OVERVIEW: It’s that time once again... This week pretty much went the way I expected, nowhere… As mentioned in the previous update with which this post replies: This could be a very volatile week and if not established in any positions this may end up being the type of week where one is glad to step aside or remain on the sidelines. My feeling is that no real direction is established until the following week once the dust settles. For the most part the majors were rather subdued where we saw little movement but mostly softness on the COMP, R2k and SPX. The exception to this equation was the U$D, Gold and the DJIA... After a parabolic move in which Gold shot up to $540, it fell back to $500 almost as quickly and as for the DJIA, just look at those candlewicks! We saw a succession of spinning tops to close out the week. The DJIA has yet to set a new high during this rally cry and follow suit with the rest of the majors. Another big mover was the U$D, a slight twist to Fedspeak verbiage and the U$D came tumbling down off of that 91-92 range that it has been stuck in since early Nov’05. I never really expected the U$D to get to 95 as many had thought and so far it looks like the buck stops here (pun intended 8^) Oil did not do too much, but what can one expect at this time of year although Nat Gas builds came in weak and while there was a slight pullback there, I believe that NG will find a higher low and move thru $15…
The CoT data has seen quite a turn of events as open interest has shot up on all of the majors, very interesting indeed… As a matter of fact, the last time an OI move like this was seen was guess when? if you said Jan-Mar’05 you would be correct. Coincidence? I won’t get into all of the particulars, you can go here to view the CoT data graphs #msg-7253670 -- Equity Fund flows as detailed by AMG Data Services reported net cash inflows totaling $2.210B and outflows totaling -$6.061B excluding ETF activity in the week ended December 14. International Equity funds reported net inflows of $899M and $443M xETF activity, as all emerging and developed markets report inflows. Taxable Bond funds reported net cash outflows totaling -$1.401B (-$1.431B xETF activity) and Money Market funds reported net outflows of -$4.123B. As for the U$D, Gold and Oil and as mentioned a little earlier, the U$D tumbled closing out below 90 at 89.7 and Oil just continues to hang around $59-$60bbl closing out at $59.05. The CRB after spiking to $340 on the gold move, settled in at $326.36. The 10-yrs and 30-yrs T-Note yields had a slight falling out on the FOMC comments and likewise U$D decline settling in at 4.448% and 4.650% respectively for the week…
ECONOMIC #’s: Manipulated or not, these were some miserable numbers…
Treasury Budget – Nov = -$83.1 vs –$59.7 expected -$80.0 #msg-8865457
Retail Sales - Nov = 0.3% vs 0.3% expected 0.4% Retail Sales (excl Autos) - Nov = -0.3% vs 0.0% expected 0.8% #msg-8865708
Business Inventories – Oct = 0.3% vs 0.5% expected 0.5% #msg-8865735
FOMC Meeting – Parsed statement (comparison to previous statement) #msg-8865788
Import Prices (excl Oil) – Nov = -0.2 vs 0.9 expected N/A Export Prices (excl Agr) – Nov = -0.9 vs 0.7 expected N/A #msg-8882097
Trade Balance – Oct = -$68.9B vs -$60.0B expected -$62.8B #msg-8882100
Oil Inventories – 12/13 as reported by the DoE / API: (Crude bbls= +900K / -1.94M) (Gas bbls = +1.8M / +412K) (Distillates bbls = -100K / +3.54M) #msg-8882114
Sometimes I am amazed at the power of perception. I want to compare Oil and Housing for a moment as they have something in common that I want to bring forth. Just like more Oil did not equal lower prices, more housing will not equal higher prices. It took Mr. Market a while to realize that if there is not enough refining capacity that all the Oil in the world does not mean too much (I think some are still in denial). The same (in a sense) can be said for housing… As soon Mr. Market realizes that more housing does not equal more buyers then building permits and construction spending will show little value. Just like there is a lack of capacity to refine oil, there is an over capacity of housing being built. Just like there is not enough refined oil for the potential buyers there is not enough potential buyer’s for the housing inventory. Once it is realized that inventory build up is to housing as inventory build up is to oil, this market tumbles… But as with Oil, there will be those who doubt, deny and spin the spin to suit their agenda.
