Friday, January 28, 2011

Food Inflation

Sorry for not posting for a few days but the weekly foot of new snow around here put a big crimp in the schedule.

Aside from another Nobel prize winner getting jailed (El Baradei in Egypt after Liu in China), the big story around the world still has to be food prices. That's one of the reason cited for the riots in Tnisia and Egypt. To the charts:
 Corn - bull market and no mention of the evil speculators of 2008.

 Wheat - resistance breakout.
Livestock ETF - cattle and hogs have a breakout

Rice -knocking on the door of a breakout after a nice bull flag.

That covers the mainstays of just about every ethnic diet (soybeans looks like corn).  Where will the next riot be?

Monday, January 24, 2011

Shipping lead vs lag

Today's Barron's Online column talked about the decline of shipping stocks and the Baltic Dry Index (BDI), which keeps tabs on how much it costs to hire those mega-behemoth tanker ships.  The theory is that falling demand means lower shipping prices and then lower stock prices.  I even saw someone overlay the BDI witht he S&P 500 and the Shanghai composite. Excellent hypothesis, especially with China gobbling up all the raw materials and shipping their finished crap back to us.

Without disparaging anyone else's work, the falling in the BDI does not provide the reason for deflation. Stocks are up but the index is way down so you'd think stocks would correct towards the BDI. 

Chart lifted from Seeking Alpha but totally reproducable on your own via the free

I think the divergence between the BDI and stock prices means the opposite. First of all, the correlation here is limited. But if we assume it is good, to me it is stocks that lead the BDI and not the other way around. That is another of my arguments for inflation, not deflation in the coming years.

Spread the Wealth!

I'm walking the line here as I try to keep this blog non-political.  But I love stealing from Charles Payne of Fox Biz and Wall Street Strategies and here is his latest:

The GINI co-efficient is a measure of the so-called inequality of a distribution. For incomes, a 0 means everyone has the same income, while 1 means one person has all the income. I decided to take a look at countries with great GINI ratings, you know, they spread the wealth. As it turns out it's those nations that America's liberals drool about. These nations have sky high tax obligations and aren't known for innovation or job creation.

Scary, no? But to be fair, Germany is doing OK so it's not a perfect measure.

He went on saying that few of the worlds billionaires live in these high GINI countries. Why should they? They'd have to give it all up and that is no incentive to do anything at all.

Friday, January 21, 2011

Burgers and Dogs

While the remaining two AFC contenders prepare to do battle, fittingly in Heinz* field, this is a post about hamburgers and hot dogs. Tailgating at its best.

This is a chart of the livestock ETN, lovingly named COW, probably because they did not want to confuse it with PIIGS.
 This ETN is based on Live Cattle and Lean Hogs futures (hence cows and pigs). It shows an attempt at breaking out from a large range that is so far unsuccessful. Short-term, the call might be for a drop back to the bottom of the range but let's keep it big picture.
 This next chart  shows the same time span for lean hogs with the warning that the contract rollover in livestock futures is funky. But basically, it looks like a breakout to me (with a short-term argument for a correction lower).
And finally the live cattle chart also shows a long-term breakout with possible reversal in play. What's a carnivore to do? Everything says long-term bull, if you'll excuse the expression, and short-term bear (I hear bear meat is greasy).

What is more interesting is how the COW ETN fell steadily in 2008 and 2009 and is now in a low level range while the futures on which it is based have rallied all the way back to previous highs.

My take is that livestock prices are rising but Wall Street once again has found a way to screw the public with this ETN. Who owned leveraged stock ETFs and watched them fall when stocks went up or down over time? (Yes, I know there is a daily reset). And what about the Oil ETN and the contango tango?

Get yourself a futures account and trade the real thing.

* Heinz is the giant maker of ketchup and other condiments

Thursday, January 20, 2011

Where's my umbrella?

