicious and not very bull market like.

Mikey still likes gold and now silver. Awesome upside reversals in both (intraday) after the Fed basically admitted they have to do dumb things rather than do nothing.

Monday, September 20, 2010

Triple Digits? Must be Monday

Once again, the Dow scooted up triple digits on Monday and just as it was showing its lactic acid NBER declared that the recession ended in June.  Nothing like driving while looking in the rear view mirror.

Timed with this report was President Obama's town hall meeting on CNBC. Honestly, I do not know why he did it as the bulk of questions were about his perceived anti-business stance and how people can no longer pay mortgages, student loans and live the dream. Was it to say, "You know, you are right and we'll keep the tax cuts for all."  Or was it to say, "You know, you are right, we should enforce trade laws."

You get the drift. And I don't want to get political as that is not what this blog is about.

So the stock market rallied - a lot. Cyclicals/heavy industrials are strong. Housing got some good news and did well. Retail marches higher.  Commodities broke out last this month but today were weak - except gold and oil, of course.

Check out copper. A bear reversal? What is going on here? If stocks were down, everything would make sense given higher gold and bonds and lower commodities. But stocks are up and that means some other factor is at work.

It's not retail. Stock volume still stinks.

It's not mutual funds. They are already operating on record low cash.

That means traders trading with traders. Enough to suck in Joe 401-K no doubt.

Friday, September 17, 2010

Still asking for "Likes"

If you have not done so, I'd appreciate you hitting that "like" button over in the Facebook section on the right of this page -->

Technology of the Future

Just a few thoughts from Google CEO Eric Schmidt:
  • "The best applications are being built for mobile."
  • "The smart phone is the defining, iconic device of our time."
  • "Smart phone sales will eclipse PC sales in two years."
  • "The web is the biggest platform of them all."
For we in the stock market, it means WinTel (Windows and Intel)  is old tech. New tech, whatever that turns out to be, should lead the next bull market, whenever that is.

    Thursday, September 16, 2010


    Survivor fans may think Parvati but this is a bit more serious. The government released data saying that 14% of Americans live below the poverty line. That's $22K per year for a family of four. Who spends that at Starbucks?

    It is an believable stat but what did Wall Street do? Why rally, of course.

    I may be a technical guy but if 14% of the country has fallen below the line then there might not be enough consumers to go around to keep things humming.

    The technician in me says to trade what is happening in the market and not what is happening outside the market. Very well. But I can't help think that the inevitable decline - when investors wake up - is going to be a killer.

    Modern Day Depression

    This was the headline in an article in Advisor Perspectives by David Rosenberg, Chief Economist of Investment Advisor Gluskin Sheff

    He wrote:

    The bottom line is that when we get to single-digit P/E multiples and a 5-6% dividend yield, we will be at levels that will touch off a new secular bull market and we are more than prepared for that eventuality. At that point, sentiment will be completely washed out, as it was in 1982, all the cheerleaders who failed to see the 2007-08 collapse and the new paradigm of frugality will be out of a job, and political change will have occurred.

    Does not look like we are there quite yet.

    Wednesday, September 15, 2010

    Analogs part 2

    In today's column i compared 2010 to 2004. Although I say so in the piece, it would not hurt to emphasize that the economic and fundamental backdrops of the two years are radically different. And back then I was not still looking for a debacle in stock prices, either.

    Just to be clear, I am still a bear. The article talks more about timing - and that timing for a tradeable buying opportunity is not here yet.

    Sy Harding of the Street Smart Report sees similarities between 2010 and 1992. Here is an excerpt from his Sept 10 free email distribution:

    The current similarities to the fall of 1992 are not confined to the similar surrounding economic conditions and fear in the stock market, but also to historical seasonal patterns, and even the political situation.

    In November, 1992, a Democratic president was elected for the first time since 1977, succeeding a previously popular Republican president, George Bush Sr. President Bush had become unpopular by re-election time, as a result of the difficulty his administration was having pulling the economy out of the 1991 recession. In another eerie similarity, that recession had been the result of the bursting of a real estate bubble; a serious collapse of the banking system (almost 1,000 banks had failed and had to be taken over by the FDIC); and federal budget deficits that were at near record highs. The budget deficits in turn were the result of economic stimulus efforts, and the costs of the Desert Storm war to drive Saddam Hussein’s Iraqi forces out of Kuwait.

    Similar to the situation of our current president, the new president in 1993, Bill Clinton, became increasingly less popular as his efforts to revive the economy seemed to be taking too long, while he seemed to put too much effort into side issues like attempting to reform healthcare.

