BW,...in response to your comment in MTUftWA i found this to back up your observations,...
",...GOOG’s entry into the S&P500. This was not as well received as I had thought it might be. While I expected to see underlying support, which was evident, I thought we would see something like a 50+ point move for the stock and quite possibly a rally in the COMP, but neither materialized. As a matter of fact the Ameritrade Online Investors Index, which is a snapshot of market trading activity actually showed more sells in GOOG than buys. The ratio shows 9% buying while nearly 14% sold. Strange? Maybe not…"
OVERVIEW: Another week of musical chairs… This week it was the COMP’s turn to set a new high and as mentioned in last week’s update with which this post replies: While I feel the current move is not sustainable due to the many divergences and mixed messages that exist, we are setting up for what appears to be a move in the COMP. Along with what has become the usual uncertain choppy and rotative mentality exhibited week after week, the BPCOMP is showing a convergence on price action in the shorter-term chart with the MACD exhibiting a pattern similar to that as seen in the other indices where you can draw a lower elliptical support line below the short term pattern (mid-Jan to present) which is beginning to point up. So in my mind there is a chance we see the COMP follow suit to that of the other indices and a new high may very well be in the works. We started the week in a numb state as those betting that the Fed was one and done did not exactly hear what they were looking for, then on Wed the COMP broke out to test 2350 intraday before settling out the week at 2339. What was the most interesting about this move to new highs for the COMP is that it occurred on Wed. the 29th, the same day the solar eclipse took place. Just coincidence? Maybe… The DJIA took a spill with a 200pts decline closing out the week at 11109, the SPX remained somewhat choppy and range bound closing out the week at 1294 and the R2k moved up yet again to set another new high finishing out the week at 759 -- impressive. What was just as impressive was the move in the PM’s with Gold hitting a 25-year high on an overnight spot price move to $594 before closing out the week at $583 and Silver setting a 22-year high with an overnight move to $11.94 before settling down and closing out the week at $11.49. The U$D meandered around the mid-90 to mid-89 area finishing out on the low side while Oil moved up out of its consolidation pattern briefly topping $67bbl before settling down to $66bbl. The CRB made a strong move off its 320-325 consolidation range and shot up to 338 before settling down and closing out the week at 333.
What we have is a very bizarre backdrop and what we see taking place is a Fed creating the very inflation they are dedicated to fighting by pumping liquidity into the market place while simultaneously raising interest rates. SCENARIO - If liquidity creates inflation and the Fed is dedicated to fighting this inflation via rates hikes, what does this tell you? Liquidity = inflation and inflation increases the costs to do business which in turn slows economic growth, therefore earnings will suffer and the stock market will begin to decline. Rising Rates = increases in the costs of lending which will slow housing while pushing up yields and along with it mortgage rates will rise and in turn consumer spending will wane due to the higher cost of mortgage payments. I could be wrong and the Fed could change course at anytime, but from the messages I see coming from this Fed, they are going to slam a square peg into a round hole and clean up the left over debris after the fact. It won’t happen overnight, but we are out of the “what if” mode and moving towards the realm of reality. Bottom line: Commodities will benefit the most under this scenario...