Bombs away
But we're O.K.
Bombs away
In old Bombay
-The Police, Bombs Away (1980)

Today's column is a follow-up to Monday's. On that day, I noted that news bombs were falling on the retail sector and that it did not bode well for consumers or consumer stocks. Today, it was extended way out to many different stocks and sectors.

We all know cloud computing stocks got clocked. But when you see names like Riverbed Technology trading 7% off their worst levels you have to think it was a Steve Jobs moment. It still could be a chance to scoop up cheap, panicked shares for a quickie.

But the ranks of biggest losers this week were flush with everything from energy to shipping. From telecoms to semiconductors. Drillers, refiners, miners, some drug stock (Mannkind MNKD - holy bleep!) Even AIG fell apart.Something is just not right, especially since Wal-Mart broke out to the upside!

Where there's smoke there's fire.
There is never just one cockroach in the kitchen.
Betcha can't eat just one (name that product)

Gotta tune in---bombs.
Gotta turn out---atomic lasers falling from the sky
- Channel Z, The B-52s (1989)

Delta redux

Just enjoying the view from the ground (and not in a cramped Delta seat).

This was a "Chart of the Day" email last week. If you do not get it, why not? It's free.  Sign-up in the box to the right --->

Read my Delta rant here.

Wednesday, January 19, 2011

Super Bowl Indicator

The late Mike Epstein's musings, as told by Mike Carr. 

Mike E. pointed to the overall economy as the reason the Super Bowl indicator works. Old NFL teams, such as the Chicago Bears, Pittsburgh Steelers and Cleveland Browns, are Rust Belt cities with economies dependent upon manufacturing. The upstart AFL, when it began playing football in the 1960s, placed franchises in booming cities dependent upon the new economy – oil in Houston, technology in Oakland – or whose owners had new money fortunes like the Hess family which owned the New York Jets.

When the old economy does well, fans in those cities have good jobs and feel good about their prospects. They fill the stadiums of the home team, and fill the coffers of their teams with cash needed to sign great players to win the Super Bowl. As the new economy does better, we see their teams dominate the game, and the manufacturing companies that dominate the Dow Jones Industrial Average do worse, resulting in a bad year for stocks.

--> So, if the Jets win its a bear market?  Anyone else, including the Steelers, means bull?

Tuesday, January 18, 2011

China Not the Biggest US Creditor

Found this on Seeking Alpha from Prieur du Plessis:

China may end up owning us but they don't own us yet.


Not that it made me or anyone any money but today's news that drove Apple down - Steve Jobs' health - has not been a secret. In fact, check out my blog post from Oct 19. Clearly not valuable to trade but if you follow fundamentals you would have been watching this one like a hawk.

Friday, January 14, 2011

Know Thy Indicator

I use eSignal in my work because it allows me to jump from indicator to indicator to different time frame to new symbol quickly. That is essential when your domain is everything that trades in all time frames. The data is another story but that is for another blog post.

Last night, as I told my subscribers this morning, I attended the monthly meeting of the Long Island Stock Traders Meetup Group and one of the speakers showed the S&P 500 using a default chart. It about 2 seconds, I said under my breath, "that does not look so good." This a day after writing my Barron's column saying it looked OK using eSignal.

I know from my days as a technical analysis product manager with Tradecenter, Knight-Ridder Financial and Bridge that not all software is the same let alone not all the data. What data is excluded? When do you start the count? Where do you put pre- and post-market data?  And for this blog post, what exactly is the formula for RSI?

The old saw "you can torture the data to say whatever you want" comes to mind.

I know when I see something funky - which I can usually tell after a quarter century of looking at charts - I run through several websites and even the exchange website to see who says what. The chart of the India ETF (INP) is the latest example of how three services show one thing and three show another.

The moral of this story is that you should probably use two different charting packages for your trading. You want them to show a few discrepancies from time to time to be sure you are getting different "opinions," too.