    However by 1996, contrary to the fears of 1993 and 1994, the economy was recovering dramatically, and the stock market continued in what would become the longest and strongest bull market in history. Some of the economic highlights included the record budget deficits that were sure to bankrupt the country being reversed to significant budget surpluses.

    Is it possible the present similarities to the early 1990’s could continue?

    No one thinks so right now. The current opinion is similar to that of Time magazine in 1992, that the “once in a lifetime dislocations will take years to work out.”

    I sure don’t have a crystal ball that’s tuned to look out five or ten years.

    But I have been saying for more than a year that the market should see an important low in the October/November time-frame this year, followed by a dramatic rally of 50% to its high next year. That expectation of a further decline from here, followed by an important buy signal, is based on indications that the degree of economic slowdown has not been fully factored into stock prices, my belief that it’s still too early for the market to anticipate an improving economy six to nine months out, the market’s annual seasonality, and the history of the Four-Year Presidential Cycle.

    End quote

    I am not one to talk about the funnymentals but Sy and I do agree that we may see a nice buying opportunity later in the year.


    I cannot reveal too much here and now because today's column is not yet up on Barron's Online but the topic was a comparison of the chart of the stock market today a time period in the past - called an analog. These sorts of comparisons often look great on paper when they are made but tracking the market's two time periods does not always give you a good path to follow.

    There are so many factors in play that any one of them can rise from being a non-influence to being the major tipping point. For example, ask a trader a few years ago what high frequency trading (HFT) was. You would ave gotten a blank stare.

    Ditto zero percent interest rates or even a war on terror with its requisite changes in how business gets down (air travel, new security industries, protection of the power grid, etc...)

    Anyway, more on the column after it is up on the site.

    Tuesday, September 14, 2010

    Is this good?

    With all the talk of zero inflation, I find it interesting that corn (above), wheat, sugar, coffee, cotton and, of course, precious metals are all in strong rising trends. Cotton (below) should be especially troublesome for the deflationists.

    Monday, September 13, 2010

    Bond Bubble Bogasity

    Bogasity (bogacity)
    Something that is making me unhappy. Something that has an element of ridiculousness. Something that is totally false and untrue.

    I've written that bonds were indeed in nosebleed territory but that this was no bubble. First of all, if we think it is a bubble it is not.

    Bubbles are not just chart patterns. They are states of mind. Measuring tech stocks on advertising dollars per share or RnD per share as they did in 1999-2000 is a bubble because everyone thought it was the only way to go.

    Ditto setting Joe the Plumber up with a 500K jumbo loan with no money down for 110% financing.

    I think we may have seen the peak in prices (see today's column) but that we are going to stay in the area for a while. Bonds are still a lousy investment but they are better then stocks IMHO.

    Check out how actively bonds of every maturity bounced off supports (again, see the column). And to the right you will see a Facebook post saying how shorter-term interest rates tanked. Down nearly 5% (vs. Friday's yield) on the 5-year and down 7% on the 2-year.

    If you think that means the market thinks the economy is roaring back you've got another thing coming (which really means you've got another think coming - as in try again, ladies and gents).

    Friday, September 10, 2010

    I knew it!

    I have been writing in Quick Takes Pro that all of the econonomic indicators we anziously await each day have turned into noise.  Here is an excerpt from a free Birinyi Associate report:

    "Over the last eight years the number of indicators deemed to be "important" has doubled from roughly forty-eight per month to now over one hundred."

    But wait! There's more! (Oh Billy Mays!)

    "Additionally, these examples are only the ones that pertain to the US economy; today's market moves because of reports ranging from Chinese GDP to expected German exports to Greek debt."

    Just this week the markets rocked and rolled over a Portuguese bond sale.  It is a good thing I look at charts instead of following Ben Bernanke around to report on the size of his briefcase and color of his tie.

    Thursday, September 9, 2010

    Grandma again

    I wrote this before and almost submitted it to my editor for today's column.

    If Grandma had wheels she'd be a bicycle.


    But breakouts from patterns as the current large one require a marked mood swing, from apathetically neutral to energetically bullish. That is what breakouts are all about — getting the crowd moving one way or the other.
    That shift seems nowhere in evidence. But if the market can suddenly fire up all burners and get the public back in the game, then I will have to eat my hat. (end quote)

    IF the market can fire up on all burners it would be a bull market
    IF Grandma......

    She doesn't and neither does the market

    Campbells - for your perusal

    Mentioned Tuesday in my column

    Tuesday, September 7, 2010

    Health care

    File this under irony - My kid needs a medical test. Insurance company has not approved it yet. I cannot show up at the doctor's office with cash in hand to get the test because my insurance company has not yet approved it. Feeling confident about more government regulations?