The CoT data is little changed from the prior week’s report. Open interest has taken a dive on the majors and remains well below the centerline, but more importantly is that the Commercial Shorts on the NDX and SPX remain slim and continue to climb on board the DJIA. Gold open interest continues to flat-line with the same Commercial Shorts and Large Spec Longs in a stand off although Commercial Shorts have increased. Oil open interest has turned back up, but the Long and Short positions have waned considerably, not much action in the Crude. You can go here to view the CoT data graphs #msg-9171642 -- As detailed by AMG Data Services, excluding ETF activity Equity funds reported net cash inflows totaling $1.807B in the week ended March 29 with 64% or $1.152 B going to funds investing in Non-domestic securities. Excluding ETF activity, International Equity funds reported net cash inflows of $953M to all Emerging and Developed regions. The largest ETF inflows were $540M to the Select Sector SPDRs Energy fund and $170M to the iShares S&P SmCap 600 Index fund. The largest ETF outflows were -$2.201B from the SPDR Trust Series 1 fund and -$870M from the NASDAQ Index Tracking Stock fund. The full report can be viewed at #msg-10468210 Treasury yields continue to climb across the board as the yield curve has once again flattened out. The 2yrs@4.80%, 5yrs@4.80%, 10yrs@4.84%, 20yrs@4.86% and 30yrs@4.88%. The Yield Curve can be viewed at #msg-10468331 …
ECONOMIC #’s: No inflation? Get a glimpse of that PCE reading this Qtr…
Consumer Confidence – Mar = 107.2 vs 102.7 w/expectations of 102.0 #msg-10406771
GDP (final) – Q4 = 1.7% vs 1.6% w/expectations of 1.7% GDP Chain Deflator – Q4 = 3.5% vs 3.3% w/expectations of 3.3% #msg-10446083
Personal Consumption Expenditures (PCE) – Q4 = 2.4% vs 1.4% w/expectations of 2.1% #msg-10446063
MBA Mortgage Applications – 3/24 increased 1.2% with filings for mortgages to purchase homes rising 2.7%, but Refi apps slipped 1.0% #msg-10424204
Oil Inventories – 3/24 as reported by the DoE and API Crude = DoE +2.1M bbls / API -240K bbls Gas = DoE -5.4M bbls / API -5.4M bbls Dist = DoE -2.5M bbls / API -2.2M bbls #msg-10424139
Initial Jobless Claims – 3/25 = 302K vs 312K w/expectations of 305K #msg-10446083
Help Wanted Index – Feb = 38 vs 38 w/expectations of 38 #msg-10446175
Personal Income – Feb = 0.3% vs 0.7% w/expectations of 0.4% Personal Spending – Feb = 0.1% vs 0.8% w/expectations of 0.0% #msg-10457573
Michigan Sentiment – Mar = 88.9 vs 86.7 w/expectations of 86.9 #msg-10457650
Chicago PMI – Mar = 60.4 vs 54.9 w/expectations of 57.0 #msg-10457721
Factory Oders – Feb = 0.2% vs -3.9% w/expectations of 1.3% #msg-10457791
I would like to start today’s spin with a quote; "There is no room in this country for hyphenated Americanism. . . . The one absolutely certain way of bringing this nation to ruin, of preventing all possibility of its continuing to be a nation at all, would be to permit it to become a tangle of squabbling nationalities." --Theodore Roosevelt
Those words of wisdom really need to be reflected upon in the context of the events currently unfolding. Illegal immigration is the hot button issue of the week and the phrase "Jobs American’s are not willing to do" is a pure unadulterated load of @&#%! I cannot begin to tell you how sick I am of hearing this phrase and what’s more, it is so false and very misleading. The jobs that illegal immigrants take are not jobs that American’s are unwilling to do, they are jobs that illegal immigrants are being offered to take for less pay than they are being offered to American workers. When the phrase "jobs American’s are unwilling to do" is spoken, the first picture that comes to mind is a field full of migrant farm workers picking lettuce for $2 an hour under a scorching sun. Sure as daylight that is not a very appealing image, but it is also a misleading image and one the media have only been too happy to portray on your TV screen. Illegal aliens do not just work on farms, hide from immigration authorities while picking produce for less than minimum wage. They are taking jobs as construction workers, in the services industry and anywhere that an employer is willing to break the law and hire them for less than what they would pay an American. Contrary to the assertion that American’s will not take low skilled jobs, American’s in fact do these jobs every day. Services have become one of the biggest industries in America today, so as far as American’s being unwilling to do these jobs, it could not be further from the truth. When looking even deeper and beyond illegal immigration we see other disturbing trends getting out of hand such as smuggling which has become a multi-billion dollar industry, an increase in violence in border towns and the environmental impact on pristine wildlife sanctuaries which are being devastated by this desert invasion. Then we have the border to the North, which needs to be secured as well. Just recently, undercover investigators were able to smuggle across the USA/Canadian border enough radioactive material to construct two dirty bombs. You should read that sentence again to get the full impact of what this implies. It does not take a rocket scientist to figure out that something awfully wrong is taking place in our nation today, beyond that of negligence alone. It is almost as if these issues are purposefully being neglected. You cannot control illegal immigration, smuggling and protect the USA and its citizens when you are unwilling to secure the borders, it all starts and ends with border security and illegal immigration is a large part of an even bigger problem. While illegal immigration is at the forefront of this issue, the lack of border control and unwillingness to deal with this travesty is troubling and something we can no longer afford to put off or ignore. In a post 9/11 era it is unimaginable to think that this has gone on for as long as it has, yet here we are nearly 5-years after the terrorist attacks had taken place and we are no safer today than we were pre 9/11, it would appear as though we are even less safe. Without getting too heavily off into the “how” this can occur in America, just ask yourself why? Why is something as simple as border control, which is so vital to our nation’s security being completely ignored for so long? It is an easy question to answer, just look at the way Katrina was handled then look at the Dubai Ports deal for some guidance. It is quite evident that our national security is being compromised… Securing our borders should not be considered an option. Securing the nation is Job #1, but it is pretty evident to me that our leaders do not have the American peoples’ best interests at heart. What I find even more outrageous is that we are even discussing “why” homeland security is not being implemented, “why” smuggling is a multi-billion dollar business taking place at our borders and “why” illegal aliens are being allowed to cross, take our jobs and weaken our economy. This is absolutely unacceptable…
I would like to end today’s spin with another quote from Theodore Roosevelt – "We stand equally against government by a plutocracy and government by a mob. There is something to be said for government by a great aristocracy which has furnished leaders to the nation in peace and war for generations; even a democrat like myself must admit this. But there is absolutely nothing to be said for government by a plutocracy, for government by men very powerful in certain lines and gifted with 'the money touch,' but with ideals which in their essence are merely those of so many glorified pawnbrokers."