Thursday, January 13, 2011

Delta falls flat

I used to love her
But I had to kill her
- Guns N' Roses

This is the long awaited (by me) therapeutic venting about my saga getting home from a road trip and how Delta Airlines went from one of my favorite airlines to my second most hated (after Spirit Airlines <--blogged here). Read the first few paragraphs for some airline history. Keep going if you have nothing better to do.

Delta's fall from grace was not immediate and to this day I still have most of my frequent flyer miles with them. From 2003 to 2006, when they ran their "Song Airlines" brand, I was a really huge fan. It was JetBlue only more fun and I though they should have re-branded the whole shebang Song instead of the other way around.

But over the past few years, and I cannot be sure if it started when they merged/bought Northwest in 2008 but it seems about right, I noticed the decline. The first thing I saw was seat sizes getting smaller. There is nothing like the passenger next to you spilling out into your personal space, elbows in your side, knees splayed wide under your tray table. Imagine feeling the warmth from some dude's leg through your pants - grasp the skeeviness. I need a shower just writing this.

Of course, a lot has to do with the airline industry as a whole as they cope with oppressive regulations and security concerns. Jet fuel prices, airport fees, refitting planes to thwart the terrorists that should not be getting through the TSA feel-ups in the first place, etc....

Digression - forget all security, do profiling like El Al and give the pilot a button to push that floods the cabin with sleeping gas. Not only would there be no terrorism but you'd get a pretty decent nap before you arrived at your destination. Use bag scanners to search for gas masks, not half-empty bottles of my kid's gatorade and my wife's bottle of hair conditioner.

But some airlines handle it well. American's JFK terminal - a breeze and clean, too. Southwest in Islip - the easiest way to go although I do hate the jockeying for a good seat with nothing assigned. JetBlue in JFK - busy but efficient with all the amenities and reasonably comfy seats.  Comfy seats - imagine that. Don't you love it when the pilot tells you to sit back and relax? 

What a crock.  If I can pay for more leg room how about more elbow room? Keep your fancy meals and tray service in First Class. Charge me the same $10 dollars you charge for more legroom and pass the Diet Coke and bag with six peanuts.

And both Southwest and JetBlue fly to the "off" airports such as Long Beach, CA instead of LAX.  If you have a choice in Gov. Moonbeam's crib, go to Long Beach.

So here's the saga of my return from Miami.You can stop reading now unless you like a good Travel Channel nightmare.

Pre-trip - Delta changes plane types and flight number and did not send me a notice. I found out when I was just rechecking my plans. Fortunately, the agent was a doll and was able to change my seats by freeing up blocked out seats for my family stacked in two rows on the same side of the plane. Five across does not work for us with a kicking small child.

Tuesday afternoon - Delta cancels my Wednesday evening flight back to NY. Why? The big snow was supposed to start when we'd be in the air. It turns out it was pushed back and the snow did not start until we would have been on the ground. They later claimed it was the Atlanta storm that was the real reason, something that is BS for reasons to be found later.

Fortunately, I was already online when it happened and was able to snag seats on the next day's flight. These were the seats, by the way, that I rejected the first time but this is no time to get fancy. Just get on the plane and tough it out.

Wednesday afternoon - Storm passed through NY and the airport was fine with few delays. Flight said to be on time.

Wednesday 5:30 pm - Arrive at Miami airport, TSA agent was rather friendly, no pat down or excessive radiation machines. Headed to the gate and flight now delayed from 7:23 departure to 11:00.  Unreal.

Got to the gate and there was a plane sitting there. Huh? Found an agent and found out that was indeed the plane and the pilot was in the terminal but the flight attendants were still in NY and about to take the next flight down. The flight attendants were the problem? Come on, nobody is on call? And why were they in NY if the earlier claim for the cancellation was because of Atlanta? This does not pass the smell test.

We take off a bit earlier than 11 and I squeeze in next to Joe Long Legs. he does not even try not to spill over into my space. Needless to say, I did what I could to disturb his sleep and coax him to contract. No dice. I found a seat in the back row and stayed there until final approach to NY.

