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 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 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).