Another Neo-CON JOB?…
WHAT CAN WE EXPECT NOW?: I wish I could be more specific in my outlook, but things are so out of whack that I do not want to give any overly definitive views. What I believe we will see is some intensely volatile times ahead, a lot of index rotation and stock/sector du’ jour activity. As mentioned many times over the last month or so we have so many divergences which appear to be spurned on by an overly liquefied Fed who in my opinion will continue to run the printing presses at full tilt boogie come hell or high water. Until such a time is reached that the Fed seems to change its attitude toward the speed bumps ahead, my feeling as outlined in the overview is that the Fed is on a mission. Obviously I do not have a crystal ball and the Fed could change course, but I will be approaching the markets and basing my trades and investments upon the current Fed attitude, geo-political risks and remain under the premise that the downside risk far outweighs the upside rewards with the caveat being the bottom could fall out of this thing at any time. It could be days, weeks, months, who knows? But I am gong to stay very cautious and if I trade it will be with extreme caution. Too many indicators are skewed and cannot be depended on to give a clear image of what is taking place within the markets due to the incredible amounts of artificial stimulus being used to prop ALL markets; financial, equity and otherwise. All in all what we do see technically speaking is that the R2k and COMP remain in an uptrend going into the week ahead, the S&P looks as if it could go either way and the DJIA looks poised to take a further nosedive. A blow off may be in the making now that the COMP has joined the party by setting new highs, but it is still too early to tell. We also have a Bradley Turn on April 3rd and as always this could go either way or be a non-event, but it is still worth noting and being aware of its presence over the next few days. Commodities on the other hand look very good to me, namely PM’s and Oil. As for the U$D, Gold and Oil – I believe that the U$D will continue to hold its ground in this current 89-90 area. Over the last couple weeks I have stressed the following: I think we are poised for a breakout in Gold and Oil, we will just have wait and see if we get confirmation or continue to base in these semi established ranges. As stated last week at worst I expect range bound volatility, but leaning towards a breakout for Oil and Gold. Well my outlook here has not changed as we appear to be on the verge of a breakout. Whether or not a little back and fill takes place over the next week is to be determined, but it appears as though $70bbl oil and $600 Gold will be tested in the very near future…
Technically Speaking AAII sentiment as of 3/29 shows 37.21% Bullish, 32.56% Bearish and 30.23% Neutral… The VIX and VXN are 11 & 16 respectively with VIX exhibiting a slight up-trend and VXN remaining in a decisive up-trend off of the lower support line. The CBOE EPC Ratio ended the week at .61 and TPC ratio at .83. The RSI 5-Days are Neutral on the SPX and INDU is nearly Oversold with the R2k and COMP being Overbought. The P/C ratios, VIX/VXN, Summation, McClellan, Highs/Lows, Advance/Decline, 200DMA stocks and Bullish %'s can all be viewed below along with the major indices…
CORE: USPIX, 70% Cash and upping my position in PRGNX
SPECULATIVE:
SCALP TRADE:
SWING:
Disclaimer: This disclosure is not a recommendation to buy, sell or do as I do. It is only to give my thoughts on current market conditions and attempt to identify trends and create a track record. I am not a day trader and invest mostly in funds or baskets of stocks, perform occasional swing trades and some scalps. Data presented may not be 100% accurate as I do make mistakes, so please perform your own due diligence.
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