Another perception that amazes me is that people seem to be surprised that we have not had another terror attack on US soil. Why do people find this so amazing? Is it because our Government is doing a better job at protecting us? Not much has changed, follow me for a second. The last truly devastating attack on US soil prior to 9/11 was Pearl Harbor. That was 50 years ago prior to 9/11! So why is it so amazing that we have not been attacked again? We lived through the Cold War, Korean War, Viet Nam, Iranian Hostage Crises, and who knows how many other terror filled years, why should now be any different? Because our Government tells us so? I for one do not believe anything that comes out of that mouthpiece and I certainly do not believe we are doing all we can. We may be more aware, but none of the 9/11 commission’s recommendations have been followed. How can this be? Whether you believe they had flawed data or the evidence of a possible attack was intentionally ignored, somebody needs to hold their feet to the fire! Then look at how we handled this year’s natural disasters, does any of that resemble preparedness? If that does not tell you something is awry, then I do not know what to tell you. We may actually be less prepared as our infrastructure has been gutted by a renegade administration. But I for one do believe that we have always done a pretty good job of protecting US citizens, maybe even more so now than in the past for the simple reason that we had to get it done with less. If you are surprised we have not been attacked again, it is only because our commander in chief has stirred a hornet’s nest and then tied the hands of progress. This all could have been dealt with in a much more efficient and less costly way. Too many lives have been lost through a seriously flawed and misguided plan all of which was concocted to line the pockets of war mongering profiteers. It truly sickens me…
The Fed has spoken! Or has he? I mean the language of the Fed has not really changed all that much and the inflation numbers are being manipulated to fit the speech or should I say “the times”. This is the way they want things to be, it is a small part of the larger scheme of things. Read between the lines, make up whatever you want, but the destination was carved in stone long before this last FOMC meeting or the announcement of the new Fed chairman. At first a stop in rate hikes may be greeted with glee, then as time passes it may be realized that the economy is actually weakening and why rate hikes came to a halt in the first place. It is hard to say because inflation data may reflect a different story in the near future, that is if it is not overly suppressed. We have new BK laws in place to catch all of those who fall through the cracks from the housing boom/bust. Little do they realize that they won’t be able to toss the keys at the mortgage companies and walk away, they will be enslaved and answer to one for the better part of their lives. I certainly hope it does not happen that way, but hey, connect the dots! The new BK laws entrap those who refinanced. They probably don’t even realize this. Rates may or may not continue higher, but does it really matter? We have printer of mass amounts of currency (B-2 bomber Ben) coming to town. Even if rates were to be cut again, they will not go to 1% anytime soon and if they do a monster hangover of epic proportions awaits the party animals. Soon M3 will be ditched and the dollar will tank. Is this all just a coincidence? I can see it now, inflation is under control all the while the printing presses run at full steam! If interest rates should fall then buyers of auctioned T-Notes could dry up as the world in general continues to diversify their holdings. Then if Oil continues higher, Gold could really go off the hook. What is the most intriguing thing of all (at least to me) is that so much can go wrong in a very short period of time. One misstep could set off a domino effect. So far the juggler has kept the plates in the air, but they certainly do have a lot of them to juggle. Still, never underestimate the power of deception as the deceivers have many tricks up their sleeves.
Don’t Believe Anything You Read & Only Half Of What You See…
WHAT CAN WE EXPECT NOW?: As mentioned in the previous update: The indices are telling us one story and bellwethers are telling us another. I think the bottom line here is that all is not what it seems in stock-land. It’s all about who blinks first as all things will not move up together for any length of time, something has to give. Big time blinking going on this past week as the U$D tumbled as did Gold. Then we have CMF –a- declining, ROC –a- weakening, Bbands -a- pinching, MACD –a- rolling, McSum –a- diving and EPC reached an extreme… Volatility indices are as low as they have been and during an Ops Exp sideways week? The stars are aligning for a nasty spill. If those indications are not enough how about weak Econ #’s, DJIA divergence, weak retail, slowing growth per bellwether company outlooks’, open interest skyrocketing, bullish sentiment approaching 60%, fund outflows and huge insider sales? It all says to me “LOOK OUT BELOW!” I would be on guard in here, these are some serious signals and if the last 2-yrs around this time are any indication, hint or clue - wink ;-) wink ;-) .. well, let’s just say history has a funny way of repeating itself. Of course there’s nothing to say that if a correction were to materialize that it would not be met with some dip buying and possible reconciliation in the New Year, but for now I am standing by my mid-Dec decline scenario that I have mentioned more times than you probably want to hear about. As a matter of fact I first made this assessment in mid-Nov here #msg-8484780 under the “What Can We Expect Now” section and have mentioned it quite often since then (nearly every week 8^) Sorry for the repetition, but I feel compelled to yell from the mountaintop. Whether or not this turns out to be correct shall be known very shortly as D-day is approaching. Better safe than sorry? I think so… Also we will see if Donald Bradley is the genius I believe him to have been. I have followed Bradley turns for some time now and as far as I am concerned he deserves to be mentioned in the same breath with the likes of Fibonacci and Gann. Put them together and we get some powerful tools right at our fingertips. These men were far ahead of their time and much praise they deserve. OK, enough of that, time to move on. As for the U$D, Oil and Gold – The U$D never could get past that barrier of 92 and it really does not surprise me. I have mentioned many times here and on the Your Economy board about the heavy resistance in this area. While I had thought the U$D may take a brief stab at 93 with the most recent rate hike, it just wasn’t meant to be and most likely remains weak. Oil has been hanging around in the $59 - $60bbl range and just in case you had not noticed, gas prices are starting to increase. I was able to buy Reg unleaded at a low of $2.11 in my neighborhood and since then have seen prices move up to $2.15 - $2.19 range. This should not surprise anyone as Christmas shopping is about done. Before you know it the New Year kicks in and so does winter (officially speaking). Oil will most likely base in this area and eventually move on to new highs, I believe now or at the least very soon is the time to position ones self in this sector while the opportunity presents itself. Then there’s GOLD, what can be said about the stellar run in the PM’s? Two words; it’s over… Of course we may linger here for a bit, but get ready for a correction that may take us down to $480 and quite possibly test that $455 area that we broke out from. Sorry to see it go, but with a correction comes another awesome buying opp within the next 3-6 months. I can hardly wait!
Technically Speaking, Bullish Advisors are at 58.8% with Bearish Advisors at 21.6%. The VIX/VXN are in the 10’s & 13’s respectively (some spread) and beginning to trend up. The CBOE EPC Ratio ended the week at .537 with a 21DMA of .569 and TPC ratio at .821 with a 21DMA of .811. The RSI 5-Days are Neutral across the board. The PC ratios, VIX/VXN, $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), stocks above 200DMA and Bullish %'s all can be viewed below along with the major indices…
NOTE:
CORE: QRAAX, RSNRX ,TAVIX, SRPIX, GSX
SPECULATIVE: ANO
SWING: USPIX, AGIX, DNDN, ENPIX, Euro & Yen Currencies
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 share the positions that I am holding through which it is my intention to create a track record. I am not a day trader and invest mostly in funds or baskets of stocks and attempt to identify up/down trends while performing occasional swing trades. Data presented may not be 100% accurate as I do make mistakes from time to time so please perform your own due diligence.
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