    Hedgies Go Boom

    I hope the long weekend went well for everyone. Here are a few snippets on hedge funds. You can piece together the story.

    From businessinsider.com:
    Recent and major departures from the hedge fund kingdom - Stanley Druckenmiller, Paolo Pelligrini, Richard Grubman and Lou Simpson - signal a trend of investors retiring at a time when hedge funds show the worst results in recent memory. The wave started with Druckenmiller, who was down for the first time in years and it just wasn't fun anymore. Then there was Pelligrini, also down, who said he fundamentally disagrees with the government's economic policies. (hat tip Alex Spiroglou)

    From dailyfinance.com:
    It's a Hedge Fund Life: Investing Billions Takes a Toll on Star Managers (hat tip Dave Steckler)

    From NYTimes.com:
    It’s funny, but when quants do well, they all call themselves brilliant, but when things don’t go well, they whine and call it an anomalous market,” said Theodore Aronson, a quant fund manager in Philadelphia whose firm’s assets have dropped to $19 billion  from $31 billion in the spring of 2007. (Steckler again)

    From WSJ.com:
    Computer-driven mutual funds, chastened by a string of poor results and a wave of redemptions, are striving to bring more of a human touch to their investment decisions. These so-called quantitative funds, which rely largely on computer models to select investments, have been on the fritz for several years. A group of 65 such funds tracked by investment-research firm Morningstar Inc. lagged behind 72% of their category rivals, on average, in the three years ended Aug. 27. (Spiroglou again)

    Then there is always this fun site tracking hedge funds that blow up - http://hf-implode.com/

    Friday, September 3, 2010

    Funny how Spoos rallied before the news

    Either data services are FUBAR in terms of how they report data and time or a lot of people knew what the jobs report would say just before it came out. You make the call.

    Thursday, September 2, 2010

    Any way the wind blows II

    The latest AAII sentiment survey is out and my have AAII members changed their tune! To quote the mailing:

    "Bullish sentiment of individual investors rose 10.1 percentage points to 30.8% in the latest AAII Sentiment Survey. While the increase in bullish sentiment was dramatic, bullish sentiment remains below its long-term average of 39%.

    The improvement in bullish sentiment comes on the heels of a strong stock market advance during the first trading day of September. Investor sentiment is often influenced by recent stock market action."

    Influenced by recent action? Ya think?

    It looks like for this to be of any value anymore it needs to be smoothed but at least a 3-period average.

    Wednesday, September 1, 2010

    Who drives a Fiat?

    You never give me your money
    You only give me your funny paper
    and in the middle of negotiations
    you break down
    - The Beatles (hat tip Josh Schneck)

    This is a picture of the dollar index. Looks like a bear flag to me. Is it any wonder gold barely fell on a day when stocks soared?  Fiat currencies - funny paper.
    This is the euro index. Think the euro index should be the exact opposite of the dollar index? Think again, Poindexter. This one looks like a bear flag, too, albeit smaller.

    Out of college, money spent
    See no future, pay no rent
    All the money's gone, nowhere to go
    - same Beatles tune

    Frank Sinatra CMT

    That's life, that's what all the people say.
    You're riding high in April,
    Shot down in May
    - Frank Sinatra (That's Life)

    How did he know?  Market peaks in May, Flash crash in May.

    (hat tip CNBC)

    Tuesday, August 31, 2010

    Cisco breaks

    The Cisco Kid was a friend of mine
    He drink whiskey, Poncho drink the wine

    - War (1972)

    Analysts looking for tech to save the day are drinking kool-aid, not whiskey.

    This chart shows Cisco Systems breaking down below another support.

    The outlaws had us pinned down at the fort
    Cisco came in blastin', drinkin' port

    Kind of makes you think of Gene Wilder in Blazing Saddles (the drunken Waco Kid)

    Monday, August 30, 2010

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    Mo Retail

    In today's column, I followed up on retailers and how their stocks react poorly to good earnings. Expectations were set way too high and needed to be re-focused. That means lower prices.

    One stock I cut out before editing was TJX. Here is what I wrote but never submitted:

    Off-price apparel and home fashions retailer, TJX Companies (TJX), owner of the Marshall's and TJ Maxx chains, reported better than expected earnings on August 17and raised its outlook. Its stock barely moved and now sits on a very important support level below where it was before releasing its good news.

    What that means is even a good earner is now trading below where it was before the good news came out. That is a rejection of the news as not being good enough.  Support at 40.25 seems mighty critical to me and it closed at 40.56 today. I am not telling you what to do if it is broken but look at the chart and you tell me.