The flight was smooth and the flight attendants were great. We land at 1:15 am and taxi 20 minutes around JFK airport to get to the terminal. Can't blame that on Delta.

Get to the terminal and we have to be towed into the gate. OK, a few more minutes but since it is after 1am, the only gate they had was this end one that needed a tow? Didn't they consider that we were already 3 hours late compared to the original arrive time?

They tow us in and we wait. The pilot comes on the PA and says the jetway is not working and they sent for someone to fix it. You would think they knew we were coming and would have checked it.

Minutes go by and the pilot comes on the PA to say it will be a few more minutes - he hopes.

Minutes go by and the pilot comes on the PA, apologizes for making excuses and says the person who fixes the jetway was not there and we'd have to be towed to another gate. Again, you'd think they knew we were coming and sent us there in the first place.

Finally, we are out of the plane - 50 minutes after we touched down - but the upside of the last delay was that our luggage had time to get there when we did. The bags come out and the belt stops. and then it started and stopped a few more times. But the limo guy was waiting and off we went.

Oh, did I mention the terminal at JFK was a dump? And that they charge for the first bag?  

Does Amtrak go to the Caribbean?

Sunday, January 9, 2011

No blog till Wednesday

On the road and all I have is my Macbook - which stinks for business use (disclosure - I need a lot of screen space).  As much as I wanted to see the Evil Empire (MSFT) blowing up in my rear view mirror, I am still in need of affordable equipment with the controls and shortcuts on which I now depend.

Friday, January 7, 2011

8 Year Bonk

This interesting post was made in a technical analysis chat room by Ed Carlson, CMT of Seattle Technical Advisors.


As part of my research for my book on George Lindsay, I was reading his newsletter from 5/21/71 last night.
It appears (to me) to apply to our current situation.

"If we count, not just from an ordinary bear market low, but from a really epochal bottom, there has always been a sharp break eight years later - a break so deep and rapid we can say that both an important high and an important low came within two or three months of each other. The crash of 1929 came eight years after the 1921 low. Eight years after the all-time low of 1932, the market really plummeted in May-June 1940, when Germany invaded France. The low of 1942 marked the end of a five year bear market, and stocks plunged in June-July 1950, when the Korean War broke out. The break of 1957 came eight years after the major low of 1949. When we count eight years from the low of 1962, we come to the spring of 1970., and again the market took a nosedive."

"Note that the break can occur at any stage of the market cycle: in 1929, it came at the top, in 1940 during a bear market, in 1950 during a bull market and in 1970 at the bottom. It makes no difference. "

I'd say our last epochal bottom was late 2002 or early 2003 which makes the eight year count end... (excuse me, I need to call my broker)

End Quote

Wednesday, January 5, 2011

Oh the Humanity!

Everyone's panties are in a bunch over golds bonk this week. "We told you so!" say the deflationistas.

Well, not so fast. This is still a bull market.

Correction yes. New market for Goldschlager, no.  And no, I do not know how this chart turned grey on me. Still need Stockcharts lessons, I suppose.

Tuesday, January 4, 2011

Yogi Bear?

What would the socionomics folks say about the success of a new movie about bears?

I like to refer to this chart I used for an appearance on the Nightly Business Report way back in November 2002. It makes the case that no matter how nice the rally from 2009 has been, this is still a secular bear market.

Check this out:

This chart was created using BridgeStation and the Athena charting package. Anyone who knows these terms is as old as I am. Anyway, here is a chart from a recent report from Martin Pring (  that essentially says the same thing.

Maybe more than a correction is coming.

Monday, January 3, 2011


Realizing that not everyone reads the media outlets for which I write, here is a link to my monthly story on MarketWatch - Commodities are Hot Again.

And here is the teaser line - Deflation may be the talk of the town, but don’t tell that to the commodities markets.